[Federal Register Volume 88, Number 165 (Monday, August 28, 2023)]
[Rules and Regulations]
[Pages 58640-59438]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-16252]
[[Page 58639]]
Vol. 88
Monday,
No. 165
August 28, 2023
Part II
Department of Health and Human Services
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Centers for Medicare & Medicaid Services
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42 CFR Parts 411, 412, 419, et al.
Medicare Program; Hospital Inpatient Prospective Payment Systems for
Acute Care Hospitals and the Long Term Care Hospital Prospective
Payment System and Policy Changes and Fiscal Year 2024 Rates; Quality
Programs and Medicare Promoting Interoperability Program Requirements
for Eligible Hospitals and Critical Access Hospitals; Rural Emergency
Hospital and Physician-Owned Hospital Requirements; and Provider and
Supplier Disclosure of Ownership; and Medicare Disproportionate Share
Hospital (DSH) Payments: Counting Certain Days Associated With Section
1115 Demonstrations in the Medicaid Fraction; Final Rule
Federal Register / Vol. 88, No. 165 / Monday, August 28, 2023 / Rules
and Regulations
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Parts 411, 412, 419, 488, 489, and 495
[CMS-1785-F and CMS-1788-F]
RINs 0938-AV08 and 0938-AV17
Medicare Program; Hospital Inpatient Prospective Payment Systems
for Acute Care Hospitals and the Long-Term Care Hospital Prospective
Payment System and Policy Changes and Fiscal Year 2024 Rates; Quality
Programs and Medicare Promoting Interoperability Program Requirements
for Eligible Hospitals and Critical Access Hospitals; Rural Emergency
Hospital and Physician-Owned Hospital Requirements; and Provider and
Supplier Disclosure of Ownership; and Medicare Disproportionate Share
Hospital (DSH) Payments: Counting Certain Days Associated With Section
1115 Demonstrations in the Medicaid Fraction
AGENCY: Centers for Medicare & Medicaid Services (CMS), Department of
Health and Human Services (HHS).
ACTION: Final rules.
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SUMMARY: This final rule will: 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); and make other policy-
related changes. This final rule also revises our regulations on the
counting of days associated with individuals eligible for certain
benefits provided by section 1115 demonstrations in the Medicaid
fraction of a hospital's disproportionate patient percentage (DPP) used
in the disproportionate share hospital (DSH) calculation.
DATES: This final rule is effective October 1, 2023. The amendments to
42 CFR 488.18(d), published at 59 FR 32120, June 22, 1994, is effective
August 1, 2023.
FOR FURTHER INFORMATION CONTACT:
Donald Thompson, and Michele Hudson, (410) 786-4487 or
[email protected], 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 Inpatient
Critical Access Hospital (CAH) Issues.
Emily Lipkin, and Jim Mildenberger, [email protected], Long-Term Care
Hospital Prospective Payment System and MS-LTC-DRG Relative Weights
Issues.
Adina Hersko, [email protected], 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, [email protected], Rural
Community Hospital Demonstration Program Issues.
Jeris Smith, [email protected], Frontier Community Health
Integration Project (FCHIP) Demonstration Issues.
Lang Le, [email protected], Hospital Readmissions Reduction
Program--Administration Issues.
Ngozi Uzokwe, [email protected], Hospital Readmissions
Reduction Program--Measures Issues.
Jennifer Tate, [email protected], Hospital-Acquired
Condition Reduction Program--Administration Issues.
Ngozi Uzokwe, [email protected], Hospital-Acquired Condition
Reduction Program--Measures Issues.
Julia Venanzi, [email protected], Hospital Inpatient
Quality Reporting Program and Hospital Value-Based Purchasing Program--
Administration Issues.
Melissa Hager, [email protected] and Ngozi Uzokwe,
[email protected]--Hospital Inpatient Quality Reporting Program
and Hospital Value-Based Purchasing Program--Measures Issues Except
Hospital Consumer Assessment of Healthcare Providers and Systems
Issues.
Elizabeth Goldstein, [email protected], 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.
Ariel Cress, [email protected], Lorraine Wickiser, Lorraine,
[email protected], Long-Term Care Hospital Quality Reporting
Program--Data Reporting Issues.
Jessica Warren, [email protected] and Elizabeth Holland,
[email protected], Medicare Promoting Interoperability
Program.
Jennifer Milby, [email protected] and Sara Brice-Payne,
[email protected], Special Requirements for Rural Emergency
Hospitals (REHs).
Lisa O. Wilson, [email protected], Physician-Owned Hospital
Issues.
Frank Whelan, [email protected], Disclosure of Ownership.
SUPPLEMENTARY INFORMATION:
Tables Available on the CMS Website
The IPPS tables for this fiscal year (FY) 2024 final rule are
available 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 2024 IPPS Final Rule Home
Page'' or ``Acute Inpatient--Files for Download.'' The LTCH PPS tables
for this FY 2024 final rule are available 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-1785-F. For further details on the contents of the tables
referenced in this final rule, we refer readers to section VI. of the
Addendum to this FY 2024 IPPS/LTCH PPS final rule.
Readers who experience any problems accessing any of the tables
that are posted on the CMS websites, as previously identified, should
contact Michael Treitel, [email protected].
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 Final Rule
D. Issuance of a Notice Proposed Rulemaking and Summary of the
Proposed Provisions
E. Use of the Best Available Data in the FY 2024 IPPS and LTCH
PPS Ratesetting
F. Potential Payment Under the IPPS for Establishing and
Maintaining Access to Essential Medicines
II. Changes to Medicare Severity Diagnosis-Related Group (MS-DRG)
Classifications and Relative Weights
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A. Background
B. Adoption of the MS-DRGs and MS-DRG Reclassifications
C. Changes to Specific MS-DRG Classifications
D. Recalibration of the FY 2024 MS-DRG Relative Weights
E. Add-On Payments for New Services and Technologies for FY 2024
III. Changes to the Hospital Wage Index for Acute Care Hospitals
A. Background
B. Worksheet S-3 Wage Data for the FY 2024 Wage Index
C. Verification of Worksheet S-3 Wage Data
D. Method for Computing the FY 2024 Unadjusted Wage Index
E. Occupational Mix Adjustment to the FY 2024 Wage Index
F. Analysis and Implementation of the Occupational Mix
Adjustment and the FY 2024 Occupational Mix Adjusted Wage Index
G. Application of the Rural Floor, Application of the State
Frontier Floor, Continuation of the Low Wage Index Hospital Policy,
and Permanent Transition to Cap Wage Index Losses
H. FY 2024 Wage Index Tables
I. Revisions to the Wage Index Based on Hospital Redesignations
and Reclassifications
J. Out-Migration Adjustment Based on Commuting Patterns of
Hospital Employees
K. Reclassification From Urban to Rural Under Section
1886(d)(8)(E) of the Act Implemented at 42 CFR 412.103
L. Process for Requests for Wage Index Data Corrections
M. Labor-Related Share for the FY 2024 Wage Index
IV. Payment Adjustment for Medicare Disproportionate Share Hospitals
(DSHs) for FY 2024 (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. Supplemental Payment for Indian Health Service (IHS) and
Tribal Hospitals and Puerto Rico Hospitals
E. Uncompensated Care Payments
F. Counting Certain Days Associated With Section 1115
Demonstration in the Medicaid Fraction
V. Other Decisions and Changes to the IPPS for Operating System
A. Changes to MS-DRGs Subject to Postacute Care Transfer Policy
and MS-DRG Special Payments Policies (Sec. 412.4)
B. Changes in the Inpatient Hospital Update for FY 2024 (Sec.
412.64(d))
C. Sole Community Hospitals--Effective Date of Status in the
Case of a Merger (Sec. 412.92)
D. Rural Referral Centers (RRCs) Annual Updates (Sec. 412.96)
E. Payment Adjustment for Low-Volume Hospitals (Sec. 412.101)
F. Medicare-Dependent, Small Rural Hospital (MDH) Program (Sec.
412.108)
G. Payments for Indirect and Direct Graduate Medical Education
Costs (Sec. Sec. 412.105 and 413.75 through 413.83)
H. Reasonable Cost Payment for Nursing and Allied Health
Education Programs (Sec. Sec. 413.85 and 413.87)
I. Payment Adjustment for Certain Clinical Trial and Expanded
Access Use Immunotherapy Cases (Sec. Sec. 412.85 and 412.312)
J. Hospital Readmissions Reduction Program (Sec. Sec.
[thinsp]412.150 Through 412.154)
K. Hospital Value-Based Purchasing (VBP) Program: Policy Changes
(Sec. Sec. [thinsp]412.160 Through 412.167)
L. Hospital-Acquired Condition (HAC) Reduction Program
M. Rural Community Hospital Demonstration Program
VI. Changes to the IPPS for Capital-Related Costs
A. Overview
B. Additional Provisions
C. Annual Update for FY 2024
D. Treatment of Rural Reclassifications for Capital DSH Payments
VII. Changes for Hospitals Excluded From the IPPS
A. Rate-of-Increase in Payments to Excluded Hospitals for FY
2024
B. Report on Adjustment (Exception) Payments
C. Critical Access Hospitals (CAHs)
VIII. Changes to the Long-Term Care Hospital Prospective Payment
System (LTCH PPS) for FY 2024
A. Background of the LTCH PPS
B. Medicare Severity Long-Term Care Diagnosis-Related Group (MS-
LTC-DRG) Classifications and Relative Weights for FY 2024
C. Changes to the LTCH PPS Payment Rates and Other Changes to
the LTCH PPS for FY 2024
IX. Quality Data Reporting Requirements for Specific Providers and
Suppliers
A. Overview
B. Crosscutting Quality Program Proposal To Adopt the Up-to-Date
COVID-19 Vaccination Coverage Among Healthcare Personnel Measure
C. Changes to the Hospital Inpatient Quality Reporting (IQR)
Program
D. Changes to the PPS-Exempt Cancer Hospital Quality Reporting
(PCHQR) Program
E. Changes to the Long-Term Care Hospital Quality Reporting
Program (LTCH QRP)
F. Changes to the Medicare Promoting Interoperability Program
X. Other Provisions Included in This Final Rule
A. Rural Emergency Hospitals (REHs)
B. Physician Self-Referral and Physician-Owned Hospitals
C. Technical Corrections to 42 CFR 411.353 and 411.357
D. Safety Net Hospitals RFI
E. Disclosures of Ownership and Additional Disclosable Parties
Information
XI. MedPAC Recommendations and Publicly Available Files
A. MedPAC Recommendations
B. Publicly Available Files
XII. Collection of Information Requirements
A. Statutory Requirements for Solicitation of Comments
B. Collection of Information Requirements
I. Executive Summary and Background
A. Executive Summary
1. Purpose and Legal Authority
This FY 2024 IPPS/LTCH PPS final rule makes payment and policy
changes under the Medicare inpatient prospective payment system (IPPS)
for operating and capital-related costs of acute care hospitals as well
as for certain hospitals and hospital units excluded from the IPPS. In
addition, it makes payment and policy changes for inpatient hospital
services provided by long-term care hospitals (LTCHs) under the long-
term care hospital prospective payment system (LTCH PPS). This final
rule also makes policy changes to programs associated with Medicare
IPPS hospitals, IPPS-excluded hospitals, and LTCHs. In this FY 2024
final rule, we are finalizing our proposal to continue policies to
address wage index disparities impacting low wage index hospitals. We
are also finalizing our proposed changes relating to Medicare graduate
medical education (GME) for teaching hospitals and new technology add-
on payments.
In this FY 2024 final rule, we are finalizing our changes to the
regulation governing the counting of days associated with individuals
eligible for certain benefits provided by section 1115 demonstrations
in the Medicaid fraction of a hospital's DPP that were proposed in CMS
1788-P, Medicare Program; Medicare Disproportionate Share Hospital
(DSH) Payments: Counting Certain Days Associated With Section 1115
Demonstrations in the Medicaid Fraction (88 FR 12623).
We are finalizing our proposals to establish new requirements and
revise existing requirements for eligible hospitals and CAHs
participating in the Medicare Promoting Interoperability Program.
In the Hospital VBP Program, we are finalizing our proposals to add
one new measure, substantively modify two existing measures, add
technical changes to the administration of the Hospital Consumer
Assessment of Healthcare Providers and Systems (HCAHPS) Survey, change
the scoring policy to include a health equity scoring adjustment, and
modify the Total Performance Score (TPS) maximum to be 110, resulting
in a numeric score range of 0 to 110. We are also providing estimated
and newly established performance standards for the FY 2026 through FY
2029 program years for the Hospital VBP Program.
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In the HAC Reduction Program, we are finalizing our proposals to
establish a validation reconsideration process for data validation and
to add an additional targeting criterion for validation. We did not
propose any changes and are not finalizing any changes for the Hospital
Readmissions Reduction Program.
In the Hospital IQR Program, we are finalizing our proposals to add
three new measures, to modify three existing measures, and to remove
three measures. We are also finalizing our proposed changes to add
technical changes to the administration of the HCAHPS Survey and to add
an additional targeting criterion for validation.
In the PPS-Exempt Cancer Hospital Quality Reporting Program
(PCHQR), we are finalizing our proposals to add four new measures and
to modify an existing measure. We are also finalizing our proposed
changes to add technical changes to the administration of the HCAHPS
Survey and to begin public reporting of one measure.
In the LTCH QRP, we are finalizing our proposals to add two new
measures, modify an existing measure, remove two measures, and increase
the LTCH QRP data completion thresholds for LTCH Continuity Assessment
Record and Evaluation (CARE) Data Set (LCDS) items. Additionally, we
provide a summary of the comments received to our request for
information on principles for selecting and prioritizing LTCH QRP
quality measures and concepts under consideration for future years and
our update on CMS' continued efforts to close the health equity gap.
Under various statutory authorities, we either discuss continued
program implementation or make changes to the Medicare IPPS, the LTCH
PPS, other related payment methodologies and programs for FY 2024 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 Balanced Budget Refinement
Act of 1999 (BBRA) (Public Law (Pub. L.) 106-113) and section 307(b)(1)
of the Benefits Improvement and Protection Act of 2000 (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.
Section 1814(l)(4) of the Act requires downward
adjustments to the applicable percentage increase, beginning with FY
2015, for CAHs that do not successfully demonstrate meaningful use of
certified electronic health record technology (CEHRT) for an EHR
reporting payment for a payment adjustment year.
Section 1814(l)(4) of the Act, which requires downward
adjustments to the applicable percentage increase, beginning with FY
2015, for CAHs that do not successfully demonstrate meaningful use of
certified electronic health record technology (CEHRT) for an electronic
health record (EHR) reporting payment for a payment adjustment year.
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. Hospitals paid under the
IPPS with approved GME programs are paid for the indirect costs of
training residents in accordance with section 1886(d)(5)(B) of the Act.
Section 1886(d)(5)(F) of the Act provides for additional
Medicare IPPS payments to subsection (d) hospitals that serve a
significantly disproportionate number of low-income patients. These
payments are known as the Medicare disproportionate share hospital
(DSH) adjustment. Section 1886(d)(5)(F) of the Act specifies the
methods under which a hospital may qualify for the DSH payment
adjustment.
Section 1886(b)(3)(B)(viii) of the Act, which requires the
Secretary to reduce the applicable percentage increase that would
otherwise apply to the standardized amount applicable to a subsection
(d) hospital for discharges occurring in a fiscal year if the hospital
does not submit data on measures in a form and manner, and at a time,
specified by the Secretary.
Section 1886(b)(3)(B)(ix) of the Act, which requires
downward adjustments to the applicable percentage increase, beginning
with FY 2015 (and beginning with FY 2022 for subsection (d) Puerto Rico
hospitals), for eligible hospitals that do not successfully demonstrate
meaningful use of CEHRT for an EHR reporting period for a payment
adjustment year.
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(n) of the Act, which establishes the
requirements for an eligible hospital to be treated as a meaningful EHR
user of CEHRT for an EHR reporting period for a payment year or, for
purposes of subsection (b)(3)(B)(ix) of the Act, for a fiscal year.
Section 1886(o) of the Act, which requires the Secretary
to establish a Hospital Value- Based Purchasing (VBP) Program, under
which value-based incentive payments are made in a fiscal year to
hospitals meeting performance standards established for a performance
period for such fiscal year.
Section 1886(p) of the Act, which establishes a Hospital-
Acquired Condition (HAC) Reduction Program, under which payments to
applicable hospitals are adjusted to provide an incentive to reduce
hospital-acquired conditions.
Section 1886(q) of the Act, as amended by section 15002 of
the 21st Century Cures Act, which establishes the Hospital Readmissions
Reduction Program. Under the program, payments for discharges from an
applicable hospital as defined under section 1886(d) of the Act will be
reduced to account for certain excess readmissions. Section 15002 of
the 21st Century Cures Act directs the Secretary to compare hospitals
with respect to the number of their Medicare-Medicaid dual-eligible
beneficiaries 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 an additional
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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 the statutory formula for Medicare
DSH payments in section 1886(d)(5)(F) of the Act (``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, in the absence of section 1886(r) of the Act; (2) 1 minus the
percent change in the percent of individuals who are uninsured; and (3)
the 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(kkk) of the Act requires the Secretary to
establish the conditions REHs must meet in order to participate in the
Medicare program and which are considered necessary to ensure the
health and safety of patients receiving services at these entities.
Section 1877(i) of the Act, as added by section 6001(a)(3)
of the Patient Protection and Affordable Care Act of 2010 (Affordable
Care Act) (Pub. L. 111-148) and amended by section 1106 of the Health
Care and Education Reconciliation Act of 2010 (HCERA) (Pub. L. 111-
152), which requires the Secretary to establish and implement a process
under which a hospital that is an ``applicable hospital'' or a ``high
Medicaid facility'' may apply for an exception from the prohibition on
expansion of facility capacity.
2. Summary of the Major Provisions
The following is a summary of the major provisions in this final
rule. In general, these major provisions are being finalized as part of
the annual update to the payment policies and payment rates, consistent
with the applicable statutory provisions. A general summary of the
changes in this final rule is presented in section I.D. of the preamble
of this final rule.
a. Modification to the Rural Wage Index Calculation Methodology
As discussed in section III.G.1. of this final rule, CMS has taken
the opportunity to revisit the case law, prior public comments, and the
relevant statutory language with regard to its policies involving the
treatment of hospitals that have reclassified as rural under section
1886(d)(8)(E) of the Act, as implemented in the regulations under 42
CFR 412.103. After doing so, CMS now agrees that the best reading of
section 1886(d)(8)(E) is that it instructs CMS to treat Sec. 412.103
hospitals the same as geographically rural hospitals. Therefore, we
believe it is proper to include these hospitals in all iterations of
the rural wage index calculation methodology included in section
1886(d) of the Act, including all hold harmless calculations in that
provision. Beginning with FY 2024, we will include hospitals with Sec.
412.103 reclassification along with geographically rural hospitals in
all rural wage index calculations and only exclude ``dual reclass''
hospitals (hospitals with simultaneous Sec. 412.103 and Medicare
Geographic Classification Review Board (MGCRB) reclassifications) in
accordance with the hold harmless provision at section
1886(d)(8)(C)(ii) of the Act.
b. Continuation of the Low Wage Index Hospital Policy
To help mitigate growing wage index disparities between high wage
and low 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. As
discussed in section III.G.4. of the preamble of this final rule, as we
only have 1 year of relevant data at this time that we could use to
evaluate any potential impacts of this policy, we believe it is
necessary to wait until we have useable data from additional fiscal
years before making any decision to modify or discontinue the policy.
Therefore, for FY 2024, we are finalizing our proposal to continue the
low wage index hospital policy and the related budget neutrality
adjustment.
c. 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 final rule, we are finalizing our proposal to update our
estimates of the three factors used to determine uncompensated care
payments for FY 2024. We are also finalizing our proposal 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. Consistent with the regulation at Sec.
412.106(g)(1)(iii)(C)(11), which was
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adopted in the FY 2023 IPPS/LTCH PPS final rule, for FY 2024, we will
use the 3 most recent years of audited data on uncompensated care costs
from Worksheet S-10 of the FY 2018, FY 2019, and FY 2020 cost reports
to calculate Factor 3 in the uncompensated care payment methodology for
all eligible hospitals.
Beginning with FY 2023, we established a supplemental payment for
IHS and Tribal hospitals and hospitals located in Puerto Rico, to help
prevent undue long-term financial disruption to these hospitals due to
the decision to discontinue use of the low-income insured days proxy in
the uncompensated care payment methodology for these providers.
In this final rule we are also finalizing our proposal (88 FR
12623) on counting of days associated with individuals eligible for
certain benefits provided by section 1115 demonstrations in the
Medicaid fraction of a hospital's disproportionate patient percentage
for the purposes of determining Medicare DSH payments to subsection (d)
hospitals under section 1886(d)(5)(F) of the Act. Specifically, under
our finalized policy, for purposes of the Medicare DSH calculation in
section 1886(d)(5)(F)(vi) of the Act we will ``regard as'' ``eligible
for medical assistance under a State plan approved under title XIX''
patients who (1) receive health insurance authorized by a section 1115
demonstration or (2) buy health insurance with premium assistance
provided to them under a section 1115 demonstration, where State
expenditures to provide the health insurance or premium assistance is
matched with funds from title XIX. Furthermore, of these expansion
groups we regard as eligible for Medicaid, we include in the
disproportionate patient percentage (DPP) Medicaid fraction numerator
only the days of those patients who receive from the demonstration (1)
health insurance that covers inpatient hospital services or (2) premium
assistance that covers 100 percent of the premium cost to the patient,
which the patient uses to buy health insurance that covers inpatient
hospital services, provided in either case that the patient is not also
entitled to Medicare Part A. Finally, patients whose inpatient hospital
costs are paid for with funds from an uncompensated/undercompensated
care pool authorized by a section 1115 demonstration will not be
patients ``regarded as'' eligible for Medicaid, and the days of such
patients may not be included in the DPP Medicaid fraction numerator.
d. Hospital Readmissions Reduction Program
We did not propose any changes to the Hospital Readmissions
Reduction Program. We note that all previously finalized policies under
this program will continue to apply and refer readers to the FY 2023
IPPS/LTCH PPS final rule (87 FR 49081 through 49094) for information on
these policies.
e. Hospital Value-Based Purchasing (VBP) Program
Section 1886(o) of the Act requires the Secretary to establish a
Hospital VBP Program under which value-based incentive payments are
made in a fiscal year to hospitals based on their performance on
measures established for a performance period for such fiscal year. In
this final rule, we are finalizing our proposal to adopt modified
versions of: (1) the Medicare Spending Per Beneficiary (MSPB) Hospital
measure beginning with the FY 2028 program year; and (2) the Hospital-
level Risk-Standardized Complication Rate (RSCR) Following Elective
Primary Total Hip Arthroplasty (THA) and/or Total Knee Arthroplasty
(TKA) measure beginning with the FY 2030 program year. In addition, we
are finalizing our proposal to adopt the Severe Sepsis and Septic
Shock: Management Bundle measure in the Safety Domain beginning with
the FY 2026 program year.
We are finalizing our proposal to make technical changes to the
form and manner of the administration of the HCAHPS Survey measure
under the Hospital VBP Program beginning with the FY 2027 program year
in alignment with the Hospital IQR Program. Additionally, we are
finalizing our proposal to adopt a health equity scoring change for
rewarding excellent care in underserved populations beginning with the
FY 2026 program year, as well as the proposal to modify the Total
Performance Score (TPS) maximum to be 110, such that the TPS numeric
score range would be 0 to 110 in order to afford even top-performing
hospitals the opportunity to receive the additional health equity bonus
points under the health equity scoring change.
f. Hospital-Acquired Condition Reduction Program
Section 1886(p) of the Act establishes the HAC Reduction Program
under which payments to applicable hospitals are adjusted to provide an
incentive to reduce hospital-acquired conditions. In this final rule,
we are finalizing our proposal to establish a validation
reconsideration process for hospitals who fail data validation
beginning with the FY 2025 program year, affecting calendar year 2022
discharges. We are also finalizing modification of the validation
targeting criteria to include hospitals granted an extraordinary
circumstances exceptions (ECEs) beginning with the FY 2027 program
year, affecting calendar year 2024 discharges.
g. Modification of the COVID-19 Vaccination Coverage Among Healthcare
Personnel (HCP) Measure in the Hospital IQR Program, PCHQR Program, and
LTCH QRP
In the FY 2024 IPPS/LTCH PPS final rule, we are finalizing our
proposal to modify the COVID-19 Vaccination Coverage among HCP measure
to replace the term ``complete vaccination course'' with the term ``up
to date'' with regard to recommended COVID-19 vaccines beginning with
the Quarter 4 (Q4) calendar year (CY) 2023 reporting period/FY 2025
payment determination for the Hospital IQR Program, and the FY 2025
program year for the LTCH QRP and the PCHQR Program.
h. 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 the FY 2024 IPPS/LTCH PPS final rule, we are finalizing several
changes to the Hospital IQR Program. We are finalizing the adoption of
three new measures: (1) Hospital Harm--Pressure Injury electronic
clinical quality measure (eCQM) beginning with the CY 2025 reporting
period/FY 2027 payment determination; (2) Hospital Harm--Acute Kidney
Injury eCQM beginning with the CY 2025 reporting period/FY 2027 payment
determination; and (3) Excessive Radiation eCQM beginning with the CY
2025 reporting period/FY 2027 payment determination. We are also
finalizing the modification of three current measures: (1) Hybrid
Hospital-Wide All-Cause Risk Standardized Mortality (HWM) measure
beginning with the FY 2027 payment determination; (2) Hybrid Hospital-
Wide All-Cause Readmission (HWR) measure beginning with the FY 2027
payment determination; and (3) COVID-19 Vaccination Coverage among HCP
measure beginning with the Q4 CY 2023 reporting period/FY 2025 payment
determination. We are also finalizing the removal of three current
measures: (1) Hospital-level Risk-standardized Complication Rate (RSCR)
Following Elective Primary Total Hip Arthroplasty
[[Page 58645]]
(THA) and/or Total Knee Arthroplasty (TKA) measure beginning with the
April 1, 2025-March 31, 2028 reporting period/FY 2030 payment
determination pursuant to Removal Factor 8; (2) Medicare Spending Per
Beneficiary (MSPB) Hospital measure beginning with the CY 2026
reporting period/FY 2028 payment determination pursuant to Removal
Factor 8; and (3) Elective Delivery (PC-01) measure beginning with the
CY 2024 reporting period/FY 2026 payment determination pursuant to
Removal Factor 1. We are finalizing the codification of our Measure
Removal Factors.
We are also finalizing two changes to current policies related to
data submission, reporting, and validation: (1) Technical changes to
the form and manner of the administration of the HCAHPS Survey Measure
beginning with the CY 2025 reporting period/FY 2027 payment
determination; and (2) Modification of the targeting criteria for
hospital validation for extraordinary circumstances exceptions (ECEs)
beginning with the FY 2027 payment determination.
i. 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 the FY 2024 IPPS/LTCH PPS final rule, we are finalizing our
proposals to adopt four new measures for the PCHQR Program: (i) three
health equity-focused measures: the Facility Commitment to Health
Equity measure, the Screening for Social Drivers of Health measure, and
the Screen Positive Rate for Social Drivers of Health measure; and (ii)
a patient preference-focused measure, the Documentation of Goals of
Care Discussions Among Cancer Patients measure. We are also finalizing
our proposal to adopt a modified version of the COVID-19 Vaccination
Coverage among HCP measure beginning with the FY 2025 program year. We
are also finalizing our proposals to publicly report the Surgical
Treatment Complications for Localized Prostate Cancer (PCH-37) measure
beginning with data from the FY 2025 program year, and technical
changes to the form and manner of the administration of the HCAHPS
survey measure beginning with the FY 2027 program year.
j. Long-Term Care Hospital Quality Reporting Program (LTCH QRP)
We are finalizing several changes to the LTCH QRP. Specifically, we
are: (1) adopting a modified version of the COVID-19 Vaccination
Coverage among HCP measure beginning with the FY 2025 LTCH QRP; (2)
adopting the Discharge Function Score measure beginning with the FY
2025 LTCH QRP; (3) removing the Percent of LTCH Patients with an
Admission and Discharge Functional Assessment and a Care Plan That
Addresses Function measure beginning with the FY 2025 LTCH QRP; (4)
removing the Application of Percent of LTCH Patients with an Admission
and Discharge Functional Assessment and a Care Plan That Addresses
Function measure beginning with the FY 2025 LTCH QRP; (5) adopting the
COVID-19 Vaccine: Percent of Patients/Residents Who Are Up to Date
measure beginning with the FY 2026 LTCH QRP; (6) increasing the LTCH
QRP data completion thresholds for the LCDS beginning with the FY 2026
LTCH QRP; and (7) beginning public reporting of the Transfer of Health
(TOH) Information to the Patient-Post-Acute Care (PAC) and TOH
Information to the Provider-PAC measures.
k. Medicare Promoting Interoperability Program
In this final rule, we are finalizing several changes to the
Medicare Promoting Interoperability Program. Specifically, we are
finalizing our proposals to: (1) amend the definition of ``EHR
reporting period for a payment adjustment year'' at 42 CFR 495.4 for
eligible hospitals and CAHs participating in the Medicare Promoting
Interoperability Program, to define the electronic health record (EHR)
reporting period in CY 2025 as a minimum of any continuous 180-day
period within CY 2025; (2) update the definition of ``EHR reporting
period for a payment adjustment year'' at Sec. 495.4 for eligible
hospitals such that, beginning in CY 2025, those hospitals that have
not successfully demonstrated meaningful use in a prior year will not
be required to attest to meaningful use by October 1st of the year
prior to the payment adjustment year; (3) modify our requirements for
the Safety Assurance Factors for EHR Resilience (SAFER) Guides measure
beginning with the EHR reporting period in CY 2024, to require eligible
hospitals and CAHs to attest ``yes'' to having conducted an annual
self-assessment of all nine SAFER Guides at any point during the
calendar year in which the EHR reporting period occurs; (4) modify the
way we refer to the calculation considerations related to unique
patients or actions for Medicare Promoting Interoperability Program
objectives and measures for which there is no numerator and
denominator; and (5) adopt three new eCQMs beginning with the CY 2025
reporting period for eligible hospitals and CAHs to select as one of
their three self-selected eCQMs: the Hospital Harm--Pressure Injury
eCQM, the Hospital Harm--Acute Kidney Injury eCQM, and the Excessive
Radiation Dose or Inadequate Image Quality for Diagnostic Computed
Tomography (CT) in Adults (Hospital Level--Inpatient) eCQM.
l. Changes to the Severity Level Designation for Z Codes Describing
Homelessness
As discussed in section II.C. of the preamble of this final rule,
we are finalizing the proposed change the severity level designation
for social determinants of health (SDOH) diagnosis codes describing
homelessness from non-complication or comorbidity (NonCC) to
complication or comorbidity (CC) for FY 2024. Consistent with our
annual updates to account for changes in resource consumption,
treatment patterns, and the clinical characteristics of patients, CMS
is recognizing homelessness as an indicator of increased resource
utilization in the acute inpatient hospital setting.
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,'' \1\ we
also continue to be 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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\1\ Available at 86 FR 7009 (January 25, 2021) (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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3. Summary of Costs and Benefits
The following table provides a summary of the costs, savings, and
benefits associated with the major
[[Page 58646]]
provisions described in section I.A.2. of the preamble of this final
rule.
[GRAPHIC] [TIFF OMITTED] TR28AU23.000
[[Page 58647]]
[GRAPHIC] [TIFF OMITTED] TR28AU23.001
[[Page 58648]]
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 an 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, beginning in FY 2023 for IHS and Tribal hospitals and
hospitals located in Puerto Rico, the 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 2024. For discharges occurring on
or after October 1, 2007, but before October 1, 2024, an MDH receives
the higher of the Federal rate or the Federal rate plus 75 percent of
the amount by which the Federal rate is exceeded by the highest of its
FY 1982, FY 1987, or FY 2002 hospital-specific rate. MDHs are a major
source of care for Medicare beneficiaries in their areas. Section
1886(d)(5)(G)(iv) of the Act defines an MDH as a hospital that is
located in a rural area (or, as amended by the Bipartisan Budget Act of
2018, a hospital located in a State with no rural area that meets
certain statutory criteria), has not more than 100 beds, is not an SCH,
and has a high percentage of Medicare discharges (not less than 60
percent of its inpatient days or discharges in its cost reporting year
beginning in FY 1987 or in two of its three most recently settled
Medicare cost reporting years).
Section 1886(g) of the Act requires the Secretary to pay for the
capital-related costs of inpatient hospital services in accordance with
a prospective payment system established by the Secretary. The basic
methodology for determining capital prospective payments is set forth
in our regulations at 42 CFR 412.308 and 412.312. Under the capital
IPPS, payments are adjusted by the same DRG for the case as they are
under the operating IPPS. Capital IPPS payments are also adjusted for
IME and DSH, similar to the adjustments made under the operating IPPS.
In addition, hospitals may receive outlier payments for those cases
that have unusually high costs.
The existing regulations governing payments to hospitals under the
IPPS are located in 42 CFR part 412, subparts A through M.
2. Hospitals and Hospital Units Excluded From the IPPS
Under section 1886(d)(1)(B) of the Act, as amended, certain
hospitals and hospital units are excluded from the IPPS. These
hospitals and units are: Inpatient rehabilitation facility (IRF)
hospitals and units; long-term care hospitals (LTCHs); psychiatric
hospitals and units; children's hospitals; cancer hospitals; extended
neoplastic disease care hospitals, and hospitals located outside the 50
States, the District of Columbia, and Puerto Rico (that is, hospitals
located in the U.S. Virgin Islands, Guam, the Northern Mariana Islands,
and American Samoa). Religious nonmedical health care institutions
(RNHCIs) are also excluded from the IPPS. Various sections of the
Balanced Budget Act of 1997 (BBA) (Pub. L. 105-33), the Medicare,
Medicaid and SCHIP [State Children's Health Insurance Program] Balanced
Budget Refinement Act of 1999 (BBRA, Pub. L. 106-113), and the
Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act
of 2000 (BIPA, Pub. L. 106-554) provide for the implementation of PPSs
for IRF hospitals and units, LTCHs, and
[[Page 58649]]
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 (DGME)
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. Section
1886(d)(5)(B) of the Act provides that prospective payment hospitals
that have residents in an approved GME program receive an additional
payment for each Medicare discharge to reflect the higher patient care
costs of teaching hospitals relative to non-teaching hospitals. The
additional payment is based on the indirect medical education (IME)
adjustment factor, which is calculated using a hospital's ratio of
residents to beds and a multiplier, which is set by Congress. 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. The regulations regarding the indirect medical
education (IME) adjustment are located at 42 CFR 412.105.
C. Summary of Provisions of Recent Legislation That Will Be Implemented
in This Final Rule
1. The Consolidated Appropriations Act, 2023 (CAA 2023; Pub. L. 117-
328)
Section 4101 of the CAA 2023 extended through FY 2024 the modified
definition of a low-volume hospital and the methodology for calculating
the payment adjustment for low-volume hospitals in effect for FYs 2019
through 2022. Specifically, under section 1886(d)(12)(C)(i) of the Act,
as amended, for FYs 2019 through 2024, 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. Under section 1886(d)(12)(D) of the
Act, as amended, for discharges occurring in FYs 2019 through 2024, 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.
Section 4102 of the CAA 2023 amended sections 1886(d)(5)(G)(i) and
1886(d)(5)(G)(ii)(II) of the Act to provide for an extension of the MDH
program through FY 2024.
Section 4143 of the CAA 2023 amended section 1886(l)(2)(B) of the
Act to specify that for portions of cost reporting periods occurring in
each of calendar years (CYs) 2010 through 2019, the $60 million payment
limit specified in that subparagraph is not to apply to the total
amount of additional payments for nursing and allied health education
to be distributed to hospitals that, as of December 29, 2022, were
operating a school of nursing, a school of allied health, or a school
of nursing and allied health. In addition, section 4143 of the CAA 2023
provides that in addition to not applying the $60 million limit for
each of years 2010 through 2019, the Secretary shall not reduce direct
GME payments by such additional payment amounts for such nursing and
allied health education for portions of cost reporting periods
occurring in the year.
D. Issuance of the Notices of Proposed Rulemaking and Summary of the
Proposed Provisions
1. FY 2024 IPPS/LTCH PPS Proposed Rule
In the proposed rule that appeared in the Federal Register on May
1, 2023 (88 FR 26658), we set forth proposed payment and policy changes
to the Medicare IPPS for FY 2024 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 2024.
The following is a general summary of the changes that we proposed
to make.
a. Proposed Changes to MS-DRG Classifications and Recalibrations of
Relative Weights
In section II. of the preamble of the proposed rule, we included
the following:
Proposed changes to MS-DRG classifications based on our
yearly review for FY 2024.
Proposed recalibration of the MS-DRG relative weights.
A discussion of the proposed FY 2024 status of new
technologies
[[Page 58650]]
approved for add-on payments for FY 2023, a presentation of our
evaluation and analysis of the FY 2024 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 2024 new technology applicants
under the alternative pathways for certain medical devices and certain
antimicrobial products.
Proposed modifications to the new technology add-on
payment application eligibility requirements for technologies that are
not already Food and Drug Administration (FDA) market authorized to
require such applicants to have a complete and active FDA market
authorization request at the time of new technology add-on payment
application submission, to provide documentation of FDA acceptance or
filing, and to move the deadline for FDA marketing authorization from
July 1 to May 1 of the year before the fiscal year for which the
applicant applied for new technology add-on payments, beginning with
applications for FY 2025 (as discussed in section II.E.9. of the
preamble of the proposed rule).
b. Proposed Changes to the Hospital Wage Index for Acute Care Hospitals
In section III. of the preamble of the proposed rule, we proposed
revisions to the wage index for acute care hospitals and the annual
update of the wage data. Specific issues addressed include, but are not
limited to, the following:
The proposed FY 2024 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 2024 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 2024 based on commuting patterns of hospital employees
who reside in a county and work in a different area with a higher wage
index.
Proposed labor-related share for the proposed FY 2024 wage
index.
c. Payment Adjustment for Medicare Disproportionate Share Hospitals
(DSHs) for FY 2024
In section IV. of the preamble of the proposed rule, we discuss the
following:
Proposed calculation of Factor 1 and Factor 2 of the
uncompensated care payment methodology.
Proposed methodological approach for determining the
additional payments for uncompensated care for FY 2024, which is the
same overall approach as was for FY 2023.
d. Other Decisions and Proposed Changes to the IPPS for Operating Costs
In section V. of the preamble of the 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 2024.
Proposed change related to the effective date of sole
community hospital (SCH) classification in cases that involve a merger.
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 2024.
Discussion of statutory extension of the MDH program
through FY 2024.
Proposed to establish a validation reconsideration process
and update the data validation targeting criteria under the HAC
Reduction Program for FY 2024.
Proposed to update the MSPB Hospital and THA/TKA
Complications measures, to adopt the new Severe Sepsis and Septic
Shock: Management Bundle measure, to update the changes to the data
collection and submission requirements for the HCAHPS Survey measure,
to revise the scoring methodology to include a health equity scoring
adjustment, to modify the Total Performance Score numeric score range
to be 0-110, and to codify the measure removal factors, the revised
scoring methodology and TPS numeric score range, and the minimum
numbers of cases.
Proposed changes to the regulations for GME payments when
training occurs in REHs.
Discussion of and proposed changes relating to the
implementation of the Rural Community Hospital Demonstration Program in
FY 2024.
Proposed nursing and allied health education program
Medicare Advantage (MA) add-on rates and direct GME MA percent
reductions for CY 2022.
Proposal to implement section 4143 of the CAA 2023 which
waives the $60 million limit on annual nursing and allied health
education program MA payments.
Proposed update to the payment adjustment for certain
clinical trial and expanded access use immunotherapy cases.
e. Proposed FY 2024 Policy Governing the IPPS for Capital-Related Costs
In section VI. of the preamble of the proposed rule, we discuss the
proposed payment policy requirements for capital-related costs and
capital payments to hospitals for FY 2024. In addition, we discuss a
proposed change to how hospitals with a rural reclassification are
treated for capital DSH payments.
f. Proposed Changes to the Payment Rates for Certain Excluded
Hospitals: Rate-of-Increase Percentages
In section VII. of the preamble of the proposed rule, we discuss
the following:
Proposed changes to payments to certain excluded hospitals
for FY 2024.
Proposed continued implementation of the Frontier
Community Health Integration Project (FCHIP) Demonstration.
g. Proposed Changes to the LTCH PPS
In section VIII. of the preamble of the proposed rule, we set forth
proposed changes to the LTCH PPS Federal payment rates, factors, and
other payment rate policies under the LTCH PPS for FY 2024.
h. Proposed Changes Relating to Quality Data Reporting for Specific
Providers and Suppliers
In section IX. of the preamble of the proposed rule, we addressed
the following:
Proposed adoption of a modified version of the COVID-19
Vaccination Coverage among Healthcare Personnel Measure in the Hospital
IQR Program, PCHQR Program, and LTCH QRP.
Proposed requirements for the Hospital Inpatient Quality
Reporting (IQR) Program.
Proposed changes to the requirements for the PPS-Exempt
Cancer Hospital Quality Reporting Program (PCHQR Program).
Proposed changes to the requirements for the Long-Term
Care Hospital Quality Reporting Program (LTCH QRP), and a request for
information on principles for selecting and prioritizing LTCH QRP
quality measures and concepts under consideration for future years. We
also provide an update on health equity.
Proposed changes to requirements pertaining to eligible
hospitals and
[[Page 58651]]
CAHs participating in the Medicare Promoting Interoperability Program.
i. Other Proposals and Comment Solicitations Included in the Proposed
Rule
Section X. of the preamble of the proposed rule included the
following:
Proposals to establish requirements for additional
information that an eligible facility would be required to submit when
applying for enrollment as an REH.
Proposed changes pertaining to the process for hospitals
requesting an exception from the prohibition against facility expansion
and program integrity restrictions on approved facility expansion.
Solicitation of comments on potential approaches to
address the challenges faced by safety-net hospitals, including an
appropriate mechanism for identifying safety-net hospitals for Medicare
policy purposes.
Proposals to apply certain definitions included in the
Disclosures of Ownership and Additional Disclosable Parties Information
for Skilled Nursing Facilities proposed rule published in the February
15, 2023 Federal Register (88 FR 9820) to all provider types that
complete the Form CMS-855-A enrollment application.
j. Other Provisions of the Proposed Rule
Section XI.A. of the preamble of the proposed rule includes our
discussion of the MedPAC Recommendations.
Section XI.B. of the preamble of the proposed rule includes a
descriptive listing of the public use files associated with the
proposed rule.
Section XII. of the preamble of the proposed rule includes the
collection of information requirements for entities based on our
proposals.
Section XIII. of the preamble of the proposed rule includes
information regarding our responses to public comments.
k. Determining Prospective Payment Operating and Capital Rates and
Rate-of-Increase Limits for Acute Care Hospitals
In sections II. and III. of the Addendum of the proposed rule, we
set forth proposed changes to the amounts and factors for determining
the proposed FY 2024 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 of the proposed rule, we address the
proposed update factors for determining the rate-of-increase limits for
cost reporting periods beginning in FY 2024 for certain hospitals
excluded from the IPPS.
l. Determining Prospective Payment Rates for LTCHs
In section V. of the Addendum of the proposed rule, we set forth
proposed changes to the amounts and factors for determining the
proposed FY 2024 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
2024. We are proposing to establish the adjustments for the wage index,
labor-related share, the cost-of-living adjustment, and high-cost
outliers, including the applicable fixed-loss amounts and the LTCH
cost-to-charge ratios (CCRs) for both payment rates.
m. Impact Analysis
In appendix A of the proposed rule, we set forth an analysis of the
impact the proposed changes would have on affected acute care
hospitals, CAHs, LTCHs and other entities.
n. Recommendation of Update Factors for Operating Cost Rates of Payment
for Hospital Inpatient Services
In appendix B of the proposed rule, as required by sections
1886(e)(4) and (e)(5) of the Act, we provide our recommendations of the
appropriate percentage changes for FY 2024 for the following:
A single average standardized amount for all areas for
hospital inpatient services paid under the IPPS for operating costs of
acute care hospitals (and hospital-specific rates applicable to SCHs
and MDHs).
Target rate-of-increase limits to the allowable operating
costs of hospital inpatient services furnished by certain hospitals
excluded from the IPPS.
The LTCH PPS standard Federal payment rate and the site
neutral payment rate for hospital inpatient services provided for LTCH
PPS discharges.
o. Discussion of Medicare Payment Advisory Commission Recommendations
Under section 1805(b) of the Act, MedPAC is required to submit a
report to Congress, no later than March 15 of each year, in which
MedPAC reviews and makes recommendations on Medicare payment policies.
MedPAC's March 2023 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 the proposed rule.
For further information relating specifically to the MedPAC March 2023
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.
2. Section 1115 Demonstration Disproportionate Share Hospital Proposed
Rule
In addition, in the proposed rule that appeared in the Federal
Register on February 28, 2023 (88 FR 12623), we set forth proposed
revisions to the regulations on the counting of days associated with
individuals eligible for certain benefits provided by section 1115
demonstrations in the Medicaid fraction of a hospital's
disproportionate patient percentage for the purposes of determining
Medicare DSH payments to subsection (d) hospitals under section
1886(d)(5)(F) of the Act. Specifically, we proposed for purposes of the
Medicare DSH calculation in section 1886(d)(5)(F)(vi) of the Act to
``regard as'' ``eligible for medical assistance under a State plan
approved under title XIX'' patients who (1) receive health insurance
authorized by a section 1115 demonstration or (2) buy health insurance
with premium assistance provided to them under a section 1115
demonstration, where State expenditures to provide the health insurance
or premium assistance is matched with funds from title XIX.
Furthermore, of these expansion groups we proposed to regard as
eligible for Medicaid, we proposed to include in the disproportionate
patient percentage (DPP) Medicaid fraction numerator only the days of
those patients who receive from the demonstration (1) health insurance
that covers inpatient hospital services or (2) premium assistance that
covers 100 percent of the premium cost to the patient, which the
patient uses to buy health insurance that covers inpatient hospital
services, provided in either case that the patient is not also entitled
to Medicare Part A. Finally, we proposed specifically that patients
whose inpatient hospital costs are paid for with funds from an
uncompensated/undercompensated care pool authorized by a section 1115
demonstration would not be patients ``regarded as'' eligible for
Medicaid, and the days of such patients may not be included in the DPP
Medicaid fraction numerator.
E. Use of the Best Available Data for the FY 2024 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
[[Page 58652]]
claims data source is the Medicare Provider Analysis and Review
(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, due to the impact of the COVID-19 public health emergency
(PHE) on our ordinary ratesetting data, we finalized modifications to
our usual ratesetting procedures in the FY 2022 and FY 2023 IPPS/LTCH
PPS final rules.
In the FY 2022 IPPS/LTCH PPS final rule (86 FR 44789 through
44793), we discussed that the FY 2020 MedPAR claims file and the FY
2019 HCRIS dataset (the most recently available data at the time of
rulemaking) 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. We stated that the most recent vaccination and hospitalization
data from the Centers for Disease Control and Prevention (CDC)
available 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.
As discussed in the FY 2023 IPPS/LTCH PPS final rule (87 FR 48795
through 48798), we discussed that the FY 2021 MedPAR claims file and
the FY 2020 HCRIS dataset (the most recently available data at the time
of rulemaking) both contain data that was significantly impacted by the
COVID-19 PHE, 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. Based on review of the most
recent hospitalization data and information available from the CDC at
the time of development of that rule, we stated our belief that it was
reasonable to assume that some Medicare beneficiaries would continue to
be hospitalized with COVID-19 at IPPS hospitals and LTCHs in FY 2023.
However, we also stated our belief that it would be reasonable to
assume based on the information available at the time that there would
be fewer COVID-19 hospitalizations in FY 2023 than in FY 2021.
Accordingly, because we anticipated Medicare inpatient hospitalizations
for COVID-19 would continue in FY 2023 but at a lower level, we
finalized our proposal to use FY 2021 data for purposes of the FY 2023
IPPS and LTCH PPS ratesetting but with several 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.
In the FY 2024 IPPS/LTCH PPS proposed rule (88 FR 26671), we
analyzed the FY 2022 MedPAR claims file and the FY 2021 HCRIS dataset,
which are the most recently available data for FY 2024 ratesetting. We
observed that certain shifts in inpatient utilization and costs that
occurred in FY 2020 continued to persist in FY 2022. Specifically, the
share of admissions at IPPS hospitals and LTCHs for MS-DRGs and MS-LTC-
DRGs that are associated with the treatment of COVID-19 continued to
remain at levels higher than those observed in the pre-pandemic data.
For example, in FY 2019, the share of IPPS cases grouped to MS-DRG
177 (Respiratory Infections and Inflammations with major complication
or comorbidity (MCC)) was approximately 1 percent, while in FY 2022 the
share of IPPS cases grouped to MS-DRG 177 was approximately 4 percent.
Similarly, in FY 2019, the share of LTCH PPS standard Federal payment
rate cases grouped to MS-LTC-DRG 207 (Respiratory System Diagnosis with
Ventilator Support >96 Hours) was approximately 18 percent, while in FY
2022 the share of LTCH PPS standard Federal payment rate cases grouped
to MS-LTC-DRG 207 was approximately 22 percent.
In the FY 2024 IPPS/LTCH PPS proposed rule (88 FR 26671), we also
reviewed the most recent COVID-19 related data and information released
by the CDC. We presented this CDC graph which illustrates new inpatient
hospital admissions of patients with confirmed COVID-19 from August 1,
2020 through January 20, 2023. (https://www.cdc.gov/coronavirus/2019-ncov/covid-data/covidview/01202023/images/hospitalizations.PNG?_=24630,
accessed January 20, 2023).
[[Page 58653]]
[GRAPHIC] [TIFF OMITTED] TR28AU23.002
We stated that the graph shows that in the United States, patients
continue to be hospitalized with the virus that causes COVID-19. We
also noted that 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. 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.\2\ In the proposed rule, we concluded
that based on the information available at the time, we believe there
will continue to be COVID-19 cases treated at IPPS hospitals and LTCHs
in FY 2024, such that it is appropriate to use the FY 2022 data, as the
most recent available data, for purposes of the FY 2024 IPPS and LTCH
PPS ratesetting. We also stated that based on the information available
at the time, we do not believe there is a reasonable basis for us to
assume that there will be a meaningful difference in the number of
COVID-19 cases treated at IPPS hospitals and LTCHs in FY 2024 relative
to FY 2022 to the extent that modifications to our usual ratesetting
methodologies would be warranted.
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\2\ https://www.cdc.gov/coronavirus/2019-ncov/variants/index.html, accessed January 20, 2023.
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As such, we stated our belief that FY 2022 data, as the most recent
available data, is the best available data for approximating the
inpatient experience at IPPS hospitals and LTCHs in FY 2024. Therefore,
we proposed to use the FY 2022 MedPAR claims file and the FY 2021 HCRIS
dataset (which contains data from many cost reports ending in FY 2022
based on each hospital's cost reporting period) for purposes of the FY
2024 IPPS and LTCH PPS ratesetting. For the reasons discussed, we did
not propose any modifications to our usual ratesetting methodologies to
account for the impact of COVID-19 on the ratesetting data.
The comments we received on our proposal to use FY 2022 data for
purposes of the FY 2024 IPPS and LTCH PPS ratesetting were focused on
the specific use of FY 2022 data when determining the FY 2024 outlier
fixed-loss amounts. Therefore, we refer the reader to section II.A.4.
of the addendum to this final rule for our summary and response to
comments received on our proposal to use FY 2022 data and our usual
methodology when determining the FY 2024 outlier fixed-loss amounts for
IPPS cases. We refer the reader to section V.D.3. of the Addendum to
this final rule for our summary and response to comments received on
our proposal to use FY 2022 data and our usual methodology when
determining the FY 2024 outlier fixed-loss amounts for LTCH PPS
standard Federal payment rate cases.
For the reasons discussed in those sections, we are finalizing our
proposal to use FY 2022 data for purposes of the FY 2024 IPPS and LTCH
PPS ratesetting. (That is, the FY 2022 MedPAR claims file and the FY
2021 HCRIS dataset (which contains data from many cost reports ending
in FY 2022 based on each hospital's cost reporting period).) We also
are finalizing, with modification, our proposal to use our usual
ratesetting methodologies for purposes of the FY 2024 IPPS and LTCH PPS
ratesetting. As discussed in section V.D.3. of the addendum to this
final rule, after consideration of the comments received, we are
modifying our proposed methodology for establishing the FY 2024 outlier
fixed-loss amount for LTCH PPS standard Federal payment rate cases.
F. Potential Payment Under the IPPS for Establishing and Maintaining
Access to Essential Medicines
In the CY 2024 Medicare Hospital Outpatient Prospective Payment
System and Ambulatory Surgical Center Payment System Proposed Rule (CMS
1786-P) issued on July 13, 2023, we included a request for public
comments on potential payment under the IPPS for establishing and
maintaining access to essential medicines. As discussed in that rule,
we are seeking comment on, and may consider finalizing based on the
review of comments received, as early as for cost reporting periods
beginning on or after January 1, 2024, separate payment under IPPS, for
establishing and maintaining access to a buffer stock of essential
medicines to foster a more reliable, resilient supply of these
medicines. Public comments are being accepted through September 11,
2023.
II. Changes to Medicare Severity Diagnosis-Related Group (MS-DRG)
Classifications and Relative Weights
A. Background
Section 1886(d) of the Act specifies that the Secretary shall
establish a classification system (referred to as diagnosis-related
groups (DRGs)) for inpatient discharges and adjust payments under the
IPPS based on appropriate weighting factors assigned to each DRG.
Therefore, under the IPPS, Medicare pays for inpatient hospital
services on a rate per discharge basis that varies according to the DRG
to which a beneficiary's stay is assigned. The formula used to
calculate payment for a specific case multiplies an
[[Page 58654]]
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/rate year (RY) 2010 LTCH PPS final rule
(74 FR 43764 through 43766) and the FYs 2011 through 2023 IPPS/LTCH PPS
final rules (75 FR 50053 through 50055; 76 FR 51485 through 51487; 77
FR 53273; 78 FR 50512; 79 FR 49871; 80 FR 49342; 81 FR 56787 through
56872; 82 FR 38010 through 38085; 83 FR 41158 through 41258; 84 FR
42058 through 42165; 85 FR 58445 through 58596; 86 FR 44795 through
44961; and 87 FR 48800 through 48891, respectively).
For discussion regarding our previously finalized policies
(including our historical adjustments to the payment rates) relating to
the effect of changes in documentation and coding that do not reflect
real changes in case mix, we refer readers to the FY 2023 IPPS/LTCH PPS
final rule (87 FR 48799 through 48800).
Comment: Several commenters requested that CMS make a positive
adjustment to restore the full amount of the documentation and coding
recoupment adjustments in the FY 2024 IPPS final rule which they
asserted is required under section (7)(B)(2) and (4) of the TMA
[Transitional Medical Assistance], Abstinence Education, and QI
[Qualifying Individuals] Programs Extension Act of 2007 (Pub. L. 110-
90). Commenters stated that the statute is explicit that CMS may not
carry forward any documentation and coding adjustments applied in
fiscal years 2010 through 2017 into IPPS rates after FY 2023.
Commenters contended that CMS, by its own admission, has restored only
2.9588 percentage points of a total 3.9 percentage point reduction. By
not fully restoring the total reductions, commenters believe that CMS
is improperly extending payment adjustments beyond the FY 2023
statutory limit. A commenter stated that, even if CMS disputes it is
required to make such an adjustment, CMS should use its special
exceptions and adjustments authority to address the shortfall.
Response: As of FY 2023, CMS completed the statutory requirements
of section 7(b)(1)(B) of Pub. L. 110-90 as amended by section 631 of
the American Taxpayer Relief Act of 2012 (ATRA, Pub. L. 112- 240),
section 404 of the Medicare Access and CHIP Reauthorization Act of 2015
(MACRA), and section 15005 of the 21st Century Cures Act (Pub. L. 114-
255). As we discussed in the FY 2022 IPPS/LTCH PPS final rule (86 FR
44794 through 44795), the FY 2021 IPPS/LTCH PPS final rule (85 FR 58444
through 58445) and in prior rules, we believe section 414 of the MACRA
and section 15005 of the 21st Century Cures Act set forth the levels of
positive adjustments for FYs 2018 through 2023. We are not convinced
that the adjustments prescribed by MACRA were predicated on a specific
adjustment level estimated or implemented by CMS in previous
rulemaking. We see no evidence that Congress enacted these adjustments
with the intent that CMS would make an additional +0.7 percentage point
adjustment in FY 2018 to compensate for the higher than expected final
ATRA adjustment made in FY 2017, nor are we persuaded that it would be
appropriate to use the Secretary's exceptions and adjustments authority
under section 1886(d)(5)(I) of the Act to adjust payments in FY 2024
restore any additional amount of the original 3.9 percentage point
reduction, given Congress' directive regarding prescriptive adjustment
levels under section 414 of the MACRA and section 15005 of the 21st
Century Cures Act. Accordingly, in the FY 2018 IPPS/LTCH PPS final rule
(82 FR 38009), we implemented the required +0.4588 percentage point
adjustment to the standardized amount for FY 2018. In the FY 2019 IPPS/
LTCH PPS final rule (FY 2019 final rule) (83 FR 41157), the FY 2020
IPPS/LTCH PPS final rule (FY 2020 final rule) (84 FR 42057), the FY
2021 IPPS/LTCH PPS final rule (FY 2021 final rule) (85 FR 58444 and
58445), the FY 2022 IPPS/LTCH PPS final rule (FY 2022 final rule) (86
FR 44794 and 44795), and the FY 2023 IPPS/LTCH PPS final rule (FY 2023
final rule) (87 FR 48800), 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,
FY 2022 and FY 2023, respectively. As discussed in the FY 2023 final
rule, the finalized 0.5 percentage point positive adjustment for FY
2023 is the final adjustment prescribed by section 414 of the MACRA.
C. Changes to Specific MS-DRG Classifications
1. Discussion of Changes to Coding System and Basis for FY 2024 MS-DRG
Updates
a. Conversion of MS-DRGs to the International Classification of
Diseases, 10th Revision (ICD-10)
As of October 1, 2015, providers use the International
Classification of Diseases, 10th Revision (ICD-10) coding system to
report diagnoses and procedures for Medicare hospital inpatient
services under the MS-DRG system instead of the ICD-9-CM coding system,
which was used through September 30, 2015. The ICD-10 coding system
includes the International Classification of Diseases, 10th Revision,
Clinical Modification (ICD-10-CM) for diagnosis coding and the
International Classification of Diseases, 10th Revision, Procedure
Coding System (ICD-10-PCS) for inpatient hospital procedure coding, as
well as the ICD-10-CM and ICD-10-PCS Official Guidelines for Coding and
Reporting. For a detailed discussion of the conversion of the MS-DRGs
to ICD-10, we refer readers to the FY 2017 IPPS/LTCH PPS final rule (81
FR 56787 through 56789).
b. Basis for FY 2024 MS-DRG Updates
As discussed in the FY 2023 IPPS/LTCH PPS proposed rule (87 FR
28127) and final rule (87 FR 48800 through 48801), beginning with FY
2024 MS-DRG classification change requests, we changed 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. We also described the new process for submitting requested
changes to the MS-DRGs via a new electronic application intake system,
Medicare Electronic Application Request Information System\TM\
(MEARIS\TM\), accessed at https://mearis.cms.gov. We stated that
beginning with FY 2024 MS-DRG classification change requests, CMS will
only accept requests submitted via MEARIS\TM\ and will no longer
consider
[[Page 58655]]
requests sent via email. Additionally, we noted 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 with 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'', also at the bottom of the MEARIS\TM\ site.
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 request for MS-DRG classification changes to CMS. The
aforementioned burden is subject to the Paperwork Reduction Act (PRA)
of 1995 and approved under Office of Management and Budget (OMB)
control number 0938-1431 and has an expiration date of 09/30/2025.
As noted previously, interested parties had to submit MS-DRG
classification change requests for FY 2024 by October 20, 2022. 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 2025 by October 20, 2023 via MEARISTM at:
https://mearis.cms.gov/public/home.
As we did for the FY 2023 IPPS/LTCH PPS proposed rule, for the FY
2024 IPPS/LTCH PPS proposed rule we provided a test version of the ICD-
10 MS-DRG GROUPER Software, Version 41, so that the public can better
analyze and understand the impact of the proposals included in the
proposed rule. We noted that this test software reflected the proposed
GROUPER logic for FY 2024. Therefore, it included the new diagnosis and
procedure codes that are effective for FY 2024 as reflected in Table
6A.--New Diagnosis Codes--FY 2024 and Table 6B.--New Procedure Codes--
FY 2024 that were associated with the proposed rule and does not
include the diagnosis codes that are invalid beginning in FY 2024 as
reflected in Table 6C.--Invalid Diagnosis Codes--FY 2024 associated
with the proposed rule. We noted that at the time of the development of
the proposed rule there were no procedure codes designated as invalid
for FY 2024, and therefore, there was no Table 6D- Invalid Procedure
Codes--FY 2024 associated with the proposed rule. Those tables were not
published in the Addendum to the proposed rule, but are available on
the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html as described in section
VI. of the Addendum to the proposed rule. Because the diagnosis codes
no longer valid for FY 2024 are not reflected in the test software, we
made available a supplemental file in Table 6P.1a that includes the
mapped Version 41 FY 2024 ICD-10-CM codes and the deleted Version 40.1
FY 2023 ICD-10-CM codes that should be used for testing purposes with
users' available claims data. Therefore, users had access to the test
software allowing them to build case examples that reflect the
proposals that were included in the proposed rule. In addition, users
were able to view the draft version of the ICD-10 MS-DRG Definitions
Manual, Version 41.
The test version of the ICD-10 MS-DRG GROUPER Software, Version 41,
the draft version of the ICD-10 MS-DRG Definitions Manual, Version 41,
and the supplemental mapping files in Table 6P.1a of the FY 2023 and FY
2024 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 proposed to the MS-DRGs for FY
2024. We invited public comments on each of the MS-DRG classification
proposed changes, as well as our proposals to maintain certain existing
MS-DRG classifications discussed in the proposed rule. In some cases,
we proposed changes to the MS-DRG classifications based on our analysis
of claims data and clinical appropriateness. In other cases, we
proposed to maintain the existing MS-DRG classifications based on our
analysis of claims data and clinical appropriateness. As discussed in
the FY 2024 IPPS/LTCH PPS proposed rule, our initial MS-DRG analysis
was based on ICD-10 claims data from the September 2022 update of the
FY 2022 MedPAR file, which contains hospital bills received from
October 1, 2021, through September 30, 2022. In our discussion of the
proposed MS-DRG reclassification changes, we referred to those claims
data as the ``September 2022 update of the FY 2022 MedPAR file.''
Separately, where otherwise indicated, additional analysis was based on
ICD-10 claims data from the December 2022 update of the FY 2022 MedPAR
file, which contains hospital bills received by CMS through December
31, 2022, for discharges occurring from October 1, 2021, through
September 30, 2022. In our discussion of the proposed MS-DRG
reclassification changes, we referred to those claims data as the
``December 2022 update of the FY 2022 MedPAR file.'' Specifically, as
discussed further in the proposed rule and in this section, we used the
additional claims data available in the December 2022 update of the FY
2022 MedPAR file to assess the application of the NonCC subgroup
criteria to existing MS-DRGs with a three-way severity level split, as
well as to simulate restructuring of any proposed MS-DRGs, to assess
the case counts and other criteria for determining whether a proposed
new base MS-DRG would satisfy the criteria to create subgroups.
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 clinical
factors to determine whether patients are clinically distinct or
similar to other patients represented in the MS-DRG. In evaluating
resource costs, we consider both the absolute and percentage
differences in average costs between the cases we select for review and
the remainder of cases in the MS-DRG. We also consider variation in
costs within these groups; that is, whether observed average
differences are consistent across patients or attributable to cases
that are extreme in terms of costs or length of stay, or both. Further,
we consider the number of patients who will have a given set of
characteristics and generally prefer not to create a new MS-DRG unless
it would include a substantial number of cases.
In the FY 2021 IPPS/LTCH PPS final rule (85 FR 58448), we finalized
our proposal to expand our existing criteria to create a new
complication or comorbidity (CC) or major complication or comorbidity
(MCC) subgroup within a base MS-DRG. Specifically, we finalized the
expansion of the criteria to include the NonCC subgroup for a three-way
severity level split. We stated we
[[Page 58656]]
believed that applying these criteria to the NonCC subgroup would
better reflect resource stratification as well as promote stability in
the relative weights by avoiding low volume counts for the NonCC level
MS-DRGs. We noted that in our analysis of MS-DRG classification
requests for FY 2021 that were received by November 1, 2019, as well as
any additional analyses that were conducted in connection with those
requests, we applied these criteria to each of the MCC, CC, and NonCC
subgroups. We also noted that the application of the NonCC subgroup
criteria going forward may result in modifications to certain MS-DRGs
that are currently split into three severity levels and result in MS-
DRGs that are split into two severity levels. We stated that any
proposed modifications to the MS-DRGs would be addressed in future
rulemaking consistent with our annual process and reflected in Table
5.--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. Interested parties
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 the FY 2023 IPPS/LTCH PPS final rule (87 FR 48803), we also
finalized a delay in application of the NonCC subgroup criteria to
existing MS-DRGs with a three-way severity level split in light of the
ongoing PHE and until such time additional analyses can be performed to
assess impacts, as discussed in response to public comments in the FY
2022 and FY 2023 IPPS/LTCH PPS final rules.
In our analysis of the MS-DRG classification requests for FY 2024
that we received by October 20, 2022, 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.
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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 the FY 2024 IPPS/LTCH PPS proposed rule, our
initial MS-DRG analysis was generally based on ICD-10 claims data from
the September 2022 update of the FY 2022 MedPAR file, with the
additional claims data
[[Page 58657]]
available in the December 2022 update of the FY 2022 MedPAR file used
to assess the case counts and other criteria for determining whether a
proposed new base MS-DRG would satisfy the criteria to create
subgroups. However, in our evaluation of requests to split an existing
base MS-DRG into severity levels, as noted in prior rulemaking (80 FR
49368), we typically analyze the most recent two years of data. This
analysis includes 2 years of MedPAR claims data to compare the data
results from 1 year to the next to avoid making determinations about
whether additional severity levels are warranted based on an isolated
year's data fluctuation and also, to validate that the established
severity levels within a base MS-DRG are supported. The first step in
our process of evaluating if the creation of a new CC subgroup within a
base MS-DRG is warranted is to determine if all the criteria is
satisfied for a three-way split. In applying the criteria for a three-
way split, a base MS-DRG is initially subdivided into the three
subgroups: MCC, CC, and NonCC. Each subgroup is then analyzed in
relation to the other two subgroups using the volume (Criteria 1 and
2), average cost (Criteria 3 and 4), and reduction in variance
(Criteria 5). If the criteria fail, the next step is to determine if
the criteria are satisfied for a two-way split. In applying the
criteria for a two-way split, a base MS-DRG is initially subdivided
into two subgroups: ``with MCC'' and ``without MCC'' (1_23) or ``with
CC/MCC'' and ``without CC/MCC'' (12_3). Each subgroup is then analyzed
in relation to the other using the volume (Criteria 1 and 2), average
cost (Criteria 3 and 4), and reduction in variance (Criteria 5). 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.
As previously noted, to validate whether the established severity
levels within a base MS-DRG are supported, we typically analyze the
most recent two years of MedPAR claims data. For the FY 2024 IPPS/LTCH
PPS proposed rule, using the December 2022 update of the FY 2022 MedPAR
file and the March 2022 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 potentially affect the
MS-DRG structure in connection with the proposed FY 2024 MS-DRG
classification changes. While, as previously noted, our MS-DRG analysis
for the FY 2024 IPPS/LTCH PPS proposed rule was otherwise based on ICD-
10 claims data from the September 2022 update of the FY 2022 MedPAR
file, we utilized the additional claims data available from the
December 2022 update of the FY 2022 MedPAR file for purposes of
assessing the application of the NonCC subgroup criteria to these
existing MS-DRGs as well as to determine whether a proposed new base
MS-DRG satisfies the criteria to create subgroups. In the FY 2024 IPPS/
LTCH PPS proposed rule, we noted that findings from our analysis
indicated that approximately 45 base 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 potential deletion of 135 MS-DRGs (45 MS-DRGs x 3 severity
levels =135) and the potential creation of 86 new MS-DRGs. We referred
the reader to Table 6P.10--Potential MS-DRG Changes with Application of
the NonCC Subgroup Criteria and Detailed Data Analysis- FY 2024
associated with the proposed rule and available on the CMS website at:
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS for detailed information, including the criteria to
create subgroups in Table 6P.10a (as also set forth in the preceding
table) and the list of the 135 MS-DRGs that would potentially be
subject to deletion and the list of the 86 MS-DRGs that would
potentially be created in Table 6P.10b. We noted that we also
identified an additional 12 obstetric MS-DRGs (4 base MS-DRGs x 3
severity levels=12) that would be subject to change based on the
application of the three-way severity level split criterion, as
reflected in our data analysis in Table 6P.10c associated with the
proposed rule. However, in response to prior public comments expressing
concern about the historical low volume of the obstetric related MS-
DRGs being subject to application of the NonCC subgroup criteria and
consistent with our discussion in prior rulemaking regarding this
population in our Medicare claims data and the development of these MS-
DRGs (83 FR 41210), we stated we believed it may be appropriate to
exclude these MS-DRGs from application of the NonCC subgroup criteria.
The list of 12 obstetric MS-DRGs is shown in the following table.
[GRAPHIC] [TIFF OMITTED] TR28AU23.004
[[Page 58658]]
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We also referred the reader to Table 6P.10d for the data analysis
of all 49 base MS-DRGs that would be subject to change based on the
application of the three-way severity level split criterion and to
Table 6P.10e for the corresponding data dictionary that describes the
meaning of the data elements and assists with interpretation of the
data related to our analysis with application of the NonCC subgroup
criteria. We noted, in our analysis of the claims data and as reflected
in Table 6P.10d, we identified four base MS-DRGs currently subdivided
with a three-way severity level split (4 base MS-DRGs x 3 severity
levels=12 MS-DRGs) that result in the potential creation of a single,
base MS-DRG when grouped under the proposed V41 GROUPER software with
application of the NonCC subgroup criteria. As shown in Table 6P.10d,
the four current base MS-DRGs (excluding the 4 obstetric related base
DRGs) are base MS-DRGs 283, 296, 411, and 799. In addition to not
satisfying the criterion that there be at least 500 cases in the NonCC
subgroup for a three-way severity level split, these four base MS-DRGs
also failed one or more of the other criteria to create subgroups. For
example, our review of base MS-DRGs 283 and 296 showed they failed the
criterion that there be at least 5% or more of the patient cases in the
NonCC subgroup. For base MS-DRG 411, we found the criterion that there
be at least 500 cases in each subgroup for a three-way severity level
split, as well as in each subgroup for both of the two-way severity
level splits, was not met. Lastly, for base MS-DRG 799, we found less
than 500 cases in at least two of three subgroups for a three-way
severity level split, as well as for at least one of the two subgroups
for a two-way severity level split, and the R2 value was less than 3.0
for the two-way severity level split.
We also referred the reader to Table 6P.10f for the alternate cost
weight analysis with application of the NonCC subgroup criteria that
includes transfer-adjusted cases from the December 2022 update of the
FY 2022 MedPAR file under the proposed V41 ICD-10 MS-DRG GROUPER
Software, the MS-DRG relative weights calculated under the proposed V41
ICD-10 MS-DRG GROUPER Software, the alternate MS-DRG relative weights
calculated with application of the NonCC subgroup criteria using an
alternate version of the ICD-10 MS-DRG GROUPER Software, Version 41.A
(discussed in more detail in this section of the proposed rule), and
the change in MS-DRG relative weights between those calculated under
the proposed V41 GROUPER Software and those calculated under the
alternate V41.A GROUPER Software. We noted that to facilitate the
structural comparison between the proposed V41 GROUPER and the
alternate V41.A GROUPER, the relative weights calculated using the
proposed V41 GROUPER Software (column F) did not reflect application of
the 10-percent cap. We further noted that changes in the status for
transfer adjusted cases were reflected for the relative weights
calculated using the proposed V41 GROUPER Software only and were not
reflected for the alternate MS-DRG weights with application of the
NonCC subgroup criteria. We noted, as shown in Table 6P.10f, that we
found five MS-DRGs for which there appears to be a greater than
negative 10% change between the relative weight calculated under the
proposed V41 GROUPER Software and the calculated alternate relative
weight under the V41.A GROUPER Software with application of the NonCC
subgroup criteria. As shown in Table 6P.10f, the five MS-DRGs are
existing MS-DRG 021 (potential new MS-DRG 105), existing MS-DRG 411
(potential new MS-DRG 426), existing MS-DRG 573 (potential new MS-DRG
529), existing MS-DRG 574 (potential new MS-DRG 530), and existing MS-
DRG 799 (potential new MS-DRG 649). Of the five existing MS-DRGs, two
of the MS-DRGs are those for which a new single, base MS-DRG would
potentially be created from the current three-way split, as previously
described: MS-DRG 411 (potential new MS-DRG 426) and MS-DRG 799
(potential new MS-DRG 649). In the proposed rule, we stated that the
findings were consistent with what we would expect given the low volume
of cases in the NonCC subgroups compared to the volume of cases in the
CC subgroups for these MS-DRGs.
As noted in prior rulemaking, any potential MS-DRG updates to be
considered for a future proposal in connection with application of the
NonCC subgroup criteria would also involve a redistribution of cases,
which would impact the relative weights, and, thus, the payment rates
proposed for particular types of cases. As such, and in response to
prior public comments requesting that further analysis of the
application of the NonCC subgroup criteria be made available, in
addition to Table 6P.10f, we made available additional files reflecting
application of the NonCC subgroup criteria in connection with the
proposed FY 2024 MS-DRG changes, using the December 2022 update of the
FY 2022 MedPAR file. These additional files included an alternate Table
5--Alternate List of Medicare Severity Diagnosis Related Groups (MS-
DRGs), Relative Weighting Factors, and Geometric and Arithmetic Mean
Length of Stay, an alternate Length of Stay (LOS) Statistics file, an
alternate Case Mix Index (CMI) file, and an alternate After Outliers
Removed and Before Outliers Removed (AOR_BOR) file. The files are
available in association with the proposed rule on the CMS website at:
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS.
For the FY 2024 IPPS/LTCH PPS proposed rule we also provided an
alternate test version of the ICD-10 MS-DRG GROUPER Software, Version
41.A, so that the public can better analyze and understand the impact
on the proposals included in the proposed rule if the NonCC subgroup
criteria were to be applied to existing MS-DRGs with a three-way
severity level split. We noted that this alternate test software
reflected the proposed GROUPER logic for FY 2024 as modified by the
application of the NonCC subgroup criteria. Therefore, it included the
new diagnosis and procedure codes that are effective for FY 2024 as
reflected in Table 6A.--New Diagnosis Codes--FY 2024 and Table 6B.--New
Procedure Codes--FY 2024 associated with the proposed rule and did not
include the diagnosis codes that are invalid beginning in FY 2024 as
reflected in Table 6C.--Invalid Diagnosis Codes--FY 2024 associated
with the proposed rule. As previously noted, at the time of the
development of the proposed rule there were no procedure codes
designated as invalid for FY 2024, and therefore, there was no Table
6D- Invalid Procedure Codes--FY 2024 associated with the proposed rule.
These tables were not published in the Addendum to the proposed rule,
but are available on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html as
described in section VI. of the Addendum to the proposed rule. Because
the diagnosis codes no longer valid for FY 2024 are not reflected in
the alternate test software, we made available a supplemental file in
Table 6P.1a that includes the mapped Version 41 FY 2024 ICD-10-CM codes
and the deleted Version 40.1 FY 2023 ICD-10-CM codes that should be
used for testing purposes with users' available claims data. Therefore,
users had access to the alternate test software allowing them to build
case examples that reflect the proposals included in the proposed rule
[[Page 58659]]
with application of the NonCC subgroup criteria. Because the potential
MS-DRG changes with application of the NonCC subgroup criteria are
available in Table 6P.10b associated with the proposed rule, an
alternate version of the ICD-10 MS-DRG Definitions Manual was not
developed.
The alternate test version of the ICD-10 MS-DRG GROUPER Software,
Version 41.A, and the supplemental mapping files in Table 6P.1a of the
FY 2023 and FY 2024 ICD-10-CM diagnosis codes are available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/MS-DRG-Classifications-and-Software.
After delaying the application of the NonCC subgroup criteria for
two years, and in response to prior public comments, we made available
these additional analyses reflecting application of the criteria in
connection with the proposed FY 2024 MS-DRG changes for public review
and comment, to inform application of the NonCC subgroup criteria for
FY 2025 rulemaking.
We proposed to continue to delay application of the NonCC subgroup
criteria to existing MS-DRGs with a three-way severity level split for
FY 2024. We stated that we were interested in hearing feedback
regarding the experience of large urban hospitals, rural hospitals, and
other hospital types and will take commenters' feedback into
consideration for our development of the FY 2025 proposed rule.
Comment: Commenters expressed appreciation that CMS provided
additional files for review and consideration that reflect application
of the NonCC subgroup criteria in connection with the FY 2024 proposed
MS-DRG changes.
Response: We thank the commenters for their feedback.
Comment: Commenters supported the proposal to delay application of
the NonCC subgroup criteria to existing MS-DRGs with a three-way
severity level split for FY 2024 and to maintain the current structure
of the 45 MS-DRGs that currently have a three-way split (total of 135
MS-DRGs). The commenters also expressed support for the proposal to
exclude the 12 obstetric related MS-DRGs from application of the NonCC
subgroup criteria in the future. Some commenters stated they agreed
with the methodology for creating subgroups and viewed the
consolidation as a positive change, however, the commenters also
recommended that CMS continue to collect data and identify any
unintended impacts to the MS-DRG relative weights because of the
redistribution of cases from application of the NonCC subgroup
criteria. Other commenters stated that although the COVID-19 PHE has
ended, several hospitals are still recovering and further assessment of
the impacts for low volume procedures in connection with the potential
MS-DRG changes with application of the NonCC subgroup criteria is
needed.
A couple commenters specifically requested that CMS provide data
analysis by hospital type for FY 2025 rulemaking to afford
organizations additional time to review and forecast impacts, as well
as to facilitate more informed comments in response to the CMS request
for comments related to experiences of large urban hospitals, rural
hospitals, and other hospital types.
Response: We appreciate the commenters' support. We will continue
to review and consider the feedback we have received for our
development of the FY 2025 proposed rule.
Comment: A couple commenters who expressed support for the proposed
delay in application of the NonCC subgroup criteria for FY 2024 and
appreciation for the additional analysis files that were made available
stated that deleting and adding a large volume of MS-DRGs may create
additional administrative burden. The commenters stated providers will
need more time than is typically provided for implementation of
finalized policies under the IPPS. The commenters urged CMS to work
with interested parties in developing an appropriate implementation
timeline. A commenter suggested that CMS consider implementing
application of the NonCC subgroup criteria using a phased approach,
over several years, to assist in the transition. This commenter
encouraged CMS to continue to provide additional analysis files as was
done with the proposed rule and to include the potential effects of a
multi-year implementation plan.
Response: We thank the commenters for their support and feedback.
We will continue to review and consider the feedback we have received
for our development of the FY 2025 proposed rule.
Comment: A commenter who agreed it is appropriate to defer
implementation of MS-DRG consolidation based on the three-way severity
criteria specifically expressed concern that the policy may result in
additional reductions to relative weights for important procedures,
including intracranial vascular procedures. According to the commenter,
intracranial vascular procedures have already experienced significant
cuts in recent years. The commenter stated that based on the data that
was made available in connection with the proposed rule, the estimates
show that consolidation for five MS-DRGs, including potential new MS-
DRG 105 (Intracranial Vascular Procedures with Principal Diagnosis
Hemorrhage without MCC) would result in a more than 10 percent relative
weight reduction (prior to the application of the current 10-percent
cap). To the extent that CMS does adopt such MS-DRG consolidation in
the future, the commenter recommended that CMS limit the single-year
relative weight reductions resulting from cumulative policy changes to
5 percent.
The commenter also suggested that CMS consider building more
flexibility into its assessment of severity level subdivisions for both
new and existing MS-DRGs. According to the commenter, the requirement
to meet multiple, rigid cost and volume cut-offs may detract from the
assessment of important clinical and resource distinctions in patient
populations within the MS-DRGs.
A few commenters expressed concern that the criterion of a 500-case
volume may be too high, particularly for low volume services and MS-
DRGs. The commenters stated that there has been tremendous growth in
Medicare Advantage claims with a decrease in fee-for-service (FFS)
claims flowing into rate-setting. The commenters stated additional
analysis of this criterion is warranted and requested that CMS provide
further information about the benefits.
Response: We appreciate the commenters' feedback. We acknowledge
the growth in Medicare Advantage claims and will continue to review and
consider the feedback we have received for our development of the FY
2025 proposed rule.
In response to the commenter's recommendation that CMS limit the
single-year relative weight reductions to 5 percent, we note that there
was extensive discussion in the FY 2023 IPPS/LTCH PPS final rule (87 FR
48897 through 48900) regarding the cap for relative weight reductions
and refer the reader to that discussion for detailed information. We
also refer the reader to the additional discussion in the FY 2024 IPPS/
LTCH PPS proposed rule (88 FR 26774 through 26775) and in section
II.D.2.c. of the preamble of this final rule.
With regard to the commenter's suggestion that more flexibility
should be built into CMS' assessment of severity level subdivisions for
both new
[[Page 58660]]
and existing MS-DRGs, we note that currently, the minimum case volume
requirements were established to avoid overly fragmenting the MS-DRG
classification system. With smaller volumes they will be subject to
stochastic (unpredictable) effects that may indicate a cost difference
within the data sample. Reevaluation in subsequent years may result in
those cost differences being insufficient to support the split.
We do not believe it is in the interest of the Medicare program or
providers to establish and then remove MS-DRG splits. We believe that
stability of MS-DRG payment is an important objective and therefore,
that a volume requirement is a necessary adjunct to cost
differentiation. We established a 500-case limit to meet this stability
requirement. With this case limit, an MS-DRG split not meeting this
minimum volume threshold will have fewer than 0.007% cases from which
the MS-DRG RW is constructed. Under application of the NonCC subgroup
criteria, hospitals would receive a payment weight that averages the
two comorbidity split levels (CC and NonCC) and will thus only
experience any potential negative impact to the extent that their case
mix is comprised of cases with the (potentially) higher weight. We
note, as discussed in prior rulemaking (86 FR 44878), 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 also
provide outlier payments to mitigate extreme loss on individual cases.
Comment: A couple commenters requested clarification on how the
policy to cap the reductions for MS-DRG relative weights to 10-percent
would apply as CMS considers implementation of the NonCC subgroup
criteria.
Response: As stated in the FY 2023 IPPS/LTCH PPS final rule (87 FR
48900), the 10- percent cap on reductions to an MS-DRG's relative
weight applies to new or modified MS-DRGs after the first fiscal year
that the new or modified MS-DRGs take effect. Therefore, the 10-percent
cap would not apply to the relative weight for any new or renumbered
MS-DRGs for the first fiscal year. However, we recognize that
application of the NonCC subgroup criteria may warrant special
consideration with respect to the 10-percent cap on reductions to an
MS-DRG's relative weight and will continue to consider this issue in
connection with our efforts to promote predictability and mitigate
financial impacts resulting from significant fluctuations in the
relative weights.
Comment: A couple commenters expressed concern that the additional
files made available in connection with the proposed rule did not
demonstrate how the explanatory power of the potential new MS-DRGs with
application of the NonCC subgroup criteria is an improvement over the
current MS-DRGs. The commenters expressed concern that the impact of
the presence of a CC for MS-DRG assignment appears to be declining
because the application of the NonCC subgroup criteria is resulting in
fewer MS-DRGs split by the presence of a CC. Specifically, the
commenters stated that when the NonCC subgroup criteria were applied to
existing MS-DRGs currently split into three severity levels, as well as
when the criteria were applied to proposed new MS-DRG classification
requests, none of the proposed new MS-DRGs with a two-way severity
level split involved a ``with CC/MCC'' and ``without CC/MCC'' split.
Response: As discussed in the FY 2024 IPPS/LTCH proposed rule, we
provided both a test version of the ICD-10 MS-DRG GROUPER Software,
Version 41 and an alternate version of the ICD-10 MS-DRG GROUPER
Software, Version 41.A so that the public could better analyze and
understand the impact on the proposals included in the proposed rule if
the NonCC subgroup criteria were to be applied to existing MS-DRGs with
a three-way severity level split. We noted that this alternate test
software reflected the proposed GROUPER logic for FY 2024 as modified
by the application of the NonCC subgroup criteria. Overall, we believe
the explanatory power (R2) for the V41.A alternate GROUPER yields
similar results to the proposed V41 GROUPER. Based on our review, the
explanatory power (R2) goes down by 0.04 percent with the V41.A
alternate GROUPER, explaining less variation when compared to the V41
notice of proposed rulemaking (NPRM) GROUPER, however this result is as
we would expect since the MS-DRGs subject to the NonCC subgroup
criteria considered for potential adjustment are low volume to begin
with.
[GRAPHIC] [TIFF OMITTED] TR28AU23.005
In response to the concerns expressed that application of the NonCC
subgroup criteria to existing MS-DRGs with a three-way severity level
split appears to result in fewer MS-DRGs split by the presence of a CC,
we note that the criteria for the two-way split of ``with CC/MCC'' and
``without CC/MCC'' requires that there be at least 500 cases in the
NonCC group, and as discussed in the proposed rule, in applying the
criteria for proposed new MS-DRGs, that volume requirement was not met.
Alternatively, the criteria for the two-way split of ``with MCC'' and
``without MCC'' was met for specific proposals, and therefore,
proposed.
We recognize and acknowledge the concerns raised by the commenters
regarding the impact the application of the NonCC subgroup criteria to
existing MS-DRGs with a three-way split appears to have on the presence
of a CC for MS-DRG assignment. We will continue to examine this issue
with respect to the criteria and how it also relates to the
comprehensive CC/MCC analysis. We refer the reader to section
II.C.12.b. of the preamble of this final rule for additional discussion
related to the comprehensive CC/MCC analysis.
Comment: Some commenters requested additional insight and rationale
as to why CMS applied the NonCC subgroup criteria to the proposed MS-
DRG changes for FY 2024 if the intent is to delay application of the
NonCC subgroup criteria until future rulemaking.
Response: As discussed in prior rulemaking, in general, once the
decision has been made to propose to make further modifications to the
MS-DRGs, such as creating a new base MS-DRG, all five criteria must be
met for the base MS-DRG to be split (or subdivided) by a CC subgroup.
We note that we have applied the criteria to create subgroups,
including application of the NonCC subgroup criteria, in our annual
analysis of the MS-DRG classification requests
[[Page 58661]]
effective FY 2021 (85 FR 58446 through 58448). For example, we applied
the criteria to create subgroups, including application of the NonCC
subgroup criteria, for a proposed new base MS-DRG as discussed in our
finalization of new base MS-DRG 018 (Chimeric Antigen Receptor (CAR) T-
cell Immunotherapy), new base MS-DRG 019 (Simultaneous Pancreas and
Kidney Transplant with Hemodialysis), new base MS-DRG 140 (Major Head
and Neck Procedures), new base MS-DRG 143 (Other Ear, Nose, Mouth and
Throat O.R. Procedures), new base MS-DRG 521 (Hip Replacement with
Principal Diagnosis of Hip Fracture) and new base MS-DRG 650 (Kidney
Transplant with Hemodialysis) for FY 2021. 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 CC or 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.
Similarly, we applied the criteria to create subgroups including
application of the NonCC subgroup criteria for MS-DRG classification
requests for FY 2022 that we received by November 1, 2020 (86 FR 44796
through 44798), for MS-DRG classification requests for FY 2023 that we
received by November 1, 2021 (87 FR 48801 through 48804), and for MS-
DRG classification requests for FY 2024 that we received by October 20,
2022 (88 FR 26673 through 26676), as well as any additional analyses
that were conducted in connection with those requests.
In the FY 2022 IPPS/LTCH PPS final rule (86 FR 44798) and FY 2023
IPPS/LTCH PPS final rule (87 FR 48803), we finalized a delay in
applying this technical criterion to existing MS-DRGs in light of the
PHE. We take this opportunity to clarify that the delay referenced was
in applying this technical criterion to existing MS-DRGs with a three-
way severity level split. Therefore, while we have made analyses for
potential MS-DRG changes with application of the NonCC subgroup
criteria publicly available, we have not yet proposed application of
the NonCC subgroup criteria to existing MS-DRGs with a three-way
severity level split. We note that we will continue to apply the
criteria to create subgroups, including application of the NonCC
subgroup criteria, in our annual analysis of MS-DRG classification
requests, consistent with our approach since FY 2021 when we finalized
the expansion of the criteria to include the NonCC subgroup for a
three-way severity level split.
Comment: A few commenters expressed concerns about the fluctuations
in potential MS-DRG restructuring with application of the NonCC
subgroup criteria from FY 2021 through FY 2024 based on different sets
of claims data.
Response: We note that we addressed similar comments in detail in
the FY 2023 IPPS/LTCH PPS final rule (87 FR 48803 through 48804) and
refer the reader to that discussion.
After consideration of the public comments we received, and for the
reasons discussed, we are finalizing our proposal to delay the
application of the NonCC subgroup criteria to existing MS-DRGs with a
three-way severity level split until FY 2025 or later, and are
finalizing for FY 2024 our proposal to maintain the current structure
of the 45 MS-DRGs that currently have a three-way severity level split.
We are making the FY 2024 ICD-10 MS-DRG GROUPER and Medicare Code
Editor (MCE) Software Version 41, the ICD-10 MS-DRG Definitions Manual
files Version 41 and the Definitions of Medicare Code Edits Manual
Version 41 available to the public on our CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/MS-DRG-Classifications-and-Software.
2. Major Diagnostic Category (MDC) 01: (Diseases and Disorders of the
Nervous System): Epilepsy With Neurostimulator
The Responsive Neurostimulator (RNS[supreg]) System is a cranially
implanted neurostimulator and is a treatment option for persons
diagnosed with medically intractable epilepsy, a brain disorder
characterized by persistent seizure activity which despite maximal
medical treatment, remains sufficiently debilitating. In the FY 2024
IPPS/LTCH PPS proposed rule (88 FR 26676 through 26681), we stated that
cases involving the use of the RNS[supreg] System are identified by the
reporting of an ICD-10-PCS code combination capturing a neurostimulator
generator inserted into the skull with the insertion of a
neurostimulator lead into the brain and the cases are assigned to MS-
DRG 023 (Craniotomy with Major Device Implant or Acute Complex CNS
Principal Diagnosis with MCC or Chemotherapy Implant or Epilepsy with
Neurostimulator) when reported with a principal diagnosis of epilepsy.
We referred the reader to the ICD-10 MS-DRG Definitions Manual Version
40.1, which is available 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 023.
As discussed in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38015
through 38019), we finalized our proposal to reassign all cases with a
principal diagnosis of epilepsy and one of the following ICD-10-PCS
code combinations capturing cases with a neurostimulator generator
inserted into the skull with the insertion of a neurostimulator lead
into the brain (including cases involving the use of the RNS[supreg]
neurostimulator) to MS-DRG 023 even if there is no MCC reported:
0NH00NZ (Insertion of neurostimulator generator into
skull, open approach), in combination with 00H00MZ (Insertion of
neurostimulator lead into brain, open approach);
0NH00NZ (Insertion of neurostimulator generator into
skull, open approach), in combination with 00H03MZ (Insertion of
neurostimulator lead into brain, percutaneous approach); and
0NH00NZ (Insertion of neurostimulator generator into
skull, open approach), in combination with 00H04MZ (Insertion of
neurostimulator lead into brain, percutaneous endoscopic approach).
We also finalized our proposed change to the title of MS-DRG 023
from ``Craniotomy with Major Device Implant or Acute Complex Central
Nervous System (CNS) Principal Diagnosis (PDX) with MCC or Chemo
Implant'' to ``Craniotomy with Major Device Implant or Acute Complex
Central Nervous System (CNS) Principal Diagnosis (PDX) with MCC or
Chemotherapy Implant or Epilepsy with Neurostimulator'' to reflect the
modifications to the MS-DRG structure.
In the FY 2021 IPPS/LTCH PPS final rule (85 FR 58459 through
58462), we discussed a request to reassign cases describing the
insertion of a neurostimulator generator into the skull in combination
with the insertion of a neurostimulator lead into the brain from MS-DRG
023 to MS-DRG 021 (Intracranial Vascular Procedures with Principal
Diagnosis Hemorrhage with CC) or to reassign these cases to another MS-
DRG for more appropriate payment. We stated that while the results of
our claims analysis indicated that the average costs of cases reporting
a neurostimulator generator inserted into the skull with the insertion
of a neurostimulator lead into the brain (including cases involving the
use of the RNS[supreg] neurostimulator), and a principal diagnosis of
epilepsy are higher compared to the average costs for all cases in
their assigned MS-DRG, we could not ascertain from the claims data
[[Page 58662]]
the resource use specifically attributable to the procedure during a
hospital stay. We stated that we believed that further analysis of
cases reporting a neurostimulator generator inserted into the skull
with the insertion of a neurostimulator lead into the brain (including
cases involving the use of the RNS[supreg] neurostimulator), and a
principal diagnosis of epilepsy was needed prior to proposing any
further reassignment of these cases to ensure clinical coherence
between these cases and the other cases with which they may potentially
be grouped and therefore did not propose to reassign cases describing a
neurostimulator generator inserted into the skull with the insertion of
a neurostimulator lead into the brain (including cases involving the
use of the RNS[supreg] neurostimulator) from MS-DRG 023 to MS-DRG 021.
We also did not propose to reassign Responsive Neurostimulator
(RNS[supreg]) System cases to another MS-DRG. We stated we expected
that, in future years, we would have additional data that could be used
to evaluate the potential reassignment of cases reporting a
neurostimulator generator inserted into the skull with the insertion of
a neurostimulator lead into the brain (including cases involving the
use of the RNS[supreg] neurostimulator), and a principal diagnosis of
epilepsy.
In the FY 2024 IPPS/LTCH PPS proposed rule, we stated we received a
similar request to reassign cases describing the insertion of a
neurostimulator generator into the skull in combination with the
insertion of a neurostimulator lead into the brain from MS-DRG 023 to
MS-DRG 021 or reassign all cases currently assigned to MS-DRG 023 that
involve a craniectomy or a craniotomy with the insertion of device
implant and create a new MS-DRG for these cases. The requestor
acknowledged both the refinements made to MS-DRG 023 effective for FY
2018 and the discussion in FY 2021 rulemaking, but stated that cases
describing the insertion of a neurostimulator generator into the skull
in combination with the insertion of a neurostimulator lead into the
brain (including cases involving the use of the RNS[supreg]
neurostimulator) are negatively impacted from a payment perspective in
their current MS-DRG assignment due to the large number of cases, with
a wide range of principal diagnoses, procedures, and procedure
approaches, also assigned to MS-DRG 023 and MS-DRG 024 (Craniotomy with
Major Device Implant or Acute Complex CNS Principal Diagnosis without
MCC) and therefore continue to be underpaid. We stated in the FY 2024
IPPS/LTCH PPS proposed rule that the requestor performed its own
analysis of Medicare claims data and stated that it found that the
average costs of cases describing the insertion of the RNS[supreg]
neurostimulator were significantly higher than the average costs of all
cases in their current assignment to MS-DRG 023, and as a result, cases
describing the insertion of the RNS[supreg] neurostimulator are not
being adequately reimbursed.
The requestor suggested the following two options for MS-DRG
assignment updates: (1) reassign cases describing the insertion of a
neurostimulator generator into the skull in combination with the
insertion of a neurostimulator lead into the brain (including cases
involving the use of the RNS[supreg] neurostimulator) from MS-DRG 023
to MS-DRG 021 with a change in title to ``Intracranial Vascular
Procedures with PDX Hemorrhage with CC or Craniectomy with
Neurostimulator;'' or (2) extract all cases from MS-DRG 023 involving a
craniectomy/craniotomy with device implant and create a new MS-DRG for
these cases.
The requestor acknowledged that the relatively low volume of cases
that only involve the insertion of a neurostimulator generator into the
skull in combination with the insertion of a neurostimulator lead into
the brain in the claims data is likely not sufficient to warrant the
creation of a new MS-DRG. The requestor further stated given the
limited options within the existing MS-DRG structure that fit from both
a cost and clinical cohesiveness perspective, they believe that MS-DRG
021 is the most logical fit in terms of average costs and clinical
coherence for reassignment of RNS[supreg] System cases even though,
according to the requestor, the insertion of a neurostimulator
generator into the skull in combination with the insertion of a
neurostimulator lead into the brain is technically more complex and
involves a higher level of training, extreme precision and
sophisticated technology than performing a craniectomy for hemorrhage.
As another option, the requestor identified procedures involving a
craniectomy or craniotomy by searching for ICD-10-PCS codes that
describe the root operations ``Destruction'', ``Division'',
``Drainage'', ``Excision'', Extirpation'', or ``Insertion'' performed
related to the brain or specific brain anatomy (for example, cerebral
ventricle, cerebellum) with an ``Open Approach'' in the claims data.
The requestor also said they identified claims involving a device
implant by searching for ICD-10-PCS codes that describe the root
operation ``Insertion'' and stated that they found that the claims they
identified had average costs comparable to the average costs of
RNS[supreg] cases and therefore creating a new MS-DRG for all cases
involving a craniectomy/craniotomy with device implant was a reasonable
alternative option.
We stated in the proposed rule that to begin our analysis, we
identified the ICD-10-CM diagnosis codes that describe a diagnosis of
epilepsy. We referred the reader to Table 6P.2a associated with the
proposed rule (and available at: https://www.cms.gov/medicare/medicare-
fee-for-service-payment/acuteinpatientpps) for the list of the ICD-10-
CM codes that we identified.
We stated in the proposed rule that we then examined the claims
data from the September 2022 update of the FY 2022 MedPAR file for all
cases in MS-DRG 023 and compared the results to cases reporting a
neurostimulator generator inserted into the skull with the insertion of
a neurostimulator lead into the brain (including cases involving the
use of the RNS[supreg] neurostimulator) that had a principal diagnosis
of epilepsy in MS-DRG 023. The following table shows our findings:
BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TR28AU23.006
[[Page 58663]]
As shown in the table, for MS-DRG 023, we identified a total of
11,602 cases, with an average length of stay of 10.4 days and average
costs of $47,321. Of those 11,602 cases in MS-DRG 023, there were 57
cases describing a neurostimulator generator inserted into the skull
with the insertion of a neurostimulator lead into the brain (including
cases involving the use of the RNS[supreg] neurostimulator) that had a
principal diagnosis of epilepsy. We noted that the 57 cases describing
a neurostimulator generator inserted into the skull with the insertion
of a neurostimulator lead into the brain (including cases involving the
use of the RNS[supreg] neurostimulator) and a principal diagnosis of
epilepsy had an average length of stay of 3.1 days and average costs of
$58,676, as compared to the average length of stay of 10.4 days and
average costs of $47,321 for all cases in MS-DRG 023. We stated that
while these neurostimulator cases had average costs that were $11,355
higher than the average costs of all cases in MS-DRG 023, there were
only a total of 57 cases. We stated we reviewed these data, and agreed
with the requestor that the number of cases continued to be too small
to warrant the creation of a new MS-DRG for these cases, for the
reasons discussed in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38015
through 38019) and the FY 2021 IPPS/LTCH PPS final rule (85 FR 58459
through 58462).
As stated in the proposed rule, we examined the reassignment of
cases describing a neurostimulator generator inserted into the skull
with the insertion of a neurostimulator lead into the brain (including
cases involving the use of the RNS[supreg] neurostimulator) to MS-DRGs
020, 021, and 022 (Intracranial Vascular Procedures with PDX Hemorrhage
with MCC, with CC, and without CC/MCC, respectively). While the request
was to reassign these cases to MS-DRG 021, we noted that MS-DRG 021 is
specifically differentiated according to the presence of a secondary
diagnosis with a severity level designation of a complication or
comorbidity (CC). Cases with a neurostimulator generator inserted into
the skull with the insertion of a neurostimulator lead into the brain
(including cases involving the use of the RNS[supreg] neurostimulator)
do not always involve the presence of a secondary diagnosis with a
severity level designation of a complication or comorbidity (CC), and
therefore we reviewed data for all three MS-DRGs. The following table
shows our findings:
[GRAPHIC] [TIFF OMITTED] TR28AU23.007
As shown in the table, for MS-DRG 020, there were a total of 2,016
cases with an average length of stay of 13.9 days and average costs of
$72,776. For MS-DRG 021, there were a total of 548 cases with an
average length of stay of 9.1 days and average costs of $53,973. For
MS-DRG 022, there were a total of 270 cases with an average length of
stay of 3.9 days and average costs of $31,248.
Because all cases describing a neurostimulator generator inserted
into the skull with the insertion of a neurostimulator lead into the
brain (including cases involving the use of the RNS[supreg]
neurostimulator) with a principal diagnosis of epilepsy are assigned
MS-DRG 023 even if there is no MCC reported and there is a three-way
split within MS-DRGs 020, 021, and 022, in the proposed rule we stated
we also analyzed the cases reporting a neurostimulator generator
inserted into the skull with the insertion of a neurostimulator lead
into the brain (including cases involving the use of the RNS[supreg]
neurostimulator) with a principal diagnosis of epilepsy for the
presence or absence of a secondary diagnosis designated as a
complication or comorbidity (CC) or a major complication or comorbidity
(MCC). The following table shows our findings:
[GRAPHIC] [TIFF OMITTED] TR28AU23.008
[[Page 58664]]
As noted in the proposed rule, this data analysis shows that,
similar to our findings as summarized in the FY 2018 and FY 2021 IPPS/
LTCH PPS final rules, on average, the cases in MS-DRG 023 describing a
neurostimulator generator inserted into the skull with the insertion of
a neurostimulator lead into the brain (including cases involving the
use of the RNS[supreg] neurostimulator) and a principal diagnosis of
epilepsy have average costs that are relatively more similar to the
average costs of cases in MS-DRG 021 ($58,676 compared to $53,973),
while the average length of stay is shorter (3.1 days compared to 9.1
days). However, when distributed based on the presence or absence of a
secondary diagnosis designated as a CC or an MCC, the 57 cases in MS-
DRG 023 reporting a principal diagnosis of epilepsy with a
neurostimulator generator inserted into the skull and insertion of a
neurostimulator lead into brain have higher average costs and shorter
lengths of stay than the cases in the FY 2022 MedPAR file for MS-DRGs
021 and 022 while having lower average costs and shorter lengths of
stay than the cases in MS-DRG 020. We stated we reviewed the clinical
issues and the claims data and continued to not support reassigning the
cases describing a neurostimulator generator inserted into the skull
with the insertion of a neurostimulator lead into the brain (including
cases involving the use of the RNS[supreg] neurostimulator) and a
principal diagnosis of epilepsy from MS-DRG 023 to MS-DRGs 020, 021, or
022. We noted in the proposed rule that as also discussed in the FY
2018 and FY 2021 IPPS/LTCH PPS final rules, the cases in MS-DRGs 020,
021, and 022 have a principal diagnosis of a hemorrhage. The
RNS[supreg] neurostimulator generators are not used to treat patients
with diagnosis of a hemorrhage. We stated we continued to believe that
it is inappropriate to reassign cases representing a principal
diagnosis of epilepsy to a MS-DRG that contains cases that represent
the treatment of intracranial hemorrhage, as discussed in the FY 2018
IPPS/LTCH PPS final rule (82 FR 38015 through 38019) and the FY 2021
IPPS/LTCH PPS final rule (85 FR 58459 through 58462). We noted that the
differences in average length of stay and average costs based on the
more recent data continued to support this recommendation.
We noted, as discussed in section II.C.1.b of the proposed rule,
using the December 2022 update of the FY 2022 MedPAR file, we analyzed
how applying the NonCC subgroup criteria to all MS-DRGs currently split
into three severity levels would affect the MS-DRG structure beginning
in FY 2024. As stated in the proposed rule, findings from our analysis
indicated that MS-DRGs 020, 021, and 022 as well as approximately 44
other base MS-DRGs would potentially be subject to change based on the
three-way severity level split criterion finalized in FY 2021. We
referred the reader to Table 6P.10b associated with the proposed rule
(which is available on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS) for the
list of the 135 MS-DRGs that would be subject to deletion and the list
of the 86 new MS-DRGs that would potentially be created if the NonCC
subgroup criteria were applied.
We stated that we then explored alternative options, as was
requested. As stated in the proposed rule, we did not agree that
searching for ICD-10-PCS codes that describe the root operations
``Destruction'', ``Division'', ``Drainage'', ``Excision'',
Extirpation'', or ``Insertion'' performed related to the brain or
specific brain anatomy as suggested by the requestor was a reasonable
approach to find cases comparable to cases involving the use of the
RNS[supreg] System as these root operations all describe procedures
performed for distinct and differing objectives. Instead, to review for
similar utilization of resources, we stated we further analyzed the
data to identify those cases currently reporting a procedure code
combination representing neurostimulator generator and lead code
combinations that are captured under the list referred to as ``Major
Device Implant'' in the GROUPER logic for MS-DRGs 023 and 024 since the
ICD-10-PCS code combinations that capture the use of the RNS[supreg]
neurostimulator generator and leads that would determine an assignment
of a case to MS-DRGs 023 are also found on the ``Major Device Implant''
list. The neurostimulator generators on this list are inserted into the
skull, as well as into the subcutaneous areas of the chest, back, or
abdomen. The leads are all inserted into the brain. The following table
shows our findings:
[[Page 58665]]
[GRAPHIC] [TIFF OMITTED] TR28AU23.009
BILLING CODE 4120-01-C
We noted that the 90 Major Device Implant list cases involving a
neurostimulator generator (including cases involving the use of the
RNS[supreg] neurostimulator and a principal diagnosis of epilepsy) have
an average length of stay of 7.3 days and average costs of $59,733 as
compared to all 11,602 cases in MS-DRG 023, which have an average
length of stay of 10.4 days and average costs of $47,321. In MS-DRG
024, we noted that the 395 Major Device Implant list cases involving a
neurostimulator generator have an average length of stay of 1.6 days
and average costs of $36,147 as compared to all 4,378 cases in MS-DRG
024, which have an average length of stay of 5.2 days and average costs
of $32,613. In the proposed rule, we stated that while these
neurostimulator cases have average costs that are higher than the
average costs of all cases in their respective MS-DRGs, it was
difficult to detect patterns of complexity and resource intensity.
Moreover, we stated we were unable to identify another MS-DRG in MDC 01
that would be a more appropriate MS-DRG assignment for these cases
based on the indication for and complexity of the procedure.
We noted that while our data findings demonstrated the average
costs are higher for the 57 cases with a principal diagnosis of
epilepsy with neurostimulator generator inserted into the skull and
insertion of a neurostimulator lead into brain when compared to all
cases in MS-DRG 023, these cases represent a small percentage of the
total number of cases reported in this MS-DRG. We stated that while we
appreciated the requestor's concerns regarding the differential in
average costs for cases describing the insertion of a neurostimulator
generator into the skull in combination with the insertion of a
neurostimulator lead into the brain when compared to all cases in their
assigned MS-DRG, we believe additional time is needed to evaluate these
cases as part of our ongoing examination of the case logic for MS-DRGs
023 through 027. As discussed in the FY 2023 IPPS/LTCH PPS final rule
(87 FR 48808 through 48820), 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. In the proposed rule, we stated
that 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
[[Page 58666]]
of these patient populations in the MS-DRGs.
As part of this evaluation, as discussed in the proposed rule, we
have begun to analyze the ICD-10 coded claims data from the September
2022 update of the FY 2022 MedPAR file to determine if the patients'
diagnoses, the objective of the procedure performed, the specific
anatomical site where the procedure is performed or the surgical
approach used (for example, open, percutaneous, percutaneous
endoscopic, among others) demonstrates a greater severity of illness
and/or increased treatment difficulty as we consider restructuring MS-
DRGs 023 through 027, including how to better align the clinical
indications with the performance of specific intracranial procedures.
We refer the reader to Tables 6P.2b through 6P.2f associated with the
proposed rule (which is available on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS) for data analysis findings of cases assigned to MS-
DRGs 023 through 027 as we continue to look for patterns of complexity
and resource intensity.
In summary, in the proposed rule, we stated we believe that further
analysis of cases reporting a neurostimulator generator inserted into
the skull with the insertion of a neurostimulator lead into the brain
(including cases involving the use of the RNS[supreg] neurostimulator)
and a principal diagnosis of epilepsy is needed in connection with our
analysis of the claims data for MS-DRGs 023 through 027 prior to
proposing any further reassignment of these cases, to ensure clinical
coherence between these cases and the other cases with which they may
potentially be grouped. Therefore, we did not propose to reassign cases
describing a neurostimulator generator inserted into the skull with the
insertion of a neurostimulator lead into the brain (including cases
involving the use of the RNS[supreg] neurostimulator) from MS-DRG 023
to MS-DRG 021. We also did not propose to create a new MS-DRG for cases
involving a craniectomy/craniotomy with device implant at this time.
Comment: Some commenters expressed support for CMS' proposal to
maintain the assignment of cases reporting procedure codes that
describe a neurostimulator generator inserted into the skull with the
insertion of a neurostimulator lead into the brain (including cases
involving the use of the RNS[supreg] neurostimulator) in MS-DRG 023 and
to not propose to create a new MS-DRG for cases involving a
craniectomy/craniotomy with device implant. A commenter stated they
agreed that it was inappropriate to reassign cases that involve
craniectomy or craniotomy with the insertion of neurostimulator into
the skull in combination with the insertion of a neurostimulator lead
into the brain from MS-DRG 023 (Craniotomy with Major Device Implant or
Acute Complex CNS Principal Diagnosis with MCC or Chemotherapy Implant
or Epilepsy with Neurostimulator) to MS-DRG 021 (Intracranial Vascular
Procedures with Principal Diagnosis Hemorrhage with CC). This commenter
also stated that due to the low volume of total cases, they agreed that
creation of a new MS-DRG was not warranted.
Response: We appreciate the commenters' support.
Comment: Another commenter opposed CMS' proposal. The commenter
stated CMS' data analysis demonstrated that the average costs of
RNS[supreg] System cases continue to be substantially higher than the
average costs of all cases in their assigned MS-DRG 023. This commenter
further stated that they believed the data analysis supports extracting
cases reporting procedure codes that describe a neurostimulator
generator inserted into the skull with the insertion of a
neurostimulator lead into the brain (including cases involving the use
of the RNS[supreg] neurostimulator) (e.g., Major Device Implant list
cases) from MS-DRGs 023 and 024 and creating two new MS-DRGs with logic
maintained for cases with a principal diagnosis of epilepsy with
neurostimulator generator inserted into the skull and insertion of a
neurostimulator lead into brain. The commenter stated this refinement
would result in a much better alignment of the average costs of these
cases compared to their current MS-DRG assignment.
Response: We thank the commenter for their feedback. We continue to
be receptive to concerns about payment for cases reporting procedure
codes that describe a neurostimulator generator inserted into the skull
with the insertion of a neurostimulator lead into the brain (including
cases involving the use of the RNS[supreg] neurostimulator). While we
agree these neurostimulator cases can have average costs that are
higher than the average costs of all cases in their respective MS-DRGs,
in our analysis of this issue, it was difficult to detect patterns of
complexity and resource intensity. As discussed in the proposed rule
and earlier in this section, to review for similar utilization of
resources, we analyzed the data to identify those cases currently
reporting a procedure code combination representing neurostimulator
generator and lead code combinations that are captured under the list
referred to as ``Major Device Implant'' in the GROUPER logic for MS-
DRGs 023 and 024 since the ICD-10-PCS code combinations that capture
the use of the RNS[supreg] neurostimulator generator and leads that
would determine an assignment of a case to MS-DRGs 023 are also found
on the ``Major Device Implant'' list. In our analysis in MS-DRG 023, we
found 90 cases reporting a procedure code combination representing
neurostimulator generator and lead code combination captured under the
list referred to as ``Major Device Implant'' with the average length of
stay ranging from 1 day to 249 days and average costs ranging from
$22,717 to $250,272 for these cases. In MS-DRG 024, we found 395 cases
reporting a procedure code combination representing neurostimulator
generator and lead code combination captured under the list referred to
as ``Major Device Implant'' with the average length of stay ranging
from 1 day to 12 days and average costs ranging from $16,359 to $70,949
for these cases. We continue to believe that additional time is needed
to evaluate these cases as part of our ongoing examination of the case
logic for MS-DRGs 023 through 027. As part of our ongoing,
comprehensive analysis of the MS-DRGs under ICD-10, we will continue to
explore mechanisms to ensure clinical coherence between these cases and
the other cases with which they may potentially be grouped.
Therefore, after consideration of the public comments we received,
and for the reasons stated earlier, we are finalizing our proposal to
maintain the current assignment of cases describing a neurostimulator
generator inserted into the skull with the insertion of a
neurostimulator lead into the brain (including cases involving the use
of the RNS[supreg] neurostimulator), without modification, for FY 2024.
As noted in the proposed rule, as we continue this analysis of the
claims data with respect to MS-DRGs 023 through 027, we continue to
seek 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 40.1, which is
available on the
[[Page 58667]]
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,
2023 and directed to the new electronic intake system, Medicare
Electronic Application Request Information SystemTM
(MEARISTM), discussed in section II.C.1.b. of the preamble
of the proposed rule and this final rule at: https://mearis.cms.gov/public/home.
Comment: In response to CMS' request for public comment and
feedback on the potential restructuring of the craniotomy MS-DRGs for
future consideration, a commenter stated they do not believe there is a
need for CMS to re-evaluate the assignment of neurosurgical procedures
within the craniotomy MS-DRGs 023 through 027. This commenter stated
that the procedures in these MS-DRGs have been well established from a
clinical homogeneity perspective, as well as a resource utilization
perspective, and the procedures costs have been stable. Another
commenter stated they appreciate CMS' willingness to review the
craniotomy/craniectomy MS-DRGs to ensure proper alignment of
procedures, indications, technical complexity, and resource
utilization. This commenter further noted there are a wide array of
diagnoses and procedures that fall within this range of MS-DRG and
stated they believe there are a variety of ways these MS-DRGs can be
classified.
A commenter mentioned that CMS referred the reader to Tables 6P.2b
through 6P.2f associated with the proposed rule (which is available on
the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS) for the data analysis findings of
cases assigned to MS-DRGs 023 through 027 and expressed concern that
there was no discussion of these findings or their significance in the
proposed rule. This commenter suggested that CMS comment on the
following:
How is CMS defining technical complexity and what factors
are being considered in the analysis?
Are there other data not included in Tables 6P.2b through
6P.2f that CMS is analyzing?
What is the timing for completion of the full analysis of
MS-DRGs 023-027?
Response: We thank the commenters for their feedback and will take
these recommendations into consideration as we further examine the
logic for case assignment. The data analysis as displayed in Tables
6P.2b through 6P.2f associated with the proposed rule was displayed to
provide the public an opportunity to review our examination of the
procedures by their approach (open versus percutaneous), clinical
indications, and procedures that involve the insertion or implantation
of a device and to reflect on what factors should be considered in the
potential restructuring of these MS-DRGs. We welcome further feedback
on how CMS should define technical complexity, what factors should be
considered in the analysis, and whether there are other data not
included in Tables 6P.2b through 6P.2f that CMS should analyze.
As discussed in the proposed rule, and earlier in this section, as
we continue the analysis of the claims data with respect to MS-DRGs 023
through 027, we are interested in receiving feedback on 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 these MS-DRGs. Feedback and
other suggestions may be submitted by October 20, 2023 and directed to
the new electronic intake system, Medicare Electronic Application
Request Information SystemTM (MEARISTM) at
https://mearis.cms.gov/public/home. We note that we would address any
proposed modifications to the existing logic in future rulemaking.
3. MDC 02 (Diseases and Disorders of the Eye): Retinal Artery Occlusion
In the FY 2023 IPPS/LTCH PPS final rule (87 FR 48830 through
48835), we discussed a request we received 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).
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 discussed, for FY 2023 we did not
propose 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.
In response to this final policy, as discussed in the FY 2024 IPPS/
LTCH PPS proposed rule (88 FR 26681 through 26684), we received a
request to again review the MS-DRG assignment of cases involving CRAO.
According to the requestor, CRAO is a form of acute ischemic stroke
which occurs when a vessel supplying blood to the brain is obstructed
and there is growing recognition of this diagnosis as a vascular
neurological problem. The requestor 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. We stated in the proposed
rule that the requestor stated they performed an internal analysis of
their claims data and found that the average costs of cases reporting a
procedure code describing the administration of a thrombolytic agent
with a principal diagnosis of CRAO were 2.5 times higher than the
average costs of cases with a principal diagnosis of CRAO that did not
report the administration of a thrombolytic agent. The requestor
further stated the increased utilization of resources of these cases
was isolated to be almost entirely due to the cost of the tPA itself
based on this review of their internal cost level data. Consequently,
the requestor stated the continued assignment of these conditions to
MS-DRG 123 does not properly recognize disease complexity and
understates the resource utilization associated with administering
critical (potentially vision-saving) treatments for these cases.
The requestor suggested that the following three MS-DRGs be created
to reflect current standard of care for these patients:
Suggested New MS-DRG XXX--Neurological Eye Disorders with
Thrombolytic Agent with MCC.
Suggested New MS-DRG XXX--Neurological Eye Disorders with
Thrombolytic Agent with CC.
[[Page 58668]]
Suggested New MS-DRG XXX--Neurological Eye Disorders with
Thrombolytic Agent without CC/MCC.
We stated in the proposed rule that in reviewing this issue, it was
unclear why the requestor did not include branch retinal artery
occlusion (BRAO) in their request for FY 2024 rulemaking. As discussed
in the FY 2023 IPPS/LTCH PPS final rule, BRAO is a closely allied
condition. Therefore, we identified the ICD-10-CM codes found in the
following table that describe CRAO and BRAO.
BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TR28AU23.010
We stated in the proposed rule that thrombolytic therapy is
identified with the following ICD-10-PCS procedure codes.
[GRAPHIC] [TIFF OMITTED] TR28AU23.011
In this final rule, we would like to correct the statement in the
proposed rule and add that thrombolytic therapy is also identified with
the following two ICD-10-PCS procedure codes.
[GRAPHIC] [TIFF OMITTED] TR28AU23.012
We stated in the proposed rule that our analysis of this grouping
issue again confirmed that, when a procedure code describing the
administration of a thrombolytic agent is reported with principal
diagnosis code describing CRAO or BRAO, these cases group to medical
MS-DRG 123. We refer the reader to the ICD-10 MS-DRG Definitions Manual
Version 40.1, which is available 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 123.
To begin our analysis, as discussed in the proposed rule, we
examined claims data from the September 2022 update of the FY 2022
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 and (2) 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 58669]]
[GRAPHIC] [TIFF OMITTED] TR28AU23.013
As shown in the table, we identified a total of 2,771 cases within
MS-DRG 123 with an average length of stay of 2.5 days and average costs
of $6,720. Of these 2,771 cases, there are 839 cases that reported a
principal diagnosis code describing CRAO or BRAO without a procedure
code describing the administration of a thrombolytic agent with an
average length of stay of 2.2 days and average costs of $5,842. There
are 38 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 3.3 days and
average costs of $13,302.
We stated in the proposed rule that the data analysis showed that
the 839 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 have lower average costs as
compared to all cases in MS-DRG 123 ($5,842 compared to $6,720), and a
shorter average length of stay (2.2 days compared to 2.5 days). For the
38 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, however, the average length of stay is longer (3.3
days compared to 2.5 days) and the average costs are higher ($13,302
compared to $6,720) than the average length of stay and average costs
compared to all cases in that MS-DRG.
We stated in the proposed rule that we reviewed these data and did
not believe that the small subset of cases reporting a principal
diagnosis code describing CRAO or BRAO with a procedure code describing
the administration of a thrombolytic agent warranted the creation of
new MS-DRGs at this time. As stated 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. 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.
Moreover, in response to the specific request to create new MS-DRGs
subdivided into severity levels for the cases reporting a principal
diagnosis code describing CRAO with a procedure code describing the
administration of a thrombolytic agent, we only identified a total of
38 cases, so the criterion that there are at least 500 or more cases in
each subgroup cannot be met. Therefore, for FY 2024, we did not propose
to create new MS-DRGs subdivided into severity levels for cases
reporting a principal diagnosis code describing CRAO with a procedure
code describing the administration of a thrombolytic agent.
We noted in the proposed rule that we recognized however, that the
average costs of the small number of cases reporting a principal
diagnosis code describing CRAO or BRAO with a procedure code describing
the administration of a thrombolytic agent are greater when compared to
the average costs of all cases in MS-DRG 123. To explore other
mechanisms to address this request, we then reexamined the MS-DRGs
within MDC 02 to consider the possibility of reassigning the cases with
a principal diagnosis of CRAO or BRAO that receive the administration
of a thrombolytic agent to other MS-DRGs within MDC 02. As discussed in
the proposed rule, after further consideration, in reviewing the claims
data from the September 2022 update of the FY 2022 MedPAR file and
examining the clinical considerations, we stated that we believe that
the cases reporting a principal diagnosis code describing CRAO or BRAO
could more suitably group to MS-DRGs 124 and 125 (Other Disorders of
the Eye with MCC, and without MCC, respectively), which contain
diagnoses other than neurological conditions that affect the eye,
noting the vascular involvement inherent to a diagnosis of CRAO or
BRAO. We refer the reader to the ICD-10 MS-DRG Definitions Manual
Version 40.1, which is available 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 124 and 125.
To determine how the resources for this subset of cases compared to
cases in MS-DRGs 124 and 125 as a whole, we stated we examined the
average costs and length of stay for cases in MS-DRGs 124 and 125. Our
findings are shown in this table.
[[Page 58670]]
[GRAPHIC] [TIFF OMITTED] TR28AU23.014
For this subset of cases, the average costs of the 38 cases
reporting a principal diagnosis code describing CRAO or BRAO with a
procedure code describing the administration of a thrombolytic agent
are slightly higher ($13,302 compared to $11,922) and the average
length of stay is shorter (3.3 days compared to 5.4 days) than for all
cases in MS-DRGs 124. The 839 cases reporting a principal diagnosis
code describing CRAO or BRAO without a procedure code describing the
administration of a thrombolytic agent have lower average costs ($5,842
compared to $7,425) and a shorter average length of stay (2.2 compared
to 3.3 days) than for cases in MS-DRG 125.
We stated in the proposed rule that our analysis demonstrated that
while the volume of cases is small, the average costs for the cases
reporting a principal diagnosis code describing CRAO or BRAO with a
procedure code describing the administration of a thrombolytic agent
currently grouping to MS-DRG 123 are more aligned with the average
costs of the cases currently grouping to MS-DRG 124. We stated we
reviewed these data and supported the addition of the ten diagnosis
codes listed previously to the GROUPER logic list for MS-DRGs 124 and
125. While the cases reporting a principal diagnosis code describing
CRAO or BRAO without a procedure code describing the administration of
a thrombolytic agent have lower costs and a shorter average length of
stay than for cases in MS-DRG 125, we stated we believed reassigning
these diagnosis codes to MS-DRGs 124 and 125 would better account for
the subset of patients who are treated with a thrombolytic agent, and
would more appropriately reflect the resources involved in evaluating
and treating these patients. We also stated we supported the assignment
of the cases reporting procedure codes describing the administration of
a thrombolytic agent to the higher (MCC) severity level MS-DRG 124 as
an enhancement to better reflect the clinical severity and resource use
involved in these cases.
Therefore, we proposed to reassign ICD-10-CM diagnosis codes
H34.10, H34.11, H34.12, H34.13, H34.231, H34.232, H34.233, and H34.239
from MDC 02 MS-DRG 123 to MS-DRGs 124 and 125, effective October 1,
2023, for FY 2024. We also proposed to add the procedure codes
describing the administration of a thrombolytic agent listed previously
to MS-DRG 124. In the proposed rule, we noted that the procedure codes
describing the administration of a thrombolytic agent are not
designated as operating room procedures for purposes of MS-DRG
assignment (``non-O.R. procedures''), therefore, as part of the logic
for MS-DRG 124, we also proposed to designate these codes as non-O.R.
procedures affecting the MS-DRG. Lastly, for consistency, we also
proposed to change the titles of MS-DRGs 124 and 125 from ``Other
Disorders of the Eye, with and without MCC, respectively'' to ``Other
Disorders of the Eye with MCC or Thrombolytic Agent, and without MCC,
respectively'' to better reflect the assigned procedures.
Comment: Commenters agreed with our proposal to reassign ICD-10-CM
diagnosis codes H34.10, H34.11, H34.12, H34.13, H34.231, H34.232,
H34.233, and H34.239 from MDC 02 MS-DRG 123 to MS-DRGs 124 and 125. A
commenter stated that this proposal better aligns with the resource
consumption of these cases. Another commenter stated that the proposed
MS-DRG assignment of cases reporting a principal diagnosis code
describing CRAO or BRAO with a procedure code describing the
administration of a thrombolytic agent would more accurately capture
the complexity of the condition and the necessary resources associated
with administering critical treatments.
Response: We thank the commenters for their support.
After consideration of the public comments we received, we are
finalizing our proposal to reassign ICD-10-CM diagnosis codes H34.10,
H34.11, H34.12, H34.13, H34.231, H34.232, H34.233, and H34.239 from MDC
02 MS-DRG 123 to MS-DRGs 124 and 125, without modification, effective
October 1, 2023, for FY 2024. In addition, we are finalizing our
proposal to add the procedure codes describing the administration of a
thrombolytic agent listed previously to MS-DRG 124. As part of the
logic for MS-DRG 124, we are also finalizing our proposal to designate
the 10 ICD-10-PCS procedure codes describing the administration of a
thrombolytic agent listed previously as non-O.R. procedures affecting
the MS-DRG. Lastly, we are finalizing our proposal to change the titles
of MS-DRGs 124 and 125 from ``Other Disorders of the Eye, with and
without MCC, respectively'' to ``Other Disorders of the Eye with MCC or
Thrombolytic Agent, and without MCC, respectively'' to better reflect
the assigned procedures for FY 2024.
4. MDC 04 (Diseases and Disorders of the Respiratory System)
a. Ultrasound Accelerated Thrombolysis for Pulmonary Embolism
As discussed in the FY 2024 IPPS/LTCH PPS proposed rule (88 FR
26684 through 26691), we received a request to reassign cases reporting
ultrasound accelerated thrombolysis (USAT) with the administration of
thrombolytic(s) for the treatment of pulmonary embolism (PE) from MS-
DRGs 166, 167, and 168 (Other Respiratory System O.R. Procedures with
MCC, with CC, and without CC/MCC, respectively) to MS-DRGs 163, 164,
and 165 (Major Chest Procedures with MCC, with CC, and without CC/MCC,
respectively).
A pulmonary embolism is an obstruction of pulmonary vasculature
most commonly caused by a venous thrombus, and less commonly by fat or
tumor tissue or air bubbles or both. Risk factors for a pulmonary
embolism include prolonged immobilization from any cause, obesity,
cancer, fractured hip or leg, use of certain medications such as oral
contraceptives, presence of certain medical conditions such as heart
failure, sickle cell anemia, or certain congenital heart defects.
Common symptoms of pulmonary embolism include shortness of breath with
or without chest pain, tachycardia, hemoptysis, low grade fever,
pleural effusion, and depending on the etiology of the embolus, might
include lower extremity pain or swelling, syncope, jugular venous
distention. Alternatively, a pulmonary embolus could be asymptomatic.
Thrombolysis is a type of treatment where the infusion of
thrombolytics (fibrinolytic or ``clot-busting'' drugs) is used to
dissolve blood clots that form in the arteries or veins with the goal
of
[[Page 58671]]
improving blood flow and preventing long-term damage to tissues and
organs. When a clot forms in the arteries of the lungs it is known as a
pulmonary embolism. In addition, clots in the veins of the legs causing
deep venous thrombosis (DVT) may also result in pulmonary embolism if a
piece of the clot breaks off and travels to an artery in the lungs.
Conventional catheter-directed thrombolysis (CDT) procedures generally
rely on a multi-sidehole catheter placed adjacent to the thrombus
through which thrombolytics are delivered directly to the thrombus,
however, the EKOSTM EkoSonic[supreg] Endovascular System
(EKOSTM System) employs ultrasound to assist in
thrombolysis. The ultrasound does not itself dissolve the thrombus, but
pulses of ultrasonic energy temporarily make the fibrin in the thrombus
more porous and increase fluid flow within the thrombus. High
frequency, low-intensity ultrasonic waves create a pressure gradient
that drives the thrombolytic into the thrombus and keeps it in close
proximity to the binding sites. USAT is also referred to as ultrasound-
assisted thrombolysis or ultrasound-enhanced thrombolysis.
As discussed in the proposed rule, according to the requestor (the
manufacturer of the EKOSTM device), USAT with the
administration of thrombolytic(s) for the treatment of PE performed
using the EKOSTM device utilizes more resources in
comparison to other procedures that are currently assigned to MS-DRGs
166, 167, and 168 and is not clinically coherent with the other
procedures assigned to those MS-DRGs. The requestor stated that the
cases reporting USAT with the administration of thrombolytic(s) for PE
are more comparable with and more clinically aligned with the
procedures assigned to MS-DRGs 163, 164, and 165. The requestor stated
they performed an analysis of cases reporting USAT for PE with the
following ICD-10-PCS procedure codes.
[GRAPHIC] [TIFF OMITTED] TR28AU23.015
We noted in the proposed rule that the requestor did not include a
list of diagnosis codes describing PE or a list of procedure codes
describing the administration of thrombolytic(s) in connection with its
analysis.
In the FY 2021 IPPS/LTCH PPS final rule (85 FR 58561 through 85 FR
58579), we summarized and responded to public comments expressing
concern with the proposed MS-DRG assignments for the newly created
procedure codes describing USAT of several anatomic sites that were
effective with discharges on and after October 1, 2020 (FY 2021). We
noted in the proposed rule that similar to the current request for FY
2024, for FY 2021, the commenters recommended that USAT procedures
performed with the EKOSTM device for the treatment of
pulmonary embolism be assigned to MS-DRGs 163, 164, and 165 instead of
MS-DRGs 166, 167, and 168. We refer the reader to the FY 2021 IPPS/LTCH
PPS final rule (85 FR 58561 through 85 FR 58579), available on the CMS
website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS for the detailed discussion.
As discussed in the proposed rule, we analyzed claims data from the
September 2022 update of the FY 2022 MedPAR file for MS-DRGs 166, 167,
and 168 for all cases reporting a principal diagnosis of PE and USAT
procedure with and without the administration of thrombolytic(s). We
identified claims reporting an USAT procedure, the administration of
thrombolytic(s), and a diagnosis of PE with the listed codes shown in
the following tables.
[[Page 58672]]
[GRAPHIC] [TIFF OMITTED] TR28AU23.016
[GRAPHIC] [TIFF OMITTED] TR28AU23.017
[GRAPHIC] [TIFF OMITTED] TR28AU23.018
We noted that the listed procedure codes describing USAT identified
for our claims analysis differ from the procedure codes identified by
the requestor for its analysis. Clinically, we did not agree that
thrombolysis of non-pulmonary anatomic sites (for example, subclavian
artery, axillary artery, etc.) would be performed for the treatment of
a PE. We also noted that the procedure codes describing thrombolysis of
non-pulmonary anatomic sites provided by the requestor are assigned to
MDC 05 (Diseases and Disorders of the Circulatory System) and not to
MDC 04 (Diseases and Disorders of the Respiratory System) where MS-DRGs
163, 164, 165, 166, 167, and 168 are assigned. The findings from our
analysis are shown in the following table.
[GRAPHIC] [TIFF OMITTED] TR28AU23.019
As shown in the table, we identified a total of 8,318 cases in MS-
DRG 166 with an average length of stay of 11 days and average costs of
$31,910. Of the 8,318 cases, we found 826 cases reporting a principal
diagnosis of PE and USAT with thrombolytic(s) with an average length of
stay of 5.4 days and average costs of $28,912 and 161 cases reporting a
principal diagnosis of PE and USAT without thrombolytic(s) with an
average length of stay of 5.4 days and
[[Page 58673]]
average costs of $27,897. The data demonstrate that the cases reporting
a principal diagnosis of PE and USAT with or without thrombolytic(s)
have a shorter average length of stay compared to the average length of
stay of all the cases in MS-DRG 166 (5.4 days and 5.4 days,
respectively versus 11 days). Similarly, the average costs for the
cases reporting a principal diagnosis of PE and USAT with or without
thrombolytic(s) are lower than the average costs of all the cases in
MS-DRG 166 ($28,912 and $27,897, respectively versus $31,910). The data
indicate that the cases reporting a principal diagnosis of PE and USAT
with or without thrombolytic(s) appear to be grouped and paid
appropriately, despite the fact the logic for case assignment to MS-DRG
166 requires the reporting of at least one or more secondary MCC
diagnoses, and it would not be unreasonable to expect these cases to be
more expensive in comparison to all the cases in MS-DRG 166. As the
average costs for these cases are lower than the average costs of all
the cases in MS-DRG 166, the data appear to reflect that the reporting
of at least one or more secondary MCC diagnoses and use of the
EKOSTM device technology did not impact consumption of
resources for these cases in MS-DRG 166.
For MS-DRG 167, we identified a total of 4,306 cases with an
average length of stay of 4.7 days and average costs of $16,290. Of the
4,306 cases, we found 316 cases reporting a principal diagnosis of PE
and USAT with thrombolytic(s) with an average length of stay of 3.9
days and average costs of $23,240 and 52 cases reporting a principal
diagnosis of PE and USAT without thrombolytic(s) with an average length
of stay of 3.7 days and average costs of $23,608. The data demonstrate
that the cases reporting a principal diagnosis of PE and USAT with or
without thrombolytic(s) have a shorter average length of stay compared
to the average length of stay of all the cases in MS-DRG 167 (3.9 days
and 3.7 days, respectively versus 4.7 days). Conversely, the average
costs for the cases reporting a principal diagnosis of PE and USAT with
or without thrombolytic(s) are higher than the average costs of all the
cases in MS-DRG 167 ($23,240 and $23,608, respectively versus $16,290)
with a corresponding difference in average costs of $6,950 and $7,318,
respectively. The data indicate the cases reporting a principal
diagnosis of PE and USAT with or without thrombolytic(s) appear to
consume more resources in comparison to the other cases in MS-DRG 167,
although it is unclear if the higher resource consumption is a direct
result of the EKOSTM device technology utilized in the
performance of the thrombolysis procedure, or the fact that these cases
also include the reporting of at least one or more secondary CC
diagnoses, or a combination of both factors.
For MS-DRG 168, we identified a total of 1,441 cases with an
average length of stay of 2.3 days and average costs of $12,379. Of the
1,441 cases, we found 65 cases reporting a principal diagnosis of PE
and USAT with thrombolytic(s) with an average length of stay of 2.8
days and average costs of $20,156 and 15 cases reporting a principal
diagnosis of PE and USAT without thrombolytic(s) with an average length
of stay of 2.7 days and average costs of $20,112. The data demonstrate
that the cases reporting a principal diagnosis of PE and USAT with or
without thrombolytic(s) have a longer average length of stay compared
to the average length of stay of all the cases in MS-DRG 168 (2.8 days
and 2.7 days, respectively versus 2.3 days). Additionally, the average
costs for the cases reporting a principal diagnosis of PE and USAT with
or without thrombolytic(s) are higher than the average costs of all the
cases in MS-DRG 168 ($20,156 and $20,112, respectively versus $12,379)
with a corresponding difference in average costs of $7,777 and $7,733,
respectively. Similar to our findings for MS-DRG 167, the data for MS-
DRG 168 indicate the cases reporting a principal diagnosis of PE and
USAT with or without thrombolytic(s) appear to consume more resources
in comparison to the other cases in MS-DRG 168. However, it is unclear
if the higher resource consumption is a direct result of the
EKOSTM device technology utilized in the performance of the
thrombolysis procedure alone, or if there are other contributing
factors, since cases grouping to MS-DRG 168 do not include the
reporting of at least one or more secondary CC or MCC diagnoses.
We stated in the proposed rule that based on our review of the data
for MS-DRGs 166, 167, and 168 and our initial analysis for cases
reporting a principal diagnosis of PE and USAT procedure with and
without the administration of thrombolytic(s), the findings also
suggest that the administration of thrombolytic(s) is not a significant
factor in the consumption of resources for these cases in MS-DRGs 166,
167, and 168 where USAT is performed in the treatment of a PE. For
example, in MS-DRG 166, there are 826 cases reporting a principal
diagnosis of PE and USAT procedure with the administration of
thrombolytic(s) and 161 cases reporting a principal diagnosis of PE and
USAT procedure without the administration of thrombolytic(s), however,
both subsets of cases have an equivalent average length of stay of 5.4
days and a difference in average costs of $1,015 ($28,912-$27,897 =
$1,015). For MS-DRG 167, there are 316 cases reporting a principal
diagnosis of PE and USAT procedure with the administration of
thrombolytic(s) and 52 cases reporting a principal diagnosis of PE and
USAT procedure without the administration of thrombolytic(s), however,
both subsets of cases have a similar average length of stay (3.9 days
and 3.7 days, respectively) with a difference in average costs of $368
($23,608-$23,240 = $368). For MS-DRG 168, there are 65 cases reporting
a principal diagnosis of PE and USAT procedure with the administration
of thrombolytic(s) and 15 cases reporting a principal diagnosis of PE
and USAT procedure without the administration of thrombolytic(s),
however, both subsets of cases have a similar average length of stay
(2.8 days and 2.7 days, respectively) with a difference in average
costs of $44 ($20,156-$20,112 = $44). Because the administration of
thrombolytic(s) would be expected to increase resource consumption, the
small difference in average costs between these two sets of cases could
also suggest that the administration of thrombolytic(s) was not
consistently reported.
We noted in the proposed rule that while the request we received
was to reassign cases reporting ultrasound accelerated thrombolysis
(USAT) with the administration of thrombolytic(s) for the treatment of
pulmonary embolism (PE) from MS-DRGs 166, 167, and 168 to MS-DRGs 163,
164, and 165, based on our findings that suggest the administration of
thrombolytic(s) is not a significant factor in the consumption of
resources for those cases or that a code describing the administration
of thrombolytic(s) may not have been consistently reported on a subset
of claims that also reported a code identifying USAT was performed, we
then analyzed claims data from the September 2022 update of the FY 2022
MedPAR file for all cases in MS-DRGs 163, 164, and 165 and compared it
to the cases reporting a principal diagnosis of PE and USAT procedure
with or without thrombolytic(s) in MS-DRGs 166, 167, and 168. The
findings from our analysis are shown in the following tables.
[[Page 58674]]
[GRAPHIC] [TIFF OMITTED] TR28AU23.020
[GRAPHIC] [TIFF OMITTED] TR28AU23.021
The average costs of the 987 cases reporting a principal diagnosis
of PE and USAT with or without thrombolytic(s) in MS-DRG 166 are
$10,380 less than the average costs of all cases in MS-DRG 163
($39,126-$28,746=$10,380) and have an average length of stay that is
approximately half the average length of stay of all cases in MS-DRG
163 (5.4 days versus 10.3 days). As stated previously, our analysis of
these cases demonstrate they appear to be grouped and paid
appropriately in MS-DRG 166. The 368 cases reporting a principal
diagnosis of PE and USAT with or without thrombolytic(s) in MS-DRG 167
have a shorter average length of stay (3.9 days versus 4.7 days) in
comparison to all the cases in MS-DRG 164, however, the average costs
of the 368 cases reporting a principal diagnosis of PE and USAT with or
without thrombolytic(s) in MS-DRG 167 are more comparable to the
average costs of all the cases in MS-DRG 164 ($23,292 versus $22,040).
Finally, the 80 cases reporting a principal diagnosis of PE and USAT
with or without thrombolytic(s) in MS-DRG 168 have an average length of
stay that is more comparable to all the cases in the MS-DRG 165 (2.8
days versus 2.7 days), however, the average costs for the 80 cases
continue to be higher in comparison to all the cases in MS-DRG 165
($20,148 versus $16,404).
We stated in the proposed rule that upon analysis of the claims
data and our review of the request, we do not agree with reassigning
cases reporting an USAT procedure with the administration of
thrombolytic(s) and a principal diagnosis of PE from MS-DRGs 166, 167,
and 168 to MS-DRGs 163, 164, and 165. As previously noted, the data do
not support that cases reporting USAT (with or without thrombolytic(s))
for PE utilize similar resources when compared to other procedures
currently assigned to MS-DRGs 163 and 165. Costs were only comparable
with procedures currently assigned to MS-DRG 164. Further, we stated we
do not agree that cases reporting USAT (with or without
thrombolytic(s)) are more comparable with and more clinically aligned
with the procedures assigned to MS-DRGs 163, 164, and 165. The vast
majority of procedures in these MS-DRGs describe procedures performed
on the trachea, bronchus or lungs with either an open approach or a
percutaneous endoscopic approach in contrast to the USAT endovascular
(percutaneous) procedure performed on the pulmonary trunk, arteries or
veins. In addition, the majority of procedures in MS-DRGs 163, 164, and
165 are performed on patients who are not clinically similar to
patients who undergo USAT for PE since they describe procedures such as
destruction (ablation) or excision performed for patients with
conditions other than a PE, such as malignant neoplasm, pneumonia, or
pulmonary fibrosis. Lastly, a number of procedures in these MS-DRGs
also involve the use of a permanently implanted device while the
procedures utilizing USAT do not. Therefore, we stated in the proposed
rule that we do not consider USAT procedures to be major chest
procedures, nor do we believe the cases reporting USAT with (or without
thrombolytic(s)) for PE utilize similar resources when compared to
other procedures currently assigned to MS-DRGs 163, 164, and 165.
As stated in the proposed rule, the findings from our analysis
suggest that the administration of thrombolytic(s) is not a significant
factor in the consumption of resources for cases in MS-DRGs 166, 167,
and 168 reporting an USAT procedure performed for the treatment of a PE
or that a code describing the administration of thrombolytic(s) may not
have been consistently reported on a subset of claims that also
reported a code identifying USAT was performed, or a combination of
both factors. Based on these findings related to the administration of
thrombolytic(s), we stated we believed it would also be beneficial to
examine cases reporting standard CDT procedures with or without
thrombolytic(s) for the treatment of PE in MS-DRGs 166, 167, and 168,
and compare the findings to the cases reporting USAT with or without
thrombolytic(s) for the treatment of PE.
Therefore, as discussed in the proposed rule, we conducted
additional analyses to determine if there were significant differences
in resource utilization for cases reporting standard CDT with or
without thrombolytic(s) versus USAT procedures with or without
thrombolytic(s) in the treatment of PE, since claims data to compare
the two modalities is now available and studies have reported similar
clinical outcomes in reducing PE regardless of which thrombolysis
modality is utilized.3 4
---------------------------------------------------------------------------
\3\ Rothschild DP, Goldstein JA, Ciacci J, Bowers TR.
Ultrasound-accelerated thrombolysis (USAT) versus standard catheter-
directed thrombolysis (CDT) for treatment of pulmonary embolism: A
retrospective analysis. Vasc Med. 2019 Jun;24(3):234-240.
\4\ Sista A, et al. Is it Time to Sunset Ultrasound-Assisted
Catheter-Directed Thrombolysis for Submassive PE?*. J Am Coll
Cardiol Intv. 2021 Jun, 14 (12) 1374-1375.
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[[Page 58675]]
In the proposed rule, we stated that we analyzed claims data from
the September 2022 update of the FY 2022 MedPAR file for all cases in
MS-DRGs 166, 167, and 168 and cases reporting a standard CDT procedure
with or without the administration of thrombolytic(s) and a principal
diagnosis of PE. We utilized the previously listed procedure codes for
the administration of thrombolytic(s) and the previously listed
diagnosis codes for a principal diagnosis of PE. We identified cases
describing standard CDT procedures performed in the treatment of PE
with the following procedure codes.
[GRAPHIC] [TIFF OMITTED] TR28AU23.022
The findings from our analysis are shown in the following table. We
noted that there were no cases found to report a principal diagnosis of
PE and standard CDT with or without thrombolytic(s) in MS-DRGs 168.
[GRAPHIC] [TIFF OMITTED] TR28AU23.023
The data shows that the 7 cases reporting a principal diagnosis of
PE and standard CDT with or without thrombolytic(s) in MS-DRG 166 have
a shorter average length of stay compared to all cases in MS-DRG 166
(3.3 days versus 11 days) and lower average costs ($18,472 versus
$31,910). For MS-DRG 167, the data shows that the 6 cases reporting a
principal diagnosis of PE and CDT with or without thrombolytic(s) have
a shorter average length of stay compared to all cases in MS-DRG 167
(3.5 days versus 4.7 days), however the average costs are higher
($30,928 versus $16,290).
As discussed in the proposed rule, based on our review and the
claims data analysis for cases in MS-DRGs 163, 164, and 165, and for
MS-DRGs 166, 167, and 168 and cases reporting standard CDT or USAT with
or without thrombolytic(s) and a principal diagnosis of PE, we believe
that while this subset of cases for patients undergoing a thrombolysis
(CDT or USAT) procedure for PE does not clinically align with patients
undergoing surgery for malignancy or treatment for infection and does
not involve the same level of complexity, monitoring or support as
cases grouping to MS-DRGs 163, 164, and 165, the differences in
resource consumption warrant proposed reassignment of these cases.
Specifically, we believe the clinical and data analyses support
creating a new base MS-DRG to distinguish cases reporting a principal
diagnosis of PE and USAT or standard CDT procedure with or without
thrombolytic(s) from other cases currently grouping to MS-DRGs 166,
167, and 168. We believe a new MS-DRG would reflect more appropriate
payment for USAT and standard CDT procedures in the treatment of PE.
We stated in the proposed rule that to compare and analyze the
impact of our suggested modifications, we ran a simulation using the
most recent claims data from the December 2022 update of the FY 2022
MedPAR file. The following table illustrates our findings for all 1,534
cases reporting procedure codes describing an USAT or CDT procedure
with a principal diagnosis of PE.
[GRAPHIC] [TIFF OMITTED] TR28AU23.024
Consistent with our established process as discussed in section
II.C.1.b. of the preamble of the proposed rule and this final rule,
once the decision has been made to propose to make further
modifications to the MS-DRGs, such as creating a new base MS-DRG, all
five criteria to create subgroups must be met for the base MS-DRG to be
split (or subdivided) by a CC subgroup. Therefore, we applied the
criteria to create subgroups in a base MS-DRG. We noted that, as shown
in the table that follows, a three-way split of this base MS-DRG failed
to meet the criterion that there be at least 500 cases in both the CC
and the NonCC (without CC/MCC) subgroup and it also failed to
[[Page 58676]]
meet the criterion that there be a 20% difference in average costs
between the CC and NonCC subgroup.
[GRAPHIC] [TIFF OMITTED] TR28AU23.025
As also discussed in section II.C.1.b. of the preamble of the
proposed rule and this final rule, if the criteria for a three-way
split fail, the next step is to determine if the criteria are satisfied
for a two-way split. We therefore applied the criteria for a two-way
split for the ``with MCC and without MCC'' subgroups. We noted that, as
shown in the table that follows, a two-way split of this base MS-DRG
failed to meet the criterion that there be at least 500 cases in the
without MCC (CC+NonCC) subgroup. The following table illustrates our
findings.
[GRAPHIC] [TIFF OMITTED] TR28AU23.026
We then applied the criteria for a two-way split for the ``with CC/
MCC and without CC/MCC'' subgroups. As with the analysis of the three-
way severity split as described previously, and as shown in the table
that follows, a two-way split of this base MS-DRG failed to meet the
criterion that there be at least 500 cases in the without CC/MCC
(NonCC) subgroup.
[GRAPHIC] [TIFF OMITTED] TR28AU23.027
We noted that because the criteria for both of the two-way splits
failed, a split (or CC subgroup) is not warranted for the proposed new
base MS-DRG. As a result, for FY 2024, we proposed to create new base
MS-DRG 173 (Ultrasound Accelerated and Other Thrombolysis with
Principal Diagnosis Pulmonary Embolism). The following table reflects a
simulation of the proposed new base MS-DRG.
[GRAPHIC] [TIFF OMITTED] TR28AU23.028
BILLING CODE 4120-01-C
We stated we believed the resulting proposed MS-DRG better
recognizes the consumption of resources and maintains clinical
coherence for both USAT and CDT procedures performed for the treatment
of PE.
We proposed to define the logic for the proposed new MS-DRG using
the previously listed diagnosis codes for PE and the previously listed
procedure codes for USAT and CDT, as identified and discussed in our
analysis of the claims data in the proposed rule and in this final
rule.
Comment: Commenters supported the proposal to create new MS-DRG 173
(Ultrasound Accelerated and Other Thrombolysis with Principal Diagnosis
Pulmonary Embolism) given the data and information provided. A
commenter expressed appreciation that CMS has acted to correct payment
disparities for these procedures and recommended that CMS also utilize
this approach to address other, similar MS-DRG reassignment requests
that may involve a component with a lower volume of cases. Another
commenter stated the proposal aligns more closely with the resources
used, as opposed to the current MS-DRGs 166, 167, and 168. The
commenter requested that CMS continue to analyze the data for these
cases and consider creating an additional MS-DRG to reflect major
complications and comorbidities, if warranted by further analysis.
Other commenters who supported the proposal to reassign the cases from
their current MS-DRG assignment expressed concern about the proposed
single base MS-DRG. Specifically, the commenters stated the proposal
does not acknowledge the secondary diagnosis
[[Page 58677]]
impact that the CMS analysis recognized may or may not be a
contributing factor for the higher average costs of the cases reporting
USAT procedures. The commenters also stated that the proposal
demonstrates that application of the NonCC Subgroup may not be
appropriate for some MS-DRGs since the result in this instance is for a
base MS-DRG with a lower relative weight because severity of illness is
unable to be recognized.
Response: We thank the commenters for their support. In response to
the concerns raised by the commenters regarding the impact application
of the NonCC subgroup criteria has on proposed new MS-DRG 173, we note
that, as discussed in the proposed rule and in this final rule, we
apply the NonCC subgroup criteria once the decision is made to propose
to make further modifications to the MS-DRGs. While application of the
criteria did not support a severity level split for proposed MS-DRG 173
for FY 2024, we intend to reevaluate for future rulemaking whether the
criteria for a potential ``with MCC'' and ``without MCC'' two-way split
would be met.
Comment: A couple commenters suggested that the proposal to create
new MS-DRG 173 should be delayed until more data can be collected. The
commenters stated their belief that it is premature to create this new
MS-DRG at this time and that in developing this proposed MS-DRG, CMS
relied on recently implemented ICD-10-PCS data. According to the
commenters, due to the lengthy processes for hospitals to adopt and
accurately implement new coding, and conflicting coding advice for
utilization of the ICD-10-PCS procedure codes for CDT and USAT, the
number of cases is currently insufficient to support development of a
new MS-DRG. The commenters stated that the low volume of cases and
related data selected by CMS for analysis, CDT for the treatment of PE,
cannot adequately compare to the costs, complexity, and utilization of
USAT with a high confidence interval.
Response: We appreciate the commenters' feedback. We disagree with
the commenters that it is premature to propose the creation of new MS-
DRG 173 based on our review and claims data analysis as discussed in
the proposed rule. In response to the commenters' statement that CMS
relied on recently implemented ICD-10-PCS data, it is not clear to us
what specific ICD-10-PCS data the commenters are referring to since a
specific list was not provided, however, we believe the commenters may
be suggesting the codes for USAT that were finalized October 1, 2020
(FY 2021), and listed previously in connection with the analysis
discussed in the proposed rule. As discussed in the proposed rule and
prior rulemaking, our goal is always to use the best available data. We
noted in the proposed rule that our initial MS-DRG analysis was based
on ICD-10 claims data from the September 2022 update of the FY 2022
MedPAR file, which contains hospital bills received from October 1,
2021, through September 30, 2022, and where otherwise indicated,
additional analysis was based on ICD-10 claims data from the December
2022 update of the FY 2022 MedPAR file, which contains hospital bills
received by CMS through December 31, 2022, for discharges occurring
from October 1, 2021, through September 30, 2022. Therefore, we believe
our analysis of claims data in consideration of the MS-DRG request to
reassign cases reporting USAT procedures for PE is consistent with our
standard process, regardless of the effective date of the coded claims
data. We also do not agree with the commenters' assertion that it is a
lengthy process for hospitals to adopt and accurately implement new
coding. We note that procedure code proposals discussed at the
September ICD-10 Coordination and Maintenance Committee meeting and
subsequently finalized are typically included in Table 6B.--New
Procedure Codes in association with the proposed rule that is made
publicly available on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS. This table (Table
6B) lists the new procedure codes that have been approved to date that
will be effective with discharges on and after October 1 of the
upcoming fiscal year. Therefore, information regarding the finalized
codes from the September meeting is made publicly available
approximately 4-5 months in advance of the implementation date,
affording the ability for users of the code set to gain familiarity
with the updates. In addition, there are extensive industry-sponsored
educational opportunities through various professional associations
that introduce and discuss the annual code updates. For example, the
American Hospital Association (AHA), American Health Information
Management Association (AHIMA), and the American Academy of
Professional Coders (AAPC) generally take lead roles in developing
detailed technical training materials for coders and other users of the
ICD-10 code set. The AHA also includes updates to ICD-10 in its Coding
Clinic[supreg] for ICD-10-CM/ICD-10-PCS publication. Because the codes
describing USAT were finalized for implementation October 1, 2020 (FY
2021), we believe sufficient time has elapsed and that providers are
successfully coding and reporting the procedure as demonstrated in our
claims analysis.
It is also not clear what conflicting coding advice for utilization
of the ICD-10-PCS procedure codes for CDT and USAT the commenters are
referring to since the commenters did not provide examples or
supplemental information for what they believed to be conflicting
advice to enable further evaluation.
Comment: A few commenters expressed concern that the inclusion of
both conventional CDT, also known as ``standard infusion catheters,''
and USAT in the proposed new MS-DRG disregards fundamental clinical
differences between the procedures. According to the commenters, CDT
generally relies on a multi-sidehole infusion catheter placed adjacent
to the thrombus through which thrombolytics are delivered, typically
over the course of 24 hours with the catheter in-dwelling, whereas USAT
employs ultrasound to assist in thrombolysis, and the pulses of
ultrasonic energy temporarily make the fibrin in the thrombus more
porous and increase fluid flow within the thrombus. The commenters
stated standard CDT is the simple infusion of liquids into the vessel
and should not map to the same root operation fragmentation codes as
does USAT. The commenters also stated CDT procedures are generally less
complex clinically and consume significantly lower level of hospital
resources as a result. The commenters recommended CMS should delay
implementation, not finalize the proposed MS-DRG at this time and
reconsider at a later date when utilization volumes reach a threshold
of significance.
A commenter also indicated that an analysis of cost data was being
submitted to CMS to demonstrate that USAT PE cases have total costs
that are more than three times the cost of CDT procedures for the
sickest patients.
Response: We disagree with the commenters that inclusion of both
conventional CDT and USAT in the proposed new MS-DRG disregards
fundamental clinical differences between the procedures. We note that
while USAT procedures performed utilizing the EKOSTM device
employ ultrasound, the objective of both CDT and USAT procedures is to
effectuate thrombolysis and reduce clot burden. In response to the
commenters' statement that standard CDT is the simple infusion
[[Page 58678]]
of liquids into the vessel and should not map to the same root
operation fragmentation codes as does USAT, we note that under ICD-10-
PCS, both USAT and CDT are reported with the root operation
fragmentation, defined as breaking solid matter in a body part into
pieces. The procedure may be accomplished by physical force (e.g.,
manual, ultrasonic) applied directly or indirectly that is used to
break the solid matter into pieces. The solid matter may be an abnormal
byproduct of a biological function or a foreign body. The pieces of
solid matter are not taken out. With respect to the commenters'
statement that CDT procedures are generally less complex clinically and
consume significantly lower level of hospital resources, we note that
any procedure that places a catheter inside a blood vessel carries
certain risks, including damage to the blood vessel, bruising or
bleeding at the puncture site, and infection. In the treatment of a
significant pulmonary embolism, both procedures (USAT and CDT) require
a right heart catheterization by either an interventional cardiologist
or an interventional radiologist, utilizing the same level of facility
resources. In response to the commenters' recommendation that CMS
should delay finalization for the proposed MS-DRG and reconsider in the
future when utilization volumes reach a threshold of significance, as
discussed in the proposed rule, once the decision was made to propose a
new base MS-DRG, we applied the criteria to create subgroups and the
criteria for both a three-way split and for a two-way split failed,
however, we believe the simulated volume of 1,534 cases is sufficient
for creation of the proposed new MS-DRG for these procedures.
Finally, in response to the cost data that was submitted by a
commenter, we note that it was the same data analysis as reflected and
discussed in the proposed rule, and therefore we refer readers to that
prior discussion.
Comment: A commenter stated they agreed that fragmentation
procedures with or without USAT do not belong in the requested MS-DRGs
163, 164, and 165, and suggested they remain in their current MS-DRGs
166, 167, and 168 based on clinical coherence and resource utilization.
Response: We appreciate the commenter's feedback and agree that
fragmentation procedures with or without USAT do not belong in the
requested MS-DRGs 163, 164, and 165. However, for reasons discussed in
the proposed rule, we believe our review of these procedures and data
analysis findings support the proposal to create new MS-DRG 173 for
grouping cases reporting the performance of USAT or CDT with a
principal diagnosis of pulmonary embolism.
Comment: A couple commenters disagreed with the proposal to create
new MS-DRG 173. A commenter stated USAT procedures have been receiving
appropriate payment since FY 2021 and the proposed new MS-DRG would
create unnecessary administrative burden for established procedure
codes that already have appropriate payment. Another commenter stated
that fragmentation procedures, with or without ultrasonic assistance to
break up blood clots, should stay assigned to the current MS-DRGs 166,
167, and 168 respectively. The commenter stated that the costs and
resources for these procedures are consistent with current payment
levels when compared to the rest of the procedures assigned to the
current MS-DRGs, that the change is not needed or necessary, and that
over time may result in overall reduced payment, given that such a low
number of procedures would be assigned to their own MS-DRGs.
Response: We appreciate the commenters' feedback, however, based on
our review of the procedures and claims data analysis as discussed in
the proposed rule, we believe that USAT and CDT procedures performed
for PE are clinically distinct and utilize a different pattern of
resources than the other procedures in MS-DRGs 166, 167, and 168. We
stated in the proposed rule that while we did not agree with the
request to reassign cases reporting USAT or CDT for PE from MS-DRGs
166, 167, and 168 to MS-DRGs 163, 164, and 165, we believed the
findings from our analysis warranted proposed reassignment of these
cases. While we described the findings from our review of the
procedures currently assigned to MS-DRGs 163, 164, and 165 to
specifically address the MS-DRG request (88 FR 26689), we note that in
our review of cases assigned to MS-DRGs 166, 167, and 168, we
identified similar findings; the majority of procedures reported are
for malignant neoplasms of the trachea, bronchus, and lung, as well as
for pneumonia and respiratory failure with either an open or
percutaneous endoscopic approach in contrast to the USAT endovascular
(percutaneous) procedure performed on the pulmonary trunk, arteries or
veins. In addition, the majority of procedures in MS-DRGs 166, 167, and
168 are performed on patients who are not clinically similar to
patients who undergo USAT or CDT for PE since they describe procedures
such as destruction (ablation) or excision performed for patients with
conditions other than a PE, such as malignant neoplasm, pneumonia, or
pulmonary fibrosis. Lastly, a number of procedures in these MS-DRGs
also involve the use of a permanently implanted device while the
procedures utilizing USAT or CDT do not.
As we have also stated in prior rulemaking (86 FR 44808), the
``other'' surgical category contains surgical procedures which, while
infrequent, could still reasonably be expected to be performed for a
patient in the particular MDC. We note that because MS-DRGs 166, 167,
and 168 are classified as an ``other'' surgical category, they are not
as precisely defined from a clinical perspective and contain surgical
procedures that are not based on any particular organizing principle
(e.g. anatomy, surgical approach, diagnostic approach, pathology,
etiology, or treatment process). However, we also note that the
classification of patient cases into the MS-DRGs is a constantly
evolving process, therefore, as coding, medical technologies or
treatments change and more comprehensive data is collected, the MS-DRG
definitions are reviewed, and revisions are proposed. As discussed in
the FY 2022 IPPS/LTCH PPS final rule (86 FR 44820), we stated we
believed further analysis of the procedures assigned to MS-DRGs 163,
164, 165, 166, 167, and 168 was warranted based on the creation of new
procedure codes that have been assigned to these MS-DRGs in recent
years for which claims data were not yet available and the need for
additional time to examine the procedures currently assigned to those
MS-DRGs by clinical intensity, complexity of service and resource
utilization. We stated we would continue to evaluate the procedures
assigned to these MS-DRGs as additional claims data became available.
We also do not agree that the proposed new MS-DRG would create an
unnecessary administrative burden for the established procedure codes
since providers are accustomed to proposed and finalized changes to the
MS-DRG classifications each fiscal year and software vendors
incorporate the finalized changes into their products. With respect to
the commenter's assertion that a low volume of procedures would be
assigned to their own MS-DRG based on the proposal, as previously
discussed, once the decision was made to propose a new base MS-DRG, we
applied the criteria to create subgroups and the criteria for both a
three-way split and for a two-way split failed, however, we believe the
simulated volume of 1,534 cases is
[[Page 58679]]
sufficient for creation of the proposed new MS-DRG.
Comment: A commenter stated they could not fully understand or
evaluate CMS' proposal for proposed new MS-DRG 173 or determine how the
data presented in the preamble of the proposed rule related to the
proposed reassignment of cases because of inconsistencies in the
materials supporting the proposed rule. According to the commenter, CMS
referred to one set of ICD-10-PCS codes in the proposed rule and cited
a different set of ICD-10-PCS codes mapping to proposed MS-DRG 173 in
the proposed ICD-10 MS-DRG V41 Definitions Manual. The commenter stated
interested parties are unable to evaluate and comment on proposals
complicated by such an important inconsistency.
Response: We appreciate the commenter's feedback, however, it is
not clear what inconsistencies in the materials the commenter is
specifically referring to since the commenter did not provide a list of
codes for evaluation. Upon review of the proposed rule and the proposed
ICD-10 MS-DRG V41 Definitions Manual, we did not find discrepancies.
After consideration of the public comments we received, we are
finalizing our proposal to create new MS-DRG 173 (Ultrasound
Accelerated and Other Thrombolysis with Principal Diagnosis Pulmonary
Embolism), without modification, for FY 2024. We are also finalizing
our proposal to define the logic for the new MS-DRG using the
previously listed diagnosis codes for PE and the previously listed
procedure codes for USAT and CDT, as identified and discussed in our
analysis of the claims data in association with the proposed rule. We
will continue to monitor the claims data for this new MS-DRG after
implementation to determine if additional refinements are warranted.
b. Respiratory Infections and Inflammations Logic
In the FY 2024 IPPS/LTCH PPS proposed rule (88 FR 26691), we stated
that the logic for case assignment to MS-DRGs 177, 178, and 179
(Respiratory Infections and Inflammations with MCC, with CC, and
without CC/MCC, respectively) as displayed in the ICD-10 MS-DRG V40.1
Definitions Manual (which is available on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/MS-DRG-Classifications-and-Software) is comprised of
two logic lists. The first logic list is entitled ``Principal Diagnosis
with Secondary Diagnosis'' and is defined by a list of five ICD-10-CM
diagnosis codes describing influenza due to other or unidentified
influenza virus with pneumonia in combination with a separate list of
ten diagnosis codes describing the specific pneumonia infection. When
any one of the five listed diagnosis codes from the ``Principal
Diagnosis'' logic list is reported as a principal diagnosis in
combination with any one of the ten listed diagnosis code from the
``with Secondary Diagnosis'' logic list as a secondary diagnosis, the
case results in assignment to MS-DRG 177, 178, or 179 depending on the
presence of any additional MCC or CC secondary diagnoses. All 15 of the
diagnosis codes included on the first logic list ``Principal Diagnosis
with Secondary Diagnosis'' are designated as MCCs.
The second logic list is entitled ``or Principal Diagnosis'' and is
defined by a list of 57 diagnosis codes describing various pulmonary
infections. When any one of the 57 diagnosis codes from this list is
reported as a principal diagnosis, the case results in assignment to
MS-DRG 177, 178, or 179 depending on the presence of any additional MCC
or CC secondary diagnoses.
We noted in the proposed rule that currently, when a diagnosis code
from the second logic list ``or Principal Diagnosis'' is reported as
the principal diagnosis and a diagnosis code from the first logic list
``Principal Diagnosis with Secondary Diagnosis'' is reported as a
secondary diagnosis, the case is grouping to MS-DRG 177 (Respiratory
Infections and Inflammations with MCC). Consistent with how other
similar logic lists function in the ICD-10 Grouper software for case
assignment to the ``with MCC'' MS-DRG, the logic for case assignment to
MS-DRG 177 is intended to require any other diagnosis designated as an
MCC and reported as a secondary diagnosis for appropriate assignment,
and not the diagnoses currently listed in the logic for the definition
of the MS-DRG.
Therefore, for FY 2024, we proposed to correct the logic for case
assignment to MS-DRG 177 by excluding the 15 diagnosis codes from the
first logic list ``Principal Diagnosis with Secondary Diagnosis'' from
acting as an MCC when any one of the listed codes is reported as a
secondary diagnosis with a diagnosis code from the second logic list
``or Principal Diagnosis'' reported as the principal diagnosis.
Comment: Several commenters expressed support for the proposal to
correct the logic for case assignment to MS-DRG 177. However, some
commenters stated it was not specifically clear what was changing and
requested that CMS provide more transparency with examples.
A couple commenters recommended that when any one of the five
influenza codes (J10.00, J10.01, J10.08, J11.00, or J11.08) from the
first logic list entitled ``Principal Diagnosis'' in MS-DRGs 177, 178,
and 179 is reported as a secondary diagnosis with a principal diagnosis
from the second logic list (``or Principal Diagnosis''), that the
influenza diagnosis code continue to be allowed to act as an MCC for
assignment to MS-DRG 177. According to the commenters, influenza is not
inherently related to the principal diagnoses on the second logic list,
and, in combination, they have the potential to be more complicated and
resource intensive to treat than any of the diagnoses occurring alone.
The commenters supported excluding the 10 secondary diagnoses from the
first logic list entitled ``with Secondary Diagnosis'' from acting as
an MCC when any one of the codes is reported as a secondary diagnosis
with a principal diagnosis code from the second logic list.
Response: We thank the commenters for their support. In response to
the commenters who requested additional clarification for the proposed
changes, we are providing the following case example to demonstrate the
intent of the proposed logic changes with application of the V41 ICD-10
MS-DRG test GROUPER that was made publicly available in association
with the proposed rule at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/MS-DRG-Classifications-and-Software.
Case Example: A patient who is admitted with COVID-19 develops
influenza due to an unidentified flu virus along with an unspecified
type of pneumonia. The principal diagnosis in this case is reported as
the COVID-19 (diagnosis code U07.1) and the secondary diagnosis in this
case is reported as influenza due to an unidentified flu virus with
unspecified type of pneumonia (diagnosis code J11.00). The diagnosis
code for COVID-19 (U07.1) is listed as one of the 58 diagnoses in the
second logic list entitled ``or Principal Diagnosis'' and the diagnosis
code for influenza due to an unidentified flu virus with unspecified
type of pneumonia (J11.00) is listed as one of the five diagnoses in
the first logic list entitled ``Principal Diagnosis''. When these
diagnoses are entered in the V41 ICD-10 MS-DRG test GROUPER, the
resulting MS-DRG is 177 (Respiratory infections and inflammations with
MCC).
[[Page 58680]]
Principal Diagnosis: U07.1 COVID-19 (DRG)
Secondary Diagnoses: J11.00 Flu due to unidentified flu virus w unsp
type of pneumonia (MCC)
Additionally, when any one of the other four influenza diagnosis
codes (J10.00, J10.01, J10.08, or J11.08) in that first logic list is
reported as a secondary diagnosis with a principal diagnosis of U07.1,
the resulting MS-DRG is also MS-DRG 177. Therefore, we agree with the
commenters that the five influenza codes (J10.00, J10.01, J10.08,
J11.00, or J11.08) should continue to be allowed to act as a MCC with a
principal diagnosis from the second logic list in specific clinical
scenarios.
The following tables illustrate additional examples when the
reporting of any one of the five influenza codes (J10.00, J10.01,
J10.08, J11.00, or J11.08) from the first logic list entitled
``Principal Diagnosis'' in MS-DRGs 177, 178, and 179 continues to act
as an MCC when reported as a secondary diagnosis with certain principal
diagnoses from the second logic list (``or Principal Diagnosis'') and
to illustrate when any one of the five influenza diagnosis codes is
excluded from acting as an MCC when reported as a secondary diagnosis
with certain principal diagnoses from the second logic list.
BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TR28AU23.029
[GRAPHIC] [TIFF OMITTED] TR28AU23.030
We note that in the preamble of the proposed rule we stated that we
were proposing to exclude the 15 diagnosis codes from the first logic
list ``Principal Diagnosis with Secondary Diagnosis'' from acting as an
MCC when any one of the listed codes is reported as a secondary
diagnosis with a diagnosis code from the second logic list ``or
Principal Diagnosis'' reported as the principal diagnosis, however, the
proposal was intended to exclude the 11 secondary diagnoses from the
first logic list entitled ``with Secondary Diagnosis'' when one of the
codes is reported as a secondary diagnosis with a principal diagnosis
code from the second logic list, (as reflected in the case example when
a diagnosis from each logic list is entered in the V41 ICD-10 MS-DRG
test GROUPER).
After consideration of the public comments we received, we are
finalizing our proposal to correct the logic for case assignment to MS-
DRG 177, with modification, for FY 2024. We are finalizing the
exclusion of the following 11 diagnosis codes listed in the first logic
list entitled ``with Secondary Diagnosis'' from acting as an MCC when
any one of the listed codes is reported as a secondary diagnosis with a
diagnosis code from the second logic list entitled ``or Principal
Diagnosis'' when reported as the principal diagnosis.
[[Page 58681]]
[GRAPHIC] [TIFF OMITTED] TR28AU23.031
BILLING CODE 4120-01-C
5. MDC 05 (Diseases and Disorders of the Circulatory System)
a. 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 second part of the
request was to reassign cases describing standalone percutaneous
endoscopic surgical ablation. In the part of the request relating to
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 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, and 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.
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,
with or without PTCA, with or without Cardiac Catheterization or Open
Ablation, with and without MCC, respectively) 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 the FY 2023 IPPS/LTCH PPS final rule (87 FR 48845 through
48849), we discussed a request we received 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 suggested 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.
We stated our analysis using the September 2021 update of the FY
2021 MedPAR file reflected that the cases reporting an open concomitant
surgical ablation code combination are predominately found in the
higher (CC or MCC) severity level MS-DRGs of their current base MS-DRG
assignment, suggesting that the patient's co-morbid conditions may also
be contributing to the higher costs of these cases. Secondly, for the
numerous procedure combinations that would comprise an ``open
concomitant surgical ablation'' procedure, the increase in average
costs appeared to directly correlate with the number of procedures
performed. For example, cases that describe ``Open MVR + Open surgical
ablation'' generally demonstrated costs that were lower than cases that
describe ``Open MVR + Open AVR + Open CABG + Open surgical ablation.''
We also noted using the September 2021 update of the FY 2021 MedPAR
file, we analyzed how applying the NonCC subgroup criteria to all MS-
DRGs currently split into three severity levels would affect the MS-DRG
structure beginning in FY 2022. Similar to our findings discussed in
the FY 2022 IPPS/LTCH final rule, findings
[[Page 58682]]
from our analysis using the September 2021 update of the FY 2021 MedPAR
file indicated that MS-DRGs 216, 217, 218 as well as approximately 40
other MS-DRGs would be subject to change based on the three-way
severity level split criterion finalized in FY 2021.
Therefore, we stated we believe that additional time was needed to
allow for further analysis of the claims data to determine to what
extent the patient's co-morbid conditions are also contributing to
higher costs and to identify other contributing factors that might
exist with respect to the increased length of stay and costs of these
cases in these MS-DRGs. For the reasons summarized, and after
consideration of the public comments we received, we did not make any
MS-DRG changes for cases involving the open concomitant surgical
ablation procedures for FY 2023.
As discussed in the FY 2024 IPPS/LTCH PPS proposed rule (88 FR
26691 through 26695), we again received a request to review the MS-DRG
assignment of cases involving open concomitant surgical ablation
procedures. The requestor recommended that CMS reassign open
concomitant surgical ablation procedures for atrial fibrillation (AF)
from MS-DRGs 219, 220, and 221 (Cardiac Valve and Other Major
Cardiothoracic Procedures without Cardiac Catheterization with MCC,
with CC, and without CC/MCC, respectively) to MS-DRGs 216, 217, and
218. The requestor further recommended that if CMS does not reassign
cases involving open concomitant surgical ablation procedures to MS-
DRGs 216, 217, and 218, in the alternative, CMS should create new MS-
DRGs for all open mitral or aortic valve repair or replacement
procedures with concomitant surgical ablation for AF to improve
clinical coherence when three to four open heart procedures are
performed in one setting.
The requestor suggested that the following three MS-DRGs be created
to reflect current standard of care for these patients:
Suggested New MS-DRG XXX--2 procedures;
Suggested New MS-DRG XXX--3 procedures; and
Suggested New MS-DRG XXX--4+ procedures.
The requestor stated that cases reporting open surgical ablation
procedures for AF performed during open valve repair/replacement
procedures are typically assigned to MS-DRGs 216, 217, 218, 219, 220,
and 221, with the majority of the cases being assigned to MS-DRGs 219,
220 and 221 because of the surgical hierarchy in MDC 05 and because
there is less of a need for cardiac catheterization in these cases. We
stated in the proposed rule that the requestor performed its own data
analysis, and stated their analysis showed that the data continues to
demonstrate that claims with open surgical ablation procedures for AF
are not clinically similar to the remaining cases in MS-DRGs 219, 220,
and 221, and there are significant differences in resource utilization
that reflect those clinical differences.
To explore mechanisms to address this request, we stated in the
proposed rule we began our analysis by examining claims data from the
September 2022 update of the FY 2022 MedPAR file for cases reporting
procedure code combinations describing open concomitant surgical
ablations assigned to MS-DRGs 216, 217, 218, 219, 220, and 221. We
referred readers to Tables 6P.3a and 6P.3b associated with the proposed
rule (which are available on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS) for the
data analysis of cases reporting procedure code combinations describing
open concomitant surgical ablations in the September 2022 update of the
FY 2022 MedPAR file. Table 6P.3a associated with the proposed rule sets
forth the list of ICD-10-PCS procedure codes reflecting mitral valve
repair or replacement (MVR), aortic valve repair or replacement (AVR),
coronary artery bypass grafting (CABG) and surgical ablation procedures
that we examined in this analysis. Table 6P.3b associated with the
proposed rule shows the data analysis findings of cases reporting
procedure code combinations describing open concomitant surgical
ablations assigned to MS-DRGs 216, 217, 218, 219, 220, and 221 from the
September 2022 update of the FY 2022 MedPAR file.
As shown in Table 6P.3b associated with the proposed rule, while
the average lengths of stay and average costs of cases reporting
procedure code combinations describing open concomitant surgical
ablations are higher than all cases in their respective MS-DRG, we
found there is variation in the volume, length of stay, and average
costs of the cases. For MS-DRG 216, we found 439 cases reporting
procedure code combinations describing open concomitant surgical
ablations with the average length of stay ranging from 16.7 days to
20.3 days and average costs ranging from $78,586 to $111,439 for these
cases. For MS-DRG 217, we found 92 cases reporting procedure code
combinations describing open concomitant surgical ablations with the
average length of stay ranging from 8.5 days to 14 days and average
costs ranging from $43,221 to $98,001 for these cases. For MS-DRG 218,
we found 2 cases reporting procedure code combinations describing open
concomitant surgical ablations with the average length of stay of 6.5
days and average cost of $38,519 for these cases. For MS-DRG 219, we
found 1,136 cases reporting procedure code combinations describing open
concomitant surgical ablations with the average length of stay ranging
from 9.5 days to 13.6 days and average costs ranging from $60,495 to
$94,572 for these cases. For MS-DRG 220, we found 770 cases reporting
procedure code combinations describing open concomitant surgical
ablations with the average length of stay ranging from 6.7 days to 9.6
days and average costs ranging from $49,900 to $84,293 for these cases.
For MS-DRG 221, we found 38 cases reporting procedure code combinations
describing open concomitant surgical ablations with the average length
of stay ranging from 4.5 days to 5.8 days and average costs ranging
from $30,725 to $59,024 for these cases.
We stated in the proposed rule that similar to our analysis of the
data as discussed in the FY 2023 IPPS/LTCH PPS final rule, this data
analysis also shows for the numerous procedure combinations that would
comprise an ``open concomitant surgical ablation'' procedure, the
increase in average costs appears to directly correlate with the number
of procedures performed. We stated the data analysis reflects that
cases that describe ``Open MVR + Open AVR'' in addition to other
concomitant procedures generally demonstrate higher average costs in
their respective MS-DRGs. In MS-DRG 216, we identified a total of 439
cases reporting procedure code combinations describing open concomitant
surgical ablations with an average length of stay of 17.7 days and
average costs of $89,877. Of those 439 cases, there were 40 cases
reporting an aortic valve repair/replacement procedure, a mitral valve
repair/replacement procedure, and another concomitant procedure with
average costs of $106,301 and an average length of stay of 17.9 days.
In MS-DRG 217, we identified a total of 92 cases reporting procedure
code combinations describing open concomitant surgical ablations with
an average length of stay of 10 days and average costs of $60,975. Of
those 92 cases, there were 9 cases reporting an aortic valve repair/
replacement procedure, a mitral valve repair/
[[Page 58683]]
replacement procedure, and another concomitant procedure with average
costs of $82,514 and an average length of stay of 12.5 days. In MS-DRG
219, we identified a total of 1,136 cases reporting procedure code
combinations describing open concomitant surgical ablations with an
average length of stay of 11.2 days and average costs of $70,693. Of
those 1,136 cases, there were 102 cases reporting an aortic valve
repair/replacement procedure, a mitral valve repair/replacement
procedure, and another concomitant procedure with average costs of
$85,537 and an average length of stay of 12.8 days. In MS-DRG 220, we
identified a total of 770 cases reporting procedure code combinations
describing open concomitant surgical ablations with an average length
of stay of 7.3 days and average costs of $52,456. Of those 770 cases,
there were 48 cases reporting an aortic valve repair/replacement
procedure, a mitral valve repair/replacement procedure, and another
concomitant procedure with average costs of $67,344 and an average
length of stay of 8.4 days. For MS-DRG 218 and MS-DRG 221, we did not
identify any cases reporting procedure code combinations describing
open concomitant surgical ablations with an aortic valve repair/
replacement procedure, a mitral valve repair/replacement procedure, and
another concomitant procedure.
In examining this request, we noted in the proposed rule that the
requestor suggested that CMS reassign open concomitant surgical
ablation procedures for atrial fibrillation (AF) from MS-DRGs 219, 220,
and 221 (Cardiac Valve and Other Major Cardiothoracic Procedures
without Cardiac Catheterization with MCC, with CC, and without CC/MCC,
respectively) to MS-DRGs 216, 217 and 218 for FY 2024, however, as
discussed in the FY 2023 IPPS/LTCH PPS final rule, MS-DRGs 216, 217 and
218 are defined by the performance of cardiac catheterization. We
stated we continue to be concerned about the effect on clinical
coherence of assigning cases reporting procedure code combinations
describing open concomitant surgical ablations that do not also have a
cardiac catheterization procedure reported to MS-DRGs that are defined
by the performance of that procedure. We also noted, as discussed in
section II.C.1.b of the proposed rule, using the December 2022 update
of the FY 2022 MedPAR file, we analyzed how applying the NonCC subgroup
criteria to all MS-DRGs currently split into three severity levels
would affect the MS-DRG structure beginning in FY 2024. Similar to our
findings discussed in the FY 2022 and FY 2023 IPPS/LTCH PPS final
rules, findings from our analysis indicate that MS-DRGs 216, 217, 218
as well as approximately 44 other base MS-DRGs would be subject to
change based on the three-way severity level split criterion finalized
in FY 2021. Specifically, we noted that the total number of cases in
MS-DRG 218 is again below 500. We refer the reader to Table 6P.10b
associated with the proposed rule (which is available on the CMS
website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS) for the list of the 135 MS-DRGs that would
potentially be subject to deletion and the list of the 86 new MS-DRGs
that would potentially be created under this policy if the NonCC
subgroup criteria was applied.
As discussed in the proposed rule, to further analyze the claims
data to determine to what extent the performance of multiple procedures
is contributing to higher costs and to identify other contributing
factors that might exist with respect to the increased length of stay
and costs of these cases in these MS-DRGs, we analyzed the cases
reporting a concomitant procedure code combination without reporting a
procedure code describing open surgical ablation assigned to MS-DRGs
216, 217, 218, 219, 220, and 221. We refer readers to Tables 6P.3c
associated with the proposed rule (which are available on the CMS
website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS) for the data analysis of cases reporting a
concomitant procedure code combination without reporting a procedure
code describing open surgical ablation assigned to MS-DRGs 216, 217,
218, 219, 220, and 221 from the September 2022 update of the FY 2022
MedPAR file.
We stated that the data analysis as shown in Table 6P.3c associated
with the proposed rule, similarly, reflects that cases that report
``Open MVR + Open AVR'' in addition to other concomitant procedures
generally demonstrate higher average costs in their respective MS-DRGs,
even in instances where an open surgical ablation was not reported. In
MS-DRG 216, we identified a total of 2,759 cases reporting a
concomitant procedure code combination without reporting a procedure
code describing open surgical ablation with an average length of stay
of 17.5 days and average costs of $89,334. Of those 2,759 cases, there
were 240 cases reporting an aortic valve repair/replacement procedure,
a mitral valve repair/replacement procedure, and another concomitant
procedure with average costs of $116,611 and an average length of stay
of 22.7 days. In MS-DRG 217, we identified a total of 852 cases
reporting a concomitant procedure code combination without reporting a
procedure code describing open surgical ablation with an average length
of stay of 10.7 days and average costs of $56,208. Of those 852 cases,
there were 31 cases reporting an aortic valve repair/replacement
procedure, a mitral valve repair/replacement procedure, and another
concomitant procedure with average costs of $70,831 and an average
length of stay of 12.6 days. In MS-DRG 218, we identified a total of 64
cases reporting a concomitant procedure code combination without
reporting a procedure code describing open surgical ablation with an
average length of stay of 6.5 days and average costs of $39,924, none
of which reported an aortic valve repair/replacement procedure, a
mitral valve repair/replacement procedure, and another concomitant
procedure. In MS-DRG 219, we identified a total of 7,604 cases
reporting a concomitant procedure code combination without reporting a
procedure code describing open surgical ablation with an average length
of stay of 11.1 days and average costs of $66,412. Of those 7,604
cases, there were 579 cases reporting an aortic valve repair/
replacement procedure, a mitral valve repair/replacement procedure, and
another concomitant procedure with average costs of $85,890 and an
average length of stay of 13.7 days. In MS-DRG 220, we identified a
total of 6,430 cases reporting a concomitant procedure code combination
without reporting a procedure code describing open surgical ablation
with an average length of stay of 6.5 days and average costs of
$45,472. Of those 6,430 cases, there were 260 cases reporting an aortic
valve repair/replacement procedure, a mitral valve repair/replacement
procedure, and another concomitant procedure with average costs of
$63,761 and an average length of stay of 7.8 days. In MS-DRG 221, we
identified a total of 666 cases reporting a concomitant procedure code
combination without reporting a procedure code describing open surgical
ablation with an average length of stay of 5.0 days and average costs
of $39,777. Of those 666 cases, there were 9 cases reporting an aortic
valve repair/replacement procedure, a mitral valve repair/replacement
procedure, and another concomitant procedure with average costs of
$38,156 and an average length of stay of 5.6 days.
[[Page 58684]]
We noted in the proposed rule that analysis of the claims data
suggested that it is the performance of an aortic valve repair or
replacement procedure, a mitral valve repair or replacement procedure
plus another concomitant procedure that is associated with increased
hospital resource utilization, not solely the performance of open
surgical ablation as suggested by the requestor, when compared to other
cases in their respective MS-DRGs. We stated we reviewed these data and
noted, clinically, the management of mixed valve disease is challenging
because patients with mixed valve disease are often frail, elderly, and
present with multiple comorbidities. The combination of conditions in
mixed valve disease, such as aortic stenosis and mitral stenosis, can
result in a greater reduction of cardiac output than in isolated
valvular stenosis. Patients requiring an aortic valve procedure and a
mitral valve procedure in the same operative session are more complex
cases and can be at significant risk for adverse events if there is
moderate or severe disease of one or more cardiac valves. In the
proposed rule, we stated that the data analysis clearly showed that
cases reporting aortic valve repair or replacement procedure, a mitral
valve repair or replacement procedure and another concomitant procedure
have higher average costs and generally longer lengths of stay compared
to all the cases in their assigned MS-DRG. For these reasons, we
proposed to create a new MS-DRG for cases reporting an aortic valve
repair or replacement procedure, a mitral valve repair or replacement
procedure, and another concomitant procedure.
As discussed in the proposed rule, to compare and analyze the
impact of our suggested modifications, we ran a simulation using the
most recent claims data from the December 2022 update of the FY 2022
MedPAR file. The following table illustrates our findings for all 892
cases reporting procedure codes describing an aortic valve repair or
replacement procedure, a mitral valve repair or replacement procedure,
and another concomitant procedure. We stated we believed that the
resulting proposed MS-DRG assignment is more clinically homogeneous,
coherent and better reflects hospital resource use.
[GRAPHIC] [TIFF OMITTED] TR28AU23.032
We applied the criteria to create subgroups in a base MS-DRG as
discussed in section II.C.1.b. of the FY 2024 IPPS/LTCH PPS proposed
rule. As shown in the table that follows, a three-way split of the
proposed new MS-DRG failed to meet the criterion that there be at least
500 or more cases in each subgroup.
[GRAPHIC] [TIFF OMITTED] TR28AU23.033
We then applied the criteria for a two-way split for the ``with CC/
MCC'' and ``without CC/MCC'' subgroups and again found that the
criterion that there be at least 500 or more cases in each subgroup
could also not be met. The following table illustrates our findings.
[GRAPHIC] [TIFF OMITTED] TR28AU23.034
We also applied the criteria for a two-way split for the ``with
MCC'' and ``without MCC'' subgroups and found that the criterion that
there be at least 500 or more cases in each subgroup similarly could
not be met. The following table illustrates our findings.
[GRAPHIC] [TIFF OMITTED] TR28AU23.035
[[Page 58685]]
Therefore, for FY 2024, we did not propose to subdivide the
proposed new MS-DRG for cases reporting procedure codes describing an
aortic valve repair or replacement procedure, a mitral valve repair or
replacement procedure, and another concomitant procedure into severity
levels.
In summary, for FY 2024, taking into consideration that it
clinically requires greater resources to perform an aortic valve repair
or replacement procedure, a mitral valve repair or replacement
procedure, and another concomitant procedure, we proposed to create a
new base MS-DRG for cases reporting an aortic valve repair or
replacement procedure, a mitral valve repair or replacement procedure,
and another concomitant procedure in MDC 05. The proposed new MS-DRG is
proposed new MS-DRG 212 (Concomitant Aortic and Mitral Valve
Procedures). We referred the reader to Table 6P.4a associated with the
proposed rule (which is available on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index for the list of procedure codes we proposed to
define in the logic for the proposed new MS-DRG. We refer the reader to
section II.C.15. of the preamble of this final rule for the discussion
of the surgical hierarchy and the complete list of our proposed
modifications to the surgical hierarchy as well as our finalization of
those proposals.
Comment: Commenters expressed support for the proposal to create
new base MS-DRG 212 (Concomitant Aortic and Mitral Valve Procedures)
for cases reporting an aortic valve repair or replacement procedure, a
mitral valve repair or replacement procedure, and another concomitant
procedure in MDC 05. Many commenters stated finalization of this
proposal would provide the resources necessary to continue offering
these concomitant procedures to Medicare patients with extremely
serious, complicated heart conditions, which avoids a future additional
surgery down the line. Other commenters stated they agreed with CMS
that this proposal would result in more clinically homogenous
assignments that better reflect hospital resources. A commenter stated
they thank CMS for recognizing the importance of adequate payment for
multiple concomitant open valvular procedures. Another commenter stated
that without an MS-DRG reflecting the additional costs of performing
concomitant procedures, hospitals will continue to be incentivized for
multiple admissions for separate cardiac procedures in order to cover
the cost of care.
Response: We appreciate the commenters' support.
Comment: Many commenters stated that the proposal to create MS-DRG
212 is a good first step, but urged CMS go a step further and also
assign cases reporting a single AVR or MVR procedure and another
concomitant procedure in MDC 05 to the proposed new MS-DRG. Commenters
stated that this modification to the proposal would better align with
the clinical literature and the clinical needs of Medicare
beneficiaries by allowing patients to receive lifesaving therapies in
one visit, while not incentivizing hospitals to send patients with AF
home to return for future procedures. Some commenters stated, based on
their analysis, more patients require an open concomitant single AVR or
MVR procedure than multiple open valvular procedures with open surgical
ablation. These commenters stated that new MS-DRG 212 would only apply
to roughly 10 percent of Medicare beneficiaries, while excluding the
majority of Medicare beneficiaries who require open heart valve
procedures in combination with open surgical ablation treatment for AF.
A commenter stated that AF is a complex arrythmia that is present in
more than 40 percent of patients undergoing open single or multiple
valve procedures and stated that these patients have a two to three
times greater risk for hospitalizations and multiple admissions if
their AF goes untreated. Commenters stated that treating atrial
fibrillation during the same surgical session as a single open valve
procedure requires significant device costs, additional operating room
time, and specialized staff. Some commenters expressed concern that
given the added costs of performing multiple procedures at the same
time, hospitals may more likely schedule the patient for separate
procedures even though guidelines of the Society for Thoracic Surgeons
and the Heart Rhythm Society recommend performing surgical ablation for
atrial fibrillation at the time of open-heart procedures when
indicated. These commenters further stated a delay in addressing the
biggest patient segment with single open valve replacement (MVR or AVR)
and other concomitant procedures risks limiting lifesaving access to
therapies for CMS beneficiaries. Many commenters stated the proposal
would be even more impactful for patients if cases reporting single
open valve procedures were included.
Some commenters urged CMS to either (1) assign all cases reporting
a single AVR or MVR procedure and another concomitant procedure for the
treatment of atrial fibrillation to new proposed MS-DRG 212, (2) create
a new MS-DRG for cases reporting a single AVR or MVR procedure for the
treatment of atrial fibrillation, or (3) assign cases reporting a
single AVR or MVR procedure and a concomitant surgical ablation
procedure for the treatment of atrial fibrillation to MS-DRGs 216, 217,
and 218 (Cardiac Valve and Other Major Cardiothoracic Procedures with
Cardiac Catheterization with MCC, with CC, and without CC/MCC,
respectively) and change the title of the MS-DRGs, while maintaining
the relative weight, and then monitor the claims data for two years.
However, other commenters were not supportive of assigning cases
reporting a single AVR or MVR procedure and another concomitant
procedure to the proposed new MS-DRG 212. These commenters noted that
the focus and clinical rationale for CMS' proposal was based on the
complex, multiple valve procedures. Commenters stated that assigning
cases reporting a single AVR or MVR procedure and another concomitant
procedure to new MS-DRG 212 would have a significant negative impact on
the remaining MS-DRGs, notably MS-DRG 216. The commenters recommended
that CMS continue to carefully review the impacts on the relative
weights in these MS-DRGs if CMS finalizes the proposal to move
approximately 900 cases out of MS-DRGs 216, 217, 218, 219, 220, and
221. Another commenter requested that CMS delay implementation of
proposed new MS-DRG 212 for a year to allow interested parties to fully
assess the impact of the proposed changes to MS-DRGs 216, 217, 218,
219, 220, and 221 and to analyze other options to address payment
adequacy more broadly across concomitant procedures, particularly given
that findings from CMS' analysis indicate that MS-DRGs 216, 217, and
218 as well as approximately 44 other base MS-DRGs would be subject to
change based on the NonCC subgroup criteria finalized in FY 2021. This
commenter further stated given the relatively small number of cases
impacted by the newly proposed MS-DRG 212, additional time would give
CMS an opportunity to work with interested parties to consider other
concomitant procedures that have similar clinical and cost coherence as
the procedures currently proposed for MS-DRG 212, such as concomitant
procedures involving the tricuspid and pulmonary valves.
Response: We appreciate the commenters sharing their concerns and
[[Page 58686]]
feedback on this proposal. To examine the recommendation that CMS
expand MS-DRG 212 to allow cases reporting a single aortic valve repair
or replacement procedure or a mitral valve repair or replacement
procedure with an open concomitant surgical ablation to be grouped into
the proposed new MS-DRG, we further analyzed the September 2022 update
of the FY 2022 MedPAR file for cases reporting procedure code
combinations describing a single AVR or MVR procedure and a concomitant
procedure assigned to MS-DRGs 216, 217, 218, 219, 220 and 221. We also
analyzed the September 2022 update of the FY 2022 MedPAR file for cases
reporting procedure code combinations describing a single AVR or MVR
procedure and a concomitant procedure and a diagnosis of AF. We
identified cases reporting AF as a principal or secondary diagnosis
with the following ICD-10-CM codes.
BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TR28AU23.036
[GRAPHIC] [TIFF OMITTED] TR28AU23.037
[[Page 58687]]
[GRAPHIC] [TIFF OMITTED] TR28AU23.038
BILLING CODE 4120-01-C
As shown in the table, in MS-DRG 216, we identified a total of
2,590 cases reporting procedure code combinations describing a single
AVR or MVR procedure and a concomitant procedure with an average length
of stay of 17.1 days and average costs of $87,374. Of those 2,590
cases, there were 1,511 cases reporting procedure code combinations
describing a single AVR or MVR procedure and a concomitant procedure,
with a diagnosis of AF with average costs of $85,840 and an average
length of stay of 17 days. The data analysis performed indicates that
the 1,511 cases in MS-DRG 216 reporting procedure code combinations
describing a single AVR or MVR procedure and a concomitant procedure
with a diagnosis of AF have an average length of stay that is longer
than the average length of stay for all the cases in MS-DRG 216 (17.1
days versus 14.9 days) and slightly higher average costs when compared
to all the cases in MS-DRG 216 ($85,840 versus $84,327).
In MS-DRG 217, we identified a total of 808 cases reporting
procedure code combinations describing a single AVR or MVR procedure
and a concomitant procedure with an average length of stay of 9.4 days
and average costs of $55,593. Of those 808 cases, there were 462 cases
reporting procedure code combinations describing a single AVR or MVR
procedure and a concomitant procedure, with a diagnosis of AF with
average costs of $56,104 and an average length of stay of 9.8 days. The
data analysis performed indicates that the 462 cases in MS-DRG 217
reporting procedure code combinations describing a single
[[Page 58688]]
AVR or MVR procedure and a concomitant procedure with a diagnosis of AF
have an average length of stay that is longer than the average length
of stay for all the cases in MS-DRG 217 (9.8 days versus 7.3 days) and
similar average costs when compared to all the cases in MS-DRG 217
($56,104 versus $56,143).
In MS-DRG 218, we identified a total of 62 cases reporting
procedure code combinations describing a single AVR or MVR procedure
and a concomitant procedure with an average length of stay of 6.6 days
and average costs of $38,013. Of those 62 cases, there were 18 cases
reporting procedure code combinations describing a single AVR or MVR
procedure and a concomitant procedure, with a diagnosis of AF with
average costs of $37,053 and an average length of stay of 6.2 days. The
data analysis performed indicates that the 18 cases in MS-DRG 218
reporting procedure code combinations describing a single AVR or MVR
procedure and a concomitant procedure with a diagnosis of AF have an
average length of stay that is longer than the average length of stay
for all the cases in MS-DRG 218 (6.2 days versus 3.1 days) and lower
average costs when compared to all the cases in MS-DRG 218 ($37,053
versus $50,208).
In MS-DRG 219, we identified a total of 7,400 cases reporting
procedure code combinations describing a single AVR or MVR procedure
and a concomitant procedure with an average length of stay of 10.9 days
and average costs of $65,489. Of those 7,400 cases, there were 4,485
cases reporting procedure code combinations describing a single AVR or
MVR procedure and a concomitant procedure, with a diagnosis of AF with
average costs of $66,912 and an average length of stay of 11.1 days.
The data analysis performed indicates that the 4,485 cases in MS-DRG
219 reporting procedure code combinations describing a single AVR or
MVR procedure and a concomitant procedure with a diagnosis of AF have
an average length of stay that is slightly longer than the average
length of stay for all the cases in MS-DRG 219 (11.1 days versus 10.8
days) and slightly higher average costs when compared to all the cases
in MS-DRG 219 ($66,912 versus $65,911).
In MS-DRG 220, we identified a total of 6,496 cases reporting
procedure code combinations describing a single AVR or MVR procedure
and a concomitant procedure with an average length of stay of 6.5 days
and average costs of $45,455. Of those 6,496 cases, there were 3,645
cases reporting procedure code combinations describing a single AVR or
MVR procedure and a concomitant procedure, with a diagnosis of AF with
average costs of $47,560 and an average length of stay of 7 days. The
data analysis performed indicates that the 3,645 cases in MS-DRG 220
reporting procedure code combinations describing a single AVR or MVR
procedure and a concomitant procedure with a diagnosis of AF have an
average length of stay that is slightly longer than the average length
of stay for all the cases in MS-DRG 220 (7 days versus 6.4 days) and
slightly higher average costs when compared to all the cases in MS-DRG
220 ($47,560 versus $45,839).
In MS-DRG 221, we identified a total of 650 cases reporting
procedure code combinations describing a single AVR or MVR procedure
and a concomitant procedure with an average length of stay of 5 days
and average costs of $39,688. Of those 650 cases, there were 239 cases
reporting procedure code combinations describing a single AVR or MVR
procedure and a concomitant procedure, with a diagnosis of AF with
average costs of $41,903 and an average length of stay of 5.6 days. The
data analysis performed indicates that the 239 cases in MS-DRG 221
reporting procedure code combinations describing a single AVR or MVR
procedure and a concomitant procedure with a diagnosis of AF have an
average length of stay that is longer than the average length of stay
for all the cases in MS-DRG 221 (5.6 days versus 4 days) and slightly
higher average costs when compared to all the cases in MS-DRG 221
($41,903 versus $40,694).
The data analysis performed also indicates that the cases in MS-
DRGs 219, 220, and 221 reporting procedure code combinations describing
a single AVR or MVR procedure and a concomitant procedure have a
similar average length of stay and generally lower average costs when
compared to all cases in MS-DRGs 216, 217, and 218. As discussed in the
proposed rule, to compare and analyze the impact of our suggested
modifications, we ran a simulation using the most recent claims data
from the December 2022 update of the FY 2022 MedPAR file. We stated we
found 892 cases reporting procedure codes describing an aortic valve
repair or replacement procedure, a mitral valve repair or replacement
procedure, and another concomitant procedure with an average length of
stay of 15.7 days and average costs of $93,764. Our additional analysis
performed in response to public comments also indicates that the cases
reporting procedure code combinations describing a single AVR or MVR
procedure and a concomitant procedure have a much shorter average
length of stay and much lower average costs when compared to these 892
cases.
Upon analysis of the claims data using our current analytical
framework, review of the original request, and review of the public
comments, while we agree that there are more cases reporting a single
AVR or MVR procedure and another concomitant procedure than cases
reporting concomitant aortic and mitral valve procedures, we do not
agree with assigning cases reporting a single AVR or MVR procedure and
another concomitant procedure for the treatment of atrial fibrillation
to new proposed MS-DRG 212. As previously noted, the data do not
indicate cases reporting a single AVR or MVR procedure and another
concomitant procedure (with or without a diagnosis of AF) utilize
similar resources when compared to the cases proposed to be assigned to
new MS-DRG 212. The cases are not clinically coherent with regard to
resource utilization as reflected in the differences in average costs.
Further, the data do not support creating a new MS-DRG for cases
reporting a single AVR or MVR procedure for the treatment of atrial
fibrillation and instead suggest that cases reporting a single AVR or
MVR procedure for the treatment of atrial fibrillation are suitably
grouped to MS-DRGs 216, 217, 218, 219, 220, and 221 where they are
currently assigned based on the similarities in resource utilization
compared to all the cases in their respective MS-DRG.
In response to comments that urged CMS to assign cases reporting
procedure code combinations describing open concomitant surgical
ablations currently assigned to MS-DRGs 216, 217, 218, 219, 220, and
221 to MS-DRGs 216, 217, and 218, as noted in prior rulemaking, MS-DRGs
216, 217, and 218 are defined by the performance of cardiac
catheterization. We continue to express concern about the effect on
clinical coherence of assigning cases reporting procedure code
combinations describing open concomitant surgical ablations that do not
also have a cardiac catheterization procedure reported to MS-DRGs that
are defined by the performance of that procedure.
In response to the suggestion that CMS delay implementation of
proposed new MS-DRG 212 for a year to allow interested parties to fully
assess the impact of the proposed changes to MS-DRGs 216, 217, 218,
219, 220, and 221 and to analyze other options to address payment
adequacy more broadly across concomitant procedures, we reviewed the
commenters' concern and do not agree that a delay would be prudent. We
believe that the data we currently have
[[Page 58689]]
available is sufficient to create a new MS-DRG for cases reporting an
aortic valve repair or replacement procedure, a mitral valve repair or
replacement procedure, and another concomitant procedure. As discussed
in the proposed rule, and earlier in this section, the data demonstrate
that cases reporting aortic valve repair or replacement procedure, a
mitral valve repair or replacement procedure and another concomitant
procedure have higher average costs and generally longer lengths of
stay compared to all the cases in their assigned MS-DRG.
We appreciate the public comments we received and will continue to
monitor for impacts in MDC 05 and across the MS-DRGs to avoid
unintended consequences or missed opportunities in most appropriately
capturing the resource utilization and clinical coherence for this
subset of procedures.
Comment: Some commenters stated the title of proposed new MS-DRG
212 (Concomitant Aortic and Mitral Valve Procedures) is not clear.
These commenters stated it was not clear if the logic intent is for
cases reporting both a mitral and aortic valve procedure with a
concomitant procedure to be assigned to new MS-DRG 212 or if the logic
intent is to have cases reporting a mitral valve or an aortic valve
procedure with a concomitant procedure to be assigned to new MS-DRG
212. A few commenters suggested that consideration be given to revising
the title of the proposed new MS-DRG as it is not intuitive that the
list of concomitant procedures in the GROUPER logic list for MS-DRG 212
includes both surgical ablation and CABG procedures. Another commenter
stated that the display in the draft Definition Manual, Version 41, for
MS-DRG 212 is unclear and observed there are no instructional notes
included in the draft Definition Manual to explain the intent of the
various lists of procedures.
Response: We appreciate the commenters' feedback. As discussed in
the FY 2024 IPPS/LTCH PPS proposed rule (88 FR 26691 through 26695),
analysis of the claims data suggests that it is the performance of an
aortic valve repair or replacement procedure, a mitral valve repair or
replacement procedure plus another concomitant procedure that is
associated with increased hospital resource utilization (88 FR 26694).
For these reasons, we proposed to create a new MS-DRG for cases
reporting an aortic valve repair or replacement procedure, a mitral
valve repair or replacement procedure, and another concomitant
procedure.
In response to commenters who stated that it was not clear if the
logic intent is for cases reporting both a mitral and aortic valve
procedure with a concomitant procedure to be assigned to new MS-DRG 212
or if the logic intent is to have cases reporting a mitral valve or an
aortic valve procedure with a concomitant procedure to be assigned to
new MS-DRG 212, we wish to clarify cases reporting: (1) an aortic valve
repair or replacement procedure; (2) a mitral valve repair or
replacement procedure; and (3) at least one other concomitant
procedure, as defined in the GROUPER logic, would be assigned to
proposed new MS-DRG 212 (Concomitant Aortic and Mitral Valve
Procedures).
In response to the suggestion that the title of MS-DRG 212 be
revised, we reviewed the commenters' concerns and do not believe a
modification is warranted. As our analysis of the claims data suggests
that it is the performance of an aortic valve repair or replacement
procedure, a mitral valve repair or replacement procedure plus another
concomitant procedure that is associated with increased hospital
resource utilization, we believe the proposed title of the new MS-DRG
appropriately characterizes these findings.
In reviewing the comment regarding the draft version of the ICD-10
MS-DRG Definitions Manual, Version 41, (available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/MS-DRG-Classifications-and-Software), that was
provided so the public can better analyze and understand the impact of
the proposals included in the FY 2024 IPPS/LTCH PPS proposed rule, we
agree refinements to the display would be helpful to clarify the
GROUPER logic for MS-DRG 212. In the final ICD-10 MS-DRG Definitions
Manual, Version 41, we will refine the display by adding headers above
each of the respective logic lists as follows:
Select ONE procedure from aortic valve procedures
Select ONE procedure from mitral valve procedures
Select at least ONE procedure from concomitant procedures
Comment: Some commenters noted that the list of procedure codes we
proposed to define aortic valve procedures and mitral valve procedures
in the logic for the proposed new MS-DRG is limited to the root
operations ``Repair'' and ``Replacement,'' however there are other
valve procedures listed under the ``Concomitant Procedure'' logic list.
These commenters suggested that CMS consider moving the aortic and
mitral valve procedure codes with the root operations of ``Creation'',
``Release'', ``Restriction'', and ``Supplement,'' that are currently
listed under the Concomitant Procedures list in Table 6P.4a and in the
draft version of the ICD-10 MS-DRG Definitions Manual to the
appropriate logic list of aortic valve or mitral valve procedures. The
commenters stated that procedure codes with these other root operations
also represent types of valvular repairs and should be included on the
aortic valve procedures and mitral valve procedures logic lists rather
than the ``Concomitant Procedure'' logic list. A commenter stated that
this change would ensure that all of the aortic valve and mitral valve
procedures codes are captured as valve procedures instead of
concomitant procedures when performed.
Response: We appreciate the feedback and will take these
suggestions under consideration. We note that the requestor originally
requested that CMS review the MS-DRG assignments for cases involving
open surgical ablation performed during another open heart surgical
procedure such as mitral valve repair or replacement (MVR), aortic
valve repair or replacement (AVR), or coronary artery bypass grafting
(CABG). Table 6P.3a associated with the proposed rule sets forth the
list of ICD-10-PCS procedure codes reflecting MVR, AVR, CABG, and
surgical ablation procedures that we examined in our analysis. We agree
with the commenters that there are other valve procedures listed under
the ``Concomitant Procedure'' logic list in Table 6P.3a, however, each
of these procedures are defined by clinically distinct definitions and
objectives, which is why there are separate and unique ICD-10-PCS
procedure codes within the classification for reporting purposes.
Additional claims analysis is needed to determine if the technical
complexity and resource utilization of all, or a subset, of the aortic
and mitral valve procedure codes with the root operations of
``Creation'', ``Release'', ``Restriction'', and ``Supplement'' in the
``Concomitant Procedures'' logic list warrant any modifications to the
GROUPER logic of proposed new MS-DRGs 212. We believe there may be an
opportunity to further refine this MS-DRG as we continue to monitor the
claims data and perform additional analysis. We note that we would
address any proposed modifications to the logic in future rulemaking.
Comment: Commenters stated they appreciated CMS' willingness to
examine how the performance of multiple procedures during the same
[[Page 58690]]
operative session contributes to higher hospital costs and patient
length of stay. Commenters encouraged CMS to continue to consider
options in the MS-DRGs for concomitant procedures with higher hospital
resource utilization, given the important patient care benefits and
efficiencies associated with performing certain procedures
concomitantly in a single encounter rather than staging separate
procedures. A commenter stated they recognize that clinical services
across many medical specialties may be performed concomitantly to
optimize patient outcomes and noted, for example, studies indicate when
left atrial appendage closure (LAAC) is performed concomitantly with
ablation, the outcomes are at least as comparable as for patients who
have undergone these procedures separately. This commenter suggested
that CMS conduct comprehensive analysis of all concomitant procedures,
similar to the analysis of concomitant aortic and mitral valve
procedures, to inform whether CMS should establish a more holistic
policy to provide adequate payment for clinical practices that lead to
better efficiency and patient outcomes. Another commenter recommended
that CMS devise a broader, more inclusive, supplemental mechanism to
facilitate incremental payment when two major procedures are performed
during the same hospital admission and urged CMS to ensure that the
incurred costs are adequately addressed so as to not disincentivize
concomitant procedures which can be more cost efficient, more
convenient, and provide a better prognosis for the patient than the
procedures being performed during different hospital stays.
Response: We appreciate the commenters' support. We also thank the
commenters for their recommendations to conduct comprehensive analysis
of all concomitant procedures as we agree that the performance of
``concomitant procedures'' may affect the consumption of resources in
other clinical scenarios, especially when the use of devices is
involved. We continue to be interested in receiving feedback on
possible mechanisms through which we can address concomitant
procedures. We are also interested in receiving feedback on how CMS can
mitigate any unintended negative payment impacts to providers providing
concomitant procedures. Commenters can continue to submit their
recommendations via the Medicare Electronic Application Request
Information SystemTM (MEARISTM) at: https://mearis.cms.gov/public/home. We will consider these public comments for
possible proposals in future rulemaking as part of our annual review
process.
Comment: While supporting the proposal, a commenter suggested that
proposed new MS-DRG 212 be split into two severity levels (with and
without MCC). The commenter stated they believe it is mathematically
impossible for the proposed new MS-DRG to ever be more than a base MS-
DRG, however in their opinion, a base MS-DRG does not take into account
the variation in the average costs between cases reporting a secondary
diagnosis designated as a MCC compared to cases reporting a secondary
diagnosis designated as a CC.
Response: We thank the commenter for their feedback. In response to
the suggestion that proposed new MS-DRG 212 for cases describing
concomitant aortic and mitral valve procedures be subdivided with a
two-way severity level split, we note as discussed in the proposed rule
and earlier in this section, in the analysis of the cases describing
concomitant aortic and mitral valve procedures, we applied the criteria
for a two-way split for the ``with MCC'' and ``without MCC'' subgroups
and found that the criterion that there be at least 500 or more cases
in each subgroup could not be met and therefore did not propose to
subdivide the proposed new MS-DRG for concomitant aortic and mitral
valve procedures into severity levels for FY 2024. In response to the
concern about variation of costs between cases reporting a secondary
diagnosis designated as a MCC compared to cases reporting a secondary
diagnosis designated as a CC in a base MS-DRG, we note 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.
Therefore, after consideration of the public comments we received,
and for the reasons discussed, we are finalizing our proposal to create
a new MS-DRG 212 (Concomitant Aortic and Mitral Valve Procedures) in
MDC 05, without modification, effective October 1, 2023, for FY 2024.
We are also finalizing the list of procedure codes to define the logic
for the new MS-DRGs as displayed in Table 6P.4a associated with the
proposed rule (which is available on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index).
b. External Heart Assist Device
Impella[supreg] Ventricular Support Systems are temporary heart
assist devices intended to support blood pressure and provide increased
blood flow to critical organs in patients with cardiogenic shock, by
drawing blood out of the heart and pumping it into the aorta, partially
or fully bypassing the left ventricle to provide adequate circulation
of blood (replace or supplement left ventricle pumping) while also
allowing damaged heart muscle the opportunity to rest and recover in
patients who need short-term support.
In the FY 2022 IPPS/LTCH PPS final rule (86 FR 44820 through
44831), we discussed a request to reassign certain cases reporting
procedure codes describing the insertion of a percutaneous short-term
external heart assist device from MS-DRG 215 (Other Heart Assist System
Implant) to MS-DRGs 216, 217, and 218 (Cardiac Valve and Other Major
Cardiothoracic Procedures with Cardiac Catheterization with MCC, with
CC, and without CC/MCC, respectively). We stated that our clinical
advisors reviewed the clinical issues and the claims data and agreed
that cases reporting a procedure code that describes the intraoperative
insertion of a short-term external heart assist device are generally
less resource intensive and are clinically distinct from other cases
reporting procedure codes describing the insertion of other types of
heart assist devices currently assigned to MS-DRG 215. We also stated
that critically ill patients who are experiencing or at risk for
cardiogenic shock from an emergent event such as heart attack or virus
that impacts the functioning of the heart and requires longer heart
pump support are different from those patients who require
intraoperative support only. Patients receiving a short-term external
heart assist device intraoperatively during coronary interventions
often have an underlying disease pathology such as heart failure
related to occluded coronary vessels that is broadly similar in kind to
other patients also receiving these interventions without the need for
an insertion of a short-term external heart assist device. In the post-
operative period, these patients can recover and can be sufficiently
rehabilitated prior to discharge. For these reasons, we finalized our
proposal to assign ICD-10-PCS codes 02HA0RJ, 02HA3RJ, or 02HA4RJ that
describe the intraoperative insertion of a short-term external heart
assist device to MS-DRGs 216, 217, 218, 219, 220, and 221.
As discussed in the FY 2024 IPPS/LTCH PPS proposed rule (88 FR
26695
[[Page 58691]]
through 26700), we received a request to reassign certain cases
reporting procedure codes describing the insertion of a short-term
external heart assist device using an axillary artery conduit from MS-
DRG 215 to MS-DRGs 001 and 002 (Heart Transplant or Implant of Heart
Assist System with MCC and without MCC, respectively) and MS-DRG 003
(ECMO or Tracheostomy with MV >96 Hours or Principal Diagnosis Except
Face, Mouth and Neck with Major O.R. Procedures).
We noted in the proposed rule that the Impella 5.5[supreg] with
SmartAssist[supreg] System is designed for longer-duration support (up
to 14 days) than other femoral access percutaneous ventricular assist
devices (pVADs) that treat cardiogenic shock (up to 4 days) providing
full cardiac and hemodynamic support with 5.5 liters of blood flow per
minute. The Impella 5.5[supreg] with SmartAssist[supreg] System is
considered a hybrid procedure of an open vascular exposure and an
endovascular procedure. The Impella 5.5[supreg] with
SmartAssist[supreg] System surgical pump can be inserted through an
open chest for direct aortic access or a surgical incision that exposes
the axillary artery. In the axillary artery approach, a surgical graft
conduit is anastomosed to the axillary artery by a surgeon in the
operating room. The device is positioned across the aortic valve, with
the inlet located in the left ventricle and the outlet in the ascending
aorta to allow the device to directly unload via the native pathway and
to support coronary perfusion. According to the requestor, the Impella
5.5[supreg] with SmartAssist[supreg] System is indicated for more
complex patients than other femoral artery access pVADs, however the
insertion of a short-term external heart assist device using an
axillary artery conduit (such as the Impella 5.5[supreg] with
SmartAssist[supreg] System) is reported with the same ICD-10-PCS code
that describes insertion of a percutaneous short-term external heart
assist device and are therefore also assigned to MS-DRG 215. According
to the requestor, Impella 5.5[supreg] with SmartAssist[supreg] System
is more clinically comparable to implantable heart assist systems, such
as left ventricular assist devices (LVADs), and like LVADs, the
insertion of a short-term external heart assist device using an
axillary artery conduit must be performed by a surgeon in the operating
room. We stated in the proposed rule that the requestor performed its
own data analysis, and stated their analysis showed a significant
variation in the resource utilization for patients treated with the
Impella 5.5[supreg] with SmartAssist[supreg] System compared to
patients treated with other femoral access pVADs assigned to MS-DRG
215.
In the proposed rule, we also noted that following the submission
of the FY 2024 MS-DRG classification change request for certain cases
reporting procedure codes describing the insertion of a short-term
external heart assist device using an axillary artery conduit, this
same requestor (the manufacturer of the Impella[supreg] Ventricular
Support Systems) submitted a code proposal requesting a new ICD-10-PCS
procedure code to describe the Impella 5.5[supreg] with
SmartAssist[supreg] System for consideration as an agenda topic to be
discussed at the March 7-8, 2023 ICD-10 Coordination and Maintenance
Committee meeting. The proposal was presented and discussed at the
March 7-8, 2023 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 7, 2023.
In reviewing this MS-DRG reclassification request, in the proposed
rule we noted that we agreed with the requestor that the insertion of a
short-term external heart assist device using an axillary artery
conduit (such as the Impella 5.5[supreg] with SmartAssist[supreg]
System) is not separately identifiable in the claims data. Therefore,
in this section, we address the assignment of the existing procedure
codes describing the insertion of short-term external heart assist
devices, including our proposed reassignment of a subset of these cases
for FY 2024.
The following ICD-10-PCS procedure codes describe the insertion of
a short-term external heart assist device.
BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TR28AU23.039
In the ICD-10 MS-DRG Definitions Manual Version 40.1, procedure
codes 02HA0RZ, 02HA3RZ, and 02HA4RZ are currently recognized as
extensive O.R. procedures assigned to MS-DRG 215 (Other Respiratory
System O.R. Procedures with MCC, with CC, and without CC/MCC,
respectively) in MDC 05.
As stated previously and discussed in the proposed rule, the
request for FY 2024 rulemaking was to reassign certain cases reporting
procedure codes describing the insertion of a short-term external heart
assist device using an axillary artery conduit from MS-DRG 215 to MS-
DRGs 001 and 002 (Heart Transplant or Implant of Heart Assist System
with MCC and without MCC, respectively) and MS-DRG 003 (ECMO or
Tracheostomy with MV >96 Hours or Principal Diagnosis Except Face,
Mouth and Neck with Major O.R. Procedures). During our review of this
request, we noted in the proposed rule that the current GROUPER logic
for MS-DRGs 001 and 002 is comprised of two lists. The first list
includes procedure codes identifying a heart transplant procedure, and
the second list includes procedure codes identifying the implantation
of a heart assist system (including short-term external heart assist
systems) and includes code combinations or procedure code ``clusters''
that, when reported together, satisfy the logic for assignment to MS-
DRGs 001 and 002. The code combinations are represented by two
procedure codes and include either one code for the insertion of the
device with one code for removal of the device or one code for the
revision of the device with one code for the removal of the device.
We also noted in the proposed rule that the GROUPER logic for MS-
DRG 003 is defined by (1) a procedure code for extracorporeal
oxygenation (ECMO), (2) a procedure code for tracheostomy, mechanical
ventilation and a procedure code further classified as extensive, or
(3) a procedure code for tracheostomy with a procedure code further
classified as extensive and a principal diagnosis not assigned to MS-
DRGs 011, 012 or 013 as reflected in the logic table:
[[Page 58692]]
[GRAPHIC] [TIFF OMITTED] TR28AU23.040
As procedure codes describing the insertion of a short-term
external heart assist device are classified as extensive procedures in
Version 40.1, specific assignment of these procedure codes to MS-DRG
003 is not required. When the other parameters of the GROUPER logic are
met and procedure codes describing the insertion of a short-term
external heart assist device are also reported, MS-DRG 003 will be
assigned, therefore in the proposed rule we stated we did not include
MS-DRG 003 in our analysis. We refer the reader to the ICD-10 MS-DRG
Version 40.1 Definitions Manual (which is available 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 and for
Appendix E--Operating Room Procedures and Procedure Code/MS-DRG Index.
In the proposed rule, we stated that to begin our analysis, we
examined claims data from the September 2022 update of the FY 2022
MedPAR file for MS-DRG 215 to identify cases reporting ICD-10-PCS codes
02HA0RZ, 02HA3RZ, and 02HA4RZ. Our findings are shown in the following
table:
[GRAPHIC] [TIFF OMITTED] TR28AU23.041
As shown in the table, we identified a total of 3,587 cases within
MS-DRG 215 with an average length of stay of 9 days and average costs
of $86,774. Of these 3,587 cases, there are 60 cases reporting a
procedure code describing the open insertion of a short-term external
heart assist device with an average length of stay of 9.2 days and
average costs of $130,153. There are 3,424 cases reporting a procedure
code describing a percutaneous insertion of a short-term external heart
assist device with an average length of stay of 8.9 days and average
costs of $86,640. There are 6 cases reporting a procedure code
describing a percutaneous endoscopic insertion of a short-term external
heart assist device with an average length of stay of 6.7 days and
average costs of $63,923. The data analysis shows that the average
length of stay is longer and the average costs are higher for the cases
reporting a procedure code describing the open insertion of a short-
term external heart assist device compared to all cases in MS-DRG 215,
while the average length of stay is shorter and the average costs are
lower for the cases reporting a procedure code describing the
percutaneous or percutaneous endoscopic insertion of a short-term
[[Page 58693]]
external heart assist device compared to all cases in that MS-DRG.
We stated in the proposed rule that we then examined claims data
from the September 2022 update of the FY 2022 MedPAR for MS-DRGs 001
and 002. Our findings are shown in the following table.
[GRAPHIC] [TIFF OMITTED] TR28AU23.042
We stated that while the average costs for all cases in MS-DRG 001
are higher than the average costs of the cases reporting a procedure
code describing the open insertion of a short-term external heart
assist device, the data suggested that overall, cases reporting a
procedure code describing the open insertion of a short-term external
heart assist device may be more appropriately aligned with the average
costs of the cases in MS-DRGs 001 and 002 in comparison to MS-DRG 215,
even though the average length of stay is shorter.
In the proposed rule, we stated that we then reviewed the clinical
considerations along with this data analysis and agreed that cases
reporting a procedure code that describes the open insertion of a
short-term external heart assist device are generally more resource
intensive and are clinically distinct from other cases reporting
procedure codes describing the insertion of short-term external heart
devices by other approaches currently assigned to MS-DRG 215. The
availability of mechanical circulatory support devices to provide acute
hemodynamic support for cardiogenic shock or to support percutaneous
coronary intervention (PCI) has expanded over the past decade. We noted
that there is now a portfolio of short-term external heart assist
devices available that each have different indications for use and
techniques for implantation.
We also noted that the percutaneous or percutaneous endoscopic
insertion of a short-term external heart assist device involves
standard catheterization techniques except for the requirement of a
large-bore 13 or 14 Fr sheath. Short-term external heart assist devices
inserted in this manner generally provide blood flow up to 2.5 L/min
for systemic perfusion and are intended for temporary (<=4 days) use to
maintain stable heart function. In contrast, the open insertion of a
short-term external heart assist device or the insertion of short-term
external heart assist devices using an axillary artery conduit requires
a surgical cutdown of the axillary artery to place the larger 23 Fr
sheaths of these devices. Short-term external heart assist devices that
are inserted via an open approach or using an axillary artery conduit
can provide blood flow up to 5.5 L/min for systemic perfusion and are
intended for longer use (<=14 days). They are indicated for the
treatment of ongoing cardiogenic shock that occurs less than 48 hours
following acute myocardial infarction or open-heart surgery or in the
setting of cardiomyopathy, including peripartum cardiomyopathy, or
myocarditis as a result of isolated left ventricular failure that is
not responsive to medical management and conventional treatment
measures. We noted in the proposed rule that the indications for the
open insertion of a short-term external heart assist device or the
insertion of short-term external heart assist devices using an axillary
artery conduit are more closely aligned with MS-DRGs 001 and 002 as
compared to MS-DRG 215. For these reasons, we stated we believed
reassigning ICD-10-PCS code 02HA0RZ that describes the open insertion
of a short-term external heart assist device to Pre-MDC MS-DRGs 001 and
002 would improve clinical coherence in these MS-DRGs.
As discussed in the proposed rule, to compare and analyze the
impact of these potential modifications, we ran a simulation using the
claims data from the September 2022 update of the FY 2022 MedPAR file.
The following table reflects our simulation for ICD-10-PCS procedure
code 02HA0RZ that describes the open insertion of a short-term external
heart assist device if it was moved to MS-DRGs 001 and 002.
[GRAPHIC] [TIFF OMITTED] TR28AU23.043
We stated in the proposed rule that we believed that this
simulation supports that the resulting MS-DRG assignments would be more
clinically homogeneous, coherent and better reflect hospital resource
use. A review of this simulation shows that this distribution of ICD-
10-PCS code 02HA0RZ that describes the open insertion of a short-term
external heart assist device if moved to MS-DRGs 001 and 002, slightly
decreases the average
[[Page 58694]]
costs of the cases remaining in MS-DRG 215 by about $3,000, while
similarly having a limited effect on the average costs of MS-DRGS 001
and 002. Therefore, for FY 2024, we proposed to reassign ICD-10-PCS
code 02HA0RZ when reported as a standalone procedure from MDC 05 in MS-
DRG 215 to Pre-MDC MS-DRGs 001 and 002. We noted that under this
proposal, procedure code 02HA0RZ would no longer need to be reported as
part of a procedure code combination or procedure code ``cluster'' to
satisfy the logic for assignment to MS-DRGs 001 and 002.
As discussed in the proposed rule, we will continue to monitor the
clinical cohesiveness of the procedures assigned to MS-DRGs 001 and 002
to assess whether they continue to be aligned on resource use, as well
as current shifts in treatment practices, to determine if additional
refinements may be warranted in the future. The increased availability
of short-term external heart assist devices and their development into
low profile, high output pumps has shifted the management of
cardiogenic shock that is unresponsive to other interventions in the
years since these MS-DRGs were created. These short-term devices can
now be used as a bridge to provide the time needed for clinical
decision making, native heart recovery, or until another procedure can
be performed, such as the insertion of a left ventricular assist device
(LVAD) or cardiac transplantation.
As noted previously, this same requestor (the manufacturer of the
Impella[supreg] Ventricular Support Systems) submitted a code proposal
to be discussed at the March 7-8, 2023 ICD-10 Coordination and
Maintenance Committee meeting to request a change to how the Impella
5.5[supreg] with SmartAssist[supreg] System is coded within the ICD-10-
PCS classification as there are no unique ICD-10-PCS codes to describe
the insertion of a short-term external heart assist system using an
axillary artery conduit. In the proposed rule, we noted that because
the decisions on the diagnosis and procedure code proposals that were
presented at the March 7-8, 2023 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 FY 2024 IPPS/
LTCH PPS proposed rule, as we have noted in prior rulemaking (86 FR
44805), 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.
We noted in the proposed rule that under this established process,
the MS-DRG assignment for any new procedure codes describing the
Impella 5.5[supreg] with SmartAssist[supreg] System, if finalized
following the March meeting, would be reflected in Table 6B.--New
Procedure Codes associated with the final rule for FY 2024. In the
event there is not support for the new procedure code as presented at
the March 7-8, 2023 ICD-10 Coordination and Maintenance Committee
meeting to describe the insertion of a short-term external heart assist
system using an axillary artery conduit, the procedure will be reported
with current coding that is applicable within the classification as
displayed in the ICD-10 Coordination and Maintenance Committee meeting
materials (available on the CMS website at: https://www.cms.gov/Medicare/Coding/ICD10/C-and-M-Meeting-Materials). We refer the reader
to section II.C.13. of the preamble of the proposed rule and this final
rule for further information regarding Table 6B.
As discussed in prior rulemaking, interested parties may use
current coding information to consider the potential MS-DRG assignments
for 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 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 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.
In summary, we proposed to reassign ICD-10-PCS code 02HA0RZ
(Insertion of short-term external heart assist system into heart, open
approach) from MDC 05 in MS-DRG 215 to Pre-MDC MS-DRGs 001 and 002 for
FY 2024. Separately, and as previously discussed, a code proposal was
discussed at the March 7-8, 2023 ICD-10 Coordination and Maintenance
Committee meeting to request a change to how the Impella 5.5[supreg]
with SmartAssist[supreg] System is coded within the ICD-10-PCS
classification. In the proposed rule, we noted that if finalized, the
new procedure code would be included in the FY 2024 code update files
that are made available in late May/early June on the CMS website at:
https://www.cms.gov/medicare/coding/icd10. In addition, using our
established process, if finalized, the MS-DRG assignment for any new
procedure codes describing the Impella 5.5[supreg] with
SmartAssist[supreg] System will be displayed in Table 6B.--New
Procedure Codes in association with this FY 2024 IPPS/LTCH PPS final
rule that will be made publicly available on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS.
Comment: Many commenters expressed support for CMS' proposal to
reassign ICD-10-PCS code 02HA0RZ from MDC 05 in MS-DRG 215 to Pre-MDC
MS-DRGs 001 and 002 when reported as a standalone procedure. These
commenters stated they agreed with the proposal and believed
reassigning this procedure to MS-DRGs 001 and 002 aligns more
accurately with, and reflects resources used for, these more complex
patients and more complex procedures. Commenters stated that they
appreciate CMS' continued efforts to ensure appropriate code
assignments of surgical approaches for
[[Page 58695]]
short-term heart assist devices and to improve clinical consistency and
predictability for providers as short-term heart assist devices have
evolved with different access procedures to treat hemodynamically
compromised patients. Some commenters also stated that streamlining the
GROUPER logic so that ICD-10-PCS code 02HA0RZ will no longer need to be
reported as part of a procedure code combination or procedure code
``cluster'' to satisfy the logic for assignment to MS-DRGs 001 and 002
will ensure that the cases in these MS-DRGs are more clinically
homogeneous and better reflect hospital resource use.
Response: We thank the commenters for their support.
After consideration of the public comments we received, we are
finalizing our proposal to reassign ICD-10-PCS code 02HA0RZ (Insertion
of short-term external heart assist system into heart, open approach)
from MDC 05 in MS-DRG 215 to Pre-MDC MS-DRGs 001 and 002 when reported
as a standalone procedure, without modification, effective October 1,
2023, for FY 2024. Under this finalization, procedure code 02HA0RZ will
no longer need to be reported as part of a procedure code combination
or procedure code ``cluster'' to satisfy the logic for assignment to
MS-DRGs 001 and 002.
Comment: Many commenters stated that if new ICD-10-PCS procedure
codes describing the Impella 5.5[supreg] with SmartAssist[supreg]
System were finalized following the March 7-8, 2023 ICD-10 Coordination
and Maintenance Committee meeting, they recommend CMS assign the new
codes to MS-DRGs 001 and 002. Some commenters stated that patients
treated with the Impella 5.5[supreg] with SmartAssist[supreg] System
have a very similar clinical presentation as patients treated with
short-term external heart assist systems inserted via the open approach
and utilize approximately the same resources. These commenters stated
that they believed that both procedures are clinically coherent with
cases currently assigned to MS-DRGs 001 and 002, so it is reasonable
that cases reporting the insertion of the Impella 5.5[supreg] with
SmartAssist[supreg] System group to the same MS-DRG as ICD-10-PCS code
02HA0RZ. A commenter further stated that this adjustment would help
ensure adequate payment for the resources invested, allowing
institutions to maintain high-quality care, and would incentivize the
advancement of innovative interventions in the field of cardiovascular
medicine.
Response: We thank the commenters for their feedback.
We note that the proposal to change how the Impella[supreg] 5.5
with SmartAssist[supreg] System is coded within the ICD-10-PCS
classification that was discussed at the March 7-8 2023 ICD-10
Coordination and Maintenance Committee meeting was approved and new
procedure codes to identify the insertion of a short-term external
heart assist system using a conduit attached to the right axillary
artery or to the ascending aorta were finalized as reflected in the FY
2024 ICD-10-PCS Code Update files that were made publicly available on
the CMS website at https://www.cms.gov/Medicare/Coding/ICD10 on June 6,
2023. In addition to the new procedure codes describing the Impella
5.5[supreg] with SmartAssist[supreg] System being made publicly
available in the FY 2024 ICD-10-PCS Code Update files on the CMS
website, we note that the new procedure codes are also reflected in
Table 6B.--New Procedure Codes, in association with this final rule and
available on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS, including the MS-DRG
assignments for these new codes for FY 2024. We refer the reader to
section II.C.13. of the preamble of this final rule for further
information regarding the table.
Specifically, using our established process, we examined the MS-DRG
assignment for the predecessor code to determine the most appropriate
MS-DRG assignment. We reviewed the predecessor code and MS-DRG
assignment most closely associated with the new procedure codes, and in
the absence of claims data, we considered other factors that may be
relevant to the MS-DRG assignment, including the severity of illness,
treatment difficulty, complexity of service and the resources utilized
in the diagnosis and/or treatment of the condition. ICD-10-PCS
procedure code 03HY0YZ (Insertion of other device into upper artery,
open approach) is the predecessor code that we utilized to inform this
analysis.
The MS-DRG assignment for the predecessor code 03HY0YZ and the new
procedure codes describing the insertion of a short-term external heart
assist system using a conduit attached to the right axillary artery or
to the ascending aorta under MDC 05 are identified as follows.
[GRAPHIC] [TIFF OMITTED] TR28AU23.044
While the new procedure codes are being assigned to the same MS-DRG
as the predecessor code in this instance, as we have noted in prior
rulemaking, and earlier in this section, 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.
We also note that the finalized procedure codes describing the
Impella 5.5[supreg] with SmartAssist[supreg] System identify the
insertion of short-term external heart assist system using a conduit
attached to the right axillary artery or to the ascending aorta. To
fully describe the procedure, a separate code will continue to be
reported for the insertion of the external heart assist system. In
addition to the MDC and MS-DRG assignments as reflected in the previous
table and in Table 6B.--New Procedure Codes, in association with this
final rule, we note the procedure code combinations reflected in the
table that follows are assigned to MS-DRGs 001 and 002, for FY 2024.
This assignment is also reflected in the final Version 41 ICD-10 MS-DRG
GROUPER logic.
[[Page 58696]]
[GRAPHIC] [TIFF OMITTED] TR28AU23.045
The public may provide feedback on these MS-DRG assignments for FY
2024, which will then be taken into consideration for the following
fiscal year.
c. Ultrasound Accelerated Thrombolysis for Deep Venous Thrombosis
As discussed in the FY 2024 IPPS/LTCH PPS proposed rule (88 FR
27000 through 26706), we received a request to reassign cases reporting
ultrasound accelerated thrombolysis (USAT) of peripheral vascular
structures procedures with the administration of thrombolytic(s) for
deep venous thrombosis from MS-DRGs 252, 253, and 254 (Other Vascular
Procedures with MCC, with CC, and without CC/MCC, respectively) to MS-
DRGs 270, 271, and 272 (Other Major Cardiovascular Procedures with MCC,
with CC, and without CC/MCC, respectively).
Deep venous thrombosis (DVT) is caused when a blood clot (or
thrombus) forms in a vein, primarily in large veins of the lower leg
and thigh, but may also occur in the deep veins of the pelvis and less
commonly, in the upper extremities. Risk factors for DVT are similar to
those of pulmonary embolism as discussed in section II.C.4.a. of the
proposed rule and this final rule, and include prolonged immobilization
from any cause, obesity, cancer, fractured hip or leg, use of certain
medications such as oral contraceptives, and the presence of certain
medical conditions such as heart failure. Common symptoms of DVT
include leg (or arm) swelling, pain, cramping, or heaviness, skin
discoloration, the feeling of warmth in the affected area, or there may
not be any noticeable symptoms.
Thrombolysis is a type of treatment where the infusion of
thrombolytics (fibrinolytic or ``clot-busting'' drugs) is used to
dissolve blood clots that form in the arteries or veins with the goal
of improving blood flow and preventing long-term damage to tissues and
organs. Conventional catheter-directed thrombolysis (CDT) procedures
generally rely on a multi-sidehole catheter placed adjacent to the
thrombus through which thrombolytics are delivered directly to the
thrombus, however, the EKOSTM EkoSonic[supreg] Endovascular
System (EKOSTM System) employs ultrasound to assist in
thrombolysis. The ultrasound does not itself dissolve the thrombus, but
pulses of ultrasonic energy temporarily make the fibrin in the thrombus
more porous and increase fluid flow within the thrombus. High
frequency, low-intensity ultrasonic waves create a pressure gradient
that drives the thrombolytic into the thrombus and keeps it in close
proximity to the binding sites. USAT is also referred to as ultrasound-
assisted thrombolysis or ultrasound-enhanced thrombolysis.
We stated in the proposed rule that, according to the requestor
(the manufacturer of the EKOSTM device), USAT of peripheral
vascular structures with the administration of thrombolytic(s) for the
treatment of DVT performed using the EKOSTM device utilizes
more resources in comparison to other procedures that are currently
assigned to MS-DRGs 252, 253, and 254 and is not clinically coherent
with the other procedures assigned to those MS-DRGs. The requestor
stated that the cases reporting USAT of peripheral vascular structures
with the administration of thrombolytic(s) for DVT are more comparable
with and more clinically aligned with the procedures assigned to MS-
DRGs 270, 271, and 272. The requestor stated they performed an analysis
of cases reporting USAT of peripheral vascular structures
[[Page 58697]]
for DVT with the following ICD-10-PCS procedure codes.
[GRAPHIC] [TIFF OMITTED] TR28AU23.046
We noted in the proposed rule that the requestor did not include a
list of diagnosis codes describing DVT or a list of procedure codes
describing the administration of thrombolytic(s) in connection with its
analysis.
In the FY 2021 IPPS/LTCH PPS final rule (85 FR 58561 through 85 FR
58579), we summarized and responded to public comments expressing
concern with the proposed MS-DRG assignments for the newly created
procedure codes describing USAT of several anatomic sites that were
effective with discharges on and after October 1, 2020 (FY 2021).
Similar to the current request for FY 2024, for FY 2021, the commenters
recommended that USAT procedures performed with the EKOSTM
device for the treatment of DVT be assigned to MS-DRGs 270, 271, and
272 instead of MS-DRGs 252, 253, and 254. We refer the reader to the FY
2021 IPPS/LTCH PPS final rule (85 FR
[[Page 58698]]
58561 through 85 FR 58579), available on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS
for the detailed discussion.
In the proposed rule, we stated that we analyzed claims data from
the September 2022 update of the FY 2022 MedPAR file for MS-DRGs 252,
253, and 254 and cases reporting a principal diagnosis of DVT and USAT
of peripheral vascular structures procedure with and without the
administration of thrombolytic(s). We noted that we identified claims
reporting an USAT of peripheral vascular structures procedure, the
administration of thrombolytic(s), and a diagnosis of DVT with the
listed codes as shown in Table 6P.5a associated with the proposed rule
(and available on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS). The findings from
our analysis are shown in the following table.
[GRAPHIC] [TIFF OMITTED] TR28AU23.047
As shown in the table, we identified a total of 20,939 cases in MS-
DRG 252 with an average length of stay of 8 days and average costs of
$29,307. Of the 20,939 cases, we found 51 cases reporting a principal
diagnosis of DVT and USAT with thrombolytic(s) with an average length
of stay of 6.4 days and average costs of $36,660 and 10 cases reporting
a principal diagnosis of DVT and USAT without thrombolytic(s) with an
average length of stay of 6.7 days and average costs of $21,538. The
data demonstrate that the cases reporting a principal diagnosis of DVT
and USAT with or without thrombolytic(s) have a shorter average length
of stay compared to the average length of stay of all the cases in MS-
DRG 252 (6.4 days and 6.7 days, respectively versus 8 days). However,
the average costs for the cases reporting a principal diagnosis of DVT
and USAT with thrombolytic(s) are higher than the average costs of all
the cases in MS-DRG 252 ($36,660 versus $29,307) and the average costs
for the cases reporting a principal diagnosis of DVT and USAT without
thrombolytic(s) are lower than the average costs of all the cases in
MS-DRG 252 ($21,538 versus $29,307). The data indicate that the cases
reporting a principal diagnosis of DVT and USAT with thrombolytic(s)
appear to consume more resources in comparison to the other cases in
MS-DRG 252, although it is unclear if the higher resource consumption
is a direct result of the EKOSTM device technology utilized
in the performance of the thrombolysis procedure, or the fact that
these cases also include the reporting of at least one or more
secondary MCC diagnoses, or a combination of both factors. Conversely,
the data indicate that the cases reporting a principal diagnosis of DVT
and USAT without thrombolytic(s) appear to be less resource intensive
with a difference in average costs of $7,769 ($29,307-$21,538 =
$7,769). Accordingly, the data appear to reflect that the cases
reporting use of the EKOSTM device technology with
thrombolytic(s) may have an impact on the consumption of resources when
compared to all the cases in MS-DRG 252.
For MS-DRG 253, we identified a total of 16,650 cases with an
average length of stay of 5.2 days and average costs of $22,685. Of the
16,650 cases, we found 80 cases reporting a principal diagnosis of DVT
and USAT with thrombolytic(s) with an average length of stay of 5.2
days and average costs of $26,471 and 11 cases reporting a principal
diagnosis of DVT and USAT without thrombolytic(s) with an average
length of stay of 3.8 days and average costs of $20,126. The data
demonstrate that the average length of stay for cases reporting a
principal diagnosis of DVT and USAT with thrombolytic(s) is the same as
the average length of stay for all the cases in MS-DRG 253 (5.2 days).
Conversely, the average length of stay for the cases reporting a
principal diagnosis of DVT and USAT without thrombolytic(s) is shorter
than the average length of stay of all the cases in MS-DRG 253 (3.8
days versus 5.2 days). Similar to MS-DRG 252, the average costs for the
cases reporting a principal diagnosis of DVT and USAT with
thrombolytic(s) are higher than the average costs of all the cases in
MS-DRG 253 ($26,471 versus $22,685) and the average costs for the cases
reporting a principal diagnosis of DVT and USAT without thrombolytic(s)
are lower than the average costs of all the cases in MS-DRG 253
($20,126 versus $22,685). The data indicate that the cases reporting a
principal diagnosis of DVT and USAT with thrombolytic(s) appear to
consume more resources in comparison to the other cases in MS-DRG 253,
although it is unclear if the higher resource consumption is a direct
result of the EKOSTM device technology utilized in the
performance of the thrombolysis procedure, or the fact that these cases
also include the reporting of at least one or more secondary CC
diagnoses, or a combination of both factors.
For MS-DRG 254, we identified a total of 6,707 cases with an
average length of stay of 2.4 days and average costs of $15,438. Of the
6,707 cases, we found 22 cases reporting a principal diagnosis of DVT
and USAT with thrombolytic(s) with an average length of stay of 3 days
and average costs of $21,867 and 9 cases reporting a principal
diagnosis of DVT and USAT without thrombolytic(s) with an average
length of stay of 2 days and average costs of $17,750. The data
demonstrate that the cases reporting a principal diagnosis of DVT and
USAT with thrombolytic(s) have a longer average length of stay compared
to the average
[[Page 58699]]
length of stay of all the cases in MS-DRG 254 (3 days versus 2.4 days),
however, the cases reporting a principal diagnosis of DVT and USAT
without thrombolytic(s) have a shorter but comparable average length of
stay compared to the average length of stay of all the cases in MS-DRG
254 (2 days versus 2.4 days). Additionally, the average costs for the
cases reporting a principal diagnosis of DVT and USAT with or without
thrombolytic(s) are higher than the average costs of all the cases in
MS-DRG 254 ($21,867 and $17,750 respectively versus $15,438) with a
corresponding difference in average costs of $6,429 and $2,312
respectively. Similar to our findings for MS-DRGs 252 and 253, the data
for MS-DRG 254 indicate the cases reporting a principal diagnosis of
DVT and USAT with thrombolytic(s) appear to consume more resources in
comparison to the other cases in their respective MS-DRG. In addition,
as noted, for MS-DRG 254, the average costs of cases reporting a
principal diagnosis of DVT and USAT without thrombolytic(s) are also
higher than the average costs of all the cases in MS-DRG 254. However,
it is unclear if the higher resource consumption is a direct result of
the EKOSTM device technology utilized in the performance of
the thrombolysis procedure alone, or if there are other contributing
factors, since cases grouping to MS-DRG 254 do not include the
reporting of at least one or more secondary CC or MCC diagnoses.
We stated in the proposed rule that our review of the data for MS-
DRGs 252, 253, and 254 and our initial analysis for cases reporting a
principal diagnosis of DVT and USAT procedure with and without the
administration of thrombolytic(s) suggests that the administration of
thrombolytic(s) may be considered a factor in the consumption of
resources for these cases in MS-DRGs 252, 253, and 254 where USAT is
performed in the treatment of a DVT. For example, in MS-DRG 252, there
are 51 cases reporting a principal diagnosis of DVT and USAT procedure
with the administration of thrombolytic(s) and 10 cases reporting a
principal diagnosis of DVT and USAT procedure without the
administration of thrombolytic(s), with both subsets of cases showing a
comparable average length of stay of 6.4 and 6.7 days, respectively,
however, the difference in average costs for cases with and without
thrombolytic(s) is $15,122 ($36,660-$21,538 = $15,122). For MS-DRG 253,
there are 80 cases reporting a principal diagnosis of DVT and USAT
procedure with the administration of thrombolytic(s) and 11 cases
reporting a principal diagnosis of DVT and USAT procedure without the
administration of thrombolytic(s), with both subsets of cases showing a
difference in the average length of stay (5.2 days and 3.8 days,
respectively) and a difference in average costs of $6,345 ($26,471-
$20,126 = $6,345). For MS-DRG 254, there are 22 cases reporting a
principal diagnosis of DVT and USAT procedure with the administration
of thrombolytic(s) and 9 cases reporting a principal diagnosis of DVT
and USAT procedure without the administration of thrombolytic(s),
however, both subsets of cases have a similar average length of stay (3
days and 2 days, respectively) with a difference in average costs of
$4,117 ($21,867-$17,750 = $4,117).
In the proposed rule, we noted that since the request we received
was to reassign cases reporting ultrasound accelerated thrombolysis
(USAT) with the administration of thrombolytic(s) for the treatment of
deep venous thrombosis (DVT) from MS-DRGs 252, 253, and 254 to MS-DRGs
270, 271, and 272, based on our approach utilized in our initial
analysis of claims reporting USAT with a principal diagnosis for DVT in
MS-DRGs 252, 253, and 254, we then analyzed claims data from the
September 2022 update of the FY 2022 MedPAR file for all cases in MS-
DRGs 270, 271, and 272 and compared it to the cases reporting a
principal diagnosis of DVT and USAT procedure with or without
thrombolytic(s) in MS-DRGs 252, 253, and 254. The findings from our
analysis are shown in the following tables.
[GRAPHIC] [TIFF OMITTED] TR28AU23.048
[GRAPHIC] [TIFF OMITTED] TR28AU23.049
The claims data show that the 61 cases reporting a principal
diagnosis of DVT and USAT with or without thrombolytic(s) in MS-DRG 252
have average costs that are lower than the average costs of all cases
in MS-DRG 270 ($34,181 versus $42,517) and have a shorter average
length of stay compared to all the cases in MS-DRG 270 (6.4 days versus
9.5 days). The 91 cases reporting a principal diagnosis of DVT and USAT
with or without thrombolytic(s) in MS-DRG 253 have a comparable average
length of stay (5 days versus 5.4 days) in comparison to all the cases
in MS-DRG 271 and lower average costs in comparison to all the cases in
MS-DRG 271 ($25,704 versus $30,030) with a difference of $4,326.
Finally, the 31 cases reporting a principal diagnosis of DVT and USAT
with or without thrombolytic(s) in MS-DRG 254 have an average length of
stay that is comparable to all the cases in the
[[Page 58700]]
MS-DRG 272 (2.7 days versus 2.4 days) and comparable average costs
($20,672 versus $21,556) with a difference of $884.
We stated in the proposed rule that upon analysis of the claims
data and our review of the request, we do not agree with reassigning
cases reporting an USAT procedure with the administration of
thrombolytic(s) and a principal diagnosis of DVT from MS-DRGs 252, 253,
and 254 to MS-DRGs 270, 271, and 272. As stated in the proposed rule,
the data do not support that cases reporting USAT (with or without
thrombolytic(s)) for DVT utilize similar resources when compared to
other procedures currently assigned to MS-DRGs 270, 271, and 272. We do
not agree that cases reporting USAT (with or without thrombolytic(s))
are more comparable with and more clinically aligned with the
procedures assigned to MS-DRGs 270, 271, and 272 because the majority
of procedures in these MS-DRGs describe procedures performed on the
heart and great vessels with either an open or an endoscopic approach
in contrast to the USAT endovascular (percutaneous) procedure performed
on the peripheral vascular structures. In addition, the majority of
procedures in MS-DRGs 270, 271, and 272 are performed on patients who
are not clinically similar to patients who undergo USAT for DVT since
they describe procedures such as bypass, occlusion, and restriction
that are typically performed for patients with conditions other than a
DVT, such as atherosclerosis, aneurysm, and acute myocardial infarction
(AMI). Lastly, a number of procedures in these MS-DRGs also involve the
use of a permanently implanted device while the procedures utilizing
USAT do not. Therefore, we do not consider USAT procedures to be major
cardiovascular procedures, nor do we believe the cases reporting USAT
with (or without thrombolytic(s)) for DVT demonstrate a similar level
of technical complexity when compared to other procedures currently
assigned to MS-DRGs 270, 271, and 272.
As noted in the proposed rule, while the average costs are higher
for cases reporting the administration of a thrombolytic, we questioned
whether the higher average costs may also reflect other factors, such
as the use of the EKOSTM device or the performance of other
O.R. procedures that also group to MS-DRGs 252, 253, and 254.
Consistent with the analysis discussed in section II.C.4.a. of the
proposed rule and this final rule for a similar, but separate request
related to thrombolysis procedures, we believed it would also be
beneficial to examine cases reporting standard CDT procedures with or
without thrombolytic(s) for the treatment of DVT in MS-DRGs 252, 253,
and 254, and compare the findings to the cases reporting USAT with or
without thrombolytic(s) for the treatment of DVT.
Therefore, as discussed in the proposed rule, we conducted
additional analyses to determine if there were significant differences
in resource utilization for cases reporting standard CDT with or
without thrombolytic(s) versus USAT procedures with or without
thrombolytic(s) in the treatment of DVT, since claims data to compare
the two modalities is now available and studies have reported similar
clinical outcomes in reducing DVT regardless of which thrombolysis
modality is utilized.\5\
---------------------------------------------------------------------------
\5\ Engelberger, Rolf & Stuck, Anna K. & Spirk, David &
Willenberg, Torsten & Haine, Axel & P[eacute]riard, Daniel &
Baumgartner, Iris & Kucher, Nils. (2017). Ultrasound-assisted versus
conventional catheter-directed thrombolysis for acute ilio-femoral
deep vein thrombosis: one-year follow-up data of a randomized-
controlled trial. Journal of Thrombosis and Haemostasis. 15.
10.1111/jth.13709.
---------------------------------------------------------------------------
We analyzed claims data from the September 2022 update of the FY
2022 MedPAR file for all cases in MS-DRGs 252, 253, and 254 and cases
reporting a standard CDT procedure with or without the administration
of thrombolytic(s) and a principal diagnosis of DVT. We utilized the
previously listed procedure codes for the administration of
thrombolytic(s) and the previously listed diagnosis codes for a
principal diagnosis of DVT. We identified cases describing standard CDT
procedures performed in the treatment of DVT with the procedure codes
listed in Table 6P.5a. associated with the proposed rule and available
on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS. The findings from our analysis are
shown in the following table. We note there were no cases found to
report a standard CDT procedure with or without thrombolytic(s) and a
principal diagnosis of DVT in MS-DRGs 253 or 254.
[GRAPHIC] [TIFF OMITTED] TR28AU23.050
The data shows that the 3 cases reporting a principal diagnosis of
DVT and standard CDT with or without thrombolytic(s) in MS-DRG 252 have
a shorter average length of stay compared to all cases in MS-DRG 252
(2.3 days versus 8 days) and lower average costs ($10,603 versus
$29,307).
We noted in the proposed rule that, overall, our analysis of the
claims data for cases reporting a principal diagnosis of DVT and USAT
or standard CDT, with or without thrombolytic(s), demonstrate a low
volume of cases, however, the average costs of the cases reporting USAT
with thrombolytic(s) reflect a significantly higher consumption of
resources than all cases in MS-DRGs 252, 253, and 254. We further noted
that because it is also possible that a patient may be admitted to a
hospital and receive thrombolysis (USAT or CDT) with a principal
diagnosis other than a DVT or the DVT condition may be reported as a
secondary diagnosis, we believed additional analysis for cases
reporting either USAT or CDT, regardless of the principal diagnosis,
would provide us with more beneficial information in our review of
these cases.
Therefore, using the September 2022 update of the FY 2022 MedPAR
file, we conducted an analysis of MS-DRGs 252, 253, and 254 for cases
reporting either USAT or CDT with and without thrombolytic(s) with any
principal diagnosis from MDC 5. Our findings are shown in the following
table.
[[Page 58701]]
[GRAPHIC] [TIFF OMITTED] TR28AU23.051
The findings from our analysis show a larger volume of cases for
each respective MS-DRG (252, 253, and 254) for cases reporting USAT or
CDT procedures with any MDC 05 principal diagnosis versus the findings
from our earlier analysis involving cases specifically reporting a
principal diagnosis of DVT. The claims data also show that the 468
cases reporting any principal diagnosis from MDC 05 and USAT or CDT
with or without thrombolytic(s) in MS-DRG 252 have average costs that
are higher than the average costs of all cases in MS-DRG 252 ($39,181
versus $29,307) and have a comparable average length of stay (8.6 days
versus 8.0 days). The 722 cases reporting any principal diagnosis from
MDC 05 and USAT or CDT with or without thrombolytic(s) in MS-DRG 253
have a shorter average length of stay (4.9 days versus 5.2 days) in
comparison to all the cases in MS-DRG 253 and higher average costs
($29,663 versus $22,685) with a difference of $6,978. Finally, the 195
cases reporting any principal diagnosis from MDC 05 and USAT or CDT
with or without thrombolytic(s) in MS-DRG 254 have an average length of
stay that is comparable to all the cases in the MS-DRG 272 (2.6 days
versus 2.4 days) and higher average costs ($22,487 versus $15,438) with
a difference of $7,049.
As discussed in the proposed rule, based on our review and the
claims data analysis for cases in MS-DRGs 252, 253, and 254 and MS-DRGs
270, 271, and 272, and for cases reporting standard CDT or USAT with or
without thrombolytic(s) regardless of the principal diagnosis reported
from MDC 05, we believe that while the subset of cases for patients
undergoing a thrombolysis (CDT or USAT) procedure for DVT does not
clinically align with patients undergoing surgery for acute myocardial
infarction (AMI) and does not involve the same level of complexity as
cases grouping to MS-DRGs 270, 271, and 272, the differences in
resource consumption warrant reassignment of these cases. Specifically,
we believed the clinical and data analyses support creating a new base
MS-DRG to distinguish cases reporting USAT or standard CDT procedure of
peripheral vascular structures with or without thrombolytic(s) from
other cases currently grouping to MS-DRGs 252, 253, and 254. We stated
we believe a new MS-DRG would reflect more appropriate payment for USAT
and standard CDT procedures of peripheral vascular structures.
In the proposed rule, we also noted that to compare and analyze the
impact of our suggested modifications, we ran a simulation using the
most recent claims data from the December 2022 update of the FY 2022
MedPAR file. The following table illustrates our findings for all 1,487
cases reporting procedure codes describing an USAT or CDT procedure
with any principal diagnosis from MDC 05.
[GRAPHIC] [TIFF OMITTED] TR28AU23.052
Consistent with our established process as discussed in section
II.C.1.b. of the preamble of the proposed rule and this final rule,
once the decision has been made to propose to make further
modifications to the MS-DRGs, such as creating a new base MS-DRG, all
five criteria to create subgroups must be met for the base MS-DRG to be
split (or subdivided) by a CC subgroup. Therefore, we applied the
criteria to create subgroups in a base MS-DRG. We noted in the proposed
rule that, as shown in the table that follows, a three-way split of
this base MS-DRG failed to meet the criterion that there be at least
500 cases in the NonCC (without CC/MCC) subgroup.
[GRAPHIC] [TIFF OMITTED] TR28AU23.053
As discussed in section II.C.1.b. of the preamble of the proposed
rule and this final rule, if the criteria for a three-way split fail,
the next step is to determine if the criteria are satisfied for a two-
way split. We applied the criteria for a two-way split for the ``with
MCC and without MCC'' subgroups. We noted that, as shown in the table
that follows, a two-way split of this base MS-DRG met all five
criteria. For the proposed MS-DRGs, there is at least (1) 500 or more
cases in the MCC group and in the without MCC subgroup; (2) 5 percent
or more of the cases in the MCC group and
[[Page 58702]]
in the without MCC subgroup; (3) a 20 percent difference in average
costs between the MCC group and the without MCC group; (4) a $2,000
difference in average costs between the MCC group and the without MCC
group; and (5) a 3-percent reduction in cost variance, indicating that
the proposed severity level splits increase the explanatory power of
the base MS-DRG in capturing differences in expected cost between the
proposed MS-DRG severity level splits by at least 3 percent and thus
improve the overall accuracy of the IPPS payment system. The following
table illustrates our findings for the suggested MS-DRGs with a two-way
severity level split.
[GRAPHIC] [TIFF OMITTED] TR28AU23.054
Accordingly, because the criteria for the two-way split were met,
we stated we believed a split (or CC subgroup) is warranted for the
proposed new base MS-DRG. As a result, for FY 2024, we proposed to
create new MS-DRG 278 (Ultrasound Accelerated and Other Thrombolysis of
Peripheral Vascular Structures with MCC) and new MS-DRG 279 (Ultrasound
Accelerated and Other Thrombolysis of Peripheral Vascular Structures
without MCC).
We proposed to define the logic for the proposed new MS-DRGs using
the previously listed procedure codes for USAT and CDT, as identified
and discussed in our analysis of the claims data in Table 6P.5a
associated with the proposed rule.
Comment: Commenters supported the proposal to create new MS-DRGs
278 and 279 (Ultrasound Accelerated and Other Thrombolysis of
Peripheral Vascular Structures with and without MCC, respectively)
given the data and information provided. A commenter stated the new MS-
DRGs will generate more appropriate payment for cases reporting these
procedures.
Response: We thank the commenters for their support.
Comment: A couple commenters suggested that the proposal to create
the two new MS-DRGs should be delayed until more data can be collected.
The commenters stated their belief that it is premature to create these
new MS-DRGs at this time and that in developing these proposed MS-DRGs,
CMS relied on recently implemented ICD-10-PCS data. According to the
commenters, due to the lengthy processes for hospitals to adopt and
accurately implement new coding, and conflicting coding advice for
utilization of the ICD-10-PCS procedure codes for CDT and USAT, the
number of cases is currently insufficient to support development of new
MS-DRGs. The commenter stated that the low volume of cases and related
data selected by CMS for analysis, CDT for the treatment of DVT, cannot
adequately compare to the costs, complexity, and utilization of USAT
with a high confidence interval.
Response: We appreciate the commenters' feedback. We disagree with
the commenters that it is premature to propose the creation of new MS-
DRGs 278 and 279 based on our review and claims data analysis as
discussed in the proposed rule. In response to the commenters'
statement that CMS relied on recently implemented ICD-10-PCS data, it
is not clear to us what specific ICD-10-PCS data the commenters are
referring to since a specific list was not provided, however, we
believe the commenters may be suggesting the codes for USAT that were
finalized October 1, 2020 (FY 2021), and listed previously in
connection with the analysis discussed in the proposed rule. As
discussed in the proposed rule and prior rulemaking, our goal is always
to use the best available data. We noted in the proposed rule that our
initial MS-DRG analysis was based on ICD-10 claims data from the
September 2022 update of the FY 2022 MedPAR file, which contains
hospital bills received from October 1, 2021, through September 30,
2022, and where otherwise indicated, additional analysis was based on
ICD-10 claims data from the December 2022 update of the FY 2022 MedPAR
file, which contains hospital bills received by CMS through December
31, 2022, for discharges occurring from October 1, 2021, through
September 30, 2022. Therefore, we believe our analysis of claims data
in consideration of the MS-DRG request to reassign cases reporting USAT
of peripheral vascular structures procedures with the administration of
thrombolytic(s) for DVT is consistent with our standard process,
regardless of the effective date of the coded claims data. We also do
not agree with the commenters' assertion that it is a lengthy process
for hospitals to adopt and accurately implement new coding. We note
that procedure code proposals discussed at the September ICD-10
Coordination and Maintenance Committee meeting and subsequently
finalized are typically included in Table 6B.--New Procedure Codes in
association with the proposed rule that is made publicly available on
the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS. This table (Table 6B) lists the new
procedure codes that have been approved to date that will be effective
with discharges on and after October 1 of the upcoming fiscal year.
Therefore, information regarding the finalized codes from the September
meeting is made publicly available approximately 4-5 months in advance
of the implementation date, affording the ability for users of the code
set to gain familiarity with the updates. In addition, there are
extensive industry-sponsored educational opportunities through various
professional associations that introduce and discuss the annual code
updates. For example, the American Hospital Association (AHA), American
Health Information Management Association (AHIMA), and the American
Academy of Professional Coders (AAPC) generally take lead roles in
developing detailed technical training materials for coders and other
users of the ICD-10 code set. The AHA also includes updates to ICD-10
in its Coding Clinic[supreg] for ICD-10-CM/ICD-10-PCS publication.
Because the codes describing USAT were finalized for implementation
October 1, 2020 (FY 2021), we believe sufficient time has elapsed and
that providers are successfully coding and reporting the procedure as
demonstrated in our claims analysis.
It is also not clear what conflicting coding advice for utilization
of the ICD-10-PCS procedure codes for CDT and USAT the commenters are
referring to since the commenters did not provide examples or
supplemental information for what they believed to be conflicting
advice to enable further evaluation.
Comment: A couple commenters expressed concern that the inclusion
of both conventional CDT, also known as
[[Page 58703]]
``standard infusion catheters,'' and USAT in the proposed new MS-DRGs
disregards fundamental clinical differences between the procedures.
According to the commenters, CDT generally relies on a multi-sidehole
infusion catheter placed adjacent to the thrombus through which
thrombolytics are delivered, typically over the course of 24 hours with
the catheter in-dwelling, whereas USAT employs ultrasound to assist in
thrombolysis, and the pulses of ultrasonic energy temporarily make the
fibrin in the thrombus more porous and increase fluid flow within the
thrombus. The commenters stated standard CDT is the simple infusion of
liquids into the vessel and should not map to the same root operation
fragmentation codes as does USAT. The commenters also stated CDT
procedures are generally less complex clinically and consume
significantly lower level of hospital resources as a result. The
commenters recommended CMS should delay implementation, not finalize
the proposed MS-DRGs at this time and reconsider at a later date when
utilization volumes reach a threshold of significance.
A commenter also indicated that an analysis of cost data was being
submitted to CMS to demonstrate that USAT DVT cases have total costs
that are more than three times the cost of CDT procedures for the
sickest patients.
Response: We disagree with the commenters that inclusion of both
conventional CDT and USAT in the proposed new MS-DRGs disregards
fundamental clinical differences between the procedures. We note that
while USAT procedures performed utilizing the EKOSTM device
employ ultrasound, the objective of both CDT and USAT procedures is to
effectuate thrombolysis and reduce clot burden. In response to the
commenters' statement that standard CDT is the simple infusion of
liquids into the vessel and should not map to the same root operation
fragmentation codes as does USAT, we note that under ICD-10-PCS, both
USAT and CDT are reported with the root operation fragmentation,
defined as breaking solid matter in a body part into pieces. The
procedure may be accomplished by physical force (e.g., manual,
ultrasonic) applied directly or indirectly that is used to break the
solid matter into pieces. The solid matter may be an abnormal byproduct
of a biological function or a foreign body. The pieces of solid matter
are not taken out. With respect to the commenters' statement that CDT
procedures are generally less complex clinically and consume
significantly lower level of hospital resources, we note that any
procedure that places a catheter inside a blood vessel carries certain
risks, including damage to the blood vessel, bruising or bleeding at
the puncture site, and infection. In response to the commenters'
recommendation that CMS should delay finalization for the proposed MS-
DRGs and reconsider in the future when utilization volumes reach a
threshold of significance, as discussed in the proposed rule, once the
decision was made to propose a new base MS-DRG, we applied the criteria
to create subgroups and the criteria for a two-way split was met,
therefore, we believe sufficient volume does exist for the proposed new
MS-DRGs.
Finally, in response to the cost data that was submitted by a
commenter, we note that it was the same data analysis as reflected and
discussed in the proposed rule, therefore we refer readers to that
prior discussion.
Comment: A commenter stated they agreed that fragmentation
procedures with or without USAT do not belong in the requested MS-DRGs
270, 271, and 272, and suggested they remain in their current MS-DRGs
252, 253, and 254 based on clinical coherence and resource utilization.
Response: We appreciate the commenter's feedback and agree that
fragmentation procedures with or without USAT do not belong in the
requested MS-DRGs 270, 271, and 272. However, for reasons discussed in
the proposed rule, we believe our review of these procedures and data
analysis findings support the proposal to create new MS-DRGs 278 and
279 for grouping cases reporting the performance of USAT or CDT with
any principal diagnosis from MDC 05.
Comment: A couple commenters disagreed with the proposal to create
new MS-DRGs 278 and 279. A commenter stated USAT procedures have been
receiving appropriate payment since FY 2021 and the proposed new MS-
DRGs would create unnecessary administrative burden for established
procedure codes that already have appropriate payment. Another
commenter stated that fragmentation procedures, with or without
ultrasonic assistance to break up blood clots in the peripheral
vasculature, should stay assigned to the current MS-DRGs 252, 253, and
254, respectively. The commenter stated that the costs and resources
for these procedures are consistent with current payment levels when
compared to the rest of the procedures assigned to the current MS-DRGs,
that the change is not needed or necessary, and that over time may
result in overall reduced payment, given that such a low number of
procedures would be assigned to their own MS-DRGs.
Response: We appreciate the commenters' feedback, however, based on
our review of the procedures and claims data analysis as discussed in
the proposed rule, we believe that USAT and CDT procedures performed on
peripheral vascular structures are clinically distinct and utilize a
different pattern of resources than other procedures in MS-DRGs 252,
253, and 254. We stated in the proposed rule that while we did not
agree with the request to reassign cases reporting USAT or CDT for
peripheral vascular structures from MS-DRGs 252, 253, and 254 to MS-
DRGs 270, 271, and 272, we believed the findings from our analysis
warranted proposed reassignment of these cases. While we described the
findings from our review of the procedures currently assigned to MS-
DRGs 270, 271, and 272 to specifically address the MS-DRG request (88
FR 26704), we note that in our review of cases assigned to MS-DRGs 252,
253, and 254 we identified the majority of procedures reported are for
procedures that involve a bypass or dilation procedure that alters the
diameter or route of a tubular body part with either an open or
percutaneous endoscopic approach in contrast to the USAT endovascular
(percutaneous) procedure performed on the peripheral vascular
structures. In addition, a number of procedures in these MS-DRGs also
involve the use of a permanently implanted device while the procedures
utilizing USAT or CDT do not. We also do not agree that the proposed
new MS-DRGs would create an unnecessary administrative burden for the
established procedure codes since providers are accustomed to proposed
and finalized changes to the MS-DRG classifications each fiscal year
and software vendors incorporate the finalized changes into their
products. With respect to the commenter's assertion that a low volume
of procedures would be assigned to their own MS-DRGs based on the
proposal, as previously discussed, once the decision was made to
propose a new base MS-DRG, we applied the criteria to create subgroups
and the criteria for a two-way split was met, therefore, we believe
sufficient volume does exist for the proposed new MS-DRGs.
After consideration of the public comments we received, we are
finalizing our proposal to create new MS-DRG 278 (Ultrasound
Accelerated and Other Thrombolysis of Peripheral Vascular Structures
with MCC) and new MS-DRG 279 (Ultrasound Accelerated
[[Page 58704]]
and Other Thrombolysis of Peripheral Vascular Structures without MCC),
without modification, for FY 2024. We are also finalizing our proposal
to define the logic for the new MS-DRGs using the previously listed
procedure codes for USAT and CDT, as identified and discussed in our
analysis of the claims data in Table 6P.5a associated with the proposed
rule. We will continue to monitor the claims data for these new MS-DRGs
after implementation to determine if additional refinements are
warranted.
d. Coronary Intravascular Lithotripsy
In the FY 2024 IPPS/LTCH PPS proposed rule (88 FR 26706 through
26712), we discussed a request we received to review the MS-DRG
assignment of cases describing percutaneous coronary intravascular
lithotripsy (IVL) involving the insertion of a coronary drug-eluting
stent. Coronary IVL is utilized in a subset of percutaneous coronary
interventions (PCI) procedures when the artery is severely calcified.
The presence of calcium can create various challenges in PCI procedures
as it can prevent the optimal deployment of coronary stents and can
negatively impact patient outcomes. To fully optimize the PCI for
severely calcified arteries, advanced techniques, such as coronary IVL,
that utilize specialty devices are often required. In coronary IVL, a
lithotripsy device catheter is delivered from a small incision in the
patient's arm or leg through to the coronary arterial system of the
heart to reach the site of a severely calcified lesion. The lithotripsy
emitters at the end of the catheter create acoustic pressure waves that
are intended to break up the calcification that is restricting the
blood flow in the vessels of the heart to help open the blood vessels
when an angioplasty balloon is inflated. After the lithotripsy is
performed, the provider can implant an intraluminal device, also called
a stent, to keep the vessel open.
According to the requestor, PCIs involving coronary IVL are
clinically more complex because coronary IVL is a therapy deployed
exclusively in severely calcified coronary lesions, and these lesion
types are associated with longer procedure times and increased
utilization of hospital resources. The requestor performed its own
analysis of claims data for cases reporting procedure codes describing
coronary IVL in MS-DRGs 246 and 247 (Percutaneous Cardiovascular
Procedures with Drug-Eluting Stent with MCC or 4+ Arteries or Stents
and without MCC, respectively) and stated that their findings showed a
significant disparity in total standardized costs for cases in MS-DRG
247. Therefore, according to the requestor, the reassignment of all
cases reporting procedure codes describing percutaneous coronary IVL
involving the insertion of a drug-eluting intraluminal device from the
lower severity level MS-DRG 247 to the higher severity level MS-DRG 246
would be reasonable. The requestor also asked that CMS analyze the
cases reporting procedure codes describing percutaneous coronary IVL
involving the insertion of a non-drug-eluting intraluminal device to
determine if reclassifying cases from the lower severity level MS-DRG
249 (Percutaneous Cardiovascular Procedures with Non-Drug-Eluting Stent
without MCC) to the higher severity level MS-DRG 248 (Percutaneous
Cardiovascular Procedures with Non-Drug-Eluting Stent with MCC or 4+
Arteries or Stents) would be warranted.
The four ICD-10-PCS procedure codes that describe percutaneous
coronary IVL are shown in the following table.
[GRAPHIC] [TIFF OMITTED] TR28AU23.055
We stated in the proposed rule that the Shockwave C2 Intravascular
Lithotripsy System, indicated for lithotripsy-enabled, low-pressure
dilation of calcified, stenotic de novo coronary arteries prior to
stenting, is identified by the reporting of an ICD-10-PCS code that
describes percutaneous coronary IVL shown in the previous table. The
Shockwave C2 Intravascular Lithotripsy System was approved for new
technology add-on payments for FY 2022 (86 FR 45151 through 45153) and
FY 2023 (87 FR 48913). We refer readers to section II.E.5 of the
preamble of the proposed rule and this final rule for a discussion
regarding the FY 2024 status of technologies approved for FY 2023 new
technology add-on payments, including the Shockwave C2 Intravascular
Lithotripsy System.
We stated in the proposed rule that the requestor is correct that
cases reporting procedure codes that describe percutaneous coronary IVL
involving the insertion of a drug-eluting intraluminal device group to
MS-DRGs 246 and 247. We also stated the requestor is correct that cases
reporting procedure codes that describe percutaneous coronary IVL
involving the insertion of a non-drug-eluting intraluminal device group
to MS-DRGs 248 and 249. We referred the reader to the ICD-10 MS-DRG
Definitions Manual Version 40.1, which is available 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 246, 247, 248, and 249.
In analyzing this request, we noted in the proposed rule that
coronary IVL is a vessel preparation technique and that there may be
instances where an intraluminal device is unable to be inserted after
the application of the IVL pulses. Therefore, in our analysis of cases
reporting procedure codes describing percutaneous coronary IVL
involving the insertion of a drug-eluting intraluminal device and non-
drug-eluting intraluminal device that group to MS-DRGs 246, 247, 248,
and 249, we stated that we included cases reporting percutaneous
coronary IVL without procedure codes describing the insertion of a
intraluminal device that group to MS-DRGs 250 and 251 (Percutaneous
Cardiovascular Procedures without Coronary Artery Stent with MCC and
without MCC, respectively) in our examination of claims data from the
September 2022
[[Page 58705]]
update of the FY 2022 MedPAR file for cases reporting percutaneous
coronary IVL and compared the results to all cases in their respective
MS-DRG.
The following table shows our findings:
[GRAPHIC] [TIFF OMITTED] TR28AU23.056
As shown by the table, in MS-DRG 246, we identified a total of
40,647 cases, with an average length of stay of 5.2 days and average
costs of $25,630. Of those 40,647 cases, there were 2,359 cases
reporting percutaneous coronary IVL, with higher average costs as
compared to all cases in MS-DRG 246 ($35,503 compared to $25,630), and
a longer average length of stay (5.7 days compared to 5.2 days). In MS-
DRG 247, we identified a total of 54,671 cases with an average length
of stay of 2.4 days and average costs of $16,241. Of those 54,671
cases, there were 1,505 cases reporting percutaneous coronary IVL, with
higher average costs as compared to all cases in MS-DRG 247 ($24,141
compared to $16,241), and a longer average length of stay (2.7 days
compared to 2.4 days). In MS-DRG 248, we identified a total of 555
cases with an average length of stay of 5.9 days and average costs of
$25,740. Of those 555 cases, there were 13 cases reporting percutaneous
coronary IVL, with higher average costs as compared to all cases in MS-
DRG 248 ($34,492 compared to $25,740), and a longer average length of
stay (7.2 days compared to 5.9 days). In MS-DRG 249, we identified a
total of 604 cases with an average length of stay of 2.5 days and
average costs of $14,909. Of those 604 cases, there were 11 cases
reporting percutaneous coronary IVL, with higher average costs as
compared to all cases in MS-DRG 249 ($18,648 compared to $14,909), and
a longer average length of stay (2.8 days compared to 2.5 days). In MS-
DRG 250, we identified a total of 3,483 cases with an average length of
stay of 4.8 days and average costs of $20,634. Of those 3,483 cases,
there were 201 cases reporting percutaneous coronary IVL, with higher
average costs as compared to all cases in MS-DRG 250 ($25,628 compared
to $20,634), and a shorter average length of stay (4.4 days compared to
4.8 days). In MS-DRG 251, we identified a total of 3,199 cases with an
average length of stay of 2.5 days and average costs of $14,273. Of
those 3,199 cases, there were 185 cases reporting percutaneous coronary
IVL, with higher average costs as compared to all cases in MS-DRG 251
($20,289 compared to $14,273), and a shorter average length of stay
(2.4 days compared to 2.5 days). We stated in the proposed rule that
the data analysis shows that the average costs of cases reporting
percutaneous coronary IVL, with or without involving the insertion of
intraluminal device, are higher than for all cases in their respective
MS-DRG.
We also stated that the data analysis also shows that when the
insertion of an intraluminal device was reported with percutaneous
coronary IVL, average costs are generally similar without regard as to
whether a drug-eluting or a non-drug-eluting intraluminal device was
placed. In MS-DRG 246, there were 2,359 cases reporting percutaneous
coronary IVL involving the insertion of a drug-eluting intraluminal
device with average costs of $35,503 compared to 13 cases reporting
percutaneous coronary IVL involving the insertion of a non-drug-eluting
intraluminal device with average costs of $34,492 in MS-DRG 248. In MS-
DRG 247, there were 1,505 cases reporting percutaneous coronary IVL
involving the insertion of a drug-eluting intraluminal device with
average costs of $24,141 compared to 11 cases reporting percutaneous
coronary IVL involving the insertion of a non-drug-eluting intraluminal
device with average costs of $18,648 in MS-DRG 249.
In the proposed rule, we stated we reviewed this data analysis and
agreed
[[Page 58706]]
that the performance of percutaneous coronary IVL contributes to
increased resource consumption for these PCI procedures. We also stated
that we agreed that clinically, the presence of severe calcification
can increase the treatment difficulty and complexity of service. The
data analysis clearly shows that cases reporting percutaneous coronary
IVL, with or without involving the insertion of intraluminal device,
have higher average costs and generally longer lengths of stay compared
to all the cases in their assigned MS-DRG. For these reasons, we
proposed to create new MS-DRGs for percutaneous coronary IVL involving
the insertion of an intraluminal device. While there is not a large
number of cases reporting percutaneous coronary IVL without the
insertion of an intraluminal device represented in the Medicare data,
and we generally prefer not to create a new MS-DRG unless it would
include a substantial number of cases, we stated in the proposed rule
that we believed creating a separate MS-DRG for these cases as well
would appropriately address the differential in resource consumption.
Therefore, we also proposed to create a new MS-DRG for cases describing
percutaneous coronary IVL without the insertion of an intraluminal
device.
To compare and analyze the impact of our suggested modifications,
we noted that we ran a simulation using the most recent claims data
from the December 2022 update of the FY 2022 MedPAR file. The following
table illustrates our findings for all 4,238 cases reporting procedure
codes describing percutaneous coronary IVL involving the insertion of
an intraluminal device.
[GRAPHIC] [TIFF OMITTED] TR28AU23.057
We stated we applied the criteria to create subgroups in a base MS-
DRG as discussed in section II.C.1.b. of the proposed rule and this FY
2024 IPPS/LTCH PPS final rule. As shown, a three-way split of the
proposed new MS-DRG failed to meet the criterion that there be at least
a 20% difference in average costs between the CC and NonCC subgroup and
also failed to meet the criterion that there be at least a $2,000
difference in average costs between the CC and NonCC subgroup.
[GRAPHIC] [TIFF OMITTED] TR28AU23.058
We then applied the criteria for a two-way split for the ``with
MCC'' and ``without MCC'' subgroups and found that all five criteria
were met. The following table illustrates our findings.
[GRAPHIC] [TIFF OMITTED] TR28AU23.059
BILLING CODE 4120-01-C
As discussed in the proposed rule, for the proposed new MS-DRGs for
cases reporting procedure codes describing percutaneous coronary IVL
involving the insertion of an intraluminal device, there is at least
(1) 500 cases in the MCC subgroup and 500 cases in the without MCC
subgroup; (2) 5 percent of the cases in the MCC group and 5 percent in
the without MCC subgroup; (3) a 20 percent difference in average costs
between the MCC group and the without MCC group; (4) a $2,000
difference in average costs between the MCC group and the without MCC
group; and (5) a 3-percent reduction in cost variance, indicating that
the proposed severity level splits increase the explanatory power of
the base MS-DRG in capturing differences in expected cost between the
proposed MS-DRG severity level splits by at least 3 percent and thus
improve the overall accuracy of the IPPS payment system.
For the cases describing coronary intravascular lithotripsy without
the insertion of an intraluminal device, we identified a total of 404
cases using the most recent claims data from the December 2022 update
of the FY 2022 MedPAR file, so the criterion that there are at least
500 or more cases in each subgroup could not be met. Therefore, for FY
2024, we did not propose to subdivide the proposed new MS-DRG for
coronary intravascular lithotripsy
[[Page 58707]]
without an intraluminal device into severity levels.
In summary, for FY 2024, taking into consideration that it
clinically requires greater resources to perform coronary intravascular
lithotripsy, we proposed to create two new MS-DRGs with a two-way
severity level split for cases describing coronary intravascular
lithotripsy involving the insertion of an intraluminal device in MDC
05. We also proposed to create a new MS-DRG for cases describing
coronary intravascular lithotripsy without an intraluminal device.
These proposed new MS-DRGs are proposed new MS-DRG 323 (Coronary
Intravascular Lithotripsy with Intraluminal Device with MCC), proposed
new MS-DRG 324 (Coronary Intravascular Lithotripsy with Intraluminal
Device without MCC) and proposed new MS-DRG 325 (Coronary Intravascular
Lithotripsy without Intraluminal Device). We refer the reader to Table
6P.6a associated with the proposed rule (which is available on the CMS
website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index for the list of procedure codes we
proposed to define in the logic for each of the proposed new MS-DRGs.
We refer the reader to section II.C.15. of the preamble of this final
rule for the discussion of the surgical hierarchy and the complete list
of our proposed modifications to the surgical hierarchy as well as our
finalization of those proposals.
Comment: Many commenters expressed support for CMS' proposal to
create new MS-DRGs for cases describing coronary intravascular
lithotripsy. A commenter stated that CMS' proposal highlights the
resources consumed when performing the procedure with or without the
insertion of an intraluminal device. This commenter further stated the
proposal also takes into consideration the challenges associated with
coronary arteries that are severely calcified while simultaneously
providing better outcomes with the optimal deployment of intraluminal
devices, when necessary. A commenter stated they appreciate CMS'
willingness to periodically review hospital resources associated with
the MS-DRGs for percutaneous coronary intervention procedures. Another
commenter applauded CMS' proposal and stated this adjustment should
provide for greater access to this new technology and should contribute
to better outcomes for Medicare patients with severely calcified
arteries.
Response: We appreciate the commenters' support.
Comment: While supporting the proposal, some commenters suggested
that proposed new MS-DRG 325 (Coronary Intravascular Lithotripsy
without Intraluminal Device) be split into two severity levels (with
and without MCC) to recognize the increased resource utilization when a
secondary diagnosis designated as an MCC is present. Another commenter
stated that CMS proposed to delay application of the NonCC subgroup
criteria to existing MS-DRGs with a three-way severity level split for
FY 2024 and questioned CMS' application of the methodology to the
proposed new MS-DRGs. This commenter stated that the presence of a
secondary diagnosis designated as CC and a MCC impacts the length of
stay and costs and therefore distinct tiers within these proposed MS-
DRGs are necessary to reflect the differences in resource utilization.
Response: We thank the commenters for their feedback.
In response to the suggestion that proposed new MS-DRG 325 for
cases describing coronary intravascular lithotripsy without
intraluminal device be subdivided with a two-way severity level split,
as discussed in the proposed rule and earlier in this section, in the
analysis of the cases describing coronary intravascular lithotripsy
without the insertion of an intraluminal device, we note we identified
a total of 404 cases using the most recent claims data from the
December 2022 update of the FY 2022 MedPAR file. Therefore, the
criterion that there are at least 500 or more cases in each subgroup
could not be met so we did not propose to subdivide the proposed new
MS-DRG for coronary intravascular lithotripsy without an intraluminal
device into severity levels for FY 2024.
In response to the concern regarding the application of the NonCC
subgroup criteria to the proposed new MS-DRGs, we note 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 CC or 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. In
the FY 2022 IPPS/LTCH PPS final rule (86 FR 44798) and FY 2023 IPPS/
LTCH PPS final rule (87 FR 48803), we finalized a delay in applying
this technical criterion to existing MS-DRGs in light of the PHE. We
note that this delay relates to applying this technical criterion to
existing MS-DRGs with a three-way severity level split. As discussed in
prior rulemaking, in general, once the decision has been made to
propose to make further modifications to the MS-DRGs, such as creating
a new base MS-DRG, all five criteria must be met for the base MS-DRG to
be split (or subdivided) by a CC subgroup. We note that we have applied
the criteria to create subgroups, including application of the NonCC
subgroup criteria, in our annual analysis of the MS-DRG classification
requests effective FY 2021 (85 FR 58446 through 58448). For example, we
applied the criteria to create subgroups, including application of the
NonCC subgroup criteria, for a proposed new base MS-DRG as discussed in
our finalization of new base MS-DRG 018 (Chimeric Antigen Receptor
(CAR) T-cell Immunotherapy), new base MS-DRG 019 (Simultaneous Pancreas
and Kidney Transplant with Hemodialysis), new base MS-DRG 140 (Major
Head and Neck Procedures), new base MS-DRG 143 (Other Ear, Nose, Mouth
and Throat O.R. Procedures), new base MS-DRG 521 (Hip Replacement with
Principal Diagnosis of Hip Fracture) and new base MS-DRG 650 (Kidney
Transplant with Hemodialysis) for FY 2021. Similarly, we applied the
criteria to create subgroups including application of the NonCC
subgroup criteria for MS-DRG classification requests for FY 2022 that
we received by November 1, 2020 (86 FR 44796 through 44798), for MS-DRG
classification requests for FY 2023 that we received by November 1,
2021 (87 FR 48801 through 48804), and for MS-DRG classification
requests for FY 2024 that we received by October 20, 2022 (88 FR 26673
through 26676), as well as any additional analyses that were conducted
in connection with those requests. We refer the reader to section
II.C.1.b. of the preamble of this final rule for related discussion
regarding our finalization of the expansion of the criteria to include
the NonCC subgroup in the FY 2021 final rule and our finalization of
the proposal to continue to delay application of the NonCC subgroup
criteria to existing MS-DRGs with a three-way severity level split for
FY 2024.
Comment: Some commenters expressed concern with CMS' proposal and
stated that the proposed MS-DRGs may not reflect the full range of
treatment options for severely calcified coronary lesions that may
demonstrate similar increased costs and acuity. These commenters stated
that the presence of severe calcification can increase treatment
difficulty and complexity of service, which lead to higher average
costs and generally longer lengths of stay. These commenters stated
that CMS should
[[Page 58708]]
consider other well-established advanced vessel preparation techniques,
such as percutaneous coronary rotational and orbital atherectomy, that
also use specialty devices to fully optimize PCI for severely calcified
arteries. A commenter stated that they agreed that there is a subset of
clinically complex PCI cases with higher average costs however, they do
not believe it serves the integrity of the IPPS to create new MS-DRGs
for a single technology serving a relatively low volume of patient
cases and suggested that CMS refine the proposed new MS-DRGs 323, 324
and 325 to include coronary atherectomy procedures. Another commenter
stated that its own analysis demonstrated that resource requirements
for orbital atherectomy are virtually the same as those for coronary
IVL. This commenter noted CMS proposed to create MS-DRG 325 for cases
describing coronary intravascular lithotripsy without intraluminal
device and stated that this is inconsistent with the labeled
indications for use of these high-resource devices. The commenter
stated that coronary IVL and other complex vessel preparation
technologies focus on treating severe calcium to facilitate placement
and technical success of intraluminal devices and expressed concern
with the precedent of establishing a device-specific MS-DRG that is
inconsistent with a technology's indications for use.
Other commenters opposed these recommendations and stated they
believed that CMS' proposal correctly differentiates coronary IVL from
other PCI procedures, given the significant resource variance when IVL
is utilized, and the more clinically complex patients being treated. A
commenter stated that atherectomy is distinct from coronary IVL in
terms of mechanism of action and technique, and further noted that, the
clinical utilization is different in that atherectomy is not a therapy
that is exclusively utilized in heavily calcified lesions. This
commenter stated that in its own analysis of the claims data, the costs
of atherectomy cases are half the costs of coronary IVL cases.
These commenters all encouraged CMS to evaluate these and any other
PCI-related procedures in future rulemaking to allow for all options to
be considered appropriately.
Response: We thank the commenters for their feedback. Although we
note that the initial request was to review the MS-DRG assignment of
cases describing percutaneous coronary intravascular lithotripsy, and
not cases describing other PCI techniques, the commenters are correct
in that there are different types of treatment options available in the
treatment of calcified coronary lesions. Under the ICD-10-PCS procedure
classification system there are two root operations, Extirpation and
Fragmentation, specifically defined as:
Extirpation: Taking or cutting out solid matter from a body part;
and
Fragmentation: Breaking solid matter in a body part into pieces
that are reported to describe the respective procedure that was
performed.
In coronary IVL, emitters at the end of the catheter create
acoustic pressure waves that are intended to break up the calcification
that is restricting the blood flow in the vessels of the heart to help
open the blood vessels when an angioplasty balloon is inflated. Because
the technique fragments matter, procedures performed utilizing devices
such as the Shockwave C2 Intravascular Lithotripsy System are
identified and described by the root operation Fragmentation. In
contrast, procedures such as rotational and orbital atherectomy are
reported with the root operation Extirpation because both techniques
cut up the calcified material into small particles that are removed
from the blood stream by the normal hemofiltration process.
In response to the commenter's statement that both coronary IVL and
coronary atherectomy are procedures intended to treat calcified
coronary arteries, we agree, however, as shown, each of these
procedures are defined by clinically distinct definitions and
objectives, and there are separate and unique ICD-10-PCS procedure
codes within the classification for reporting purposes. We do not
believe it is appropriate to specifically compare the devices being
utilized in the performance of these distinct procedures in
consideration of MS-DRG assignment, rather, the emphasis is on the
fragmentation and extirpation procedures performed and evaluating the
treatment difficulty, resource utilization, and complexity of service.
In response to the commenter's statement regarding the labeled
indications for coronary IVL, as discussed in the proposed rule, there
may be instances where an intraluminal device is unable to be inserted
after the application of the IVL pulses. Accordingly, we identified a
total of 386 cases describing coronary intravascular lithotripsy
without the insertion of an intraluminal device using the September
2022 update of the FY 2022 MedPAR file and 404 cases describing
coronary intravascular lithotripsy without the insertion of an
intraluminal device using the more recent claims data from the December
2022 update of the FY 2022 MedPAR file. We continue to we believe
creating a MS-DRG for these cases as well would appropriately address
the differential in resource consumption.
As discussed in the proposed rule, the data analysis clearly shows
that cases reporting percutaneous coronary IVL, with or without
involving the insertion of intraluminal device, have higher average
costs and generally longer lengths of stay compared to all the cases in
their assigned MS-DRG. We appreciate the commenters' feedback and
suggestions, however, we believe that continued monitoring of the data
and further analysis is needed prior to proposing any modifications to
the proposed new MS-DRGs for percutaneous coronary IVL. We will
continue to evaluate the claims data to determine if further
modifications to the MS-DRG assignment of cases reporting percutaneous
coronary intervention procedures are warranted and address any proposed
modifications to the existing logic in future rulemaking.
Therefore, after consideration of the public comments we received,
and for the reasons discussed, we are finalizing our proposal to create
new MS-DRG 323 (Coronary Intravascular Lithotripsy with Intraluminal
Device with MCC), new MS-DRG 324 (Coronary Intravascular Lithotripsy
with Intraluminal Device without MCC) and new MS-DRG 325 (Coronary
Intravascular Lithotripsy without Intraluminal Device) in MDC 05,
without modification, effective October 1, 2023 for FY 2024. We are
also finalizing the list of procedure codes to define the logic for
each of the new MS-DRGs as displayed in Table 6P.6a associated with the
proposed rule (which is available on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.
In reviewing this issue, we noted in the FY 2024 proposed rule that
we received a separate but related request in FY 2022 rulemaking. In
the FY 2022 IPPS/LTCH PPS final rule (86 FR 44848 through 44850), we
discussed a request to review the MS-DRG assignments of claims
involving the insertion of coronary stents in PCIs. The requestor
suggested that CMS eliminate the distinction between drug-eluting and
bare-metal coronary stents in the MS-DRG classification. According to
the requestor, coated stents have a clinical performance comparable to
drug-eluting stents, however, they are grouped with bare-metal stents
because they do not contain a drug. The requestor asserted that this
comingling muddies the clinical coherence of the MS-DRG structure, as
one cannot infer distinctions in clinical performance or
[[Page 58709]]
benefits among the groups and potentially creates a barrier (based on
hospital decision-making) to patient access to modern coated stents. In
response, we stated that based on a review of the procedure codes that
are currently assigned to MS-DRGs 246, 247, 248, and 249, our clinical
advisors agreed that further refinement of these MS-DRGs may be
warranted. We noted that in the FY 2003 IPPS/LTCH PPS final rule (67 FR
50003 through 50005), although the FDA had not yet approved the
technology for use, we created two new temporary CMS DRGs to reflect
cases involving the insertion of a drug-eluting coronary artery stent
as signified by the presence of ICD-9-CM procedure code 36.07
(Insertion of drug-eluting coronary artery stent) in recognition of the
potentially significant impact this technology may conceivably have on
the treatment of coronary artery blockages, the predictions of its
rapid, widespread use, and that the higher costs of this technology
could create undue financial hardships for hospitals due to the high
volume of stent cases. In the FY 2022 final rule, we noted that the
distinction between drug-eluting and non-drug-eluting stents is found
elsewhere in the ICD-10-PCS procedure code classification and stated
evaluating this request required a more extensive analysis to assess
potential impacts across the MS-DRGs. We also stated that we believed
it would be more appropriate to consider this request further in future
rulemaking.
As discussed in the proposed rule and this section of the final
rule, our analysis of claims data from the September 2022 update of the
FY 2022 MedPAR file indicates that in cases reporting percutaneous
coronary IVL involving the insertion of an intraluminal device, average
costs are generally similar without regard as to whether a drug-eluting
or non-drug-eluting intraluminal device was inserted. Therefore, in
consideration of the prior request discussed in FY 2022 rulemaking and
to further explore this current finding, we stated we examined claims
data from the September 2022 update of the FY 2022 MedPAR file for MS-
DRGs 246, 247, 248, and 249 for ``all other cases'' assigned to MS-DRGs
246, 247, 248, and 249 that did not report percutaneous coronary IVL as
reflected in the previous table.
In the proposed rule, we again noted that the data analysis shows
that in percutaneous cardiovascular procedures involving the insertion
of an intraluminal device, the average costs are generally similar
without regard as to whether a drug-eluting or non-drug-eluting
intraluminal device(s) was inserted. In MS-DRG 246, there were 38,288
cases reporting percutaneous cardiovascular procedures involving the
insertion of a drug-eluting intraluminal device with an MCC or
procedures involving four or more arteries or intraluminal devices with
average costs of $25,022 compared to 542 cases reporting percutaneous
cardiovascular procedures involving the insertion of a non-drug-eluting
intraluminal device with an MCC or procedures involving four or more
arteries or intraluminal devices with average costs of $25,530 in MS-
DRG 248. In MS-DRG 247, there were 53,166 cases reporting percutaneous
cardiovascular procedures involving the insertion of a drug-eluting
intraluminal device without an MCC with average costs of $16,017
compared to 593 cases reporting percutaneous coronary IVL involving the
insertion of a non-drug-eluting intraluminal device without an MCC with
average costs of $14,840 in MS-DRG 249.
We stated we reviewed these findings and believed that it may no
longer be necessary to subdivide the MS-DRGs based on the type of
coronary intraluminal device inserted. Drug-eluting intraluminal
devices consist of a standard metallic stent, a polymer coating, and an
anti-restenotic drug that is mixed within the polymer and released over
time. In current practice, drug-eluting intraluminal devices are
generally viewed as the default type of intraluminal device considered
for patients undergoing PCI, although non-drug-eluting stents such as
bare-metal coronary artery stents can also be used in PCI procedures
for a range of indications, including stable and unstable angina, acute
myocardial infarction (MI), and multiple-vessel disease. We noted the
related data analysis clearly showed that in the years since the MS-
DRGs for cases involving the insertion of a drug-eluting coronary
artery stent were created, cases reporting percutaneous cardiovascular
procedures involving the insertion of a drug-eluting intraluminal
device now demonstrate average costs and lengths of stays comparable to
cases reporting percutaneous cardiovascular procedures involving the
insertion of a non-drug-eluting intraluminal device. For these reasons,
we proposed the deletion of MS-DRGs 246, 247, 248, and 249, and the
creation of new MS-DRGs.
We noted that in the FY 2008 IPPS/LTCH PPS final rule (72 FR 47259
through 47260) we stated we found that percutaneous transluminal
coronary angioplasties (PTCAs) with four or more vessels or four or
more stents were more comparable in average charges to the higher
weighted DRG in the group and made changes to the GROUPER logic. Claims
containing ICD-9-CM procedure code 00.66 for PTCA, and code 36.07
(Insertion of drug-eluting coronary artery stent(s)), and code 00.43
(Procedure on four or more vessels) or code 00.48 (Insertion of four or
more vascular stents) were assigned to MS-DRG 246. In addition, claims
containing ICD-9-CM procedure code 00.66 for PTCA, and code 36.06
(Insertion of non-drug-eluting coronary artery stent(s)), and code
00.43 or code 00.48 were assigned to MS-DRG 248. We also made
conforming changes to the MS-DRG titles as follows: MS-DRG 246 was
titled ``Percutaneous Cardiovascular Procedures with Drug-Eluting
Stent(s) with MCC or 4 or more Vessels/Stents''. MS-DRG 248 was titled
``Percutaneous Cardiovascular Procedures with Non-Drug-Eluting Stent(s)
with MCC or 4 or more Vessels/Stents''. In FY 2018 IPPS/LTCH PPS final
rule (82 FR 38024), we finalized our proposal to revise the title of
MS-DRG 246 to ``Percutaneous Cardiovascular Procedures with Drug-
Eluting Stent with MCC or 4+ Arteries or Stents'' and the title of MS-
DRG 248 to ``Percutaneous Cardiovascular Procedures with Non-Drug-
Eluting Stent with MCC or 4+ Arteries or Stents'' to better reflect the
ICD-10-PCS terminology of ``arteries'' versus ``vessels'' as used in
the procedure code titles within the classification.
Recognizing that the current GROUPER logic for case assignment to
MS-DRGs 246 or 248 continues to require at least one secondary
diagnosis designated as an MCC or procedures involving four or more
arteries or intraluminal devices, we examined claims data from the
September 2022 update of the FY 2022 MedPAR file for cases reporting
percutaneous cardiovascular procedures involving four or more arteries
or intraluminal devices and compared these data to all cases in MS-DRGs
246 and 248.
[[Page 58710]]
[GRAPHIC] [TIFF OMITTED] TR28AU23.060
As discussed in the proposed rule, in MS-DRG 246, we identified a
total of 40,647 cases with an average length of stay of 5.2 days and
average costs of $25,630. Of those 40,647 cases, there were 3,430 cases
reporting percutaneous cardiovascular procedures involving four or more
arteries or intraluminal devices, with higher average costs as compared
to all cases in MS-DRG 246 ($27,397 compared to $25,630), and a shorter
average length of stay (3.2 days compared to 5.2 days). In MS-DRG 248,
we identified a total of 555 cases with an average length of stay of
5.9 days and average costs of $25,740. Of those 555 cases, there were
21 cases reporting percutaneous cardiovascular procedures involving
four or more arteries or intraluminal devices, with higher average
costs as compared to all cases in MS-DRG 248 ($28,251 compared to
$25,740), and a shorter average length of stay (3.4 days compared to
5.9 days). We stated this analysis demonstrates that cases reporting
percutaneous procedures involving four or more arteries or intraluminal
devices continue to be more comparable in average costs and resource
consumption to the cases in the higher weighted MS-DRG in the group and
indicates that maintaining the logic that recognizes the performance of
percutaneous cardiovascular procedures involving four or more arteries
or intraluminal devices that exists currently in MS-DRGs 246 and 248 in
the proposed new MS-DRGs was warranted.
We noted presently, MS-DRGs 246 and 248 are defined as base MS-
DRGs, each of which is split by a two-way severity level subgroup. Our
proposal includes the creation of one base MS-DRG split also by a two-
way severity level subgroup. To compare and analyze the impact of our
suggested modifications, we stated we ran a simulation using the most
recent claims data from the December 2022 update of the FY 2022 MedPAR
file. The following table illustrates our findings for all 97,338 cases
reporting percutaneous cardiovascular procedures involving intraluminal
devices.
[GRAPHIC] [TIFF OMITTED] TR28AU23.061
We applied the criteria to create subgroups in a base MS-DRG as
discussed in section II.C.1.b. of the proposed rule and this FY 2024
IPPS/LTCH PPS final rule. As shown in the table that follows, a three-
way split of the proposed new MS-DRGs failed to meet the criterion that
there be at least a 20% difference in average costs between the CC and
NonCC subgroup and also failed to meet the criterion that there be at
least a $2,000 difference in average costs between the CC and NonCC
subgroup.
[GRAPHIC] [TIFF OMITTED] TR28AU23.062
We then applied the criteria for a two-way split for the ``with
MCC'' and ``without MCC'' subgroups for the proposed new MS-DRGs and
found that all five criteria were met. The following table illustrates
our findings.
[[Page 58711]]
[GRAPHIC] [TIFF OMITTED] TR28AU23.063
For the proposed new MS-DRGs, there is (1) at least 500 cases in
the MCC subgroup and in the without MCC subgroup; (2) at least 5
percent of the cases are in the MCC subgroup and in the without MCC
subgroup; (3) at least a 20 percent difference in average costs between
the MCC subgroup and the without MCC subgroup; (4) at least a $2,000
difference in average costs between the MCC subgroup and the without
MCC subgroup; and (5) at least a 3-percent reduction in cost variance,
indicating that the proposed severity level splits increase the
explanatory power of the base MS-DRG in capturing differences in
expected cost between the proposed MS-DRG severity level splits by at
least 3 percent and thus improve the overall accuracy of the IPPS
payment system.
We noted in that proposed rule that proposed refinements for cases
reporting percutaneous cardiovascular procedures with intraluminal
devices represented the first step in investigating how we may evaluate
the distinctions between drug-eluting and non-drug-eluting intraluminal
devices found elsewhere in the ICD-10-PCS procedure code
classification. We stated we are making concerted efforts to continue
refining the ICD-10 MS-DRGs and we believed the resulting MS-DRG
assignments in our current proposal would be more clinically
homogeneous, coherent and better reflect current trends and hospital
resource use.
In summary, for FY 2024, taking into consideration it appears to no
longer be necessary to subdivide the MS-DRGs for percutaneous
cardiovascular procedures based on the type of coronary intraluminal
device inserted, we proposed to delete MS-DRGs 246, 247, 248, and 249,
and create a new base MS-DRG with a two-way severity level split for
cases describing percutaneous cardiovascular procedures with
intraluminal device in MDC 05. These proposed new MS-DRGs are proposed
new MS-DRG 321 (Percutaneous Cardiovascular Procedures with
Intraluminal Device with MCC or 4+ Arteries/Intraluminal Devices) and
proposed new MS-DRG 322 (Percutaneous Cardiovascular Procedures with
Intraluminal Device without MCC). We proposed to add the procedure
codes from current MS-DRGs 246, 247, 248, and 249 to the proposed new
MS-DRGs 321 and 322. We also proposed to revise the titles for MS-DRGs
250 and 251 from ``Percutaneous Cardiovascular Procedures without
Coronary Artery Stent with MCC, and without MCC, respectively'' to
``Percutaneous Cardiovascular Procedures without Intraluminal Device
with MCC, and without MCC, respectively'' to better reflect the ICD-10-
PCS terminology of ``intraluminal devices'' versus ``stents'' as used
in the procedure code titles within the classification.
We refer the reader to section II.C.15. of the preamble of this
final rule for the discussion of the surgical hierarchy and the
complete list of our proposed modifications to the surgical hierarchy
as well as our finalization of those proposals.
Comment: Commenters supported CMS' proposals. These commenters
stated that they agreed with CMS that the distinction between drug-
eluting and bare metal stents is no longer required given the evolution
of these technologies. A commenter stated they appreciated the
simplification of MS-DRGs involving percutaneous intraluminal devices
by omitting the distinction between drug-eluting versus non-drug-
eluting devices with the proposed creation of MS-DRGs 321 and 322.
Another commenter stated that they appreciate CMS periodically
reviewing the MS-DRGs for percutaneous coronary interventions to ensure
they appropriately reflect current clinical practice and appropriately
reflect the hospital resources associated with these procedures. A
commenter supported the proposal, but suggested that there be
consideration to split the new base MS-DRG for cases describing
percutaneous cardiovascular procedures with intraluminal device with a
three-way severity level split, instead of a two-way severity level
split as proposed.
Response: We appreciate the commenters' support. In response to the
suggestion to split the new base MS-DRG for cases describing
percutaneous cardiovascular procedures with intraluminal device with a
three-way severity level split, as discussed in the proposed rule and
earlier in this section, we note we applied the criteria to create
subgroups in a base MS-DRG as discussed in section II.C.1.b. of the
proposed rule and this FY 2024 IPPS/LTCH PPS final rule. We note that a
three-way split of the proposed new MS-DRGs failed to meet the
criterion that there be at least a 20% difference in average costs
between the CC and NonCC subgroup and also failed to meet the criterion
that there be at least a $2,000 difference in average costs between the
CC and NonCC subgroup.
Comment: Other commenters stated that while they agreed with CMS'
rationale that it is no longer necessary to subdivide the MS-DRGs based
on the type of coronary intraluminal device inserted and supported the
proposal to delete MS-DRGs 246, 247, 248, and 249 and create a new base
MS-DRG with a two-way severity level split for cases describing
percutaneous cardiovascular procedures with intraluminal device in MDC
05, they did not agree with the proposed relative weights for these new
MS-DRGs and requested that CMS review the proposed weights for these
MS-DRGs with the weight decline to ensure it adequately captures the
resources for the complex treatment of these patients. These commenters
stated a decrease in the relative weight for the proposed new MS-DRGs
would cause inadequate payment for the medical care and treatment
provided to the patient.
Response: We appreciate the commenters' feedback and concern. We
note that each year, we calculate the relative weights by dividing the
average cost for cases within each MS-DRG by the average cost for cases
across all MS-DRGs. It is to be expected that when MS-DRGs are
restructured, such as when procedure codes are reassigned or the
hierarchy within an MDC is revised, resulting in a different case-mix
within the MS-DRGs, the relative weights of the MS-DRGs will change as
a result. As discussed in the FY 2024 IPPS/LTCH PPS proposed rule, and
earlier in this section, upon application of the criteria to create
subgroups, we proposed to create a base MS-DRG split by a two-way
severity level subgroup for cases describing coronary intravascular
lithotripsy involving the insertion of an intraluminal device in MDC 05
for FY
[[Page 58712]]
2024. Therefore, the data appear to reflect that the difference in the
relative weights reflected in Table 5.--List of Medicare Severity
Diagnosis-Related Groups (MS-DRGs), Relative Weighting Factors, and
Geometric and Arithmetic Mean Length of Stay--FY 2024, associated with
the proposed rule, can be attributed to the fact that these proposals
resulted in a different case-mix within the MS-DRGs which is then being
reflected in the relative weights. We refer the reader to section II.D.
of the preamble of this FY 2024 IPPS/LTCH PPS final rule for a complete
discussion of the relative weight calculations.
After consideration of the public comments we received, and for the
reasons discussed, we are finalizing our proposal, without
modification, to delete MS-DRGs 246, 247, 248, and 249 for FY 2024. We
are also finalizing our proposal to create new MS-DRG 321 (Percutaneous
Cardiovascular Procedures with Intraluminal Device with MCC or 4+
Arteries/Intraluminal Devices) and new MS-DRG 322 (Percutaneous
Cardiovascular Procedures with Intraluminal Device without MCC).
Accordingly, we are finalizing our proposal to reassign the procedure
codes from current MS-DRGs 246, 247, 248, and 249 to the new MS-DRGs
321 and 322. Lastly, we are also finalizing our proposal to revise the
titles of MS-DRGs 250 and 251 from ``Percutaneous Cardiovascular
Procedures without Coronary Artery Stent with MCC, and without MCC,
respectively'' to ``Percutaneous Cardiovascular Procedures without
Intraluminal Device with MCC, and without MCC, respectively'' effective
October 1, 2023 for FY 2024.
e. Shock
In the FY 2022 IPPS/LTCH PPS final rule (86 FR 44831 through
44833), we discussed a request we received to review the MS-DRG
assignment of ICD-10-CM diagnosis code I21.A1 (Myocardial infarction
type 2). The requestor stated that when a type 2 myocardial infarction
is documented, per coding guidelines, it is to be coded as a secondary
diagnosis since it is due to an underlying cause. This requestor also
noted that when a type 2 myocardial infarction is coded with a
principal diagnosis in MDC 05 (Diseases and Disorders of the
Circulatory System), the GROUPER logic assigns MS-DRGs 280 through 282
(Acute Myocardial Infarction, Discharged Alive with MCC, with CC, and
without CC/MCC, respectively). The requestor questioned if this GROUPER
logic was correct or if the logic should be changed so that a type 2
myocardial infarction, coded as a secondary diagnosis, does not result
in the assignment of a MS-DRG that describes an acute myocardial
infarction. During our review of this issue, we also noted that ICD-10-
CM diagnosis code I21.A1 (Myocardial infarction type 2) was one of the
listed principal diagnoses in the GROUPER logic for MS-DRGs 222 and 223
(Cardiac Defibrillator Implant with Cardiac Catheterization with Acute
Myocardial Infarction (AMI), Heart Failure (HF), or Shock with and
without MCC, respectively). However, code I21.A1 was not recognized in
these same MS-DRGs when coded as a secondary diagnosis. Acknowledging
that coding guidelines instruct to code I21.A1 after the diagnosis code
that describes the underlying cause, we indicated our clinical advisors
recommended adding special logic in MS-DRGs 222 and 223 to have code
I21.A1 also qualify when coded as a secondary diagnosis in combination
with a principal diagnosis in MDC 05 since these diagnosis code
combinations also describe acute myocardial infarctions. In the FY 2022
final rule, after consideration of the public comments, we finalized
our proposal to maintain the structure of MS-DRGs 280 through 285,
without modification, for FY 2022. We also finalized our proposal to
modify the GROUPER logic to allow cases reporting diagnosis code I21.A1
(Myocardial infarction type 2) as a secondary diagnosis to group to MS-
DRGs 222 and 223 when reported with qualifying procedures, effective
October 1, 2021. Under this finalization, code I21.A1, as a secondary
diagnosis, is used in the definition of the logic for assignment to MS-
DRGs 222 and 223, and therefore does not act as an MCC in these MS-
DRGs.
In response to this final policy, in the FY 2024 IPPS/LTCH PPS
proposed rule (88 FR 26712 through 26717), we discussed a related
request we received to also add ICD-10-CM diagnosis code R57.0
(Cardiogenic shock) to the list of ``secondary diagnoses'' that group
to MS-DRGs 222 and 223. Cardiogenic shock occurs when the heart cannot
pump enough oxygen-rich blood to the brain and other vital organs
resulting in inadequate tissue perfusion. The most common cause of
cardiogenic shock is acute myocardial infarction. Other causes include
myocarditis, endocarditis, papillary muscle rupture, left ventricular
free wall rupture, acute ventricular septal defect, severe congestive
heart failure, end-stage cardiomyopathy, severe valvular dysfunction,
acute cardiac tamponade, cardiac contusion, massive pulmonary embolus,
or the overdose of drugs such as beta blockers or calcium channel
blockers.
As discussed in the proposed rule, since the MS-DRG titles contain
the word ``shock'', the requestor indicated that it seemed reasonable
for the GROUPER logic to recognize cardiogenic shock when coded as a
secondary diagnosis because, according to the requestor, the specific
underlying cardiac condition responsible for causing the cardiogenic
shock must always be sequenced first. The requestor further asserted
that ICD-10-CM coding guidelines require codes from Chapter 18
(Symptoms, Signs, and Abnormal Clinical and Laboratory Findings) to be
sequenced first, therefore when coding guidelines are followed, this
code can never be an appropriate principal diagnosis. The requestor
acknowledged that if code R57.0 were to be added to the list of
``secondary diagnoses'' that group to MS-DRGs 222 and 223, and
therefore used in the definition of the logic for assignment, the code
would no longer act as an MCC in MS-DRGs 222 and 223.
To begin our analysis, we stated we reviewed the GROUPER logic. In
the proposed rule, we noted that ICD-10-CM diagnosis code R57.0
(Cardiogenic shock) is currently one of the listed principal diagnoses
in the GROUPER logic for MS-DRGs 222 and 223. We stated that requestor
was correct that diagnosis code R57.0 is not currently recognized in
these same MS-DRGs when coded as a secondary diagnosis. We refer the
reader to the ICD-10 MS-DRG Definitions Manual Version 40.1, which is
available 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 and 223.
We also stated that the requestor was also correct that the
diagnosis code R57.0 is found in Chapter 18 (Symptoms, Signs and
Abnormal Clinical and Laboratory Findings) of ICD-10-CM and that
diagnosis code R57.0 has a current severity designation of MCC when
reported as a secondary diagnosis. We disagreed, however, that this
code can never be an appropriate principal diagnosis. We noted that
according to the ICD-10-CM Official Guidelines for Coding and
Reporting, diagnoses described by codes from Chapter 18 of ICD-10-CM,
such as R57.0, are acceptable for reporting when a related definitive
diagnosis has not been established (confirmed) by the provider. We also
pointed out that a
[[Page 58713]]
``code first'' note appears at ICD-10-CM diagnosis code I21.A1
(Myocardial infarction type 2). The ``code first'' note is an etiology/
manifestation coding convention (additional detail can be found in the
ICD-10-CM Official Guidelines for Coding and Reporting), indicating
that the condition has both an underlying etiology and manifestation
due to the underlying etiology. No such ``code first'' notes appear at
ICD-10-CM diagnosis code R57.0 (Cardiogenic shock). If providers have
cases involving cardiogenic shock which they need ICD-10 coding
assistance, we encourage them to submit their questions to the American
Hospital Association's Central Office on ICD-10 at https://www.codingclinicadvisor.com/.
As discussed in the proposed rule, we then examined claims data
from the September 2022 update of the FY 2022 MedPAR file for all cases
in MS-DRGs 222 and 223 (Cardiac Defibrillator Implant with Cardiac
Catheterization with AMI, HF or Shock, with and without MCC,
respectively) and compared the results to cases that had a principal
diagnosis or a secondary diagnosis of cardiogenic shock in these MS-
DRGs. We also included MS-DRGs 224 and 225 (Cardiac Defibrillator
Implant with Cardiac Catheterization without AMI, HF or Shock with and
without MCC, respectively) and MS-DRGs 226 and 227 (Cardiac
Defibrillator Implant without Cardiac Catheterization with and without
MCC, respectively) in our analysis as the logic for these MS-DRGs is
similar, differing only in the reporting of a diagnosis that describes
acute myocardial infarction, heart failure or shock, or the performance
of cardiac catheterization. The following table shows our findings:
[GRAPHIC] [TIFF OMITTED] TR28AU23.064
In MS-DRG 222, we identified a total of 1,488 cases with an average
length of stay of 11 days and average costs of $64,794. Of those 1,488
cases, there were six cases reporting a principal diagnosis of R57.0,
with higher average costs as compared to all cases in MS-DRG 222
($88,486 compared to $64,794), and a longer average length of stay
(13.5 days compared to 11 days). There were 322 cases reporting a
secondary diagnosis of R57.0, with higher average costs as compared to
all cases in MS-DRG 222 ($77,451 compared to $64,794), and a longer
average length of stay (15.1 days compared to 11 days). In MS-DRG 224,
we identified a total of 1,606 cases with an average length of stay of
9.4 days and average costs of $60,583. Of those 1,606 cases, there were
zero cases reporting a principal diagnosis of R57.0. There were 268
cases reporting a secondary diagnosis of R57.0, with higher average
costs as compared to all cases in MS-DRG 224 ($77,334 compared to
$60,583), and a longer average length of stay (12.9 days compared to
9.4 days). In MS-DRG 226, we identified a total of 3,595 cases with an
average length of stay of 8.3 days and average costs of $53,706. Of
those 3,595 cases, there were four cases reporting a principal
diagnosis of R57.0, with higher average costs as compared to all cases
in MS-DRG 226 ($72,349 compared to $53,706), and a longer average
length of stay (14.3 days compared to 8.3 days). There were 325 cases
reporting a secondary diagnosis of R57.0, with higher average costs as
compared to all cases in MS-DRG 226 ($65,266 compared to $53,706), and
a longer average length of stay (12.5 days compared to 8.3 days). We
found zero cases across MS-DRGs 223, 225, and 227 reporting R57.0 as
principal or as a secondary diagnosis. Our analysis
[[Page 58714]]
clearly shows that the cases reporting a secondary diagnosis of
cardiogenic shock in MS-DRGs 222, 224 and 226 had higher average costs
and longer average length of stay compared to all cases in their
respective MS-DRGs.
We stated in the proposed rule that we reviewed these data and did
not recommend modifying the GROUPER logic to allow cases reporting
diagnosis code R57.0 (Cardiogenic shock) as a secondary diagnosis to
group to MS-DRGs 222 and 223 when reported with qualifying procedures.
As noted by the requestor, and as discussed in FY 2022 IPPS/LTCH PPS
final rule, (86 FR 44831 through 44833), a diagnosis code may define
the logic for a specific MS-DRG assignment in three different ways.
Whenever there is a secondary diagnosis component to the MS-DRG logic,
the diagnosis code can either be used in the logic for assignment to
the MS-DRG or to act as a CC/MCC.
We stated we believed that patients with cardiogenic shock as a
secondary diagnosis tend to be more severely ill and these inpatient
admissions are associated with greater resource utilization.
Cardiogenic shock represents a life-threatening emergency that requires
urgent treatment that focuses on getting blood flowing properly to
prevent, and protect against, organ failure, brain injury or death. For
clinical consistency, we stated it was more appropriate for ICD-10-CM
diagnosis code R57.0 to act as an MCC when cardiogenic shock is
documented in the medical record and coded as a secondary diagnosis.
Therefore, we did not propose to modify the GROUPER logic to allow
cases reporting diagnosis code R57.0 (Cardiogenic shock) as a secondary
diagnosis to group to MS-DRGs 222 and 223 when reported with qualifying
procedures.
Comment: Commenters expressed support for CMS' proposal to not
modify the GROUPER logic to allow cases reporting diagnosis code R57.0
(Cardiogenic shock) as a secondary diagnosis to group to MS-DRGs 222
and 223 when reported with qualifying procedures.
Response: We thank the commenters for their support.
During our review of this issue, we noted in the proposed rule that
the data analysis showed that in procedures involving a cardiac
defibrillator implant, the average costs and length of stay are
generally similar without regard to the presence of diagnosis codes
describing AMI, HF or shock. In MS-DRG 222, there were 1,488 cases
reporting cardiac defibrillator implant with cardiac catheterization
with AMI, HF, or Shock with an MCC with average costs of $64,794 and an
average length of stay of 11 days compared to 1,606 cases reporting
cardiac defibrillator implant with cardiac catheterization without AMI,
HF, or Shock with an MCC with average costs of $60,583 and an average
length of stay of 9.4 days in MS-DRG 224. In MS-DRG 223, there were 270
cases reporting cardiac defibrillator implant with cardiac
catheterization with AMI, HF or Shock without an MCC with average costs
of $43,500 and an average length of stay of 5.7 days compared to 1,167
cases reporting cardiac defibrillator implant with cardiac
catheterization without AMI, HF, or Shock without an MCC with average
costs of $42,442 and an average length of stay of 4.6 days in MS-DRG
225.
We stated that the analysis of MS-DRGs 222, 223, 224, 225, 226, and
227 further demonstrated that the average length of stay and average
costs for all cases are similar for each of the ``without MCC''
subgroups. As stated previously, for all of the cases in MS-DRG 223, we
found that the average length of stay was 5.7 days with average costs
of $43,500, and for all of the cases in MS-DRG 225, the average length
of stay was 4.6 days with average costs of $42,442. Likewise, for all
of the cases in MS-DRG 227, we found that the average length of stay
was 3.9 days with average costs of $41,636.
We reviewed these findings and stated we believed that it may no
longer be necessary to subdivide these MS-DRGs based on the diagnosis
codes reported. We noted that in the FY 2004 IPPS/LTCH PPS final rule
(68 FR 45356 through 45358) we stated we found that patients who are
admitted with acute myocardial infarction, heart failure, or shock and
have a cardiac catheterization are generally acute patients who require
emergency implantation of the defibrillator. Thus, we stated there were
very high costs associated with these patients. Therefore, we finalized
the creation of new DRGs for patients receiving a cardiac defibrillator
implant with cardiac catheterization and with a principal diagnosis of
acute myocardial infarction, heart failure, or shock.
As discussed in the proposed rule, our analysis of claims data from
the September 2022 update of the FY 2022 MedPAR file clearly shows that
in the 20 years since the DRGs for cases involving a cardiac
defibrillator implant with cardiac catheterization split based on the
presence or absence of diagnosis codes describing acute myocardial
infarction, heart failure, or shock were created, cases reporting a
cardiac defibrillator implant with cardiac catheterization continue to
demonstrate higher average costs and longer lengths of stays, however
these increased costs appear to be more related to the procedures
performed than to the diagnoses reported on the claim, and therefore we
stated that we believed it was time to restructure these MS-DRGs
accordingly.
In the proposed rule, we did note that when reviewing consumption
of hospital resources for the cases reporting cardiac defibrillator
implant with cardiac catheterization during a hospital stay, the claims
data clearly shows that the cases reporting secondary diagnoses
designated as MCCs are more resource intensive as compared to other
cases reporting cardiac defibrillator implant. As noted previously, in
MS-DRG 222, there were 1,488 cases reporting cardiac defibrillator
implant with cardiac catheterization with AMI, HF, or Shock with an MCC
with average costs of $64,794 and an average length of stay of 11 days.
Similarly, in MS-DRG 224, there were 1,606 cases reporting cardiac
defibrillator implant with cardiac catheterization without AMI, HF, or
Shock with an MCC with average costs of $60,583 and an average length
of stay of 9.4 days in MS-DRG 224. In comparison, there were 270 cases
reporting cardiac defibrillator implant with cardiac catheterization
with AMI, HF, or Shock without an MCC with average costs of $43,500 and
an average length of stay of 5.7 days in MS-DRG 223, 1,167 cases
reporting cardiac defibrillator implant with cardiac catheterization
without AMI, HF, or Shock without an MCC with average costs of $42,442
and an average length of stay of 4.6 days in MS-DRG 225, 3,595 cases
reporting cardiac defibrillator implant without cardiac catheterization
with an MCC with average costs of $53,706 and an average length of stay
of 8.3 days in MS-DRG 226, and 2,522 cases reporting cardiac
defibrillator implant without cardiac catheterization without an MCC
with average costs of $41,636 and an average length of stay of 3.9 days
in MS-DRG 227.
Therefore, we stated we supported the removal of the special logic
defined as ``Principal Diagnosis AMI/HF/SHOCK'' from the definition for
assignment to any proposed modifications to the MS-DRGs, noting the
cases can be appropriately grouped along with cases reporting any MDC
05 diagnosis when reported with qualifying procedures, in any
restructured proposed MS-DRGs. For these reasons, we proposed the
deletion of MS-DRGs 222, 223, 224, 225, 226, and 227, and the creation
of three new MS-DRGs. Our proposal
[[Page 58715]]
included the creation of one new base MS-DRG for cases reporting a
cardiac defibrillator implant with cardiac catheterization and a
secondary diagnosis designated as an MCC and another new base MS-DRG
split by a two-way severity level subgroup for cases reporting a
cardiac defibrillator implant without cardiac catheterization.
We stated in the proposed rule that to compare and analyze the
impact of our suggested modifications, we ran a simulation using the
most recent claims data from the December 2022 update of the FY 2022
MedPAR file. The following table illustrates our findings for all 3,467
cases reporting a cardiac defibrillator implant with cardiac
catheterization and a secondary diagnosis designated as an MCC. We note
that as discussed in prior rulemaking (86 FR 44831 through 44833), a
diagnosis code may define the logic for a specific MS-DRG assignment in
three different ways. The diagnosis code may be listed as principal or
as any one of the secondary diagnoses, as a secondary diagnosis, or
only as a secondary diagnosis. For this specific scenario, we proposed
that secondary diagnosis codes with a severity designation of MCC be
used in the definition of the logic for assignment to the proposed base
MS-DRG for cases reporting a cardiac defibrillator implant with cardiac
catheterization and a secondary diagnosis designated as an MCC.
Therefore, we did not apply the criteria to create further subgroups in
a base MS-DRG for cases reporting a cardiac defibrillator implant with
cardiac catheterization and a secondary diagnosis designated as an MCC
as discussed in section II.C.1.b. of the FY 2024 IPPS/LTCH PPS proposed
rule. We stated that we believed the resulting proposed MS-DRG
assignment is more clinically homogeneous, coherent and better reflects
hospital resource use.
[GRAPHIC] [TIFF OMITTED] TR28AU23.065
To further compare and analyze the impact of our suggested
modifications, we stated we then ran a simulation using the most recent
claims data from the December 2022 update of the FY 2022 MedPAR file
for cases reporting a cardiac defibrillator implant without
additionally reporting both a cardiac catheterization and a secondary
diagnosis designated as an MCC. The following table illustrates our
findings for all 7,935 cases.
[GRAPHIC] [TIFF OMITTED] TR28AU23.066
We applied the criteria to create subgroups in a base MS-DRG as
discussed in section II.C.1.b. of the FY 2024 IPPS/LTCH PPS proposed
rule. As shown in the table that follows, a three-way split of the
proposed new MS-DRGs failed the criterion that there be at least 500
cases for each subgroup due to low volume. Specifically, for the
``without CC/MCC'' (NonCC) split, there were only 452 cases in the
subgroup. The criterion that there be at least a 20% difference in
average costs between the CC and NonCC subgroup also failed to be met.
[GRAPHIC] [TIFF OMITTED] TR28AU23.067
We then applied the criteria for a two-way split for the ``with
MCC'' and ``without MCC'' subgroups for the proposed new MS-DRGs and
found that all five criteria were met. The following table illustrates
our findings.
[GRAPHIC] [TIFF OMITTED] TR28AU23.068
[[Page 58716]]
For the proposed new MS-DRGs, there is (1) at least 500 cases in
the MCC subgroup and in the without MCC subgroup; (2) at least 5
percent of the cases are in the MCC subgroup and in the without MCC
subgroup; (3) at least a 20 percent difference in average costs between
the MCC subgroup and the without MCC subgroup; (4) at least a $2,000
difference in average costs between the MCC subgroup and the without
MCC subgroup; and (5) at least a 3-percent reduction in cost variance,
indicating that the proposed severity level splits increase the
explanatory power of the base MS-DRG in capturing differences in
expected cost between the proposed MS-DRG severity level splits by at
least 3 percent and thus improve the overall accuracy of the IPPS
payment system.
In summary, for FY 2024, taking into consideration that it appears
to no longer be necessary to subdivide the MS-DRGs for cases reporting
a cardiac defibrillator implant based on the diagnosis code reported,
we proposed to delete MS-DRGs 222, 223, 224, 225, 226, and 227, and
create a new MS-DRG for cases reporting a cardiac defibrillator implant
with cardiac catheterization and a secondary diagnosis designated as an
MCC in MDC 05. We also proposed to create two new MS-DRGs with a two-
way severity level split for cases reporting a cardiac defibrillator
implant without additionally reporting both a cardiac catheterization
and a secondary diagnosis designated as an MCC. These proposed new MS-
DRGs are proposed new MS-DRG 275 (Cardiac Defibrillator Implant with
Cardiac Catheterization and MCC), proposed new MS-DRG 276 (Cardiac
Defibrillator Implant with MCC) and proposed new MS-DRG 277 (Cardiac
Defibrillator Implant without MCC).
In the proposed rule, we noted that the procedure codes describing
cardiac catheterization are designated as non-O.R. procedures,
therefore, as part of the logic for MS-DRG 275, we also proposed to
designate these codes as non-O.R. procedures affecting the MS-DRG. We
referred the reader to Table 6P.7a and Table 6P.7b associated with the
proposed rule (which is available on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index) for the list of procedure codes we proposed to
define in the logic for each of the proposed new MS-DRGs. We refer the
reader to section II.C.15. of the preamble of this final rule for the
discussion of the surgical hierarchy and the complete list of our
proposed modifications to the surgical hierarchy as well as our
finalization of those proposals.
Comment: Most commenters supported the proposal to delete MS-DRGs
222, 223, 224, 225, 226, and 227, and to create three new MS-DRGs in
MDC 05. These commenters stated that they agreed with CMS that it is no
longer necessary to subdivide the MS-DRGs for cases reporting a cardiac
defibrillator implant based on the diagnosis code reported. A few
commenters stated that while they found the proposal reasonable based
on the data and rationale provided, they urged CMS to monitor for any
unintended consequences. However, a commenter opposed the proposal.
This commenter stated that the proposed change will have a notable
negative impact based on its own analysis of claims data at its
organization. The commenter further noted claims at its organization
demonstrate significant length of stay and cost variations across the
current MS-DRGs which they asserted further supports that revising the
MS-DRGs is not appropriate from a resource utilization perspective.
Response: We appreciate the commenters' support and appreciate the
additional feedback. With regard to the commenter's concern that the
proposal might have a negative impact based on its own analysis of
claims data at its organization, the examination of claims data from
the September 2022 update of the FY 2022 MedPAR file for MS-DRGs 222,
223, 224, 225, 226, and 227 showed that in procedures involving a
cardiac defibrillator implant, the average costs and length of stay are
generally similar without regard to the presence of diagnosis codes
describing AMI, HF or shock. We note that the commenter did not provide
any clinical rationale as to why the distinction based on the presence
of diagnosis codes should be maintained in these MS-DRGs. As noted in
prior rulemaking, 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. Our analysis of the claims data demonstrated
that for cases involving a cardiac defibrillator implant the increased
costs appear to be more related to the procedures performed than to the
diagnoses reported on the claim, and we continue to believe it is time
to restructure these MS-DRGs accordingly, noting that cases reporting
any MDC 05 diagnosis when reported with qualifying procedures will
group to the proposed new MS-DRGs. CMS will continue to monitor the
claims data for these procedures for unintended consequences as a
result of the deletion of the six MS-DRGs from the GROUPER logic as we
continue our comprehensive analysis in future rulemaking.
Comment: While supporting the proposal, other commenters noted that
CMS proposed to create new MS-DRG 275 (Cardiac Defibrillator Implant
with Cardiac Catheterization and MCC) for cases reporting a cardiac
defibrillator implant with cardiac catheterization and a secondary
diagnosis designated as an MCC in MDC 05. These commenters recommended
that an additional MS-DRG be created for cardiac defibrillator implant
with cardiac catheterization without MCC. A few commenters stated that
it was not clear where cases reporting a cardiac defibrillator implant
with a cardiac catheterization without MCC would be assigned. A
commenter noted that the draft HTML version of the ICD-10 MS-DRG
Definitions Manual for Version 41 available on the CMS website does not
show ``MCC'' as part of the logic for MS-DRGs 275 and 276. Another
commenter noted that CMS proposed to delay application of the NonCC
subgroup criteria to existing MS-DRGs with a three-way severity level
split for FY 2024 and questioned CMS' application of the methodology to
the proposed new MS-DRGs.
Response: We thank the commenters for their feedback. We note to
commenters that when reviewing consumption of hospital resources for
the cases reporting cardiac defibrillator implant with cardiac
catheterization during a hospital stay, as discussed earlier in this
section, the claims data clearly showed that the cases reporting
secondary diagnoses designated as MCCs are more resource intensive as
compared to other cases reporting cardiac defibrillator implant.
Accordingly, our proposal included the creation of one base MS-DRG for
cases reporting a cardiac defibrillator implant with cardiac
catheterization and a secondary diagnosis designated as an MCC and
another base MS-DRG split by a two-way severity level subgroup for
cases reporting a cardiac defibrillator implant without cardiac
catheterization.
As discussed in the proposed rule, we examined claims data from the
September 2022 update of the FY 2022 MedPAR file for all cases in MS-
DRGs 222, 223, 224, 225, 226, and 227. In MS-DRGs 222 and 224, there
were 3,094 cases reporting cardiac defibrillator implant with cardiac
catheterization, with or without a diagnosis of AMI, HF, or Shock, and
a secondary diagnosis designated as an MCC with average costs of
$62,608 and an average length of stay of 10.2 days. In comparison,
there were 3,959 cases reporting cardiac
[[Page 58717]]
defibrillator implant, with or without cardiac catheterization, with or
without a diagnosis of AMI, HF, or Shock, without an MCC with average
costs of $42,001 and an average length of stay of 4.2 days in MS-DRG
223, 225 and 227. We did not propose to subdivide the proposed new base
MS-DRG 275 for cases reporting a cardiac defibrillator implant with
cardiac catheterization and a secondary diagnosis designated as an MCC
into severity levels as the cases reporting a cardiac defibrillator
implant with cardiac catheterization without a secondary diagnosis
designated as an MCC (that are currently assigned to MS-DRGs 223 and
225) have average costs and an average lengths of stay comparable to
other cases reporting cardiac defibrillator implant, without cardiac
catheterization, with or without a diagnosis of AMI, HF, or Shock, also
without a secondary diagnosis designated as an MCC. Instead, for this
specific scenario, we proposed that secondary diagnosis codes with a
severity designation of MCC be used in the definition of the logic for
assignment to the proposed base MS-DRG for cases reporting a cardiac
defibrillator implant with cardiac catheterization and a secondary
diagnosis designated as an MCC. We continue to believe the resulting
proposed MS-DRG assignment is more clinically homogeneous, coherent and
better reflects hospital resource use.
In response to commenters who stated that it was not clear where
cases reporting a cardiac defibrillator implant with a cardiac
catheterization without a secondary diagnosis designated as an MCC
would be assigned, we note that these cases would be assigned to
proposed new MS-DRG 277 (Cardiac Defibrillator Implant without MCC), as
reflected in the test version of the ICD-10 MS-DRG GROUPER Software,
Version 41.
In response to the comment regarding the draft version of the ICD-
10 MS-DRG Definitions Manual, Version 41, available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/MS-DRG-Classifications-and-Software, we agree there
was an inadvertent error in the logic table for MS-DRGs 275, 276 and
277. We are correcting the display as reflected in the following logic
table:
[GRAPHIC] [TIFF OMITTED] TR28AU23.069
This correction will also be reflected in the final ICD-10 MS-DRG
Definitions Manual, Version 41.
In response to the concern regarding the application of the NonCC
subgroup criteria to the proposed new MS-DRGs, we note that 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. In the FY 2022 IPPS/LTCH PPS final rule (86 FR 44798) and FY
2023 IPPS/LTCH PPS final rule (87 FR 48803), we finalized a delay in
applying this technical criterion to existing MS-DRGs in light of the
PHE. We note that this delay relates to applying this technical
criterion to existing MS-DRGs with a three-way severity level split. As
discussed in prior rulemaking, in general, once the decision has been
made to propose to make further modifications to the MS-DRGs, such as
creating a new base MS-DRG, all five criteria must be met for the base
MS-DRG to be split (or subdivided) by a CC subgroup. We note that we
have applied the criteria to create subgroups, including application of
the NonCC subgroup criteria, in our annual analysis of the MS-DRG
classification requests effective FY 2021 (85 FR 58446 through 58448).
For example, we applied the criteria to create subgroups, including
application of the NonCC subgroup criteria, for a proposed new base MS-
DRG as discussed in our finalization of new base MS-DRG 018 (Chimeric
Antigen Receptor (CAR) T-cell Immunotherapy), new base MS-DRG 019
(Simultaneous Pancreas and Kidney Transplant with Hemodialysis), new
base MS-DRG 140 (Major Head and Neck Procedures), new base MS-DRG 143
(Other Ear, Nose, Mouth and Throat O.R. Procedures), new base MS-DRG
521 (Hip Replacement with Principal Diagnosis of Hip Fracture), and new
base MS-DRG 650 (Kidney Transplant with Hemodialysis) for FY 2021.
Similarly, we applied the criteria to create subgroups including
application of the NonCC subgroup criteria for MS-DRG classification
requests for FY 2022 that we received by November 1, 2020 (86 FR 44796
through 44798), for MS-DRG classification requests for FY 2023 (87 FR
48801 through 48804) that we received by November 1, 2021, and for MS-
DRG classification requests for FY 2024 that we received by October 20,
2022 (88 FR 26673 through 26676), as well as any additional analyses
that were conducted in connection with those requests. We refer the
reader to section II.C.1.b. of the preamble of this final rule for
related discussion regarding our finalization of the expansion of the
criteria to include the NonCC subgroup in the FY 2021 final rule and
our finalization of the proposal to continue to delay application of
the NonCC subgroup criteria to existing MS-DRGs with a three-way
severity level split for FY 2024.
Comment: A commenter stated that while they agreed that it appears
to no longer be necessary to subdivide the MS-DRGs for cases reporting
a cardiac defibrillator implant based on the diagnosis code reported,
they did not think it was necessary to delete MS-DRGs 226 and 227
(Cardiac Defibrillator Implant without Cardiac Catheterization with and
without MCC, respectively) and create new MS-DRGs 276 and 277 (Cardiac
Defibrillator Implant with and without MCC, respectively). This
commenter stated that the proposed new MS-DRG 276 has the same GROUPER
logic as the existing MS-DRG 226 and therefore will capture the same
cases. This commenter further stated they believed that the current
title of MS-DRG 226 better identifies the cases assigned. This
commenter also suggested keeping existing MS-DRG 227 and revising the
title to ``Cardiac Defibrillator Implant with or without Cardiac
Catheterization without MCC'' instead of creating new MS-DRG 277.
Response: We appreciate the commenter's feedback. The commenter is
correct that proposed new MS-DRG 276 has the same GROUPER logic as
current MS-DRG 226. In response to the
[[Page 58718]]
commenter's concern regarding why new MS-DRG numbers would be
considered, as discussed in prior rulemaking (87 FR 48804), we note
that new MS-DRG numbers are preferred because we anticipate that
individuals, payers, and organizations conducting analysis would need
to be aware if proposed changes to base DRG concepts are made to allow
them time to adjust their programs, analyses, or queries that may have
hard coded the DRG numbers. To minimize confusion for those who rely on
MS-DRG concepts year to year and to avoid unintended consequences from
maintaining the existing MS-DRG number, we believe it is appropriate to
finalize the revision to both the MS-DRG number and corresponding
description for cases reporting a cardiac defibrillator implant without
cardiac catheterization with a secondary diagnosis designated as an
MCC.
Therefore, after consideration of the public comments received, and
for the reasons previously stated, we are finalizing our proposal to
delete MS-DRGs 222, 223, 224, 225, 226, and 227. We are also finalizing
our proposal to create new MS-DRG 275 (Cardiac Defibrillator Implant
with Cardiac Catheterization and MCC), new MS-DRG 276 (Cardiac
Defibrillator Implant with MCC), and new MS-DRG 277 (Cardiac
Defibrillator Implant without MCC) in MDC 05, without modification,
effective October 1, 2023, for FY 2024. Accordingly, we are also
finalizing our proposal to designate the procedure codes describing
cardiac catheterization as non-O.R. procedures affecting the MS-DRG.
Comment: Another commenter stated that a code proposal requesting
new procedure codes to describe the implantation, removal and revision
of extravascular implantable defibrillator (EV ICD) leads was presented
and discussed at the March 7-8, 2023 ICD-10 Coordination and
Maintenance Committee meeting. The commenter further stated that CMS
has proposed to create new MS-DRGs 275, 276, and 277 for cases
reporting cardiac defibrillator implant procedures, which includes
procedures describing the insertion of implantable cardioverter-
defibrillators (ICDs) for FY 2024, while cases reporting cardiac
defibrillator lead removal and revision procedures are assigned to MS-
DRG 265 (AICD Lead Procedures). This commenter suggested that any new
procedure codes finalized after the March 7-8, 2023 ICD-10 Coordination
and Maintenance Committee meeting that describe EV ICD procedures
should be assigned to MS-DRG 265 and MS-DRGs 275-277 as well and stated
that alignment of these new ICD-10-PCS codes with existing
defibrillator procedure codes in terms of MS-DRG assignment will ensure
clinical coherence and facilitate patient access and provider choice
among ICD technologies.
Response: We thank the commenter for their feedback. We note that
the proposal requesting new procedure codes to identify procedures
involving extravascular implantable defibrillator leads that was
discussed at the March 7-8, 2023 ICD-10 Coordination and Maintenance
Committee meeting was approved and 11 new procedure codes to identify
procedures involving EV ICD leads were finalized as reflected in the FY
2024 ICD-10-PCS Code Update files that were made publicly available on
the CMS website at https://www.cms.gov/Medicare/Coding/ICD10 on June 6,
2023. We also note that the new procedure codes are also reflected in
Table 6B.--New Procedure Codes, in association with this final rule and
available on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS, including the MS-DRG
assignments for these new codes for FY 2024. We refer the reader to
section II.C.13. of the preamble of this final rule for further
information regarding the table.
As we have noted in prior rulemaking (86 FR 44805), we used our
established process to determine the most appropriate MS-DRG assignment
for the new procedure codes approved after March 7-8, 2023 ICD-10
Coordination and Maintenance Committee meeting to identify procedures
involving EV ICD leads. Specifically, we reviewed the predecessor codes
and MS-DRG assignments most closely associated with the new procedure
codes, and in the absence of claims data, we considered other factors
that may be relevant to the MS-DRG assignment, including the severity
of illness, treatment difficulty, complexity of service and the
resources utilized in the diagnosis and/or treatment of the condition.
The MS-DRG assignments for the predecessor codes that we utilized to
inform this analysis and the new procedure codes to identify procedures
involving extravascular implantable defibrillator leads under MDC 05
are identified as follows.
BILLING CODE 4120-01-P
[[Page 58719]]
[GRAPHIC] [TIFF OMITTED] TR28AU23.070
While the new procedure codes are being assigned to the same MS-DRG
as the predecessor codes in this instance, as we have noted in prior
rulemaking, and earlier in this section, 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 addition to the MDC and MS-DRG assignments as reflected in Table
6B.--
[[Page 58720]]
New Procedure Codes, in association with this final rule, we note that
the procedure code combinations describing the insertion of an EV ICD
lead with the insertion of a defibrillator generator, are assigned to
new MS-DRGs 275, 276, and 277 for FY 2024. This assignment is reflected
in the final V41 GROUPER logic. The public may provide feedback on the
MS-DRG assignments for FY 2024, which will then be taken into
consideration for the following fiscal year.
6. MDC 06 (Diseases and Disorders of the Digestive System):
Appendicitis
In the FY 2023 IPPS/LTCH PPS proposed rule (87 FR 28163 through 87
FR 28165) and final rule (87 FR 48849 through 87 FR 48850), we
discussed a request related to the MS-DRG assignment of diagnosis codes
describing acute appendicitis with generalized peritonitis, with and
without perforation or abscess when reported with an appendectomy
procedure. In that discussion, we stated that any future proposed
changes to the MS-DRGs for appendectomy procedures would be dependent
on the diagnosis code revisions that are finalized by the CDC/National
Center for Health Statistics (NCHS) since the CDC/NCHS staff presented
a proposal for further revisions to the diagnosis codes describing
acute appendicitis with generalized peritonitis at the March 8-9, 2022
ICD-10 Coordination and Maintenance Committee meeting. Specifically,
the CDC/NCHS staff proposed to expand diagnosis codes K35.20 (Acute
appendicitis with generalized peritonitis, without abscess) and K35.21
(Acute appendicitis with generalized peritonitis, with abscess), making
them sub-categories and creating new diagnosis codes to identify and
describe acute appendicitis with generalized peritonitis, with
perforation and without perforation, and unspecified as to perforation.
We noted 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 was May 9, 2022, and
according to the CDC/NCHS staff, the diagnosis code proposals were
being considered for an October 1, 2023, implementation (FY 2024). 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.
In the FY 2024 IPPS/LTCH PPS proposed rule (88 FR 26717), we stated
that, as shown in Appendix B--Diagnosis Code/MDC/MS-DRG Index of the
ICD-10 MS-DRG Definitions Manual V40.1 (available at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/MS-DRG-Classifications-and-Software), diagnosis codes
K35.20 and K35.21 are currently assigned to medical MS-DRGs 371, 372,
and 373 (Major Gastrointestinal Disorders and Peritoneal Infections
with MCC, with CC, and without CC/MCC, respectively) in MDC 06.
Diagnosis code K35.21 is also assigned to surgical MS-DRGs 338, 339,
and 340 (Appendectomy with Complicated Principal Diagnosis with MCC,
with CC, and without CC/MCC, respectively) in MDC 06 because diagnosis
code K35.21 is defined as a complicated diagnosis in the GROUPER logic.
Therefore, when a procedure code describing an appendectomy is reported
with principal diagnosis code K35.21, the logic for case assignment to
MS-DRGs 338, 339, or 340 is satisfied.
As discussed in section II.C.13. of the preamble of the proposed
rule, Table 6C--Invalid Diagnosis Codes (available on the CMS website
at: https://www.cms.gov/medicare/medicare-fee-for-service-payment/
acuteinpatientpps) lists the diagnosis codes that are no longer
effective starting October 1, 2023. Included in this table are
diagnosis codes K35.20 and K35.21. In addition, we noted that as shown
in the following table and in Table 6A--New Diagnosis Codes associated
with the proposed rule (and available on the CMS website at: https://
www.cms.gov/medicare/medicare-fee-for-service-payment/
acuteinpatientpps), six new diagnosis codes describing acute
appendicitis with generalized peritonitis, with and without perforation
or abscess were finalized and are effective with discharges on and
after October 1, 2023. We stated in the proposed rule that consistent
with our established process for assigning new diagnosis and procedure
codes, we reviewed the predecessor codes (K35.20 and K35.21) to
determine the MS-DRG assignment most closely associated with the new
diagnosis codes. In addition, we noted that the proposed severity level
designations for the new diagnosis codes are set forth in Table 6A. As
shown, the new codes are proposed for assignment to medical MS-DRGs
371, 372, and 373 (Major Gastrointestinal Disorders and Peritoneal
Infections with MCC, with CC, and without CC/MCC, respectively), in
accordance with the assignment of predecessor codes K35.20 and K35.21.
[GRAPHIC] [TIFF OMITTED] TR28AU23.071
We stated in the proposed rule that because the acute appendicitis
diagnosis code revisions have been finalized by the CDC/NCHS, we
believed it is now appropriate to address the MS-DRG request for
diagnosis code K35.20 describing acute appendicitis with generalized
peritonitis when an appendectomy procedure is performed. We referred
the reader to the ICD-10 MS-DRG Definitions Manual Version 40.1, which
is available 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 338, 339, and 340 (Appendectomy with Complicated
Principal Diagnosis with MCC, with CC, and without CC/MCC,
respectively) and MS-DRGs 341, 342, and 343 (Appendectomy without
Complicated Principal Diagnosis with MCC, with CC, and without CC/MCC,
respectively) that includes the procedure codes defined in the logic
for an appendectomy.
As stated in the proposed rule, we first analyzed claims data from
the September 2022 update of the FY 2022 MedPAR file for MS-DRGs 338,
339, and 340 and cases reporting any one of
[[Page 58721]]
the following diagnosis codes currently defined in the logic as a
complicated principal diagnosis when reported as a principal diagnosis.
[GRAPHIC] [TIFF OMITTED] TR28AU23.072
Our findings are shown in the following table. We note that if a
diagnosis is not listed it is because there were no cases found.
[GRAPHIC] [TIFF OMITTED] TR28AU23.073
The data shows that overall, each of the ``complicated'' diagnoses
appears to have a comparable average length of stay and similar average
costs when compared to the average length of stay and average costs of
all the cases in the respective MS-DRG, as well as, to each other.
Next, we analyzed claims data from the September 2022 update of the
FY 2022 MedPAR file for MS-DRGs 341, 342, and 343 and cases reporting
any one of the following diagnosis codes describing acute appendicitis.
[[Page 58722]]
[GRAPHIC] [TIFF OMITTED] TR28AU23.074
Our findings are shown in the following table.
[GRAPHIC] [TIFF OMITTED] TR28AU23.075
Similar to the findings for the ``complicated'' diagnoses, the
``uncomplicated'' diagnoses also have a comparable average length of
stay and similar average costs when compared to the average length of
stay and average costs of all the cases in the respective MS-DRG.
We stated in the proposed rule that based on our analysis for both
the ``complicated'' and ``uncomplicated'' diagnoses combined with our
review of all the cases in the MS-DRGs, we believed the findings
support a prior comment, as summarized in the FY 2023 IPPS/LTCH PPS
final rule (87 FR 48849), that clinically, both localized and
generalized peritonitis in association 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 identify possible abscess, use of intravenous antibiotics,
and prolonged monitoring. In addition, localized peritonitis progresses
to generalized peritonitis. In our direct comparison of the
``complicated'' versus ``uncomplicated'' MS-DRGs, we believe the
distinction is no longer meaningful with regard to resource
consumption. As shown in the following table, we
[[Page 58723]]
found the ``with MCC'' MS-DRGs, the ``with CC'' MS-DRGs, and the
``without CC/MCC'' MS-DRGs all have a comparable average length of stay
and similar average costs. For example, MS-DRG 338 has an average
length of stay of 7 days with average costs of $20,311 and MS-DRG 341
has an average length of stay of 5.8 days and average costs of $19,080.
The volume of cases for this MS-DRG pair is also similar with 579 cases
in MS-DRG 338 and 533 cases in MS-DRG 341.
[GRAPHIC] [TIFF OMITTED] TR28AU23.076
As a result of our analysis and review of this issue, we stated in
the proposed rule that we believed the findings support eliminating the
logic for ``complicated'' and ``uncomplicated'' diagnoses and
restructuring the six MS-DRGs. We also noted that in our review of the
logic for the appendectomy procedures, we identified procedures listed
in the current logic that we did not agree reflect an actual
appendectomy as suggested in the title of the current MS-DRGs, rather
the logic describes various procedures performed on the appendix.
To compare and analyze the impact of our suggested modifications,
we ran a simulation using the most recent claims data from the December
2022 update of the FY 2022 MedPAR file. The following table illustrates
our findings for all 8,060 cases reporting procedure codes describing a
procedure performed on the appendix.
[GRAPHIC] [TIFF OMITTED] TR28AU23.077
Consistent with our established process as discussed in section
II.C.1.b. of the preamble of the proposed rule, once the decision has
been made to propose to make further modifications to the MS-DRGs, all
five criteria to create subgroups must be met for the base MS-DRG to be
split (or subdivided) by a CC subgroup. Therefore, we applied the
criteria to create subgroups in a base MS-DRG. We noted that, as shown
in the table that follows, a three-way split of this proposed new base
MS-DRG was met. The following table illustrates our findings.
[GRAPHIC] [TIFF OMITTED] TR28AU23.078
For the proposed new MS-DRGs, there is (1) at least 500 cases in
the MCC subgroup, the CC subgroup, and the without CC/MCC subgroup; (2)
at least 5 percent of the cases are in the MCC subgroup, the CC
subgroup, and the without CC/MCC subgroup; (3) at least a 20 percent
difference in average costs between the MCC subgroup and the CC
subgroup and between the CC group and NonCC subgroup; (4) at least a
$2,000 difference in average costs between the MCC subgroup and the CC
subgroup and between the CC subgroup and NonCC subgroup; and (5) at
least a 3-percent reduction in cost variance, indicating that the
proposed severity level splits increase the explanatory
[[Page 58724]]
power of the base MS-DRG in capturing differences in expected cost
between the proposed MS-DRG severity level splits by at least 3 percent
and thus improve the overall accuracy of the IPPS payment system.
Therefore, we proposed to delete MS-DRGs 338, 339, 340, 341, 342,
and 343 and proposed to create new MS-DRG 397 Appendix Procedures with
MCC, MS-DRG 398 Appendix Procedures with CC, and MS-DRG 399 Appendix
Procedures without CC/MCC for FY 2024. These proposed new MS-DRGs would
no longer require a diagnosis in the definition of the logic for case
assignment. We also proposed to include the current list of
appendectomy procedures in the logic for case assignment of appendix
procedures for the proposed new MS-DRGs.
Comment: Several commenters expressed support for the proposed
changes to the MS-DRGs for appendectomy with and without a complicated
principal diagnosis. A commenter who agreed with CMS that the average
length of stay and average costs were comparable among the appendectomy
MS-DRGs with and without a complicated principal diagnosis stated that
the data for diagnosis code K35.21 (Acute appendicitis with generalized
peritonitis, with abscess) specifically reflected a longer length of
stay and higher average costs among all the MS-DRGs for appendectomy
with complicated principal diagnosis (MS-DRGs 338, 339, and 340). The
commenter requested that CMS continue to monitor this diagnosis code.
Response: We appreciate the commenters' support and feedback. CMS
will continue to monitor and analyze the claims data for diagnosis code
K35.21.
Comment: A commenter expressed concerns about the proposed new MS-
DRGs 397, 398, and 399 no longer reflecting the differences in
complexity and costs associated with treating appendicitis, including
concerns about the potential decrease in case weight. The commenter
stated tertiary care centers may have up to 30% of patients with
complicated appendicitis and that the treatment of appendicitis with a
complicated principal diagnosis utilizes substantially more resources.
This commenter also stated specifically, patients with more complicated
disease frequently have perforated disease which contaminates the
peritoneal cavity and wounds. According to the commenter, as a result,
these patients face significantly higher risk of surgical site
infections and require longer hospitalizations in order to a receive
longer duration IV antibiotics. Finally, the commenter stated that
operations on complex patients take much longer and suggested there is
little parity with regard to these populations between major referral
centers and smaller centers of care.
Another commenter stated their belief that CMS failed to recognize
clinical best practice for treatment of patients with complicated
disease including perforation. The commenter stated that the proposed
MS-DRG changes demonstrated a lack of understanding about the
complexities of appendectomy procedures and urged CMS to maintain the
existing MS-DRGs and reassign code K35.20 to MS-DRGs 338, 339, and 340,
due to the risk of postoperative abscess formation and extended length
of hospital stay, thereby warranting classification as a complicated
diagnosis.
Another commenter who disagreed with CMS' proposal agreed that
clinically, both localized and generalized peritonitis in association
with an appendectomy requires increased levels of care, inclusive of
extensive intraoperative irrigation at the surgical site, direct
inspection or imaging of the abdomen, use of antibiotics and prolonged
monitoring, however, the commenter stated both localized and general
peritonitis are complicated appendicitis diagnoses and are clinically
different than uncomplicated appendicitis, therefore, complicated
appendicitis diagnoses should group to a complicated appendicitis MS-
DRG. The commenter recommended retaining MS-DRGs 338, 339, and 340.
Additionally, the commenter suggested CMS add four diagnoses currently
considered uncomplicated principal diagnoses: K35.20 (Acute
appendicitis with generalized peritonitis, without abscess); K35.30
(Acute appendicitis with localized peritonitis, without perforation or
gangrene); K35.31 (Acute appendicitis with localized peritonitis and
gangrene, without perforation); and K35.891 (Other acute appendicitis
without perforation, with gangrene) to MS-DRGs 338, 339, and 340 to
reflect the complicated appendectomy. The commenter further suggested
that MS-DRGs 341, 342, and 343 (Appendectomy without Complicated
Principal Diagnosis with MCC, with CC, and without CC/MCC,
respectively) only reflect the principal diagnoses of K35.80
(Unspecified acute appendicitis), K35.890 (Other acute appendicitis
without perforation or gangrene), and K36 (Other appendicitis) as they
would clinically be considered an uncomplicated appendectomy.
Response: We thank the commenters for their feedback. In response
to the commenter who expressed concerns about the potential decrease in
case weight for the proposed new MS-DRGs, we note that the relative
weights (RW) and geometric mean length of stay (GMLOS) for existing MS-
DRGs 338, 339, 340, 341, 342, and 343 have been trending downward over
the past few years as shown in the following table.
[[Page 58725]]
[GRAPHIC] [TIFF OMITTED] TR28AU23.079
In association with the proposed rule, we made available the
proposed FY 2024 relative weights and GMLOS for proposed new MS-DRGs
397, 398, and 399 as reflected in Table 5--List of Medicare Severity
Diagnosis-Related Groups (MS-DRGs), Relative Weighting Factors, and
Geometric and Arithmetic Mean Length of Stay--FY 2024 Proposed Rule
available on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS.
[GRAPHIC] [TIFF OMITTED] TR28AU23.080
We believe the proposed relative weight and GMLOS for the proposed
new MS-DRGs appear to be appropriately driven by the underlying data.
While we recognize the commenter's statement that tertiary care
centers may provide treatment for up to 30% of patients with
complicated appendicitis, we note that we do not propose MS-DRG
modifications based on provider type. We also do not agree with the
commenter's statement that complicated appendicitis utilizes
substantially more resources since, as discussed in the proposed rule,
our findings reflect that cases in the complicated appendectomy MS-DRGs
are comparable to cases in the uncomplicated MS-DRGs with regard to
volume, average length of stay, and average costs.
In response to the commenter who indicated that CMS failed to
recognize clinical best practice for treatment of patients with
complicated disease including perforation, we note that our proposed
MS-DRG classification changes are not a reflection of, nor intended to
define, how providers render care for patients diagnosed with acute
appendicitis, rather, our proposals are based on a combination of data
analysis and clinical judgement. With respect to the commenter's
request that CMS reassign diagnosis code K35.20 (Acute appendicitis
with generalized peritonitis, without abscess), we note that, as
discussed in the preamble of the proposed rule and this final rule,
diagnosis code K35.20 has been expanded and is no longer valid
effective October 1, 2023, as reflected in Table 6C.--Invalid Diagnosis
Codes.
In response to the commenter who disagreed with CMS' proposal but
agreed that clinically, both localized and generalized peritonitis in
association with an appendectomy are complicated appendicitis diagnoses
and should group to a complicated appendicitis MS-DRG, we note that our
proposal reflects that both localized and generalized peritonitis in
association with an appendectomy are comparable, clinically coherent
diagnoses and should be grouped together. The MS-DRGs are a
classification system intended to group together those diagnoses and
procedures with similar
[[Page 58726]]
clinical characteristics and utilization of resources. Our proposal
also essentially reflects the commenter's suggestion to group the four
diagnoses (K35.20, K35.30, K35.31, and K35.891) that are currently
assigned to the appendectomy without complicated principal diagnosis
MS-DRGs (MS-DRGs 341, 342, and 342) together with the diagnoses that
are currently assigned to the appendectomy with complicated principal
diagnosis MS-DRGs (MS-DRGs 338, 338, and 340). Additionally, as
previously discussed, we believe our data findings and clinical review
no longer support the distinction of complicated versus uncomplicated
MS-DRGs with respect to resource utilization for acute appendicitis and
therefore, disagree with the commenter's suggestion to retain the
existing MS-DRGs and to only reflect diagnosis codes K35.80, K35.890,
and K36 in an uncomplicated MS-DRG. We note that diagnosis code K36
(Other appendicitis) is currently assigned to MS-DRGs 393, 394, and 395
(Other Digestive System Diagnoses with MCC, with CC, and without CC/
MCC, respectively), and was not specifically included or addressed in
our analysis, nor our proposal.
After consideration of the public comments we received, and for the
reasons discussed, we are finalizing our proposal to delete MS-DRGs
338, 339, 340, 341, 342, and 343 and to create MS-DRGs 397, 398, and
399 (Appendix Procedures with MCC, with CC, and without CC/MCCC,
respectively), without modification, for FY 2024. These finalized new
MS-DRGs no longer require a diagnosis in the definition of the logic
for case assignment. We are also finalizing our proposal to include the
current list of appendectomy procedures in the logic for case
assignment of appendix procedures for the finalized new MS-DRGs.
7. MDC 07 (Diseases and Disorders of the Hepatobiliary System and
Pancreas): Alcoholic Hepatitis
As stated in the FY 2024 IPPS/LTCH PPS proposed rule (88 FR 26721
through 26726), we received a request to create new MS-DRGs with a two-
way split (with MCC and without MCC) for cases reporting alcoholic
hepatitis. Alcoholic hepatitis is identified with ICD-10-CM diagnosis
codes K70.10 (Alcoholic hepatitis without ascites) and K70.11
(Alcoholic hepatitis with ascites) which are currently assigned to MS-
DRGs 432, 433, and 434 (Cirrhosis and Alcoholic Hepatitis with MCC,
with CC, and without CC/MCC, respectively) when reported as a principal
diagnosis.
Alcoholic hepatitis is characterized as an inflammatory condition
due to chronic, excessive alcohol use and is considered an acute form
of alcohol-associated liver disease (ALD). Data suggests that ALD was
responsible for over 100,000 hospitalizations in 2017 and admissions
for ALD continued to increase during the COVID-19 public health
emergency.\6\ Data also suggest that ALD may be one of the leading
causes of liver transplants in the U.S.
---------------------------------------------------------------------------
\6\ Gonzalez HC, Zhou Y, Nimri FM, Rupp LB, Trudeau S, Gordon
SC. Alcohol-related hepatitis admissions increased 50% in the first
months of the COVID-19 pandemic in the USA. Liver Int. 2022
Apr;42(4):762-764.
---------------------------------------------------------------------------
As discussed in the proposed rule, the requestor stated that
currently there are no effective therapies available to treat alcoholic
hepatitis and current treatment guidelines suggest corticosteroids,
despite increased risk of infection and minimal impact on survival
beyond 28 days. However, the requestor (manufacturer of Larsucosterol)
also indicated that epigenetic therapy is currently being studied to
address various types of acute and chronic organ injury and provided
information related to its AHFIRM (Alcohol-associated Hepatitis to
evaluate saFety and effIcacy of LaRsucosterol (DUR-928) treatMent)
Phase 2b study for patients diagnosed with alcoholic hepatitis. The FDA
granted Fast Track Designation to DUR-928 for the treatment of
alcoholic hepatitis in 2020.
The requestor stated it performed its own analysis using 2 years of
claims data, (calendar years 2018 and 2019), and its findings showed
that the patients with alcoholic hepatitis are distinct from the
typical Medicare beneficiary and that the condition disproportionately
affects younger patients that represent a small proportion of the cases
currently grouping to MS-DRGs 432, 433, and 434. According to the
requestor, the low volume of cases reporting alcoholic hepatitis have
little to no impact on the annual recalibration of the MS-DRG relative
payment weights for MS-DRGs 432, 433, and 434, resulting in
underpayments. The requestor stated its analysis of cases reporting
alcoholic hepatitis showed higher resource utilization and a longer
length of stay when compared to all cases in MS-DRGs 432, 433, and 434.
The requestor stated it applied the criteria to create subgroups for
the cases reporting alcoholic hepatitis currently grouping to MS-DRGs
432, 433, and 434 and found that the criteria for a two-way split (with
MCC and without MCC) was met. The requestor further stated that
splitting out the cases reporting alcoholic hepatitis from MS-DRGs 432,
433, and 434 would enable more accurate payment of these cases and
support research that is specific to alcoholic hepatitis distinct from
cirrhosis.
The logic for case assignment to MS-DRGs 432, 433, and 434 is
comprised of the following diagnosis codes.
[[Page 58727]]
[GRAPHIC] [TIFF OMITTED] TR28AU23.081
As stated in the proposed rule, we analyzed claims data from the
September 2022 update of the FY 2022 MedPAR file for MS-DRGs 432, 433,
and 434 and cases reporting any one of the listed diagnoses as a
principal diagnosis. We noted that if a diagnosis code is not listed it
is because there were no cases found reporting that code in the
respective MS-DRG. The findings from our analysis are shown in the
following table.
[GRAPHIC] [TIFF OMITTED] TR28AU23.082
[[Page 58728]]
[GRAPHIC] [TIFF OMITTED] TR28AU23.083
[[Page 58729]]
[GRAPHIC] [TIFF OMITTED] TR28AU23.084
Based on our initial analysis for cases in MS-DRGs 432, 433, and
434, the data clearly demonstrate that there are several diagnoses,
other than the two diagnoses identified by the requestor (codes K70.10
and K70.11) with increased resource utilization when compared to the
average length of stay and average costs of all cases in MS-DRGs 432,
433, and 434.
We stated in the proposed rule that the data show cases in MS-DRG
432 reporting diagnosis codes K70.11, K70.31, K70.40, K70.41, K74.3, or
K74.5 as a principal diagnosis have a longer average length of stay
(9.1 days, 7.5 days, 8.1 days, 8.7 days, 7.3 days, and 8.2 days,
respectively versus 6.8 days) and higher average costs ($20,727,
$17,694, $19,277, $22,530, $18,020, and $16,569, respectively versus
$16,532) compared to the average length of stay and the average costs
for all the cases in MS-DRG 432. We noted that the cases reporting
diagnosis codes K70.10, K74.4, or K74.69 as a principal diagnosis also
have a longer average length of stay (7.4 days, 7.5 days, and 6.9 days,
respectively versus 6.8 days) compared to all the cases in MS-DRG 432,
however, the average costs of these cases are lower ($14,710, $15,324
and $16,501, respectively versus $16,532) compared to the average costs
for all the cases.
For MS-DRG 433, the cases reporting diagnosis codes K70.11, K70.30,
K70.31, K70.40, or K70.9 as a principal diagnosis have a longer average
length of stay (5.0 days, 4.5 days, 4.4 days, 4.6 days, and 4.8 days,
respectively versus 4.3 days) and comparable average costs ($10,085,
$9,343, $9,548, $9,066, and $11,893, respectively versus $9,007)
compared to the average length of stay and the average costs for all
the cases in MS-DRG 433. We noted that the cases reporting diagnosis
code K70.10 as a principal diagnosis also have a longer average length
of stay (4.8 days versus 4.3 days) compared to all the cases in MS-DRG
433, however, the average costs of these cases are lower ($8,436 versus
$9,007) compared to the average costs for all the cases in the MS-DRG.
Lastly, for MS-DRG 434, the cases reporting diagnosis codes K70.31,
K74.3, or K74.60 as a principal diagnosis have a longer average length
of stay (3 days, 4.2 days, and 2.6 days, respectively versus 2.8 days)
and higher average costs ($6,348, $8,485, and $5,862, respectively
versus $5,825) compared to the average length of stay and the average
costs for all the cases in MS-DRG 434.
The data also show that there is significantly more case volume for
several of the other diagnoses compared to the case volume of the two
diagnoses (K70.10 and K70.11) associated with the request to create new
MS-DRGs. We identified diagnosis code K70.31 (Alcoholic cirrhosis of
liver with ascites) to be the most prevalent diagnosis with respect to
case volume reported across MS-DRGs 432, 433, and 434. For example, as
shown in the table, we found 5,687 cases in MS-DRG 432 reporting
diagnosis code K70.31 as a principal diagnosis compared to 269 cases
reporting diagnosis code K70.10 and 244 cases reporting diagnosis code
K70.11. For MS-DRG 433, we found 2,825 cases reporting diagnosis code
K70.31 as a principal diagnosis compared to 309 cases reporting
diagnosis code K70.10 and 173 cases reporting diagnosis code K70.11.
Lastly, for MS-DRG 434, we found 179 cases reporting diagnosis code
K70.31 as a principal diagnosis compared to 41 cases reporting
diagnosis code K70.10 and 8 cases reporting diagnosis code K70.11.
As discussed in the proposed rule, following our initial review of
the claims data for the cases reporting any one of the listed diagnoses
as a principal diagnosis that are included in the logic for case
assignment to MS-DRGs 432, 433, and 434, we performed additional
analyses to focus on the cases specifically reporting diagnosis code
K70.10 or K70.11 as a principal diagnosis in response to the request to
create new MS-DRGs with a two-way split (with and without MCC,
respectively). The findings from our analysis are shown in the
following table.
[[Page 58730]]
[GRAPHIC] [TIFF OMITTED] TR28AU23.085
The data show that the 513 cases reporting alcoholic hepatitis
without or with ascites in MS-DRG 432 have a longer average length of
stay (8.2 days versus 6.8 days) and higher average costs ($17,572
versus $16,532). For MS-DRG 433, the data show that the 482 cases
reporting alcoholic hepatitis without or with ascites have a longer
average length of stay (4.9 days versus 4.3 days) and a difference in
average costs of $21 ($9,028 versus $9,007). For MS-DRG 434, the 49
cases reporting alcoholic hepatitis without or with ascites have a
shorter length of stay (2.4 days versus 2.8 days) and lower average
costs ($5,544 versus $5,825).
We stated in the proposed rule that, based on the results of our
review and our analysis of the claims data for cases reporting a
principal diagnosis of alcoholic hepatitis without or with ascites
(codes K70.10 or K70.11), we believe the cases demonstrate similar
patterns of resource intensity in comparison to the other cases in MS-
DRGs 432, 433, and 434. We also stated we believed that these diagnoses
are clinically coherent with the other diagnoses currently assigned to
MS-DRGs 432, 433, and 434. In addition, we stated that while we
recognize the concerns expressed by the requestor for this subset of
patients with respect to the younger population and the lower volume of
cases, we noted that the logic for case assignment to MS-DRGs 432, 433,
and 434 includes clinically related diagnoses that differ in severity
and resource intensity with alcoholic hepatitis being at the lowest end
of the severity spectrum. Therefore, we proposed to maintain the
structure of MS-DRGs 432, 433, and 434 for FY 2024.
Comment: The majority of commenters agreed with the proposal to
maintain the structure of MS-DRGs 432, 433, and 434 for FY 2024 given
the data and information provided.
Response: We thank the commenters for their support.
Comment: A commenter (the requestor) who disagreed with the
proposal stated that alcoholic hepatitis (AH) is a distinct clinical
pathological entity that is different from common forms of
alcoholic[hyphen]liver disease (ALD) and that liver failure in severe
AH is driven by loss of hepatocyte nuclear factor 4 alpha (HNF4[alpha])
function and liver[hyphen]specific changes distinct from those seen in
other forms of ALD. The commenter expressed concerns regarding both the
analysis conducted by CMS and the interpretation of the findings.
Specifically, the commenter stated that analyses by principal diagnoses
comparing average length of stay and average costs should not be used
as the primary determinant in assessing resource use differences,
although the commenter acknowledged some principal diagnoses findings
will be above, and some will be below, when compared to an average.
According to the commenter, the CMS analyses also did not account for
the differences between AH and non-AH cases and masked resource use
differences. Using data from calendar years 2018 through 2022, the
commenter provided an updated analysis for MS-DRG 432 while combining
its analyses for MS-DRGs 433 and 434, separating AH cases from non-AH
and comparing average length of stay among the cases.
Response: The MS-DRGs were developed as a patient classification
scheme consisting of patients who are similar clinically and with
regard to their consumption of hospital resources. 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 and that a specific medical specialty should typically provide
care to the patients in the MS-DRG. While all patients are unique,
groups of patients have diagnostic and therapeutic attributes in common
that determine their level of resource intensity. Similar resource
intensity means that the resources used are relatively consistent
across the patients in each MS-DRG. However, some variation in resource
intensity will remain among the patients in each MS-DRG. In other
words, the definition of a MS-DRG will not be so specific that every
patient is identical, rather the level of variation is relatively
understood and predictable. We continue to believe, as stated
previously, that AH diagnoses are clinically coherent with the other
diagnoses currently assigned to MS-DRGs 432, 433, and 434.
With respect to the updated analyses that was submitted, we
appreciate the commenter's feedback. However, we note that the
commenter did not uniquely identify and distinguish the AH cases from
non-AH cases with specific ICD-10-CM codes that it was considering
under its analyses, nor did the analysis include any case counts. As
such, it was not clear specifically what diagnoses were included in the
commenter's data analysis.
With respect to the commenter's assertion that the CMS analyses by
principal diagnoses comparing average length of stay and average costs
was used as the primary determinant in assessing resource use
differences, we note that while the logic for case assignment to MS-
DRGs 432, 433, and 434 is driven by the reporting of any one of the
listed diagnoses as a principal diagnosis, we also consider other
factors in deciding whether to propose to make further modifications to
the MS-DRGs for particular circumstances brought to
[[Page 58731]]
our attention, as described in the preamble of the proposed rule (88 FR
26673) and discussed in prior rulemaking (for example, severity of
illness, treatment difficulty, complexity of service, etc.).
In response to the commenter's statement that the CMS analyses did
not account for the differences between AH and non-AH cases masking
resource use differences, we note that the analysis we performed and
made available in the proposed rule to address the MS-DRG request
listed the number of cases (volume), average length of stay and average
costs of all cases, as well as detailed data for each diagnosis code
defined in the logic for case assignment to MS-DRGs 432, 433, and 434
when reported as the principal diagnosis. Therefore, the data findings
for what we believe the commenter is referring to as non-AH cases were
reflected and the ability to perform a comparison between AH and non-AH
was made available. Specifically, in review of the findings for MS-DRG
432, as displayed in the proposed rule and this final rule, the number
of non-AH cases (e.g., cases reporting a principal diagnosis other than
diagnosis code K70.10 or K70.11) can be calculated by subtracting the
total number of cases reporting AH from the total number of all cases
in the MS-DRG. For example, the total number of cases found in MS-DRG
432 is 16,836 and the total number of cases reporting AH is 513,
therefore, the number of non-AH cases is 16,323 (16,836-513 = 16,323),
with an average length of stay of 6.8 days and average costs of
$16,499, resulting in a difference of 1.4 days for the average length
of stay and a difference in average costs of $1,073 for AH and non-AH
cases. For MS-DRG 433, the number of non-AH cases can be calculated as
7,954 (8,436-482 = 7,954) with an average length of stay of 4.3 days
and average costs of $9,006, resulting in a difference of .6 days for
the average length of stay and a difference in average costs of $22 for
AH and non-AH cases. Lastly, for MS-DRG 434, the number of non-AH cases
can be calculated as 309 (358-49 = 309) with an average length of stay
of 2.9 days and average costs of $5,870, resulting in a difference of
.5 days for the average length of stay and a difference in average
costs of $326 for AH and non-AH cases. We illustrate these findings in
the following table.
[GRAPHIC] [TIFF OMITTED] TR28AU23.086
After consideration of the public comments we received, and for the
reasons discussed, we are finalizing our proposal to maintain the
structure of MS-DRGs 432, 433, and 434, without modification, for FY
2024.
We also note, as discussed in section II.C.1.b. of the preamble of
proposed rule, using the December 2022 update of the FY 2022 MedPAR
file, we analyzed how applying the NonCC subgroup criteria to all MS-
DRGs currently split into three severity levels would affect the MS-DRG
structure beginning in FY 2024. Findings from our analysis indicated
that MS-DRGs 432, 433, and 434, as well as approximately 44 other base
MS-DRGs, would potentially be subject to change based on the three-way
severity level split criterion finalized in FY 2021. We referred the
reader to Table 6P.10b associated with the proposed rule (which is
available on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS) for the list of the 135 MS-
DRGs that would potentially be subject to deletion and the list of the
86 new MS-DRGs that would potentially be created under this policy if
the NonCC subgroup criteria was applied.
Comment: A commenter expressed support for the analysis CMS
performed to determine how applying the NonCC subgroup criteria would
potentially impact MS-DRGs currently split into three severity levels.
Specifically, the commenter stated application of the NonCC subgroup
criteria for MS-DRGs 432, 433, and 434 is reflective of the MS-DRG
structure that was requested for AH.
Response: We thank the commenter for their support. We refer the
reader to section II.C.1.b. of the preamble of this final rule for
related discussion regarding our finalization of the expansion of the
criteria to include the NonCC subgroup and our finalization of the
proposal to continue to delay application of the NonCC subgroup
criteria to existing MS-DRGs with a three-way severity level split for
FY 2024.
8. MDC 08 (Diseases and Disorders of the Musculoskeletal System and
Connective Tissue): Spinal Fusion
As discussed in the FY 2024 IPPS/LTCH PPS proposed rule (88 FR
26726 through 26729), we received a request to
[[Page 58732]]
reassign cases reporting spinal fusion procedures utilizing an
aprevoTM customized interbody fusion device from the lower
severity MS-DRG 455 (Combined Anterior and Posterior Spinal Fusion
without CC/MCC) to the higher severity MS-DRG 453 (Combined Anterior
and Posterior Spinal Fusion with MCC), from the lower severity MS-DRG
458 (Spinal Fusion Except Cervical with Spinal Curvature, Malignancy,
Infection or Extensive Fusions without CC/MCC) to the higher severity
level MS-DRG 456 (Spinal Fusion Except Cervical with Spinal Curvature,
Malignancy, Infection or Extensive Fusions with MCC) when a diagnosis
of malalignment is reported, and from MS-DRGs 459 and 460 (Spinal
Fusion Except Cervical with MCC and without MCC, respectively) to MS-
DRG 456.
We noted that the AprevoTM Intervertebral Body Fusion
Device technology was discussed in the FY 2022 IPPS/LTCH PPS proposed
(86 FR 25361 through 25365) and final rules (86 FR 45127 through 45133)
with respect to a new technology add-on payment application and was
approved for add-on payments for FY 2022. We also noted that, as
discussed in the FY 2023 IPPS/LTCH PPS final rule (87 FR 49468 through
49469), CMS finalized the continuation of the new technology add-on
payments for this technology for FY 2023.
In support of the new technology add-on payment application that
was submitted for FY 2022 consideration, we received a request and
proposal to create new ICD-10-PCS codes to differentiate spinal fusion
procedures that utilize an aprevoTM customized interbody
fusion device, which was discussed at the March 9-10, 2021 ICD-10
Coordination and Maintenance Committee meeting. As a result, effective
October 1, 2021 (FY 2022), we implemented 12 new ICD-10-PCS procedure
codes to identify and describe spinal fusion procedures utilizing the
aprevoTM customized interbody fusion device as shown in the
following table.
[GRAPHIC] [TIFF OMITTED] TR28AU23.087
Each of the listed procedure codes are assigned to MDC 01 (Diseases
and Disorders of the Nervous System) in MS-DRGs 028, 029, and 030
(Spinal Procedures with MCC, with CC or Spinal Neurostimulators, and
without CC/MCC, respectively) and to MDC 08 (Diseases and Disorders of
the Musculoskeletal System and Connective Tissue) in MS-DRGs 453, 454,
and 455 (Combined Anterior and Posterior Spinal Fusion with MCC, with
CC, and without CC/MCC, respectively), MS-DRGs 456, 457, and 458
(Spinal Fusion Except Cervical With Spinal Curvature, Malignancy,
Infection or Extensive Fusions with MCC, with CC, and without CC/MCC,
respectively), and MS-DRGs 459 and 460 (Spinal Fusion Except Cervical
with MCC and without MCC, respectively).
As stated in the proposed rule, the requestor (the manufacturer of
aprevoTM customized interbody spinal fusion devices)
expressed concerns that findings from its analysis of claims data for
spinal fusion MS-DRGs 453, 454, 455, 456, 457, 458, 459, and 460 from
the first half of FY 2022 indicate there may be unintentional miscoded
claims from providers with whom they do not have an explicit
relationship. Specifically, the requestor stated that a subset of the
facilities identified in its analysis are not customers to whom the
aprevoTM custom-made device was provided. The volume of
cases initially identified by the requestor in its analysis totaled 89
cases, however, upon
[[Page 58733]]
eliminating the provider claims from the facilities that are not a
current client, the resulting volume was 14 cases. The requestor stated
that subsequently, after another quarter's data became available from
current clients for cases reporting the performance of a spinal fusion
procedure utilizing an aprevoTM customized interbody spinal
fusion device, they identified an additional 16 cases for a total of 30
cases, all of which were assigned to MS-DRGs 453, 454, and 455.
Upon further review of the data, the requestor stated it found that
cases reporting the performance of a spinal fusion procedure utilizing
an aprevoTM customized interbody spinal fusion device had
higher average costs in comparison to the average costs of all the
cases in the highest severity level ``with MCC'' MS-DRGs 453 and 456.
According to the requestor, this finding suggested that the use of the
device impacts intensity of resources such that the cases reporting the
performance of a spinal fusion procedure utilizing an
aprevoTM customized interbody spinal fusion device merit
reassignment to the highest severity level ``with MCC'' MS-DRGs (MS-
DRGs 453 and 456). The requestor asserted that while spinal disorders
impact approximately 65 million patients in the U.S., the patients
undergoing spine surgery with an aprevoTM customized
interbody spinal fusion device are those with irreversible,
debilitating conditions. In addition, the requestor stated that since
the cases reporting the performance of a spinal fusion procedure
utilizing an aprevoTM customized interbody spinal fusion
device already appear to map to the most resource intensive MS-DRGs for
spinal procedures, there is no other alternative assignment for these
procedures, with the exception of a new MS-DRG. Lastly, the requestor
maintained that reassigning cases reporting the performance of a spinal
fusion procedure utilizing an aprevoTM customized interbody
spinal fusion device to the ``with MCC'' level aligns with CMS's
factors that are considered in review of MS-DRG classification change
requests, including treatment difficulty, complexity of service, and
utilization of resources.
As discussed in the proposed rule, we analyzed data from the
September 2022 update of the FY 2022 MedPAR file for MS-DRGs 453, 454,
455, 456, 457, 458, 459, and 460 and cases reporting any one of the
previously listed procedure codes describing utilization of an
aprevoTM customized interbody spinal fusion device. Our
findings are shown in the following table.
[GRAPHIC] [TIFF OMITTED] TR28AU23.088
We found the majority of cases reporting the performance of a
spinal fusion procedure utilizing an aprevoTM customized
interbody spinal fusion device in MS-DRGs 453, 454, and 455 with a
total of 159 cases (17 + 75 + 67 = 159) with an average length of stay
of 4.1 days and average costs of $66,847. The 17 cases identified in
MS-DRG 453 appear to have a comparable average length of stay and
comparable average costs compared to all the cases in MS-DRG 453 with a
difference of 1.0 day and a difference in average costs of $1,383 for
the cases reporting the performance of a spinal fusion procedure
utilizing an aprevoTM customized interbody spinal fusion
device. The 75 cases found in MS-DRG 454 have an identical average
length of stay of 4.4 days in comparison to all the cases in MS-DRG
454, however, the difference in average costs is $21,067 ($75,294-
$54,227 = $21,067) for the cases reporting the performance of a spinal
fusion procedure utilizing an aprevoTM customized interbody
spinal fusion device. The 67 cases found in MS-DRG 455 also have an
identical average length of stay of 2.7 days in comparison to all the
cases in MS-DRG 455, however, the difference in average costs is
$13,604 ($54,287-$40,683 = $13,604) for the cases reporting the
performance of a spinal fusion procedure utilizing an
aprevoTM customized interbody spinal fusion device. As shown
in the table, there were no cases found to report utilization of an
aprevoTM customized interbody spinal fusion device in MS-DRG
456. For MS-DRG 457, the 2 cases found to report utilization of an
aprevoTM customized interbody spinal fusion device appear to
be outliers with a difference in average costs of $105,032 ($158,782-
$53,750 = $105,032) and a shorter average length of stay (3.5 days
versus 6.4 days) in comparison to all the cases in MS-DRG 457. For MS-
DRG 458, we found 1 case reporting utilization of an
aprevoTM customized interbody spinal fusion device with an
average length of stay almost three times the average length of stay of
all the cases in MS-DRG 458 (12 days versus 3.5 days) and average costs
that are twice as
[[Page 58734]]
high ($91,672 versus $40,343) compared to the average costs of all the
cases in MS-DRG 458. For MS-DRG 459, the 2 cases reporting utilization
of an aprevoTM customized interbody spinal fusion device had
a shorter average length of stay (5 days versus 9.8 days) compared to
the average length of stay of all the cases in MS-DRG 459 with a
difference in average costs of $3,697 ($57,039-$53,342 = $3,697). For
MS-DRG 460, the 30 cases reporting utilization of an
aprevoTM customized interbody spinal fusion device had a
longer average length of stay (4.5 days versus 3.5 days) compared to
the average length of stay of all the cases in MS-DRG 460 with a
difference in average costs of $14,762 ($46,683-$31,921 = $14,762).
As discussed in the proposed rule, the requestor expressed concerns
that there may be unintentional miscoded claims from providers with
whom they do not have an explicit relationship. In the proposed rule,
we noted that following the submission of the request for the FY 2024
MS-DRG classification change for cases reporting the performance of a
spinal fusion procedure utilizing an aprevoTM customized
interbody spinal fusion device, this same requestor (the manufacturer
of aprevoTM customized interbody spinal fusion devices)
submitted a code proposal requesting a revision to the title of the
current procedure codes that identify and describe a spinal fusion
procedure utilizing an aprevoTM customized interbody spinal
fusion device for consideration as an agenda topic to be discussed at
the March 7-8, 2023 ICD-10 Coordination and Maintenance Committee
meeting. The requestor stated its belief that the term ``customizable''
as currently reflected in each of the 12 procedure code descriptions is
potentially misunderstood by providers to encompass expandable
interbody fusion cages that have been available for several years and
which were not approved for new technology add-on payment as was the
aprevoTM customized interbody spinal fusion device.
According to the requestor, these other interbody fusion devices do not
require the same patient specific surgical plan coordination as the
aprevoTM customized interbody spinal fusion device and do
not offer the personalized fit that matches the topography of a
patient's bone. Therefore, in an effort to encourage appropriate
reporting for cases where an aprevoTM customized interbody
spinal fusion device has been utilized in the performance of a spinal
fusion procedure, the requestor provided alternative terminology for
consideration.
We stated in the proposed rule that the proposal to revise the code
title was presented and discussed as an Addenda item at the March 7-8,
2023 ICD-10 Coordination and Maintenance Committee meeting. We referred
the reader to the CMS website at: https://www.cms.gov/Medicare/Coding/ICD10/C-and-M-Meeting-Materials for additional detailed information
regarding 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 7, 2023.
We noted in the proposed rule that 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, Table 6B.--New Procedure Codes, Table 6C.--Invalid Diagnosis
Codes, Table 6D.--Invalid Procedure Codes, Table 6E.--Revised Diagnosis
Code Titles or Table 6F.--Revised Procedure Code Titles in association
with the proposed rule. Accordingly, we stated that any update to the
title of the procedure codes describing utilization of an
aprevoTM customized interbody spinal fusion device, if
finalized following the March meeting, would be reflected in Table
6F.--Revised Procedure Code Titles associated with the final rule for
FY 2024.
As discussed in the proposed rule, based on our review of this
issue and our analysis of the claims data, we agreed that the findings
appear to indicate that cases reporting the performance of a procedure
utilizing an aprevoTM customized interbody spinal fusion
device reflect a higher consumption of resources. However, due to the
concerns expressed with respect to suspected inaccuracies of the coding
and therefore, reliability of the claims data, we stated we believed
further review is warranted. In addition, as previously discussed in
the proposed rule and this final rule, the proposal to revise the
current code descriptions was presented at the March 2023 ICD-10
Coordination and Maintenance Committee meeting and if finalized, the
revised coding may improve the reporting of procedures where an
aprevoTM customized interbody spinal fusion device is
utilized. In the proposed rule, we also stated we believed that because
this technology is currently receiving new technology add-on payments,
it would be advantageous to allow for more claims data to be analyzed
under the application of the policy in consideration of any future
modifications to the MS-DRGs for which the technology is utilized in
the performance of a spinal fusion procedure.
In the proposed rule, we noted that with regard to possible future
action, we will continue to monitor the claims data for resolution of
the potential coding issues identified by the requestor. We also noted
that because the procedure codes that we analyzed and presented
findings for in the FY 2024 IPPS/LTCH PPS proposed rule may be revised
based on the proposal as discussed at the March 2023 ICD-10
Coordination and Maintenance Committee meeting, the claims data that we
examine in the future may change. Additionally, we stated that we will
continue to collaborate with the AHA as one of the four Cooperating
Parties through the AHA's Coding Clinic for ICD-10-CM/PCS and provide
further education on spinal fusion procedures utilizing an
aprevoTM customized interbody spinal fusion device and the
proper reporting of the ICD-10-PCS spinal fusion procedure codes. Until
these potential coding inaccuracies are addressed and additional,
future analysis of the procedures being reported in the claims data can
occur, we stated we believed it would be premature to propose any MS-
DRG modifications for spinal fusion procedures utilizing an
aprevoTM customized interbody spinal fusion device at this
time. For these reasons, we proposed to maintain the current structure
of MS-DRGs 453, 454, 455, 456, 457, 458, 459, and 460 for FY 2024.
Comment: Commenters supported our proposal to maintain the current
structure of MS-DRGs 453, 454, 455, 456, 457, 458, 459, and 460 for FY
2024.
Response: We thank the commenters for their support.
Comment: Several commenters (orthopedic surgeons) who expressed
support for the requested reassignment of cases reporting the
utilization of an aprevoTM customized interbody spinal
fusion device stated how important these devices are for their patients
because it optimizes patient alignment, is patient-specific, and
therefore, beneficial for situations where a patient's normal anatomy
does not allow for traditional implants. These commenters stated that
without reassignment to the higher severity MS-DRGs their facilities
would not allow use of the technology on the population of Medicare
patients they serve.
Response: We appreciate the commenters' feedback. As discussed in
the proposed rule, based on our review
[[Page 58735]]
and analysis of the claims data, we agreed that the findings appear to
indicate that cases reporting the performance of a procedure utilizing
an aprevoTM customized interbody spinal fusion device
reflect a higher consumption of resources. We also note that the
proposal to revise the current code descriptions that was presented at
the March 2023 ICD-10 Coordination and Maintenance Committee meeting
was finalized, as reflected in the FY 2024 ICD-10-PCS Code Update files
available via the CMS website at: https://www.cms.gov/medicare/icd-10/2024-icd-10-pcs as well as in Table 6F.--Revised Procedure Code
Titles--FY 2024 associated with this final rule and available via the
CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS.
As also previously discussed, because of the concerns with respect
to suspected inaccuracies of the current coding, we continue to believe
additional review of claims data is warranted and would be informative
as we continue to consider this technology for future rulemaking.
Accurate and complete documentation within the medical record is
important for patient management, outcome measurement, and quality
improvement, as well as payment accuracy. We anticipate that the
revisions to the code title for the aprevoTM customized
interbody spinal fusion device will encourage more accurate reporting
of procedures and improve the quality and reliability of the data. We
also continue to believe that because this technology is currently
receiving new technology add-on payments and will continue to receive
new technology add-on payments, additional claims data analysis of the
cases under the application of the policy in consideration of any
future modifications to the MS-DRGs for which the technology is
utilized in the performance of a spinal fusion procedure would be
beneficial.
As we have stated in prior rulemaking, we rely on providers to
assess the needs of their patients and provide the most appropriate
treatment. It is not appropriate for facilities to deny treatment to
beneficiaries needing a specific type of therapy or treatment that
potentially involves increased costs (86 FR 44847). It would also not
be appropriate to consider modifications to the MS-DRG assignment of
cases reporting the performance of a procedure that identifies and
describes a specific technology solely as an incentive for providers to
purchase and utilize one technology over another.
After consideration of the public comments we received, and for the
reasons discussed, we are finalizing our proposal to maintain the
structure of MS-DRGs 453, 454, 455, 456, 457, 458, 459, and 460,
without modification, for FY 2024.
9. MDC 11 (Diseases and Disorders of the Kidney and Urinary Tract):
Complications of Arteriovenous Fistulas and Shunts
In the FY 2024 IPPS/LTCH PPS proposed rule (88 FR 26729 through
26733), we discussed a request we received to add eight ICD-10-CM
diagnosis codes to the list of principal diagnoses assigned to MS-DRGs
673, 674, and 675 (Other Kidney and Urinary Tract Procedures with MCC,
with CC, and without CC/MCC, respectively) in MDC 11 (Diseases and
Disorders of the Kidney and Urinary Tract) when reported with procedure
codes describing the insertion of totally implantable vascular access
devices (TIVADs) and tunneled vascular access devices. The list of
eight ICD-10-CM diagnosis codes submitted by the requestor, as well as
their current MDC assignments, are found in the table:
[GRAPHIC] [TIFF OMITTED] TR28AU23.089
As noted in the proposed rule, in order to be treated with
dialysis, a procedure that replaces kidney function when the organs
fail, a connection must be established between the dialysis equipment
and the patient's bloodstream. To establish long-term hemodialysis
access, an arteriovenous (AV) fistula or an AV shunt can be surgically
created. An AV fistula is created by suturing an artery directly to a
vein, generally in the wrist, forearm, inner elbow or upper arm. AV
fistulas usually require from 8 to 12 weeks for maturation prior to
initial use. AV shunts, also called AV grafts, are created by
connecting an artery and a vein using a graft made of synthetic
material. AV shunts do not require maturation, as AV fistulas do, and
they can be used for hemodialysis in as little as 24 hours after
creation depending upon the type of graft that is used. The requestor
noted that diagnosis codes that describe complications of dialysis
catheters currently are in the list of qualifying principal diagnoses
in MS-DRGs 673, 674, and 675 when reported with procedure codes
describing the insertion of TIVADs or tunneled vascular access devices;
therefore, according to the requestor, diagnosis codes that describe
complications of arteriovenous fistulas and shunts should reasonably be
added.
We stated in the proposed rule that to begin our analysis, we
reviewed the GROUPER logic for MS-DRGs 673, 674, and 675 including the
special logic in MS-DRGs 673, 674, and 675 for certain MDC 11 diagnoses
reported with procedure codes for the insertion of tunneled or totally
implantable vascular access devices. We refer the reader to the ICD-10
MS-DRG Definitions Manual Version 40.1, which is available 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 673, 674, and
675.
As discussed in the FY 2003 IPPS/LTCH PPS final rule (67 FR 49993
through 49994), the procedure code for the insertion of totally
implantable
[[Page 58736]]
vascular access devices was added to the GROUPER logic of DRG 315
(Other Kidney and Urinary Tract O.R. Procedures), the predecessor DRG
of MS-DRGs 673, 674, and 675, when combined with principal diagnoses
specifically describing renal failure, recognizing that inserting these
devices as an inpatient procedure for the purposes of hemodialysis can
lead to higher average charges and longer lengths of stay for those
cases. In the FY 2021 IPPS/LTCH PPS final rule (85 FR 58511 through
58517), we discussed a similar request to add 29 ICD-10-CM diagnosis
codes to the list of principal diagnoses assigned to MS-DRGs 673, 674,
and 675. In the FY 2021 IPPS/LTCH PPS final rule, we finalized the
assignment of diagnosis codes that describe diabetes mellitus with
diabetic chronic kidney disease, codes that describe complications of
kidney transplant and codes that describe mechanical complications of
vascular dialysis catheters to the list of qualifying principal
diagnoses in MS-DRGs 673, 674, and 675 and stated that we believed the
insertion of TIVADs or tunneled vascular access devices for the
purposes of hemodialysis was clinically related to these diagnosis
codes. We stated that for clinical coherence, the cases reporting these
diagnoses should be grouped with the subset of cases that report the
insertion of totally implantable vascular access devices or tunneled
vascular access devices as an inpatient procedure for the purposes of
hemodialysis for renal failure.
As discussed in the FY 2024 IPPS/LTCH proposed rule, we reviewed
the eight diagnosis codes submitted by the requestor. Diagnosis codes
T82.510A, T82.511A, T82.520A, T82.521A, T82.530A, T82.531A, T82.590A,
and T82.591A describe mechanical complications of arteriovenous
fistulas and shunts and are currently assigned to MDC 05 (Diseases and
Disorders of the Circulatory System). The eight diagnosis codes would
require reassignment to MDC 11 in MS-DRGs 673, 674, and 675 to group
with the subset of cases that report the insertion of totally
implantable vascular access devices or tunneled vascular access devices
as an inpatient procedure for the purposes of hemodialysis for renal
failure. We examined claims data from the September 2022 update of the
FY 2022 MedPAR file for all cases reporting procedures describing the
insertion of TIVADs or tunneled vascular access devices with a
principal diagnosis describing mechanical complications of
arteriovenous fistulas and shunts and compared these data to cases in
MS-DRGs 673, 674 and 675. The following table shows our findings:
[GRAPHIC] [TIFF OMITTED] TR28AU23.090
As shown in the table, there were 13,904 cases in MS-DRG 673 with
an average length of stay of 12.1 days and average costs of $31,946.
There were 748 cases reporting a principal diagnosis describing
mechanical complications of arteriovenous fistulas and shunts, with a
secondary diagnosis of MCC, and a procedure code for the insertion of a
TIVAD or tunneled vascular access device with an average length of stay
of 6 days and average costs of $24,467. There were 5,532 cases in MS-
DRG 674 with an average length of stay of 7.8 days and average costs of
$20,702. There was one case reporting a principal diagnosis describing
mechanical complications of arteriovenous fistulas and shunts, with a
secondary diagnosis of CC, and a procedure code for the insertion of a
TIVAD or tunneled vascular access device with a length of stay of 3
days and costs of $6,418. There were 303 cases in MS-DRG 675 with an
average length of stay of 3.6 days and average costs of $13,343. There
were zero cases reporting a principal diagnosis describing mechanical
complications of arteriovenous fistulas and shunts, without a secondary
diagnosis of CC or MCC, and a procedure code for the insertion of a
TIVAD or tunneled vascular access device. We note that the average
length of stay and average costs of cases reporting a principal
diagnosis describing mechanical complications of arteriovenous fistulas
and shunts and the insertion of a TIVAD or a tunneled
[[Page 58737]]
vascular access device are lower than for all cases in MS-DRGs 673 and
674, respectively.
To further examine the impact of moving the eight MDC 05 diagnoses
into MDC 11, in the proposed rule, we stated we analyzed claims data
for cases reporting an O.R. procedure assigned to MDC 05 and a
principal diagnosis describing mechanical complications of
arteriovenous fistulas and shunts. Our findings are reflected in the
following table:
[GRAPHIC] [TIFF OMITTED] TR28AU23.091
We noted in the proposed rule that whenever there is a surgical
procedure reported on the claim that is unrelated to the MDC to which
the case was assigned based on the principal diagnosis, it results in
an MS-DRG assignment to a surgical class referred to as ``unrelated
operating room procedures''. As shown in the table, if we were to move
the eight diagnosis codes describing mechanical complications of
arteriovenous fistulas and shunts from MDC 05 to MDC 11, 1,581 cases
would be assigned to the surgical class referred to as ``unrelated
operating room procedures'' as an unintended consequence. We stated
that the data also indicates that there were more cases that reported
an O.R. procedure assigned to MDC 05 with a principal diagnosis
describing mechanical complications of arteriovenous fistulas and
shunts than there were cases reporting a principal diagnosis describing
mechanical complications of arteriovenous fistulas and shunts and a
procedure code for the insertion of a TIVAD or tunneled vascular access
device (1,581 cases versus 749 cases) demonstrating that inpatient
admissions for mechanical complications of arteriovenous fistulas and
shunts more typically have an O.R. procedure assigned to MDC 05
performed.
We further stated we also reviewed the cases reporting an O.R.
procedure assigned to MDC 05 and a principal diagnosis describing
mechanical complications of arteriovenous fistulas and shunts to
identify the top 10 O.R. procedures assigned to MDC 05 that were
reported within the claims data for these cases. Our findings are shown
in the following table:
[[Page 58738]]
[GRAPHIC] [TIFF OMITTED] TR28AU23.092
As noted previously, if we were to move the eight diagnosis codes
describing mechanical complications of arteriovenous fistulas and
shunts to MDC 11, cases reporting one of the O.R. procedures assigned
to MDC 05 shown in the table would be assigned to the surgical class
referred to as ``unrelated operating room procedures'' as an unintended
consequence.
Based on the results of our analysis, we stated we did not support
adding the eight diagnosis codes that describe mechanical complications
of arteriovenous fistulas and shunts to the special logic in MS-DRGs
673, 674, and 675. As discussed previously, these diagnosis codes are
assigned to MDC 05 (Diseases and Disorders of the Circulatory System).
In the proposed rule, we noted that patients can sometimes require the
insertion of tunneled or totally implantable vascular access devices
for hemodialysis while surgically created AV fistulas or AV shunts are
unable to be accessed due to mechanical complications, however more
often these mechanical complications related to AV fistulas or AV
shunts require inpatient admission for vascular surgery to be
effectively treated. We stated we believed that the eight diagnosis
codes describing mechanical complications of arteriovenous fistulas and
shunts are most clinically aligned with the diagnosis codes assigned to
MDC 05 (where they are currently assigned). We also stated we believed
it would not be appropriate to move these diagnoses into MDC 11 because
it would inadvertently cause cases reporting the eight diagnosis codes
that describe mechanical complications of arteriovenous fistulas and
shunts with O.R. procedures assigned to MDC 05 to be assigned to an
unrelated MS-DRG.
Therefore, for the reasons discussed, we did not propose to add the
following eight ICD-10-CM codes to the list of principal diagnosis
codes for MS-DRGs 673, 674, and 675 when reported with a procedure code
describing the insertion of a TIVAD or a tunneled vascular access
device: T82.510A, T82.511A, T82.520A, T82.521A, T82.530A, T82.531A,
T82.590A, and T82.591A.
Comment: Commenters supported the proposal to maintain the current
assignment of the eight diagnosis codes in MDC 05 and expressed
appreciation for CMS' analysis of clinical best practice and claims
data. A commenter stated that while they recognize that the insertion
of TIVADS and tunneled vascular access devices may be performed to
treat renal failure, the resources used for such treatment--including
surgical equipment, interventional radiology services, clinical staff,
among others--are more consistent with vascular disease than the
primary diagnosis (that is, kidney disease) that led to the procedure.
Response: We thank the commenters for their support and appreciate
the feedback. After consideration of the public comments we received,
we are finalizing for FY 2024, without modification, our proposal to
not add the following eight ICD-10-CM codes to the list of principal
diagnosis codes for MS-DRGs 673, 674, and 675 when reported with a
procedure code describing the insertion of a TIVAD or a tunneled
vascular access device: T82.510A, T82.511A, T82.520A, T82.521A,
T82.530A, T82.531A, T82.590A, and T82.591A.
10. Review of Procedure Codes in MS-DRGs 981 Through 983 and 987
Through 989
We annually conduct a review of procedures producing assignment to
MS-DRGs 981 through 983 (Extensive O.R. Procedure Unrelated to
Principal Diagnosis with MCC, with CC, and without CC/MCC,
respectively) or MS-DRGs 987 through 989 (Non-Extensive O.R. Procedure
Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC,
respectively) on the basis of volume, by procedure, to see if it would
be appropriate to move cases reporting these procedure codes out of
these MS-DRGs into one of the surgical MS-DRGs for the MDC into which
the principal diagnosis falls. The data are arrayed in two ways for
comparison purposes. We look at a frequency count of each major
operative procedure code. We also compare procedures across MDCs by
volume of procedure codes within each MDC. We use this information to
determine which procedure codes and diagnosis codes to examine.
We identify those procedures occurring in conjunction with certain
principal diagnoses with sufficient frequency to justify adding them to
one of the surgical MS-DRGs for the MDC in which the diagnosis falls.
We also consider whether it would be more appropriate to move the
principal diagnosis codes into the MDC to which the procedure is
currently assigned.
Based on the results of our review of the claims data from the
September 2022 update of the FY 2022 MedPAR file of cases found to
group to MS-DRGs 981 through 983 or MS-DRGs 987 through 989, we
proposed to move the cases reporting the procedures and/or principal
diagnosis codes described in
[[Page 58739]]
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. Percutaneous Endoscopic Resection of Colon
As discussed in the FY 2024 IPPS/LTCH PPS proposed rule (88 FR
26733 through 26735), during our review of the cases that group to MS-
DRGs 981 through 983, we noted that when ICD-10-PCS procedure code
0DTN4ZZ (Resection of sigmoid colon, percutaneous endoscopic approach)
is reported with a principal diagnosis in MDC 11 (Diseases and
Disorders of the Kidney and Urinary Tract), the cases group to MS-DRGs
981 through 983. We stated in the proposed rule that the principal
diagnosis most frequently reported with ICD-10-PCS procedure code
0DTN4ZZ in MDC 11 is ICD-10-CM code N32.1 (Vesicointestinal fistula).
ICD-10-PCS procedure code 0DTN4ZZ currently groups to several MDCs,
which are listed in the following table.
[GRAPHIC] [TIFF OMITTED] TR28AU23.093
As noted in the proposed rule, we examined claims data from the
September 2022 update of the FY 2022 MedPAR file to identify the
average length of stay and average costs for cases reporting procedure
code 0DTN4ZZ with a principal diagnosis in MDC 11, which are currently
grouping to MS-DRGs 981 through 983, as well as all cases in MS-DRGs
981 through 983. Our findings are shown in the following table.
[GRAPHIC] [TIFF OMITTED] TR28AU23.094
We then examined the MS-DRGs within MDC 11 and determined that the
cases reporting procedure code 0DTN4ZZ with a principal diagnosis in
MDC 11 would most suitably group to MS-DRGs 673, 674, and 675 (Other
Kidney and Urinary Tract Procedures with MCC, with CC, and without CC/
MCC, respectively), which contain procedures performed on structures
other than kidney and urinary tract anatomy.
To determine how the resources for this subset of cases compared to
cases in MS-DRGs 673, 674, and 675 as a whole, we stated in the
proposed rule we examined the average costs and length of stay for
cases in MS-DRGs 673, 674, and 675. Our findings are shown in this
table.
[[Page 58740]]
[GRAPHIC] [TIFF OMITTED] TR28AU23.095
We reviewed the data and noted in the proposed rule that for this
subset of cases, the average costs are higher and the average length of
stays are shorter than for cases in MS-DRGs 673, 674, and 675. However,
we stated we believed that when ICD-10-PCS procedure code 0DTN4ZZ is
reported with a principal diagnosis in MDC 11 (typically
vesicointestinal fistula), the procedure is related to the principal
diagnosis. Because vesicointestinal fistulas involve both the bladder
and the bowel, we stated some procedures in both MDC 06 (Diseases and
Disorders of the Digestive System) and MDC 11 (Diseases and Disorders
of the Kidney and Urinary Tract) would be expected to be related to a
principal diagnosis of vesicointestinal fistula (ICD-10-CM code N32.1).
Therefore, we proposed to add ICD-10-PCS procedure code 0DTN4ZZ to MDC
11. Under this proposal, cases reporting procedure code 0DTN4ZZ with a
principal diagnosis of vesicointestinal fistula (diagnosis code N32.1)
in MDC 11 would group to MS-DRGs 673, 674, and 675.
Comment: Commenters supported the proposal to add ICD-10-PCS
procedure code 0DTN4ZZ (Resection of sigmoid colon, percutaneous
endoscopic approach) to MDC 11 (Diseases and Disorders of the Kidney
and Urinary Tract).
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
finalizing our proposal to add ICD-10-PCS procedure code 0DTN4ZZ to MDC
11 (Diseases and Disorders of the Kidney and Urinary Tract), without
modification, effective October 1, 2023 for FY 2024.
b. Open Excision of Muscle
As discussed in the FY 2024 IPPS/LTCH PPS proposed rule (88 FR
26735 through 26737), during the review of the cases that group to MS-
DRGs 981 through 983, we noted that when ICD-10-PCS procedure codes
describing the open excision of muscle are reported in conjunction with
ICD-10-CM diagnosis codes in MDC 05 (Diseases and Disorders of the
Circulatory System), the cases group to MS-DRGs 981 through 983. The
list of 28 ICD-10-CM procedure codes reviewed, as well as their current
MDC assignments, are found in the table:
[[Page 58741]]
[GRAPHIC] [TIFF OMITTED] TR28AU23.096
We refer the reader to Appendix E of the ICD-10 MS-DRG Version 40.1
Definitions Manual (which is available on the CMS website at: https://www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/AcuteInpatientPPS/MS-DRGClassifications-and-Software) for the MS-DRG assignment for each
procedure code listed and further discussion of how each procedure code
may be assigned to multiple MDCs and MS-DRGs under the IPPS.
As discussed in the proposed rule, the principal diagnosis most
frequently reported with the 28 ICD-10-PCS procedure codes describing
the open excision of muscle in MDC 05 is ICD-10-CM code I96 (Gangrene,
not elsewhere classified). Gangrene is a condition in which body tissue
dies from not getting enough blood. It can cause changes in skin color,
numbness or pain, swelling, and other symptoms. The combination of a
procedure code describing the open excision of muscle and ICD-10-CM
diagnosis code I96 indicates open debridement of muscle for gangrene
was performed.
We stated we examined claims data from the September 2022 update of
the FY 2022 MedPAR file to identify the average length of stay and
average costs for cases reporting a procedure code describing the open
excision of muscle with a principal diagnosis in MDC 05, which are
currently grouping to MS-DRGs 981 through 983, as well as all cases in
MS-DRGs 981 through 983. Our findings are shown in the following table.
[[Page 58742]]
[GRAPHIC] [TIFF OMITTED] TR28AU23.097
We then examined the MS-DRGs within MDC 05 and stated we determined
that the cases reporting procedure codes describing the open excision
of muscle with a principal diagnosis in MDC 05 would most suitably
group to MS-DRG 264 (Other Circulatory System O.R. Procedures), which
contains procedures performed on structures other than circulatory
anatomy.
To determine how the resources for this subset of cases compared to
cases in MS-DRG 264 as a whole, we examined the average costs and
length of stay for cases in MS-DRG 264. Our findings are shown in this
table.
[GRAPHIC] [TIFF OMITTED] TR28AU23.098
As discussed in the proposed rule, we reviewed the data and noted
for this subset of cases, in the ``with MCC'' subgroup the average
costs of the cases reporting procedure codes describing the open
excision of muscle with a principal diagnosis in MDC 05 are slightly
higher ($27,392 compared to $27,237) and the average length of stay is
longer (11.7 days compared to 9.9 days) than for all cases in MS-DRGs
264, while the cases in the ``with CC'' and the ``without CC/MCC''
subgroups have lower average costs ($16,989 and $7,140 respectively
compared to $27,237) and a shorter average length of stay (7.9 days and
4.7 days respectively compared to 9.9 days) than for cases in MS-DRG
264. However, we stated we believed that when a procedure code
describing the open excision of muscle is reported with a principal
diagnosis in MDC 05 (typically gangrene, not elsewhere classified), the
procedure is related to the principal diagnosis. Because debridement,
or the cutting away of dead and dying tissue, can be performed to keep
gangrene from spreading, we stated a procedure code describing the open
excision of muscle would be expected to be related to a principal
diagnosis of gangrene, not elsewhere classified (diagnosis code I96),
and it would be clinically appropriate for the procedures to group to
the same MS-DRGs as the principal diagnoses. Therefore, we proposed to
add the 28 procedure codes listed previously to MDC 05. Under this
proposal, cases reporting a procedure code describing the open excision
of muscle with a principal diagnosis of gangrene, not elsewhere
classified (diagnosis code I96) in MDC 05 would group to MS-DRG 264.
Comment: Commenters supported the proposal to add the 28 ICD-10-PCS
codes that describe the open excision of muscle to MDC 05 (Diseases and
Disorders of the Circulatory System).
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
finalizing our proposal to add the 28 ICD-10-PCS codes that describe
the open excision of muscle listed previously to MDC 05 (Diseases and
Disorders of the Circulatory System), without modification, effective
October 1, 2023, for FY 2024.
c. Open Replacement of Skull With Synthetic Substitute
As discussed in the FY 2024 IPPS/LTCH PPS proposed rule (88 FR
26737 through 26739), during our review of the cases that group to MS-
DRGs 981 through 983, we noted that when ICD-10-PCS procedure code
0NR00JZ (Replacement of skull with synthetic substitute, open approach)
is reported with a principal diagnosis in MDC 09 (Diseases and
Disorders of the Skin, Subcutaneous Tissue and Breast), the cases group
to MS-DRGs 981 through 983. The principal diagnosis most frequently
reported with ICD-10-PCS procedure code 0NR00JZ in MDC 09 is ICD-10-CM
code Z42.8 (Encounter for other plastic and reconstructive surgery
[[Page 58743]]
following medical procedure or healed injury).
ICD-10-PCS procedure code 0NR00JZ currently groups to several MDCs,
which are listed in the following table.
[GRAPHIC] [TIFF OMITTED] TR28AU23.099
As discussed in the proposed rule, we examined claims data from the
September 2022 update of the FY 2022 MedPAR file to identify the
average length of stay and average costs for cases reporting procedure
code 0NR00JZ with a principal diagnosis in MDC 09, which are currently
grouping to MS-DRGs 981 through 983, as well as all cases in MS-DRGs
981 through 983. Our findings are shown in the following table.
[GRAPHIC] [TIFF OMITTED] TR28AU23.100
We then examined the MS-DRGs within MDC 09 and determined that the
cases reporting procedure code 0NR00JZ with a principal diagnosis in
MDC 09 would most suitably group to MS-DRGs 579, 580, and 581 (Other
Skin, Subcutaneous Tissue and Breast Procedures with MCC, with CC, and
without CC/MCC, respectively) given the nature of the procedure. MS-
DRGs 579, 580, and 581 contain procedures assigned to MDC 09 that do
not fit within the specific surgical MS-DRGs in MDC 09, which are: skin
graft; skin debridement; mastectomy for malignancy; and breast biopsy,
local excision, and other breast procedures.
To determine how the resources for this subset of cases compared to
cases in MS-DRGs 579, 580, and 581 as a whole, we stated we examined
the average costs and length of stay for cases in MS-DRGs 579, 580, and
581. Our findings are shown in this table.
[GRAPHIC] [TIFF OMITTED] TR28AU23.101
We reviewed the data and noted for this subset of cases, the
average costs are higher and the average length of stays are shorter
than for cases in MS-DRGs 579, 580, and 581. However, we stated we
believed that when ICD-10-PCS procedure code 0NR00JZ is reported with a
principal diagnosis in MDC 09 (typically encounter for other plastic
and reconstructive surgery following medical procedure or healed
injury), the
[[Page 58744]]
procedure is related to the principal diagnosis.
We noted in the proposed rule that open brain surgeries that
require removing a portion of the skull, for indications such as brain
tumor resection, hydrocephalus shunt implantation, cerebral aneurysm
clipping, evacuation of a brain hemorrhage, microvascular
decompression, and lobectomy, can sometimes result in a residual
cranial defect. We stated we believed that would be clinically
appropriate for the procedure to group to the same MS-DRGs as the
principal diagnosis as procedure code 0NR00JZ can be used to describe
cranial reconstruction procedures that involve applying a cranial
prosthetic device to address the residual bony void and/or defect to
restore the natural contours of the skull.
Therefore, we proposed to add ICD-10-PCS procedure code 0NR00JZ to
MDC 09. Under this proposal, cases reporting procedure code 0NR00JZ
with a principal diagnosis in MDC 09 (such as encounter for other
plastic and reconstructive surgery following medical procedure or
healed injury) would group to MS-DRGs 579, 580, and 581.
Comment: Most commenters supported the proposal to add ICD-10-PCS
procedure code 0NR00JZ to MDC 09 (Diseases and Disorders of the Skin,
Subcutaneous Tissue and Breast). However, a commenter opposed CMS'
proposal. The commenter stated they did not agree and stated MS-DRGs
579, 580, and 581 are not reflective of the clinical nature of skull
procedures which are more in line with cranial procedures in MDC 01
(Diseases and Disorders of the Nervous System). This commenter further
requested the creation of new MS-DRGs in MDC 01 to reflect the
resources utilized in the performance of these procedures.
Response: We thank the commenters for their support and feedback.
In response to the commenter that opposed the proposal, we note
that ICD-10-PCS procedure code 0NR00JZ currently groups to several
MDCs, which are listed in the previous table. In MDC 01 specifically,
ICD-10-PCS procedure code 0NR00JZ is assigned to 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). When ICD-10-PCS procedure code
0NR00JZ is reported with an ICD-10-CM diagnosis code assigned to MDC
01, the cases group MS-DRGs 023 through 027 depending on the
circumstances of the admission. ICD-10-CM diagnosis code Z42.8
(Encounter for other plastic and reconstructive surgery following
medical procedure or healed injury), however, is currently assigned to
MDC 09 and would require reassignment to MDC 01 in order for these
cases to group to MS-DRGs in MDC 01 as suggested by the commenter. We
believe that diagnosis code Z42.8 is appropriately assigned to MDC 09
(Diseases and Disorders of the Circulatory System) as it describes
encounters for other plastic and reconstructive surgery following
medical procedure or healed injury. In reviewing the commenter's
concerns, we note that diagnosis code Z42.8 does not describe a
diagnosis or circumstance limited to affecting the nervous system. It
would not be appropriate to move this diagnosis code into another MDC
because it could inadvertently cause cases reporting this MDC 09
diagnosis with reconstructive procedures to be assigned to an unrelated
MS-DRG. We note that whenever there is a surgical procedure reported on
the claim that is unrelated to the MDC to which the case was assigned
based on the principal diagnosis, it results in a MS-DRG assignment to
a surgical class referred to as ``unrelated operating room
procedures''.
As discussed in the proposed rule, we note that MS-DRGs 579, 580,
and 581 contain procedures assigned to MDC 09 that do not fit within
the specific surgical MS-DRGs in MDC 09. We continue to believe that
when ICD-10-PCS procedure code 0NR00JZ is reported with a principal
diagnosis in MDC 09 (typically encounter for other plastic and
reconstructive surgery following medical procedure or healed injury),
the procedure is related to the principal diagnosis and that it would
be clinically appropriate for the procedure to group to the same MS-
DRGs as the principal diagnosis. We also continue to believe that cases
reporting procedure code 0NR00JZ with a principal diagnosis in MDC 09
would most suitably group to MS-DRGs 579, 580, and 581 (Other Skin,
Subcutaneous Tissue and Breast Procedures with MCC, with CC, and
without CC/MCC, respectively) given the nature of the procedure.
Therefore, after consideration of the public comments we received,
and for the reasons discussed, we are finalizing our proposal to add
ICD-10-PCS procedure code 0NR00JZ to MDC 09 (Diseases and Disorders of
the Circulatory System), without modification, effective October 1,
2023 for FY 2024.
d. Endoscopic Dilation of Ureters With Intraluminal Device
As discussed in the FY 2024 IPPS/LTCH PPS proposed rule (88 FR
26739 through 26740), during the review of the cases that group to MS-
DRGs 987 through 989, we noted that when ICD-10-PCS procedure codes
describing the endoscopic dilation of ureters with an intraluminal
device are reported in conjunction with ICD-10-CM diagnosis codes in
MDC 05 (Diseases and Disorders of the Circulatory System), the cases
group to MS-DRGs 987 through 989. The principal diagnosis most
frequently reported with ICD-10-PCS procedure codes describing the
endoscopic dilation of ureters with an intraluminal device in MDC 05 is
ICD-10-CM code I13.0 (Hypertensive heart and chronic kidney disease
with heart failure and stage 1 through stage 4 chronic kidney disease,
or unspecified chronic kidney disease).
In the following tables, the ICD-10-PCS procedure codes describing
the endoscopic dilation of ureters with an intraluminal device are
listed, as well as their MDC and MS-DRG assignments.
[GRAPHIC] [TIFF OMITTED] TR28AU23.102
[[Page 58745]]
[GRAPHIC] [TIFF OMITTED] TR28AU23.103
As discussed in the proposed rule, we examined claims data from the
September 2022 update of the FY 2022 MedPAR file to identify the
average length of stay and average costs for cases reporting procedure
code 0T768DZ, 0T778DZ, or 0T788DZ with a principal diagnosis in MDC 05,
which are currently grouping to MS-DRGs 987 through 989, as well as all
cases in MS-DRGs 987 through 989. Our findings are shown in the
following table.
[GRAPHIC] [TIFF OMITTED] TR28AU23.104
We stated we then examined the MS-DRGs within MDC 05 and determined
that the cases reporting procedure codes describing the endoscopic
dilation of ureters with an intraluminal device with a principal
diagnosis in MDC 05 would most suitably group to MS-DRG 264 (Other
Circulatory System O.R. Procedures), which contains procedures
performed on structures other than circulatory anatomy.
To determine how the resources for this subset of cases compared to
cases in MS-DRG 264 as a whole, we stated we examined the average costs
and length of stay for cases in MS-DRG 264. Our findings are shown in
this table.
[GRAPHIC] [TIFF OMITTED] TR28AU23.105
As discussed in the proposed rule, we reviewed these data and noted
that the average costs for this subset of cases, most of which group to
MS-DRG 987, are lower than the average costs than for cases in MS-DRG
264. However, we stated we believed that when a procedure code
describing the endoscopic dilation of ureters with an intraluminal
device is reported with a principal diagnosis in MDC 05 (typically
hypertensive heart and chronic kidney disease with heart failure and
stage 1 through stage 4 chronic kidney disease, or unspecified chronic
kidney disease), the procedure is related to the principal diagnosis.
We noted in the proposed rule that ureteral intraluminal devices are
used to relieve ureteral obstruction by passively dilating the ureter
to allow urine to drain through the center of the hollow intraluminal
device as well as around the device. Indications for endoscopic
[[Page 58746]]
ureteral intraluminal device placement include the uncomplicated
ureteral obstruction due to causes such as nephrolithiasis, tumor, or
retroperitoneal fibrosis, or obstruction complicated by urinary tract
infection, renal insufficiency, or renal failure. As the endoscopic
dilation of ureters with an intraluminal device would be expected to be
related to a principal diagnosis of hypertensive heart and chronic
kidney disease with heart failure and stage 1 through stage 4 chronic
kidney disease, or unspecified chronic kidney disease, not elsewhere
classified (diagnosis code I13.0), we stated it would be clinically
appropriate for the procedures to group to the same MS-DRGs as the
principal diagnoses.
Therefore, we proposed to add ICD-10-PCS procedure codes 0T768DZ,
0T778DZ, and 0T788DZ to MDC 05. Under this proposal, cases reporting
procedure code 0T768DZ, 0T778DZ, or 0T788DZ with a principal diagnosis
of hypertensive heart and chronic kidney disease with heart failure and
stage 1 through stage 4 chronic kidney disease, or unspecified chronic
kidney disease (I13.0) in MDC 05 would group to MS-DRG 264.
Comment: Most commenters supported the proposal to add ICD-10-PCS
procedure codes 0T768DZ, 0T778DZ and 0T788DZ to MDC 05 (Diseases and
Disorders of the Circulatory System). However, a commenter opposed CMS'
proposal. The commenter stated they did not agree and stated these
cases would most appropriately group to MDC 11 (Diseases and Disorders
of the Kidney and Urinary Tract).
Response: We thank the commenters for their support and feedback.
In response to the commenter that opposed the proposal, we note that
ICD-10-CM diagnosis code I13.0 (Hypertensive heart and chronic kidney
disease with heart failure and stage 1 through stage 4 chronic kidney
disease, or unspecified chronic kidney disease) is currently assigned
to MDC 05 and would require reassignment to MDC 11 in order for these
cases to group to MDC 11 as suggested by the commenter. As discussed in
prior rulemaking (85 FR 58504), we believe that this diagnosis code is
appropriately assigned to MDC 05 (Diseases and Disorders of the
Circulatory System) as it describes heart failure. We continue to
believe it would not be appropriate to move this diagnosis into another
MDC because it could inadvertently cause cases reporting this MDC 05
diagnosis with a circulatory system procedure to be assigned to an
unrelated MS-DRG. We note that 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''.
Therefore, after consideration of the public comments we received,
and for the reasons discussed, we are finalizing our proposal to add
ICD-10-PCS procedure codes 0T768DZ, 0T778DZ, and 0T788DZ to MDC 05
(Diseases and Disorders of the Circulatory System), without
modification, effective October 1, 2023, for FY 2024.
e. Occlusion of Splenic Artery
As discussed in the FY 2024 IPPS/LTCH PPS proposed rule (88 FR
26740 through 26742), during our review of the cases currently grouping
to MS-DRGs 987 through 989, we noted that when ICD-10-PCS procedure
codes describing the occlusion of the splenic artery are reported in
conjunction with ICD-10-CM diagnosis codes in MDC 16 (Diseases and
Disorders of Blood, Blood Forming Organs and Immunologic Disorders),
the cases group to MS-DRGs 987 through 989. The principal diagnosis
most frequently reported with ICD-10-PCS procedure codes describing the
occlusion of the splenic artery in MDC 16 is ICD-10-CM code S36.032A
(Major laceration of spleen, initial encounter).
In the following tables, the ICD-10-PCS procedure codes describing
the occlusion of the splenic artery are listed, as well as their MDC
and MS-DRG assignments.
[GRAPHIC] [TIFF OMITTED] TR28AU23.106
[GRAPHIC] [TIFF OMITTED] TR28AU23.107
[[Page 58747]]
As discussed in the proposed rule, we examined claims data from the
September 2022 update of the FY 2022 MedPAR file to identify the
average length of stay and average costs for cases reporting procedure
codes describing the occlusion of the splenic artery with a principal
diagnosis in MDC 16, which are currently grouping to MS-DRGs 987
through 989, as well as all cases in MS-DRGs 987 through 989. Our
findings are shown in the following table.
[GRAPHIC] [TIFF OMITTED] TR28AU23.108
We stated we then examined the MS-DRGs within MDC 16 and determined
that the cases reporting a procedure code describing the occlusion of
the splenic artery with a principal diagnosis in MDC 16 would most
suitably group to MS-DRGs 799, 800, and 801 (Splenectomy with MCC, with
CC, and without CC/MCC, respectively) given the nature of the
procedure.
We note, as discussed in section II.C.1.b of the proposed rule and
this final rule, using the December 2022 update of the FY 2022 MedPAR
file, we analyzed how applying the NonCC subgroup criteria to all MS-
DRGs currently split into three severity levels would affect the MS-DRG
structure beginning in FY 2024. Findings from our analysis indicate
that MS-DRGs 799, 800, and 801 as well as approximately 44 other base
MS-DRGs would be subject to change based on the three-way severity
level split criterion finalized in FY 2021. We refer the reader to
Table 6P.10b associated with the proposed rule (which is available on
the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS) for the list of the 135 MS-DRGs that
would potentially be subject to deletion and the list of the 86 new MS-
DRGs that would potentially be created if the NonCC subgroup criteria
was applied.
To determine how the resources for this subset of cases compared to
cases in MS-DRGs 799, 800, and 801 as a whole, we stated we examined
the average costs and length of stay for cases in MS-DRGs 799, 800, and
801. Our findings are shown in this table.
[GRAPHIC] [TIFF OMITTED] TR28AU23.109
BILLING CODE 4120-01-C
We reviewed these data and noted that the average length of stay
and average costs of the subset of cases reporting a procedure code
describing the occlusion of the splenic artery with a principal
diagnosis in MDC 16 are more similar to those of cases in MS-DRGs 799,
800, and 801. In the proposed rule, we also noted that in cases of
splenic injury, the diagnosis and prompt management of potentially
life-threatening hemorrhage is the primary goal. Procedures to occlude
the splenic artery, such as splenic embolization, can be performed for
spleen injuries, such as lacerations, in order to manage bleeding prior
to or instead of more invasive splenic procedures. We stated a
procedure code describing the occlusion of the splenic artery would be
expected to be related to a principal diagnosis of a major laceration
of spleen, initial encounter
[[Page 58748]]
(diagnosis code S36.032A) and would be clinically appropriate for the
procedures to group to the same MS-DRGs as the principal diagnoses.
Given the similarity in resource use between this subset of cases
and cases in MS-DRGs 799, 800, and 801, and that we believed that
procedure codes describing the occlusion of the splenic artery are
related to principal diagnoses in MDC 16 (typically major laceration of
spleen, initial encounter), we stated these cases would be more
appropriately assigned to MS-DRGs 799, 800, and 801 in MDC 16 than
their current assignment in MS-DRGs 987 through 989. Therefore, we
proposed to add the nine procedure codes listed in the previous table
that describe the occlusion of the splenic artery to MDC 16 (Diseases
and Disorders of Blood, Blood Forming Organs and Immunologic Disorders)
in MS-DRGs 799, 800, and 801. Under this proposal, cases reporting a
principal diagnosis of a major laceration of spleen, initial encounter
(S36.032A) with a procedure describing the occlusion of the splenic
artery would group to MS-DRGs 799, 800, and 801.
As discussed in the proposed rule, during the review of this issue,
we noted that a splenectomy is a surgical operation involving removal
of the spleen, however the GROUPER logic list for MS-DRGs 799, 800, and
801 does not exclusively contain procedure codes that describe the
removal of the spleen. We refer the reader to the ICD-10 MS-DRG Version
40.1 Definitions Manual (which is available on the CMS website at:
https://www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/AcuteInpatientPPS/MS-DRGClassifications-and-Software) for complete
documentation of the GROUPER logic for MS-DRGs 799, 800, and 801.
Therefore, we also proposed to revise the titles of MDC 16 MS-DRGs 799,
800, and 801 from ``Splenectomy with MCC, with CC, and without CC/MCC,
respectively'' to ``Splenic Procedures with MCC, with CC, and without
CC/MCC, respectively'' to better reflect the assigned procedures.
Comment: Commenters supported the proposal to add the nine ICD-10-
PCS codes that describe the occlusion of the splenic artery to MDC 16
(Diseases and Disorders of Blood, Blood Forming Organs and Immunologic
Disorders) and to revise the titles of MDC 16 MS-DRGs 799, 800, and
801. A commenter stated they appreciated CMS' analysis and requested
that CMS provide ongoing analysis of other splenic diseases and
disorders that group to MS-DRGs 987, 988, and 989 when reported with
ICD-10-PCS procedure codes.
Response: We appreciate the commenters' support. We note that
consistent with our process as described previously in this section, we
do conduct an annual 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.
After consideration of the public comments we received, we are
finalizing our proposal to add the nine procedure codes listed in the
previous table that describe the occlusion of the splenic artery to MDC
16 (Diseases and Disorders of Blood, Blood Forming Organs and
Immunologic Disorders) in MS-DRGs 799, 800, and 801, without
modification, effective October 1, 2023, for FY 2024. We are also
finalizing our proposal to revise the titles of MDC 16 MS-DRGs 799,
800, and 801 from ``Splenectomy with MCC, with CC, and without CC/MCC,
respectively'' to ``Splenic Procedures with MCC, with CC, and without
CC/MCC, respectively'' to better reflect the assigned procedures for FY
2024.
In addition to the internal review of procedures producing
assignment to MS-DRGs 981 through 983 or MS-DRGs 987 through 989, as
discussed in the proposed rule, 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. We stated
we did not receive any requests suggesting reassignment.
We also review the list of ICD-10-PCS procedures that, when in
combination with their principal diagnosis code, result in assignment
to MS-DRGs 981 through 983, or 987 through 989, to ascertain whether
any of those procedures should be reassigned from one of those two
groups of MS-DRGs to the other group of MS-DRGs based on average costs
and the length of stay. We look at the data for trends such as shifts
in treatment practice or reporting practice that would make the
resulting MS-DRG assignment illogical. If we find these shifts, we
would propose to move cases to keep the MS-DRGs clinically similar or
to provide payment for the cases in a similar manner.
Additionally, we also consider requests that we receive to examine
cases found to group to MS-DRGs 981 through 983 or MS-DRGs 987 through
989 to determine if it would be appropriate for the cases to be
reassigned from one of the MS-DRG groups to the other. In the proposed
rule, we stated that based on the results of our review of the claims
data from the September 2022 update of the FY 2022 MedPAR file we did
not identify any cases for reassignment. We also stated we did not
receive any requests suggesting reassignment. Therefore, for FY 2024 we
did not propose to move any cases reporting procedure codes from MS-
DRGs 981 through 983 to MS-DRGs 987 through 989 or vice versa.
Comment: Commenters expressed support for CMS' proposal to not move
any cases reporting procedure codes from MS-DRGs 981 through 983 to MS-
DRGs 987 through 989 or vice versa.
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
finalizing, without modification, our proposal to not move any cases
reporting procedure codes from MS-DRGs 981 through 983 to MS-DRGs 987
through 989 or vice versa.
11. Operating Room (O.R.) and Non-O.R. Procedures
a. Background
Under the IPPS MS-DRGs (and former CMS DRGs), we have a list of
procedure codes that are considered operating room (O.R.) procedures.
Historically, we developed this list using physician panels that
classified each procedure code based on the procedure and its effect on
consumption of hospital resources. For example, generally the presence
of a surgical procedure which required the use of the operating room
would be expected to have a significant effect on the type of hospital
resources (for example, operating room, recovery room, and anesthesia)
used by a patient, and therefore, these patients were considered
surgical. Because the claims data generally available do not precisely
indicate whether a patient was taken to the operating room, surgical
patients were identified based on the procedures that were performed.
Generally, if the procedure was not expected to require the use of the
operating room, the
[[Page 58749]]
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, we 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.C.13 of the preamble of this final rule, we are making Table
6B.--New Procedure Codes--FY 2024 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 40.1 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 stated 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 the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25158)
and final rule (86 FR 44891), and FY 2023 IPPS/LTCH PPS proposed rule
(87 FR 28174) and final rule (87 FR 48862), we stated that in
consideration of the ongoing PHE, we believed it may be appropriate to
allow additional time for the claims data to stabilize prior to
selecting the timeframe to analyze for this review.
We stated in the FY 2024 IPPS/LTCH PPS proposed rule, we continue
to believe additional time is necessary as we continue to develop our
process and methodology. Therefore, we stated we will provide more
detail on this analysis and the methodology for conducting this review
in future rulemaking.
Comment: Commenters supported CMS' plan to continue to conduct the
comprehensive, systematic review of the ICD-10-PCS codes and to
evaluate their current O.R. and non-O.R. designations. These commenters
expressed that they were supportive of CMS' decision to continue to
develop the processes and methodology over the upcoming years and to
allow the claims data to become more stable. Other commenters stated
they agreed that a restructuring of these designations may be warranted
as a result of the expanded detail in the ICD-10-PCS classification and
changes in medical practice and that they look forward to commenting on
CMS' data analysis and methodology in the future.
Response: We thank the commenters for their support.
Comment: Other commenters stated that designation of O.R. versus
non-O.R. may no longer be the most critical differentiator between
resource-intensive procedures for MS-DRG purposes. These commenters
stated presently, there are increasingly complex and resource-intensive
procedures performed by hospitals that do not involve the use of an
operating room. A commenter stated that the administration of certain
complex biologics or radiotherapies are not surgical procedures at all,
yet these procedures represent significant resource utilization by
hospitals. Another commenter stated that biplane radiology
interventional suites and cardiac catheterization labs used for
procedures such as mechanical thrombectomy or endovascular coiling for
aneurysms can utilize more advanced equipment and supplies than a basic
operating room with minimal installed equipment. This commenter
[[Page 58750]]
encouraged CMS to recognize that the revolution in medical procedures
in recent years may render O.R. vs. non-O.R. a less critical
distinction in driving payment policy.
As part of the broader and continuing conversation about future MS-
DRG assignments and designations for these procedures and therapies, a
commenter encouraged CMS to consider how other factors influence
resource utilization, and recommended CMS consider questions such as
whether:
Certain types of procedures and therapies make up a
substantial percentage of the costs within a particular MS-DRG?
There is an average amount of cost within the relative
weight of a MS-DRG that represents significant resource utilization and
complexity?
Certain types of interventions, such as the administration
of certain complex drugs/biologics or therapies (for example, radiation
therapy), that demonstrate higher costs and resource utilization,
warrant consideration of a designation as an O.R. procedure or another
equivalent designation? Should these therapies be considered for
another type of distinction apart from medical and surgical MS-DRGs--
for example, a third category, or be treated like CCs/MCCs?
What percentage of cases within an MS-DRG receive outlier
payment?
Response: CMS appreciates the commenters' feedback and
recommendations as to what factors to consider in evaluating O.R.
versus non-O.R. designations. As stated previously, we have typically
evaluated procedures on the basis of whether or not they would be
performed in an operating room. We agree with commenters and believe
that there may be other factors to consider with regard to resource
utilization, particularly with the implementation of ICD-10. As
discussed in the proposed rule, we are exploring alternatives on how we
may restructure the current O.R. and non-O.R. designations for
procedures by leveraging the detail that is available in the ICD-10
claims data. As we continue to consider the feedback we have received
to help inform the development of our process and methodology, we will
provide more detail in future rulemaking. We encourage the public to
continue to submit comments on any other factors to consider in our
refinement efforts to recognize and differentiate consumption of
resources for the ICD-10 MS-DRGs for consideration.
As discussed in the FY 2024 IPPS/LTCH PPS proposed rule (88 FR
26744 through 26746), we received the following requests regarding
changing the designation of specific ICD-10-PCS procedure codes from
non-O.R. to O.R. procedures. In this section of this rule, as we did in
the proposed rule, we summarize these requests and address why we are
not considering a change to the designation of these codes at this time
and, further, respond to the public comments we received regarding
these requests.
In the FY 2023 IPPS/LTCH PPS final rule (87 FR 48863), we discussed
a request we received to change the designation of all ICD-10-PCS codes
that describe diagnostic and therapeutic percutaneous endoscopic
procedures performed on thoracic and abdominal organs, from non-O.R. to
O.R. In the FY 2023 final rule, we stated that we believed additional
time was 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. We
stated that rather than evaluating the procedure codes describing
diagnostic and therapeutic percutaneous endoscopic procedures performed
on thoracic and abdominal organs in isolation, analysis should be
performed for this subset of procedure codes across the MS-DRGs, as
part of the comprehensive procedure code review. We also stated that as
a component of our broader comprehensive procedure code review, we are
also reviewing the process for determining when a procedure is
considered an operating room procedure.
As discussed in the FY 2024 IPPS/LTCH PPS proposed rule, we again
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 from the same requestor. According to the requestor,
diagnostic and therapeutic thoracoscopic and laparoscopic procedures on
thoracic and abdominal organs are always performed in the operating
room under complex general anesthesia. The requestor did not provide a
specific list of the procedure codes that describe diagnostic and
therapeutic percutaneous endoscopic procedures performed on thoracic
and abdominal organs and are currently designated as non-O.R. for CMS
for review, to narrow the scope of this repeat request.
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; in other words, the
performance of a procedure in an operating room is not the sole
determining factor we consider as we examine the designation of a
procedure in the ICD-10-PCS classification system. 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.
As also stated in prior rulemaking, we plan to conduct a comprehensive,
systematic review of the ICD-10-PCS procedure codes. We stated in the
proposed rule that rather than evaluating this subset of procedure
codes in isolation, as any potential change to the designation of these
codes requires significant review, we continue to believe that analysis
of the designation of the procedure codes describing diagnostic and
therapeutic percutaneous endoscopic procedures performed on thoracic
and abdominal organs should be performed across the MS-DRGs, as part of
the comprehensive procedure code review. Therefore, for the reasons
discussed, we did not propose any changes to 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. for FY 2024. As diagnostic and
therapeutic percutaneous endoscopic procedures performed on thoracic
and abdominal organs differ greatly in terms of clinical factors such
as procedure complexity and resource utilization, we invited feedback
on what factors or criteria to consider in determining whether a
procedure should be designated as an O.R. procedure in the ICD-10-PCS
classification system when evaluating this subset of procedure codes as
part of the comprehensive procedure code review. Feedback and other
suggestions may be submitted by October 20, 2023, and directed to the
new electronic intake system, Medicare Electronic Application Request
Information SystemTM (MEARISTM), discussed in
section II.C.1.b of the preamble of the proposed rule at: https://mearis.cms.gov/public/home.
We will provide more detail on the comprehensive procedure code
review and the methodology for conducting this review in future
rulemaking.
Comment: Most commenters agreed with CMS' proposal to maintain the
designation of all ICD-10-PCS procedure codes that describe
[[Page 58751]]
diagnostic and therapeutic percutaneous endoscopic procedures performed
on thoracic and abdominal organs for FY 2024.
Response: We appreciate the commenters' support.
Comment: A commenter stated that while they did not dispute that
there may be numerous ICD-10-PCS codes that describe procedures
performed using a percutaneous endoscopic approach, they believed that
this list could be narrowed down substantially by considering only
codes describing procedures performed on thoracic and abdominal organs.
This commenter stated that even with a smaller list utilizing the
criteria they suggested, they were unable to envision a thoracoscopic
or laparoscopic procedure that would not require general anesthesia and
be performed in an operating room and urged CMS to designate any ICD-
10-PCS procedure code that describes a thoracic or abdominal procedure
using a percutaneous endoscopic approach as an operating room
procedure.
Response: We thank the commenter for their feedback. We also
appreciate the commenter's suggestion, however, as stated in the
proposed rule, and in prior rulemaking, we plan to conduct a
comprehensive, systematic review of the ICD-10-PCS procedure codes. We
continue to believe that rather than evaluating the procedure codes
describing diagnostic and therapeutic percutaneous endoscopic
procedures performed on thoracic and abdominal organs in isolation,
analysis should be performed for this subset of procedure codes across
the MS-DRGs, as part of the comprehensive procedure code review. As a
component of our broader comprehensive procedure code review, we are
also reviewing 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 available in the ICD-10 claims data. Therefore,
after consideration of the public comments we received, and for the
reasons discussed, we are not making changes in this final rule to 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.
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 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] TR28AU23.110
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
[[Page 58752]]
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.
In the FY 2023 IPPS/LTCH PPS final rule (87 FR 48863 through
48865), we discussed a request we received to re-examine this change in
designation. In the FY 2023 final rule, we did not make changes to the
designation of these codes and stated that procedure codes that
describe the open drainage of subcutaneous tissue and fascia do not
reflect the technical complexity or resource intensity in comparison to
other procedures that are designated as O.R. procedures. We stated that
our analysis of the September 2021 update of the FY 2021 MedPAR file
reflected that when the procedure codes that describe the open drainage
of the subcutaneous tissue and fascia are reported, approximately 70%
of the MS-DRGs assigned are classified as surgical MS-DRGs which
indicated at least one procedure code designated as an O.R. procedure
was also reported in these cases. We also stated 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.
As discussed in the FY 2024 IPPS/LTCH PPS proposed rule, we again
received a request to re-examine the designation of the 22 procedure
codes that describe the open drainage of subcutaneous tissue and fascia
as non-O.R. procedures from the same requestor. The requestor stated
that CMS should return the designation of these procedure codes to O.R.
procedures to reflect the operating room resources utilized in the
performance of these procedures and suggested that CMS analyze claims
containing the 22 ICD-10-PCS codes to determine the percentage that
contained timed O.R. charges billed under revenue code 360. The
requestor also indicated there was confusion about the coded claims
data as presented in the FY 2023 final rule. The requestor noted that
the 22 procedure codes that describe the open drainage of subcutaneous
tissue and fascia were designated as O.R. procedures in FY 2021 so it
was unclear to the requestor why the table displayed by CMS associated
with the FY 2023 final rule contained assignment to medical MS-DRGs.
First, in response to the question about the coded claims data as
presented in the FY 2023 final rule, in the proposed rule we noted as
generally stated in the preamble of the proposed rule each year, the
diagnosis and procedure codes from the specified FY MedPAR claims data
are grouped through the applicable version of the proposed FY GROUPER.
The FY 2021 MedPAR claims data presented in the FY 2023 final rule were
regrouped using the proposed FY 2023 MS-DRG classifications. In the
proposed FY 2023 GROUPER, the procedure codes that describe the open
drainage of subcutaneous tissue and fascia no longer impacted MS-DRG
assignment and that is the reason why assignments to medical DRGs were
displayed in Table 6P.1f associated with the FY 2023 final rule.
Next, we referred the reader to Table 6P.8a associated with the
proposed rule (which is available on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS) for the data analysis of cases reporting the 22
procedure codes that describe the open drainage of subcutaneous tissue
and fascia in the September 2022 update of the FY 2022 MedPAR file. We
noted that within each MDC, the MS-DRGs are divided into medical and
surgical categories. In general, surgical MS-DRGs are further defined
based on the precise surgical procedure performed while the medical MS-
DRGs are further defined based on the precise principal diagnosis for
which a patient was admitted to the hospital. In Table 6P.8a associated
with the proposed rule, column B displays the category of each MS-DRG
in MS-DRG GROUPER Version 40.1. The letter M is used to designate a
medical MS-DRG and the letter P is used to designate a surgical MS-DRG.
In the proposed rule, we stated that overall, the data continues to
indicate that the open drainage of subcutaneous tissue and fascia was
not the underlying reason for, or main driver of, resource utilization
for those cases. As shown in the table, when the procedure codes that
describe the open drainage of the subcutaneous tissue and fascia are
reported, approximately 55% of the MS-DRGs assigned are classified as
surgical MS-DRGs, which indicates at least one procedure code
designated as an O.R. procedure was also reported in these cases. We
referred the reader to the ICD-10 MS-DRG Version 40.1 Definitions
Manual (which is available on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/MS-DRGClassifications-and-Software) for complete documentation of the
GROUPER logic for the listed MS-DRGs.
We stated we reviewed these data and continued to believe that
procedure codes that describe the open drainage of subcutaneous tissue
and fascia do not reflect the technical complexity or resource
intensity in comparison to other procedures that are designated as O.R.
procedures. As stated in prior rulemaking, procedures describing the
open drainage of subcutaneous tissue and fascia can now be safely
performed in the outpatient setting and when performed during a
hospitalization, it is typically in conjunction with another O.R.
procedure. In cases where procedures describing open drainage of
subcutaneous tissue and fascia are the only procedures performed in an
admission, the admission is quite likely due to need for IV antibiotics
as opposed to the need for operating room resources in an inpatient
setting.
We also noted that, as stated in prior rulemaking (84 FR 42069), in
deciding whether to propose to make further modifications to the MS-
DRGs for particular circumstances brought to our attention, we do not
consider the reported revenue codes. Rather, as stated previously, we
consider whether the resource consumption and clinical characteristics
of the patients with a given set of conditions are significantly
different than the remaining patients represented in the MS-DRG. We
stated we do this by evaluating the ICD-10-CM diagnosis and/or ICD-10-
PCS procedure codes that identify the patient conditions, procedures,
and the relevant MS-DRG(s) that are the subject of a request.
Specifically, for this request, we analyzed the cases reporting the
ICD-10-PCS procedure codes that describe the open drainage of
subcutaneous tissue and fascia. We then evaluated patient care costs
using average costs and average lengths of stay (based on the MedPAR
data) to detect if, and in what way, the performance of these
procedures 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 stated in the proposed rule, we continue to believe 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. Therefore, for the reasons
discussed, we did not propose changes to the designation of the 22
[[Page 58753]]
codes that describe the open drainage of subcutaneous tissue and fascia
listed in the previous table for FY 2024.
Comment: Most commenters agreed with CMS' proposal to maintain the
designation of the 22 codes that describe the open drainage of
subcutaneous tissue and fascia for FY 2024.
Response: We appreciate the commenters' support.
Comment: A commenter opposed 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. This commenter
stated that they disagree that these 22 ICD-10-PCS procedures do not
typically require the resources of an O.R. when occurring in the
inpatient setting and stated they do not believe these procedures can
be safely performed in a non-O.R. setting. The commenter stated in the
FY 2018 IPPS proposed rule, these same 22 ICD-10-PCS codes were
identified, and a commenter opposed the proposal to re-designate these
codes at that time. In response to the issues raised by this commenter,
CMS determined in the FY 2018 IPPS final rule that it was appropriate
to maintain the designation of the 22 procedure codes. This commenter
further stated they find CMS' rulemaking on this issue between FY 2018
and FY 2024 to be contradictory and believe that the rationale to
maintain these 22 codes as O.R. procedures remains the same and that
there is no safe way to effectively drain an infection involving the
subfascial plane without the resources of an operating room.
Response: We thank the commenter for their feedback. We reviewed
the commenters' concerns and continue to state that treatment practices
have continued to shift since FY 2018 rulemaking. As stated in the
proposed rule, and in prior rulemaking, in response to similar
comments, we believe procedures describing the open drainage of
subcutaneous tissue and fascia can now be safely performed in the
outpatient setting and when performed during a hospitalization, it is
typically in conjunction with another O.R. procedure. In cases where
procedures describing open drainage of subcutaneous tissue and fascia
are the only procedures performed in an admission, the admission is
quite likely due to need for IV antibiotics as opposed to the need for
operating room resources in an inpatient setting. As shown in Table
6P.8a associated with the proposed rule (which is available on the CMS
website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS), when the procedure codes that describe the
open drainage of the subcutaneous tissue and fascia are reported,
approximately 55% of the MS-DRGs assigned are classified as surgical
MS-DRGs which indicates at least one procedure code designated as an
O.R. procedure was also reported in these cases.
As discussed in the proposed rule and earlier in this section, we
have signaled in prior rulemaking that the designation of an O.R.
procedure encompasses more than the physical location of the hospital
room in which the procedure may be performed; in other words, the
performance of a procedure in an operating room is not the sole
determining factor we consider as we examine the designation of a
procedure in the ICD-10-PCS classification system. We continue to
believe that procedure codes that describe the open drainage of
subcutaneous tissue and fascia do not reflect the technical complexity
or resource intensity in comparison to other procedures that are
designated as O.R. procedures. 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.
Therefore, after consideration of the public comments we received,
and for the reasons discussed, we are not making changes in this final
rule to the designation of the 22 codes that describe the open drainage
of subcutaneous tissue and fascia listed in the previous table for FY
2024.
12. Changes to the MS-DRG Diagnosis Codes for FY 2024
a. Background of the CC List and the CC Exclusions List
Under the IPPS MS-DRG classification system, we have developed a
standard list of diagnoses that are considered CCs. Historically, we
developed this list using physician panels that classified each
diagnosis code based on whether the diagnosis, when present as a
secondary condition, would be considered a substantial complication or
comorbidity. A substantial complication or comorbidity was defined as a
condition that, because of its presence with a specific principal
diagnosis, would cause an increase in the length-of-stay by at least 1
day in at least 75 percent of the patients. However, depending on the
principal diagnosis of the patient, some diagnoses on the basic list of
complications and comorbidities may be excluded if they are closely
related to the principal diagnosis. In FY 2008, we evaluated each
diagnosis code to determine its impact on resource use and to determine
the most appropriate CC subclassification (NonCC, CC, or MCC)
assignment. We refer readers to sections II.D.2. and 3. of the preamble
of the FY 2008 IPPS final rule with comment period for a discussion of
the refinement of CCs in relation to the MS-DRGs we adopted for FY 2008
(72 FR 47152 through 47171).
b. Overview of Comprehensive CC/MCC Analysis
In the FY 2008 IPPS/LTCH PPS final rule (72 FR 47159), we described
our process for establishing three different levels of CC severity into
which we would subdivide the diagnosis codes. The categorization of
diagnoses as a MCC, a CC, or a NonCC was accomplished using an
iterative approach in which each diagnosis was evaluated to determine
the extent to which its presence as a secondary diagnosis resulted in
increased hospital resource use. We refer readers to the FY 2008 IPPS/
LTCH PPS final rule (72 FR 47159) for a complete discussion of our
approach. Since the comprehensive analysis was completed for FY 2008,
we have evaluated diagnosis codes individually when assigning severity
levels to new codes and when receiving requests to change the severity
level of specific diagnosis codes.
We noted in the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19235
through 19246) that with the transition to ICD-10-CM and the
significant changes that have occurred to diagnosis codes since the FY
2008 review, we believed it was necessary to conduct a comprehensive
analysis once again. Based on this analysis, we proposed changes to the
severity level designations for 1,492 ICD-10-CM diagnosis codes and
invited public comments on those proposals. As summarized in the FY
2020 IPPS/LTCH PPS final rule, many commenters expressed concern with
the proposed severity level designation changes overall and recommended
that CMS conduct further analysis prior to finalizing any proposals.
After careful consideration of the public comments we received, as
discussed further in the FY 2020 final rule, we generally did not
finalize our proposed changes to the severity designations for the ICD-
10-CM diagnosis codes, other than the changes to the severity level
designations for the diagnosis codes in category Z16 (Resistance to
antimicrobial drugs) from a NonCC to a CC. We stated that postponing
adoption
[[Page 58754]]
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/Medicare-Fee-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 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 discussed in the FY 2023 IPPS/LTCH PPS final rule (87 FR 48866),
we stated that as the new unspecified code edit became effective
beginning with discharges on and after April 1, 2022, we believed it
was 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 interested parties the time needed to become
acclimated to the new edit.
In the FY 2023 IPPS/LTCH proposed rule (87 FR 28177 through 28181),
we also requested public comments on how the reporting of diagnosis
codes in categories Z55-Z65 might improve our ability to recognize
severity of illness, complexity of illness, and/or utilization of
resources under the MS-DRGs. 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,'' \7\ we stated we were 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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\7\ 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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We noted that 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.\8\ 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
[[Page 58755]]
exposure to toxic agents, dust, or radiation.
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\8\ Available at: https://health.gov/healthypeople/objectives-and-data/social-determinants-health.
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We received numerous public comments that expressed a variety of
views on our comment solicitation, including many comments that were
supportive, and others that offered specific suggestions for our
consideration in future rulemaking. Many commenters applauded CMS'
efforts to encourage documentation and reporting of SDOH diagnosis
codes given the impact that social risks can have on health outcomes.
These commenters stated that it is critical that physicians, other
health care professionals, and facilities recognize the impact SDOH
have on the health of their patients. Many commenters also stated that
the most immediate and important action CMS could take to increase the
use of SDOH Z codes is to finalize the evidence-based ``Screening for
Social Drivers of Health'' and ``Screen Positive Rate for Social
Drivers of Health'' measures proposed to be adopted in the Hospital
Inpatient Quality Reporting (IQR) Program. In the FY 2023 IPPS/LTCH PPS
final rule (87 FR 49202 through 49220), CMS finalized the ``Screening
for Social Drivers of Health'' and ``Screen Positive Rate for Social
Drivers of Health'' measures in the Hospital Inpatient Quality
Reporting (IQR) Program. We refer readers to the FY 2023 IPPS/LTCH PPS
final rule (87 FR 48867 through 48872) for the complete discussion of
the public comments received regarding the request for information on
SDOH diagnosis codes as well as the following section of this final
rule for our proposed changes to the severity level designation for
certain diagnosis codes that describe homelessness for FY 2024, as well
as our finalization of that proposal.
As discussed in the FY 2024 IPPS/LTCH PPS proposed rule, 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 through the FY 2022 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.
As discussed in the FY 2024 IPPS/LTCH PPS proposed rule (88 FR
26748), for new diagnosis codes approved for FY 2024, 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 noted that this process does not automatically result in the new
diagnosis code having the same designation as the predecessor code. We
refer the reader to section II.C.13 of this final rule for the
discussion of the finalized changes to the ICD-10-CM and ICD-10-PCS
coding systems for FY 2024.
c. Changes to Severity Levels
As discussed earlier in this section, in the FY 2023 IPPS/LTCH PPS
proposed rule (87 FR 28177 through 28181), we requested public comments
on how the reporting of diagnosis codes in categories Z55-Z65 might
improve our ability to recognize severity of illness, complexity of
illness, and/or utilization of resources under the MS-DRGs. We sought
comment on which specific SDOH Z codes were 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. In the FY 2023 proposed
rule, we stated CMS believed a potential starting point for discussion
was consideration of the SDOH Z diagnosis codes describing homelessness
as homelessness can be reasonably expected to have an impact on
hospital utilization.
To further examine the diagnosis codes that describe SDOH, in the
FY 2023 proposed rule, we stated 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 the
comment solicitation. We noted that prior to FY 2022, homelessness was
one of the more frequently reported codes that describe social
determinants of health. We also noted that effective FY 2022, the
subcategory was expanded and now included codes Z59.00 (Homelessness,
unspecified), Z59.01 (Sheltered homelessness), and code Z59.02
(Unsheltered homelessness).
We also displayed 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 noted there was no data for codes Z59.01
(Sheltered homelessness) and code Z59.02 (Unsheltered homelessness) as
these codes became effective on October 1, 2021. We stated that when
examining diagnosis code Z59.0 (Homelessness) in FY 2019 and FY 2020,
the data suggested 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. However, in FY 2021, the data
suggested that 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 stated we were uncertain if the
data from FY 2021, in particular, reflected fluctuations that may be a
result of the public health emergency or even reduced hospitalizations
of certain conditions. We also stated we were uncertain if homelessness
may be underreported when there is not an available field on the claim
when other diagnoses are reported instead.
As discussed in the FY 2024 IPPS/LTCH PPS proposed rule, we again
reviewed the data on the impact on resource use for the ICD-10-CM SDOH
Z codes that describe homelessness, currently designated as NonCC, when
reported as a secondary diagnosis. The following table reflects the
impact on resource use data generated using claims from the September
2022 update of the FY 2022 MedPAR file. 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.
[[Page 58756]]
[GRAPHIC] [TIFF OMITTED] TR28AU23.111
The table shows that the C1 is 1.75 for ICD-10-CM diagnosis code
Z59.00, 2.00 for ICD-10-CM diagnosis code Z59.01, and 2.12 for ICD-10-
CM diagnosis code Z59.02. A value close to 2.0 in column C1 suggests
that the secondary diagnosis is more aligned with a CC than a NonCC.
Because the C1 values in the table are generally close to 2, the data
suggest that when these three SDOH Z codes are reported as a secondary
diagnosis, the resources involved in caring for a patient experiencing
homelessness support increasing the severity level from a NonCC to a
CC. In the proposed rule, we noted the table also shows that the C2
finding was 2.19 for ICD-10-CM diagnosis code Z59.00, 2.24 for ICD-10-
CM diagnosis code Z59.01, and 2.35 for ICD-10-CM diagnosis code Z59.02.
A C2 value close to 2.0 suggests the condition is more like a CC than a
NonCC, but not as significant in resource usage as an MCC when there is
at least one other secondary diagnosis that is a CC but none that is an
MCC. Because the C2 values in the table are generally close to 2, we
stated that the data again suggested that when these three SDOH Z codes
are reported as a secondary diagnosis, the resources involved in caring
for a patient experiencing homelessness support increasing the severity
level from a NonCC to a CC.
As discussed in the FY 2021 IPPS/LTCH PPS final rule (85 FR 58550
through 58554), following the listening session on October 8, 2019, we
reconvened an internal workgroup comprised of clinicians, consultants,
coding specialists and other policy analysts to identify guiding
principles to apply in evaluating whether changes to the severity level
designations of diagnoses are needed and to ensure the severity
designations appropriately reflect resource use based on review of the
claims data, as well as consideration of relevant clinical factors (for
example, the clinical nature of each of the secondary diagnoses and the
severity level of clinically similar diagnoses) and improve the overall
accuracy of the IPPS payments. In considering the nine guiding
principles identified by the workgroup, as summarized previously, to
illustrate how they might be applied in evaluating changes to the
severity designations of diagnosis codes, in the FY 2024 IPPS/LTCH PPS
proposed rule we noted that homelessness is a circumstance that can
impede patient cooperation or management of care or both. In addition,
patients experiencing homelessness can require a higher level of care
by needing an extended length of stay. As discussed in the FY 2023
proposed rule, healthcare needs for patients experiencing homelessness
(sheltered,\9\ unsheltered,\10\ or unspecified) may be associated with
increased resource utilization.\11\ 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.\12\ Longer hospital stays for these patients \13\ 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,\14\ and studies have shown
difficulties adhering to medication regimens among persons experiencing
homelessness.\15\
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\9\ ``Sheltered homelessness'' refers to people experiencing
homelessness who were found in emergency shelters, safe havens,
transitional housing, or other temporary settings. Department of
Housing and Urban Development (HUD) Press Release No. 22-022,
https://www.hud.gov/press/press_releases_media_advisories/
hud_no_22_022#:~:text=HUD%20Releases%202021%20Annual%20Homeless%20Ass
essment%20Report%20Part%201,-
Report%20Suggests%20that&text=%E2%80%9CSheltered%20homelessness%E2%80
%9D%20refers%20to%20people,housing%2C%20or%20other%20temporary%20sett
ings (accessed October 2022).
\10\ Unsheltered homelessness refers to ``a primary nighttime
residence that is a public or private place not designed for or
ordinarily used as a regularly sleeping accommodation for human
beings, including a car, park, abandoned building, bus or train
station, airport, or camping ground.'' HUD. 2011. HEARTH Homeless
Definition Final Rule, 24 CFR 578.3, https://www.govinfo.gov/content/pkg/FR-2011-12-05/pdf/2011-30942.pdf (accessed October
2022).
\11\ Koh HK, O'Connell JJ. Improving Health Care for Homeless
People. JAMA. 2016;316(24):2586-2587. doi:10.1001/jama.2016.18760.
\12\ 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/.
\13\ 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.
\14\ Sun R (Agency for Healthcare Research and Quality (AHRQ)),
Karaca Z (AHRQ), Wong HS (AHRQ). Characteristics of Homeless
Individuals Using Emergency Department Services in 2014. Healthcare
Cost and Utilization Project (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.
\15\ 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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Therefore, after considering the C1 and C2 ratings of the three
ICD-10-CM diagnosis codes that describe
[[Page 58757]]
homelessness and consideration of the nine guiding principles, we
proposed to change the severity level designation for diagnosis codes
Z59.00 (Homelessness, unspecified), Z59.01 (Sheltered homelessness),
and Z59.02 (Unsheltered homelessness) from NonCC to CC for FY 2024. As
discussed in the FY 2023 IPPS/LTCH PPS final rule, 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. In the proposed rule, we stated
we also expect that SDOH Z code reporting may continue to increase for
a number of reasons, for example, newer SDOH screening performed as a
result of new quality measures in the Hospital Inpatient Quality
Reporting program. We may consider proposed changes for other SDOH
codes in the future based on our analysis of the impact on resource
use, per our methodology, as previously described, and consideration of
the guiding principles. We further stated we also continue to be
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.
Feedback and other suggestions may be submitted by October 20, 2023
and directed to the electronic intake system, Medicare Electronic
Application Request Information SystemTM
(MEARISTM) at: https://mearis.cms.gov/public/home.
Comment: Commenters expressed overwhelming support for our proposal
to change the severity level designation for diagnosis codes Z59.00
(Homelessness, unspecified), Z59.01 (Sheltered homelessness), and
Z59.02 (Unsheltered homelessness) from NonCC to CC for FY 2024. These
commenters stated this proposal acknowledges the impact of homelessness
as a social determinant of health, its implications for resource
utilization, and its costs to healthcare providers in effectively
addressing the healthcare needs of Medicare beneficiaries experiencing
homelessness. A commenter stated they especially appreciate thoughtful
policies that are data-driven and intended to bridge the gap of
compensation for providers who have been tirelessly caring for
underserved populations. Another commenter stated that this change will
confer enhanced financial resources to safety net hospitals, which care
for a disproportionate number of patients impacted by health-related
social risk factors. A commenter specifically stated that they see this
proposal as a watershed moment as it is the first time CMS will be
linking social determinants of health to payment in traditional
Medicare. Commenters stated that a change to the severity level
designation of the three diagnosis codes that describe homelessness
from NonCC to CC may increase voluntary reporting of these
circumstances, incentivize treating the whole patient, while enabling
CMS to assess homelessness-related impacts on illness severity, care
complexity, and hospital utilization to drive meaningful evaluation of
the association between these Z codes and outcomes. A few commenters
stated that based on their own analysis, homelessness has an effect on
resource utilization on par with other diagnoses currently designated
as MCCs but stated changing the designation to a CC is a logical and
necessary step.
Response: We thank the commenters for their support.
Comment: While commending CMS' efforts, many commenters noted an
operational concern in that currently only 25 diagnoses are captured on
the institutional claim form. Commenters stated that documenting and
reporting the social and economic circumstances patients may be
experiencing may require a substantial number of SDOH Z codes and
stated that this could lead to the crowding out of other diagnosis
codes that also need to be captured on the institutional claim form for
both payment and quality measures. A commenter stated that the
``Screening for Social Drivers of Health'' and ``Screen Positive Rate
for Social Drivers of Health'' measures in the Hospital Inpatient
Quality Reporting (IQR) Program, finalized in the FY 2023 IPPS/LTCH
final rule, will result in the need to include additional Z codes on
the claim to represent the findings of the SDOH screenings, further
limiting the space available. Commenters stated that given the number
of fields available to report diagnosis codes, it would be helpful if
CMS would instruct hospitals on how to prioritize the use of SDOH
diagnosis codes to ensure that all the medical diagnoses that govern
mortality and readmission rates are also captured. A few commenters
suggested that CMS evaluate the potential to expand the number of
diagnosis codes that can be submitted, or alternatively, design a
separate way to report the Z codes on the claim form, separate and
distinct from the fields for the diagnosis codes.
Response: We thank the commenters for their feedback. We note that
any proposed changes to the institutional claim form would need to be
submitted to the National Uniform Billing Committee (NUBC) for
consideration as the NUBC develops and maintains the Uniform Billing
(UB) 04 data set and form. The NUBC is a Data Content Committee named
in the Health Insurance Portability and Accountability Act of 1996
(HIPAA) and is composed of a diverse group of interested parties
representing providers, health plans, designated standards maintenance
organizations, public health organizations, and vendors.
Comment: Some commenters requested that CMS further explore other
SDOH diagnosis codes that could impact hospital resource use. These
commenters encouraged CMS to examine other SDOH Z codes that describe
circumstances such as food insecurity, lack of adequate food and
drinking water, extreme poverty, lack of transportation, inadequate
housing environmental temperature, and problems related to employment,
physical environment, social environment, upbringing, primary support
group, literacy, economic circumstances, and psychosocial circumstances
to determine the hospital resource utilization related to addressing
these factors and to analyze whether these SDOH Z codes should be
considered for severity designation changes in future rulemaking as
well. Other commenters also pointed to conditions outside of the SDOH Z
codes in categories Z55-Z65 such as: medical debt, malnutrition,
delirium due to a known physiological condition, elder abuse and
neglect, contact with and (suspected) exposure to hazards in the
physical environment, personal history of falling, personal history of
adult physical and sexual abuse, awaiting organ transplant status, and
underdosing of medication regimens as examples of other areas where
fostering better documentation and reporting, and considering severity
designation changes in future rulemaking, could improve health
outcomes.
Response: We appreciate the feedback. We will examine these
suggestions and determine if there are other diagnoses codes, including
diagnosis codes that describe SDOH, that should also be considered
further. We will consider these diagnosis codes
[[Page 58758]]
for changes to severity level designations, using a combination of
mathematical analysis of claims data and the application of nine
guiding principles, as we continue our comprehensive CC/MCC analysis
and will provide more detail in future rulemaking.
Comment: While supporting the proposal to designate the three ICD-
10-CM diagnosis codes describing homelessness as CCs, some commenters
expressed concern with the perceived diminished value that designating
homelessness as a CC when reported as a secondary diagnosis may have,
due to the expansion of the criteria for subdividing a base MS-DRG into
a three-way split. These commenters stated the application of the NonCC
subgroup criteria as demonstrated by the MS-DRG changes associated with
Table 6P.10--Potential MS-DRG Changes with Application of the NonCC
Subgroup Criteria and Detailed Data Analysis--FY 2024, associated with
the proposed rule, appears to frequently not recognize the need for a
severity level of CC by eliminating many ``with CC'' and ``without CC/
MCC'' MS-DRGs, meaning there is a potential for fewer MS-DRGs to be
impacted by the presence of homelessness as a CC. The commenters
further stated that if there are a limited number of MS-DRGs impacted
by the presence of a CC, the change of the severity designation of
these three diagnosis codes will not accomplish the desired
documentation and reporting goals.
Response: We appreciate the commenters' feedback and concern. We
concur with commenters that the application of the NonCC subgroup
criteria to existing MS-DRGs currently subdivided by a three-way
severity level split going forward may result in modifications to
certain MS-DRGs that are currently split into three severity levels and
potentially result in MS-DRGs that are proposed to be split into two
severity levels. As discussed in section II.C.1.b of the proposed rule,
we identified four base MS-DRGs currently subdivided with a three-way
severity level split that result in the potential creation of a single,
base MS-DRG. We refer the reader to Table 6P.10b associated with the
proposed rule (which is available on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS) for the list of the 135 MS-DRGs that would be
subject to deletion and the list of the 86 new MS-DRGs that would
potentially be created if the NonCC subgroup criteria were applied.
In response to the commenters who expressed concern that changes to
the underlying MS-DRG structure would have the greatest impacts with
respect to particular MS-DRGs, as noted in prior rulemaking, we note
that generally, changes to the MS-DRG classifications and related
policies under the IPPS that are implemented on an annual basis,
including any potential MS-DRG updates to be considered for a future
proposal in connection with application of the NonCC subgroup criteria
to existing MS-DRGs with a three-way severity level split, would also
involve a redistribution of cases, which would impact the relative
weights, and, thus, the payment rates proposed for particular types of
cases. As discussed in the FY 2021 final rule (85 FR 58446), we believe
that applying these criteria to the NonCC subgroup of existing MS-DRGs
with a three-way severity level split would better reflect resource
stratification and also promote stability in the relative weights by
avoiding low volume counts for the NonCC level MS-DRGs. We refer the
reader to section II.C.1.b. of the preamble of this final rule for
related discussion regarding our finalization of the expansion of the
criteria to include the NonCC subgroup and our finalization of the
proposal to continue to delay application of the NonCC subgroup
criteria to existing MS-DRGs with a three-way severity level split.
Comment: A commenter stated that even though they applaud CMS'
efforts to recognize the underreporting of SDOH, they recommended only
changing the designation of diagnosis codes Z59.01 (Sheltered
homelessness) and Z59.02 (Unsheltered homelessness) from NonCC to CC.
This commenter stated that if the proposed change to the severity
designation of diagnosis code Z59.00 (Homelessness, unspecified) is
finalized, they envisioned payment oversight agencies would question
its significance and effect on resource utilization due to the
``unspecified'' code description, especially if code Z59.00 is the only
secondary diagnosis code designated as a CC on the claim.
Response: We thank the commenter for their feedback. We reviewed
the commenter's concern and note that whether the patient is
experiencing sheltered, unsheltered, or unspecified homelessness, the
patient may still 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, and have difficulties adhering
to medication regimens. We continue to believe that patients
experiencing homelessness (regardless of type) may be 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. If SDOH Z codes are
consistently reported in inpatient claims data, our methodology
utilized to mathematically measure the impact on resource use may more
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 and we can reexamine these severity designations in future
rulemaking.
Comment: Some commenters thanked CMS for its continued interest in
receiving feedback on documentation and reporting of the ICD-10-CM
diagnosis SDOH Z codes, yet stated there continue to be many challenges
for clinicians in documenting SDOH, such as the lack of knowledge
surrounding these codes, the time and burden associated with adding
them to a patient's problem list, and the perceived inability to do
anything with the information. Other commenters stated assigning codes
for SDOH can be a time-consuming and labor-intensive process, as many
electronic health records (EHRs) do not have pathways to add a Z code
to the problem or diagnosis list. These commenters stated prioritizing
provider education on the reporting of Z codes and offering support
mechanisms, including the use of incentives, would significantly
improve the acquisition of SDOH data, as such data is essential in
helping health systems better anticipate needs and help vulnerable
patients receive support at both the individual and population levels.
Another commenter stated that given the administrative and operational
challenges for providers associated with capturing SDOH data, they
recommended CMS delay implementation of the change in severity level
designation of diagnosis codes Z59.00, Z59.01, and Z59.02 by one year
so that providers may continue to adapt their processes and workflows
to properly capture the homelessness Z codes. This commenter stated
that although the proposed change would not require additional work for
providers beyond reporting the codes, the act of reporting itself is
still a broad change to hospital coding practices and electronic health
record (EHR) use that
[[Page 58759]]
they believe deserves additional time for provider adoption.
Response: We appreciate the feedback. We note that the ICD-10-CM
Official Guidelines for Coding and Reporting have been regularly
revised to provide additional guidance as it relates to diagnosis codes
describing social determinants of health diagnosis. Specifically,
Section I.C.21.c.17 of the ICD-10-CM Official Guidelines for Coding and
Reporting were updated:
Effective October 1, 2021, to clarify that code assignment
may be based on medical record documentation from clinicians involved
in the care of the patient who are not the patient's provider and that
patient self-reported documentation may be used to assign codes for
social determinants of health, as long as the patient self-reported
information is signed-off by and incorporated into the medical record
by either a clinician or provider;
Effective October 1, 2022, to clarify that SDOH codes
should be assigned only when the documentation specifies that the
patient has an associated problem or risk factor; and
Effective April 1, 2023, to provide more guidance on
reporting SDOH and to provide more examples to facilitate the capture
of these data.
We encourage the commenters to review the Official ICD-10-CM Coding
Guidelines, which can be found on the CDC website at: https://www.cdc.gov/nchs/icd/icd10.htm. The American Hospital Association
(AHA)'s Coding Clinic for ICD-10-CM/PCS publication has provided
further clarification on the appropriate documentation and use of Z
codes to enable hospitals to incorporate them into their processes. The
AHA also offers a range of tools and resources for hospitals, health
systems and clinicians to address the social needs of their patients.
We believe these updates and resources will help alleviate the concerns
expressed by these commenters. As one of the four Cooperating Parties
for ICD-10, we will continue to collaborate with the AHA to provide
guidance for coding problems or risk factors related to SDOH through
the AHA's Coding Clinic for ICD-10-CM/PCS publication and to review the
ICD-10-CM Coding Guidelines to determine where further clarifications
may be made.
In response to commenters that state there continue to be many
challenges for clinicians in documenting SDOH, such as the time and
burden associated with adding them to a patient's problem list, and
state that many electronic health records (EHRs) do not have pathways
to add a Z code to the problem or diagnosis list, the Office of the
Assistant Secretary for Planning and Evaluation (ASPE), the principal
advisor to the Secretary of the U.S. Department of Health and Human
Services, conducted interviews with six electronic health records
(EHRs) vendors with large market shares in both ambulatory and
inpatient settings to investigate the development of software products
that allow health care providers to identify and address patients SDOH
in health care settings. The findings of the study indicate commercial
vendors appear to be ready to collaboratively discuss policy solutions,
such as standards or guidelines with each other, health care systems,
and government agencies in order to further promote integration of SDOH
data into the standard of care for all health systems.\16\ We further
note that on April 18, 2023, the Office of the National Coordinator
proposed updated certification standards (USCDI v3) that would, if
finalized, require certified EHR vendors to include four SDOH data
elements: SDOH Assessment, Goals, Interventions, Problems/Health
Concerns.\17\
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\16\ Freij M, Dullabh P, Lewis S, Smith SR, Hovey L,
Dhopeshwarkar R. Incorporating Social Determinants of Health in
Electronic Health Records: Qualitative Study of Current Practices
Among Top Vendors. JMIR Med Inform. 2019 Jun 7;7(2):e13849. doi:
10.2196/13849. PMID: 31199345; PMCID: PMC6592390. https://aspe.hhs.gov/sites/default/files/migrated_legacy_files/185561/NORCSDH.pdf.
\17\ 88 FR 23746 (https://www.federalregister.gov/d/2023-07229/p-318).
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In response to the suggestion that CMS delay implementation of the
change to the severity level designation of diagnosis codes Z59.00,
Z59.01, and Z59.02 by one year so that providers may continue to adapt
their processes and workflows to properly capture the diagnosis codes
describing homelessness, we reviewed the commenters' concern and do not
agree that a delay is necessary or appropriate. As discussed in the
proposed rule, and previously in this section, when examining the data
on the impact on resource use for the ICD-10-CM SDOH Z codes that
describe homelessness from the FY 2019, FY 2020, and FY 2022 MedPAR
files, the data suggested 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. After considering the
C1 and C2 ratings of the three ICD-10-CM diagnosis codes that describe
homelessness and consideration of the nine guiding principles, we
believe changing the severity level designation for diagnosis codes
Z59.00 (Homelessness, unspecified), Z59.01 (Sheltered homelessness),
and Z59.02 (Unsheltered homelessness) from NonCC to CC at this time to
be prudent, without the need for further delay.
Therefore, after consideration of the public comments received, we
are finalizing changes to the severity levels for diagnosis codes
Z59.00 (Homelessness, unspecified), Z59.01 (Sheltered homelessness),
and Z59.02 (Unsheltered homelessness), from NonCC to CC for FY 2024,
without modification. In addition, these diagnosis codes are reflected
in Table 6J.1--Additions to the CC List--FY 2024 associated with this
final rule and available at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS. We refer the reader to section
II.C.13 of the preamble of the proposed rule and this final rule for
further information regarding Table 6J.1.
We again thank commenters for sharing their views and their
willingness to support CMS in these efforts. We will take the
commenters' feedback into consideration in future policy development.
We hope and expect that this finalization will foster the increased
documentation and reporting of the diagnosis codes describing social
and economic circumstances and serve as an example for providers that
when they document and report Z codes, CMS can further examine the
claims data and consider future changes to the designation of these
codes when reported as a secondary diagnoses. CMS will continue to
monitor and evaluate the reporting of the diagnosis codes describing
social and economic circumstances, including diagnosis codes Z59.00
(Homelessness, unspecified), Z59.01 (Sheltered homelessness), and
Z59.02 (Unsheltered homelessness).
Additionally, as discussed in the FY 2024 IPPS/LTCH PPS proposed
rule, we received a request to change the severity level designations
of three ICD-10-CM diagnosis codes. The requestor suggested the
severity level of ICD-10-CM diagnosis code K76.72 (Hepatic
encephalopathy) be changed from NonCC to CC or MCC; N14.11 (Contrast-
induced nephropathy) be changed from NonCC to CC; and S06.2XAA (Diffuse
traumatic brain injury with loss of consciousness status unknown,
initial encounter) be changed from CC to MCC.
In the proposed rule, we noted that these three diagnosis codes
became effective with discharges on and after October 1, 2022 (FY
2023), and the current claims data from the September 2022 update of
the FY 2022 MedPAR file did not yet reflect these new diagnosis codes.
The proposed and finalized severity level designations for
[[Page 58760]]
these ICD-10-CM diagnosis codes were displayed in Table 6A- New
Diagnosis Codes (associated with the FY 2023 proposed rule and final
rule and are available on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS). As
discussed earlier in this section, for new diagnosis codes approved for
each fiscal year, consistent with our annual process for designating a
severity level (MCC, CC, or NonCC) for new diagnosis codes, in
establishing the severity level of these codes, we first reviewed 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.
Specifically, the predecessor code for K76.72 (Hepatic
encephalopathy) was diagnosis code K72.90 (Hepatic failure, unspecified
without coma), which is designated as a NonCC. We stated when we
reviewed and considered the factors as described previously, we did not
believe that the resources required for hepatic encephalopathy exceeded
the resources required for patients with hepatic failure, unspecified
without coma as both conditions require treatment to rid the body of
toxins. Therefore, our proposed and finalized severity level
designation for hepatic encephalopathy was also a NonCC for FY 2023.
Similarly, the predecessor code for N14.11 (Contrast-induced
nephropathy) was diagnosis code N14.1 (Nephropathy induced by other
drugs, medicaments and biological substances), which was designated as
a NonCC. After review and consideration of the factors as described
previously, we did not believe that the resources required for
contrast-induced nephropathy exceeded the resources required for
patients with nephropathy induced by other drugs, medicaments and
biological substances, as code N14.11 was created as an expansion of
the subcategory to identify contrast dyes as the substance causing
nephropathy. Before the implementation of N14.11, the diagnosis was
identified with code N14.1. Therefore, our proposed and finalized
severity level designation for contrast-induced nephropathy was also a
NonCC. Lastly, the predecessor code for S06.2XAA (Diffuse traumatic
brain injury with loss of consciousness status unknown, initial
encounter) was diagnosis code S06.2X9A (Diffuse traumatic brain injury
with loss of consciousness of unspecified duration, initial encounter),
which is designated as a CC. When we reviewed and considered the
factors as described previously, we did not believe that the resources
required for diffuse traumatic brain injury with loss of consciousness
status unknown, initial encounter exceeded the resources required for
diffuse traumatic brain injury with loss of consciousness of
unspecified duration, initial encounter, therefore our proposed and
finalized severity level designation for diffuse traumatic brain injury
with loss of consciousness status unknown, initial encounter was also a
CC.
As stated in prior rulemaking (85 FR 58560), generally, the
proposed severity level ultimately depends on clinical judgement and,
where the data is available, the empirical analysis of the additional
resources associated with the secondary diagnosis. The impact of the
secondary diagnosis is dependent on the principal diagnosis reported,
with which it is associated. If the secondary diagnosis is reported
primarily with a principal diagnosis that reflects serious illness with
treatment complexity, then the marginal contribution of the secondary
diagnosis to the overall resource use may actually be relatively small.
We stated in the proposed rule we continue to believe that in the
absence of claims data, the severity designation of these three codes
as established in FY 2023 rulemaking is appropriate.
We further stated we believed that claims data reflecting the
reporting of these new diagnosis codes are needed for analysis prior to
proposing changes to these three diagnosis codes. 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 stated we believed it was
appropriate to consider these requests in connection with our continued
comprehensive CC/MCC analysis in future rulemaking, using the available
claims data, rather than proposing to change the designation of these
individual ICD-10-CM diagnosis codes in the absence of such data at
this time. We will consider these individual requests received for
changes to severity level designations as we continue our comprehensive
CC/MCC analysis and will provide more detail in future rulemaking.
Comment: Commenters stated that they support CMS' decision not to
propose to change the severity level designation of diagnosis codes
K76.72 (Hepatic encephalopathy), N14.11 (Contrast-induced nephropathy)
and S06.2XAA (Diffuse traumatic brain injury with loss of consciousness
status unknown, initial encounter) at this time and to consider these
requests in connection with our continued comprehensive CC/MCC analysis
in future rulemaking. A commenter specifically stated they appreciate
CMS moving cautiously with changes that could cause considerable
upheaval during this time of unprecedented stress on hospitals and
encouraged CMS to continue careful assessment of significant changes in
the future. However, another commenter expressed concern that CMS
continues to not be able to undertake a comprehensive analysis of the
severity designation of the diagnosis codes in the ICD-10-CM
classification. The commenter stated they believed that the nation is
being negatively impacted since, in their opinion, some diagnoses
currently designated as an MCC (for example severe malnutrition) do not
require the resources inherent to a MCC whereas others that do (for
example cardiac tamponade) are not designated as such. This commenter
further stated it would be helpful if CMS made a proposed list of
severity level designation changes available along with the impact on
resource use files generated using claims from the FY 2019 through the
FY 2022 MedPAR files that have been made publicly available on the CMS
website.
Response: We thank the commenters for their support and appreciate
the feedback. With respect to CMS not being able to undertake a
comprehensive analysis, we note that in the FY 2020 IPPS/LTCH PPS
proposed rule (84 FR 19235 through 19246) we stated 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 and therefore
proposed changes to the severity level designations for 1,492 ICD-10-CM
diagnosis codes. As summarized in the FY 2020 IPPS/LTCH PPS final rule,
after careful consideration of the public comments we received in
response, 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
[[Page 58761]]
rationale applied across diagnostic categories to assist the public in
its review.
Since that time, CMS has taken interval steps to continue a
comprehensive CC/MCC analysis. First, CMS hosted a listening session on
October 8, 2019, to review the methodology utilized to mathematically
measure the impact on resource use. 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 and the application of 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. In the FY 2022 IPPS/LTCH PPS final rule (86 FR
44940 through 44943), instead of changing the severity level
designations of the ``unspecified'' ICD-10-CM diagnosis codes
identified, 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 believed finalizing this new edit would provide
additional time for providers to be educated while not affecting the
payment the provider is eligible to receive. As discussed in the FY
2023 IPPS/LTCH PPS final rule (87 FR 48866), as the new unspecified
edit became effective beginning with discharges on and after April 1,
2022, we believed it was 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, to allow
interested parties the time needed to become acclimated to the new
edit.
In the FY 2023 IPPS/LTCH proposed rule (87 FR 28177 through 28181),
we requested public comments on how the reporting of diagnosis codes in
categories Z55-Z65 might improve our ability to recognize severity of
illness, complexity of illness, and/or utilization of resources under
the MS-DRGs. In addition, we have provided 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 2018, FY
2019, FY 2020, FY 2021 and the FY 2022 MedPAR files, respectively at
https://www.cms.gov/Medicare/MedicareFee-for-Service-Payment/AcuteInpatientPPS/MS-DRG-Classifications-and-Software.html.
Considering the potential impact of implementing a significant
number of severity designation changes, and in light of the public
health emergency (PHE) that was occurring concurrently during much of
this timeframe, we believe these interval steps were appropriate as 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 continue to solicit comments regarding the nine
guiding principles, as well as other possible ways we can incorporate
meaningful indicators of clinical severity. We encourage commenters to
provide a detailed explanation of how applying a suggested concept or
principle would ensure that the severity designation appropriately
reflects resource use for ICD-10-CM codes when reported as secondary
diagnoses. Commenters should submit their recommendations by October
20, 2023 via the electronic intake system, Medicare Electronic
Application Request Information SystemTM
(MEARISTM) at: https://mearis.cms.gov/public/home. With
respect to the suggestion that CMS make a proposed list of severity
level designation changes available along with the impact on resource
use files generated using claims from the fiscal year MedPAR files, we
appreciate the feedback and will take this suggestion under
consideration.
After consideration of the public comments we received, and for the
reasons discussed, we are finalizing our proposal, without
modification, to maintain the current severity level designation of
diagnosis codes K76.72 (Hepatic encephalopathy), N14.11 (Contrast-
induced nephropathy), and S06.2XAA (Diffuse traumatic brain injury with
loss of consciousness status unknown, initial encounter) for FY 2024.
d. Additions and Deletions to the Diagnosis Code Severity Levels for FY
2024
In the FY 2024 IPPS/LTCH PPS proposed rule (88 FR 26750), we noted
the following tables identify the proposed additions and deletions to
the diagnosis code MCC severity levels list and the proposed additions
and deletions to the diagnosis code CC severity levels list for FY 2024
and are available 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 2024;
Table 6I.2--Proposed Deletions to the MCC List FY 2024;
Table 6J.1--Proposed Additions to the CC List FY 2024; and
Table 6J.2--Proposed Deletions to the CC List FY 2024.
Comment: Commenters agreed with the proposed additions and
deletions to the MCC and CC lists as shown in tables 6I.1, 6I.2, 6J.1,
and 6J.2 associated with the proposed rule.
Response: We appreciate the commenters' support.
The following tables associated with this final rule reflect the
finalized severity levels under Version 41 of the ICD-10 MS-DRGs for FY
2024 and are available on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS; Table 6I.
--Complete MCC List--FY 2024; Table 6I.1--Additions to the MCC List--FY
2024; Table 6I.2--Deletions to the MCC List--FY 2024; Table 6J.--
Complete CC List--FY 2024; Table 6J.1--Additions to the CC List--FY
2024; and Table 6J.2--Deletions to the CC List--FY 2024.
e. CC Exclusions List for FY 2024
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;
[[Page 58762]]
Codes for the same condition in anatomically proximal
sites should not be considered CCs for one another; and
Closely related conditions should not be considered CCs
for one another.
The creation of the CC Exclusions List was a major project
involving hundreds of codes. We have continued to review the remaining
CCs to identify additional exclusions and to remove diagnoses from the
master list that have been shown not to meet the definition of a CC. We
refer readers to the FY 2014 IPPS/LTCH PPS final rule (78 FR 50541
through 50544) for detailed information regarding revisions that were
made to the CC and CC Exclusion Lists under the ICD-9-CM MS-DRGs.
The ICD-10 MS-DRGs Version 40.1 CC Exclusion List is included as
Appendix C in the ICD-10 MS-DRG Definitions Manual, which is available
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 an MCC only
for patients discharged alive; otherwise, they are assigned as a NonCC.
In the FY 2024 IPPS/LTCH PPS proposed rule, we proposed additional
changes to the ICD-10 MS-DRGs Version 41 CC Exclusion List based on the
diagnosis and procedure code updates as discussed in section II.C.13.
of the proposed rule and set forth in Tables 6G.1, 6G.2, 6H.1, and 6H.2
associated with the proposed rule and available on the CMS website at:
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS.
As discussed in section II.C.13 of the preamble of this final rule,
we are finalizing, without modification, the proposed assignments and
designations for the diagnosis codes after consideration of the public
comments received. Therefore, the finalized CC Exclusions List as
displayed in Tables 6G.1, 6G.2, 6H.1, 6H.2, and 6K, associated with
this final rule reflect the severity levels under V41 of the ICD-10 MS-
DRGs. We have developed Table 6G.1.--Secondary Diagnosis Order
Additions to the CC Exclusions List--FY 2024; Table 6G.2.--Principal
Diagnosis Order Additions to the CC Exclusions List--FY 2024; Table
6H.1.--Secondary Diagnosis Order Deletions to the CC Exclusions List--
FY 2024; and Table 6H.2.--Principal Diagnosis Order Deletions to the CC
Exclusions List--FY 2024; and Table 6K. Complete List of CC
Exclusions--FY 2024.
For Table 6G.1, each secondary diagnosis code finalized for
addition to the CC Exclusion List is shown with an asterisk and the
principal diagnoses finalized to exclude the secondary diagnosis code
are provided in the indented column immediately following it. For Table
6G.2, each of the principal diagnosis codes for which there is a CC
exclusion is shown with an asterisk and the conditions finalized for
addition to the CC Exclusion List that will not count as a CC are
provided in an indented column immediately following the affected
principal diagnosis. For Table 6H.1, each secondary diagnosis code
finalized for deletion from the CC Exclusion List is shown with an
asterisk followed by the principal diagnosis codes that currently
exclude it. For Table 6H.2, each of the principal diagnosis codes is
shown with an asterisk and the finalized deletions to the CC Exclusions
List are provided in an indented column immediately following the
affected principal diagnosis. Tables 6G.1., 6G.2., 6H.1., and 6H.2.
associated with this final rule are available on the CMS website at:
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html.
As discussed in the proposed rule, we also noted that in our review
of the CC Exclusion List that we identified a total of 668 diagnosis
codes currently listed on various principal diagnosis collection lists
that are not able to be reported as a principal diagnosis based on the
ICD-10-CM Official Guidelines for Coding and Reporting. In addition,
these codes are listed on the Medicare Code Editor (MCE) code edit
lists for Unacceptable Principal Diagnosis or Manifestations not
allowed as Principal Diagnosis. Therefore, we stated we believed it was
appropriate to remove these codes from the affected principal diagnosis
collection lists for V41 of the GROUPER. Because we were unable to
reflect these changes in Table 6G.1., 6G.2., 6H.1., or 6H.2 at the time
of the development of the proposed rule, we provided a supplementary
table, Table 6H.3--Principal Diagnosis Codes for Removal from CC
Exclusion List--FY 2024 listing each of these 668 diagnosis codes,
including the code descriptions, the applicable MCE edit, and the
current principal diagnosis collection list(s) where each code is
currently listed and from which the code would be removed for the final
FY 2024 V41 GROUPER. Table 6H.3 associated with the proposed rule is
available on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html.
The ICD-10 MS-DRGs Version 41 CC Exclusion List is included as
Appendix C of the Definitions Manual (available in two formats; text
and HTML). The manuals are available on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/MS-DRG-Classifications-and-Software and each format
includes two lists identified as Part 1 and Part 2. Part 1 is the list
of all diagnosis codes that are defined as a CC or MCC when reported as
a secondary diagnosis. For all diagnosis codes on the list, a link
(HTML version) is provided to a collection of diagnosis codes which,
when used as the principal diagnosis, would cause the CC or MCC
diagnosis to be considered as a 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.
13. Changes to the ICD-10-CM and ICD-10-PCS Coding Systems
To identify new, revised and deleted diagnosis and procedure codes,
for FY 2024, we have developed Table 6A.--New Diagnosis Codes, Table
6B.--New Procedure Codes, Table 6C.--Invalid Diagnosis Codes, Table
6D.--Invalid Procedure Codes, Table 6E.--Revised Diagnosis Code Titles
and Table 6F.--Revised Procedure Code Titles for this final rule.
These tables are not published in the Addendum to the proposed rule
or final rule, but are available on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html as described in section VI. of the
Addendum to this final rule. As discussed in section II.C.16. of the
preamble of the proposed rule and this final rule, the code titles are
adopted as part of the ICD-10 Coordination and Maintenance Committee
meeting process. Therefore, although we publish the code titles in the
IPPS proposed and final rules, they are not subject to comment in the
proposed or final rules.
In the FY 2024 IPPS/LTCH PPS proposed rule (88 FR 26752), we
proposed the MDC and MS-DRG assignments for the new diagnosis codes and
procedure codes as set forth in Table 6A.--New Diagnosis Codes and
Table 6B.--New Procedure Codes. We also stated that the proposed
severity level designations for the new diagnosis codes are set forth
in Table 6A. and the proposed O.R. status for the new
[[Page 58763]]
procedure codes are set forth in Table 6B. Consistent with our
established process, we examined the MS-DRG assignment and the
attributes (severity level and O.R. status) of the predecessor
diagnosis or procedure code, as applicable, to inform our proposed
assignments and designations.
Specifically, we reviewed the predecessor code and MS-DRG
assignment most closely associated with the new diagnosis or procedure
code, and in the absence of claims data, we considered other factors
that may be relevant to the MS-DRG assignment, including the severity
of illness, treatment difficulty, complexity of service and the
resources utilized in the diagnosis and/or treatment of the condition.
We noted that this process does not automatically result in the new
diagnosis or procedure code being proposed for assignment to the same
MS-DRG or to have the same designation as the predecessor code.
In this section of this rule, we summarize the public comments
received for Table 6A and Table 6B and provide our responses.
Comment: A commenter applauded the addition of diagnosis code
Z29.81 (Encounter for HIV pre-exposure prophylaxis) (PrEP) and
encouraged ongoing monitoring of the code to ensure appropriate
billing. The commenter stated a diagnostic code for PrEP has the
opportunity to improve HIV prevention efforts for patients at the point
of care. According to the commenter, HIV remains an issue in every
region of the United States (U.S.) and significant gaps persist in
ongoing HIV preventive care in clinical practice, including early
detection of HIV and linking patients to appropriate prevention
services, such as PrEP.
Response: We thank the commenter for their feedback.
Comment: A commenter stated that CMS proposed the severity level
designation for diagnosis code O90.41 (Hepatorenal syndrome following
labor and delivery) to the MCC list, proposed the removal of diagnosis
code O90.4 (Postpartum acute kidney failure) from the MCC list (since
the code will no longer be valid), and proposed to add several
diagnosis codes describing osteoporosis and intrahepatic cholestasis of
pregnancy codes to the CC list. However, according to the commenter,
CMS did not include a proposal to add diagnosis code O26.649
(Intrahepatic cholestasis of pregnancy, unspecified trimester) to the
CC list. The commenter stated that in FY 2022, CMS finalized
maintaining the severity level designation of ``unspecified'' diagnosis
codes as CC or MCC where there are other codes available in the code
subcategory that further specify the anatomic site for purposes of a
new Medicare Code Editor (MCE) ``Unspecified code edit'' effective with
discharges on or after April 1, 2022. As such, the commenter requested
consideration for the addition of diagnosis code O26.649 (Intrahepatic
cholestasis of pregnancy, unspecified trimester) to the CC list to be
in alignment with the other diagnosis codes describing intrahepatic
cholestasis of pregnancy first trimester, second trimester, and third
trimester (codes O26.641, O26.642, and O26.643, respectively) or to
consider adding as a diagnosis subject to the ``unspecified'' code
edit.
Response: We appreciate the commenters' feedback. We are providing
clarification that the Unspecified code edit is only applicable to
diagnosis codes that are (1) defined as an unspecified code in the
classification by the title description, (2) currently designated as a
CC or MCC, and (3) able to be further specified by laterality (right,
left, or bilateral) for the anatomic site by other codes in the code
subcategory. Because the other intrahepatic cholestasis of pregnancy
codes do not include laterality in their code title descriptions, and
code O26.649 is not a CC or MCC, the intrahepatic cholestasis of
pregnancy, unspecified trimester code (O26.649) is unable to be
considered for addition to the Unspecified code edit. We also note that
consistent with our established process, we examined the severity level
for the predecessor code to determine the most appropriate severity
level designation. The predecessor code for code O26.649 is diagnosis
code O26.619 (Liver and biliary tract disorders in pregnancy,
unspecified trimester), as reflected in the FY 2024 ICD-10-CM
Conversion Table (available on the CMS web page at: https://www.cms.gov/medicare/icd-10/2024-icd-10-cm) and is designated as a
NonCC. Therefore, consistent with the designation of that predecessor
code, we proposed to designate code O26.649 as a NonCC.
Comment: A couple commenters requested that CMS change the MS-DRG
assignment for new procedure codes X2H03R9 (Insertion of intraluminal
device, bioprosthetic valve into inferior vena cava, percutaneous
approach, new technology group (9) and X2H13R9 (Insertion of
intraluminal device, bioprosthetic valve into superior vena cava,
percutaneous approach, new technology group 9) that describe insertion
of the TricValve[supreg] Bicaval Valve System from MS-DRGs 252, 253,
and 254 (Other Vascular Procedures with MCC, with CC, and without CC/
MCC, respectively) to MS-DRGs 266 and 267 (Endovascular Cardiac Valve
Replacement and Supplement Procedures with and without MCC,
respectively). According to the commenters, these procedures describe
bioprostheses that replace the function of the diseased tricuspid valve
while leaving the native valve in place. A commenter stated that while
the ICD-10-PCS codes are new and do not yet have cost data associated
with them, cases reporting use of the devices will require resources
and work similar to other endovascular cardiac valve replacement
procedures, such as placement within the major vessels and heart to
treat valve disease. The commenter urged CMS to consider moving
procedure codes X2H03R9 and X2H13R9 to MS-DRGs 266 and 267 and to
monitor the costs of these procedures going forward to ensure
appropriate assignment. Another commenter stated the TricValve[supreg]
replaces the function of the tricuspid valve and should be described as
a replacement procedure with assignment to MS-DRGs 266 and 267.
Response: We appreciate the commenters' feedback. We note that as
reflected in Table 6B.--New Procedure Codes, associated with the FY
2024 IPPS/LTCH PPS proposed rule, we finalized the two procedure codes
(X2H03R9 and X2H13R9) after consideration of public comments from the
September 13, 2022 ICD-10 Coordination and Maintenance (C&M) Committee
meeting. We note that under the ICD-10-PCS classification, the root
operation Replacement is defined as: Putting in or on biological or
synthetic material that physically takes the place and/or function of
all or a portion of a body part. As such, the TricValve[supreg]
technology is not literally replacing the tricuspid valve as defined
under ICD-10-PCS and the body part is not the tricuspid valve, rather,
the site of the procedure is the superior vena cava (SVC) and inferior
vena cava (IVC). Therefore, while the intent of the technology is to
replace the function of the tricuspid valve, the procedure to place the
bicaval valve system is not literally doing that and the native
tricuspid valve is left in place. Using our established process, we
proposed the Operating Room (O.R.) designations, MDC and MS-DRG
assignments based on the predecessor code assignments. The predecessor
code for procedure code X2H03R9 is procedure code 06H03DZ (Insertion of
intraluminal device into inferior vena cava, percutaneous approach) and
the
[[Page 58764]]
predecessor code for procedure code X2H13R9 is procedure code 02HV3DZ
(Insertion of intraluminal device into superior vena cava, percutaneous
approach), as reflected in the FY 2024 ICD-10-PCS Conversion Table
(available on the CMS web page at: https://www.cms.gov/medicare/icd-10/2024-icd-10-pcs). The predecessor code 06H03DZ is designated as non-
O.R. while the predecessor code 02HV3DZ is designated as an O.R.
procedure and is assigned to MS-DRGs 252, 253, and 254. Therefore, we
proposed that code X2H03R9 also be designated as non-O.R. and code
02HV3DZ be designated as O.R. and assigned to MS-DRGs 252, 253, and
254. Because the TricValve[supreg] technology requires the reporting of
both procedure codes (X2H03R9 and X2H13R9) as a ``pair'', cases
reporting the procedure were proposed for assignment to MS-DRGs 252,
253, and 254.
For the reasons discussed, we are maintaining the severity level
assignment for diagnosis code O26.649 as NonCC and finalizing the MS-
DRG assignment for procedure codes X2H03R9 and X2H13R9 to MS-DRGs 252,
253, and 254. We will continue to monitor the claims data when it
becomes available to determine if additional modifications are
warranted.
After consideration of the public comments received, we are
finalizing 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 associated with this final rule. In
addition, the finalized severity level designations for the new
diagnosis codes are set forth in Table 6A. and the finalized O.R.
status for the new procedure codes are set forth in Table 6B associated
with this final rule.
We are making available on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html
the following tables associated with this final rule:
Table 6A.--New Diagnosis Codes--FY 2024.
Table 6B.--New Procedure Codes--FY 2024.
Table 6C.--Invalid Diagnosis Codes--FY 2024.
Table 6D.--Invalid Procedure Codes--FY 2024;
Table 6E.--Revised Diagnosis Code Titles--FY 2024.
Table 6F.--Revised Procedure Code Titles--FY 2024.
Table 6G.1.--Secondary Diagnosis Order Additions to the CC
Exclusions List--FY 2024.
Table 6G.2.--Principal Diagnosis Order Additions to the CC
Exclusions List--FY 2024.
Table 6H.1.--Secondary Diagnosis Order Deletions to the CC
Exclusions List--FY 2024.
Table 6H.2.--Principal Diagnosis Order Deletions to the CC
Exclusions List--FY 2024.
Table 6 I. --Complete MCC List--FY 2024.
Table 6I.1.--Additions to the MCC List--FY 2024.
Table 6I.2.-Deletions to the MCC List--FY 2024.
Table 6J.--Complete CC List--FY 2024.
Table 6J.1.--Additions to the CC List--FY 2024.
Table 6J.2.--Deletions to the CC List--FY 2024.
Table 6K.--Complete List of CC Exclusions--FY 2024.
14. Changes to the Medicare Code Editor (MCE)
The Medicare Code Editor (MCE) is a software program that detects
and reports errors in the coding of Medicare claims data. Patient
diagnoses, procedure(s), and demographic information are entered into
the Medicare claims processing systems and are subjected to a series of
automated screens. The MCE screens are designed to identify cases that
require further review before classification into an MS-DRG.
As discussed in the FY 2023 IPPS/LTCH PPS final rule (87 FR 48874),
we made available the FY 2023 ICD-10 MCE Version 40 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 40
(and ICD-10 MS-DRGs) are posted on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/MS-DRG-Classifications-and-Software.
In the FY 2024 IPPS/LTCH PPS proposed rule (88 FR 26755), we
discussed an MCE request we received related to the Sex Conflict edit
by the October 20, 2022, deadline, as discussed further in this section
of the preamble of this final rule. Additionally, we discussed the
proposals we were making based on our internal review and analysis. In
this FY 2024 IPPS/LTCH PPS final rule, we present a summation of the
comments we received in response to the MCE proposals presented based
on internal review and analyses in the proposed rule, our responses to
those comments, and our finalized policies.
In addition, as a result of new and modified code updates approved
after the annual spring ICD-10 Coordination and Maintenance Committee
meeting, we routinely make changes to the MCE. In the past, in both the
IPPS proposed and final rules, we have only provided the list of
changes to the MCE that were brought to our attention after the prior
year's final rule. We historically have not listed the changes we have
made to the MCE as a result of the new and modified codes approved
after the annual spring ICD-10 Coordination and Maintenance Committee
meeting. These changes are approved too late in the rulemaking schedule
for inclusion in the proposed rule. Furthermore, although our MCE
policies have been described in our proposed and final rules, we have
not provided the detail of each new or modified diagnosis and procedure
code edit in the final rule. However, we make available the finalized
Definitions of Medicare Code Edits (MCE) file. Therefore, we are making
available the FY 2024 ICD-10 MCE Version 41 Manual file, along with the
link to the mainframe and computer software for the MCE Version 41 (and
ICD-10 MS-DRGs), on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/MS-DRG-Classifications-and-Software.
We also note that, as discussed in the CY 2024 Outpatient
Prospective Payment System and Ambulatory Surgical Center (OPPS/ASC)
proposed rule (CY 2024 OPPS/ASC proposed rule) (88 FR 49552, July 31,
2023), consistent with the process that is used for updates to the
``Integrated'' Outpatient Code Editor (I/OCE) and other Medicare claims
editing systems, we proposed to address any future revisions to the
IPPS MCE, including any additions or deletions of claims edits, as well
as the addition or deletion of ICD-10 diagnosis and procedure codes to
the applicable MCE edit code lists, outside of the annual IPPS
rulemakings. As discussed in the CY 2024 OPPS/ASC proposed rule, we
proposed to remove discussion of the IPPS MCE from the annual IPPS
rulemakings, beginning with the FY 2025 rulemaking, and to generally
address future changes or updates to the MCE through instruction to the
Medicare administrative contractors (MACs). We encourage readers to
review the discussion in the CY 2024 OPPS/ASC proposed rule and submit
comments in response to the proposal by the applicable deadline by
following
[[Page 58765]]
the instructions provided in that proposed rule.
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.C.13. of the preamble of the proposed
rule and this final rule, Table 6A.--New Diagnosis Codes, lists the
diagnosis codes that have been approved to date which will be effective
with discharges on and after October 1, 2023. We proposed to add the
ICD-10-CM diagnosis codes shown in Table 6P.9a associated with the
proposed rule and available on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS to the edit
code list for the External causes of morbidity codes as principal
diagnosis edit.
Comment: Commenters agreed with CMS' proposal to add the diagnosis
codes listed in Table 6P.9a to the External causes of morbidity codes
as principal diagnosis edit code list.
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
finalizing our proposal to add the diagnosis codes listed in Table
6P.9a associated with the proposed rule to the External causes of
morbidity codes as principal diagnosis edit code list under the ICD-10
MCE Version 41, effective October 1, 2023.
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).
Comment: A commenter requested that we provide clarification
regarding the overlapping age ranges (0 to 17 years and 15 to 124
years) in the Pediatric and Adult categories under the Age Conflict
edit.
Response: As stated in the FY 2018 IPPS/LTCH PPS final rule (82 FR
38045), the age ranges defined within the Age Conflict edits were
established with the implementation of the IPPS. The adult age range
includes the minimum age of 15 years to account for those patients who
are declared emancipated minors.
(1) Perinatal/Newborn Diagnosis Category
Under the ICD-10 MCE, the Perinatal/Newborn diagnoses category for
the Age conflict edit considers the age range of 0 years only. For that
reason, the diagnosis codes on this Age conflict edit list would be
expected to apply to conditions or disorders which will only occur
during the perinatal or newborn period of age 0.
As discussed in section II.C.13. of the preamble of the proposed
rule and this final rule, Table 6A.--New Diagnosis Codes, lists the
diagnosis codes that have been approved to date which will be effective
with discharges on and after October 1, 2023. We proposed to add new
ICD-10-CM diagnosis codes Z05.81 (Observation and evaluation of newborn
for suspected condition related to home physiologic monitoring device
ruled out) and Z05.89 (Observation and evaluation of newborn for other
specified suspected condition ruled out) to the edit code list for the
Perinatal/Newborn diagnoses category under the Age conflict edit.
Comment: Commenters agreed with CMS' proposal to add diagnosis
codes Z05.81and Z05.89 to the edit code list for the Perinatal/Newborn
diagnoses category under the Age conflict edit.
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
finalizing our proposal to add diagnosis codes Z05.81and Z05.89 to the
edit code list for the Perinatal/Newborn diagnoses category under the
Age conflict edit for the ICD-10 MCE Version 41, effective October 1,
2023.
In addition, as discussed in section II.C.13. of the preamble of
the proposed rule and this final rule, Table 6C.--Invalid Diagnosis
Codes, lists the diagnosis codes that are no longer effective October
1, 2023. Included in this table is ICD-10-CM diagnosis code Z05.8
(Observation and evaluation of newborn for other specified suspected
condition ruled out) that is currently listed on the edit code list for
the Perinatal/Newborn diagnoses category under the Age conflict edit.
We proposed to delete this code from the Perinatal/Newborn diagnoses
edit code list.
Comment: Commenters agreed with CMS' proposal to delete diagnosis
code Z05.8 from the edit code list for the Perinatal/Newborn diagnoses
category since it is no longer valid.
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
finalizing our proposal to delete diagnosis code Z05.8 from the edit
code list for the Perinatal/Newborn diagnoses category under the Age
conflict edit for the ICD-10 MCE Version 41, effective October 1, 2023.
(2) 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.C.13. of the preamble of the 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, 2023. We proposed to add new ICD-10-CM diagnosis
codes to the edit code list for the Maternity diagnoses category under
the Age conflict edit.
BILLING CODE 4120-01-P
[[Page 58766]]
[GRAPHIC] [TIFF OMITTED] TR28AU23.120
Comment: Commenters agreed with CMS' proposal to add the diagnosis
codes listed in the previous table to the Maternity diagnoses edit code
list.
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
finalizing our proposal to add the diagnosis codes listed in the
previous table to the Maternity diagnoses edit code list under the Age
conflict edit for the ICD-10 MCE Version 41, effective October 1, 2023.
In addition, as discussed in section II.C.13. of the preamble of
the proposed rule and this final rule, Table 6C.--Invalid Diagnosis
Codes, lists the diagnosis codes that are no longer effective October
1, 2023. Included in this table is ICD-10-CM diagnosis code O90.4
(Postpartum acute kidney failure) that is currently listed on the edit
code list for the Maternity diagnoses category under the Age conflict
edit. We proposed to delete this code from the Maternity diagnoses edit
code list.
Comment: Commenters agreed with CMS' proposal to remove diagnosis
code O90.4 from the Maternity diagnoses edit code list since it is no
longer valid.
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
finalizing our proposal to remove diagnosis code O90.4 from the
Maternity diagnoses edit code list under the Age conflict edit for the
ICD-10 MCE Version 41, effective October 1, 2023.
(3) 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.C.13. of the preamble of the proposed
rule and this final rule, Table 6A.--New Diagnosis Codes, lists the
diagnosis codes that have been approved to date which will be effective
with discharges on and after October 1, 2023. We proposed 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 58767]]
[GRAPHIC] [TIFF OMITTED] TR28AU23.112
Comment: Commenters agreed with CMS' proposal to add the diagnosis
codes listed in the previous table to the Adult diagnoses edit code
list.
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
finalizing our proposal to add the diagnosis codes listed in the
previous table to the Adult diagnoses edit code list under the ICD-10
MCE Version 41, effective October 1, 2023.
c. Sex Conflict Edit
As discussed in the proposed rule, we received a request to
reconsider sex conflict edits in connection with concerns related to
claims processing for transgender individuals. The requestor raised
concerns that the current edit is not clinically accurate and is
inconsistent with equitable documentation of gender at the time of
service. The requestor expressed concerns that automated systems are
contributing to administrative burden for obstetrician-gynecologists
because the sex conflict edit requires physicians to choose the sex
assigned at birth only and that hospitals must include condition code
45 to override the edit for appropriate payment for certain
[[Page 58768]]
surgeries or procedures. The requestor described that claims are
inappropriately denied due to the edit singling out transgender
individuals, contributing to continued alienation of transgender
patients. The requestor further shared that obstetrician-gynecologists
have indicated that to provide high-quality, patient-centered care,
they need to be able to document a patient's gender identity along with
their sex.\18\ We note that the requestor raises a number of issues
that are related to multiple prospective payment systems and broader
aspects of health care, such as the electronic health record.
---------------------------------------------------------------------------
\18\ We note that the requester used the phrase ``gender
identity along with their sex''. We believe the requester was
referring to ``sex assigned at birth'' in this context.
---------------------------------------------------------------------------
We share the requestor's concern that the original design of the
sex conflict edits is descriptive of a patient's sex assigned at birth
as submitted on a claim, which may not be fully reflective of the
practice of medicine and patient-doctor interactions, as well as that
CMS policy and communications about the use of condition code 45 for
institutional claims has not been re-examined in some time. As we state
in the CMS Framework for Health Equity, 2022-2032,\19\ we strive to
identify and remedy systemic barriers to equity so that every one of
the people we serve has a fair and just opportunity to attain their
optimal health regardless of race, ethnicity, disability, sexual
orientation, gender identity, socioeconomic status, geography,
preferred language, or other factors that affect access to care and
health outcomes. CMS is committed to looking holistically at the
concerns raised by the commenter across settings of care and will
consider how to address for future rulemaking or guidance, and we thank
the commenter for continuing to share firsthand experiences.
---------------------------------------------------------------------------
\19\ https://www.cms.gov/files/document/cms-framework-health-equity-2022.pdf.
---------------------------------------------------------------------------
Comment: Commenters expressed their appreciation that CMS stated it
is committed to looking holistically at the concerns raised with
respect to the sex conflict edit and claims processing of transgender
individuals across settings of care. A commenter who expressed support
for the continued application of the sex conflict edit stated that
while the edit plays an important role in coding error detection and
condition code 45 is intended to ensure claims submission accuracy,
coding and MS-DRG assignment remain challenging as a result of the
edit.
Response: We appreciate the commenters' feedback. We also note that
following publication of the FY 2024 IPPS/LTCH PPS proposed rule, in
further consideration of the concerns expressed by the requestor and
recognizing that communication about the use of condition code 45 for
institutional claims had not been re-examined in some time, we issued
guidance via a Medicare Learning Network[supreg] (MLN Connects) article
on June 8, 2023 that is intended to provide clarification on the proper
billing and usage of condition code 45 and modifier KX. This guidance
also informed providers that effective July 1, 2023, the National
Uniform Billing Committee (NUBC) revised the terminology and definition
for Condition Code 45 to Gender Incongruence, defined as
``characterized by a marked and persistent incongruence between an
individual's experienced gender and sex at birth.'' We refer the reader
to the CMS website at: https://www.cms.gov/outreach-and-education/outreach/ffsprovpartprog/provider-partnership-email-archive/2023-06-08-mlnc for additional information regarding this guidance.
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.C.13. of the preamble of the proposed
rule and this final rule, Table 6A.--New Diagnosis Codes, lists the new
diagnosis codes that have been approved to date which will be effective
with discharges on and after October 1, 2023. Included in this table
are the following new ICD-10-CM diagnosis codes that we proposed 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] TR28AU23.113
Comment: Commenters agreed with CMS' proposal to add the diagnosis
codes listed in the previous table to the Manifestation code as
principal diagnosis edit code list.
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
finalizing our proposal to add the diagnosis codes listed in the
previous table to the Manifestation code as principal diagnosis edit
code list under the ICD-10 MCE Version 41, effective October 1, 2023.
In addition, as discussed in section II.C.13. of the preamble of
the proposed rule and this final rule, Table 6C.--Invalid Diagnosis
Codes, lists the diagnosis codes that are no longer effective October
1, 2023. Included in this table is ICD-10-CM diagnosis code H36
(Retinal disorders in diseases classified elsewhere) that is currently
listed on the edit code list for the Manifestation code as principal
diagnosis edit. We proposed to delete this code from the Manifestation
code as principal diagnosis edit code list.
Comment: Commenters agreed with CMS' proposal to remove diagnosis
code H36 from the Manifestation code as principal diagnosis edit code
list since it is no longer valid.
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
finalizing our proposal to remove diagnosis code H36 from the
Manifestation code as principal diagnosis edit code list under the ICD-
10 MCE Version 41, effective October 1, 2023.
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
[[Page 58769]]
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.C.13. of the preamble of the proposed
rule and this final rule, Table 6A.--New Diagnosis Codes, lists the new
diagnosis codes that have been approved to date which will be effective
with discharges on and after October 1, 2023. We proposed to add the
following new ICD-10-CM diagnosis codes to the Unacceptable Principal
Diagnosis edit code list.
[[Page 58770]]
[GRAPHIC] [TIFF OMITTED] TR28AU23.114
Comment: Commenters agreed with our proposal to add the diagnosis
codes listed in the previous table to the Unacceptable Principal
Diagnosis edit code list.
[[Page 58771]]
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
finalizing our proposal to add the diagnosis codes listed in the
previous table to the Unacceptable Principal Diagnosis edit code list
under the ICD-10 MCE Version 41, effective October 1, 2023.
In addition, as discussed in section II.C.13. of the preamble of
the proposed rule and this final rule, Table 6C.--Invalid Diagnosis
Codes, lists the diagnosis codes that are no longer effective October
1, 2023. Included in this table are the following ICD-10-CM diagnosis
codes that are currently listed on the Unacceptable Principal Diagnosis
edit code list. We proposed to delete these codes from the Unacceptable
Principal Diagnosis edit code list.
[GRAPHIC] [TIFF OMITTED] TR28AU23.115
Comment: Commenters agreed with CMS' proposal to remove the
diagnosis codes listed in the previous table from the Unacceptable
principal diagnosis edit code list since they are no longer valid.
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
finalizing our proposal to remove the diagnosis codes listed in the
previous table from the Unacceptable Principal Diagnosis edit code list
under the ICD-10 MCE Version 41, effective October 1, 2023.
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.C.13. of the preamble of the proposed
rule and this final rule, Table 6A.--New Diagnosis Codes, lists the new
diagnosis codes that have been approved to date which will be effective
with discharges on and after October 1, 2023. We proposed to add the
following new ICD-10-CM diagnosis codes to the Unspecified code edit
list.
[[Page 58772]]
[GRAPHIC] [TIFF OMITTED] TR28AU23.116
Comment: Commenters agreed with our proposal to add the diagnosis
codes listed in the previous table to the Unspecified code edit code
list.
Response: We thank the commenters for their support. We also note
that we erroneously included the following diagnosis codes in our
proposal that are not designated as a CC or MCC, and are therefore
excluded from being subject to the Unspecified code edit. Specifically,
Table 6A. associated with the proposed rule and this final rule lists
the severity level designation for these six new diagnosis codes as
NonCC.
[GRAPHIC] [TIFF OMITTED] TR28AU23.117
[[Page 58773]]
After consideration of the public comments we received, we are
finalizing our proposal to add the following diagnosis codes that are
designated as CC to the Unspecified code edit code list under the ICD-
10 MCE Version 41, effective October 1, 2023.
[GRAPHIC] [TIFF OMITTED] TR28AU23.118
In addition, as stated in the proposed rule, we identified four
diagnosis codes that were inadvertently omitted from the Unspecified
code edit list effective with discharges on and after April 1, 2022. We
therefore proposed to also add the following ICD-10-CM diagnosis codes
to the Unspecified code edit list effective with discharges on and
after October 1, 2023.
[GRAPHIC] [TIFF OMITTED] TR28AU23.119
Comment: Commenters agreed with our proposal to add the diagnosis
codes listed in the previous table to the Unspecified code edit code
list.
Response: We thank the commenters for their support.
After consideration of the public comments we received, we are
finalizing our proposal to add the previously listed diagnosis codes
that are designated as MCC to the Unspecified code edit code list under
the ICD-10 MCE Version 41, effective October 1, 2023.
g. Future Enhancement
As discussed previously in this section of this final rule, we have
continued to evaluate the purpose and function of the MCE with respect
to ICD-10, and encouraged public input for future discussion. As we
have also discussed in prior rulemaking, we recognize a need to further
examine the current list of edits and the definitions of those edits.
We refer the reader to our discussion in the CY 2024 Outpatient
Prospective Payment System and Ambulatory Surgical Center (OPPS/ASC)
proposed rule (88 FR 49552, July 31, 2023), where we proposed to
address any future revisions to the IPPS MCE, including any additions
or deletions of claims edits, as well as the addition or deletion of
ICD-10 diagnosis and procedure codes to the applicable MCE edit code
lists, outside of the annual IPPS rulemakings.
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 System (MEARISTM), discussed in section
II.C.1.b. of the preamble of the proposed rule and this final rule, at:
https://mearis.cms.gov/public/home by October 20, 2023.
15. Changes to Surgical Hierarchies
Some inpatient stays entail multiple surgical procedures, each one
of which, occurring by itself, could result in assignment of the case
to a different MS-DRG within the MDC to which the principal diagnosis
is assigned. Therefore, it is necessary to have a decision rule within
the GROUPER by which these cases are assigned to a single MS-DRG. The
surgical hierarchy, an ordering of surgical classes from most resource-
intensive to least resource-intensive, performs that function.
Application of this hierarchy ensures that cases involving multiple
surgical procedures are assigned to the MS-DRG associated with the most
resource-intensive surgical class.
[[Page 58774]]
A surgical class can be composed of one or more MS-DRGs. For
example, in MDC 11, the surgical class ``kidney transplant'' consists
of a single MS-DRG (MS-DRG 652) and the class ``major bladder
procedures'' consists of three MS-DRGs (MS-DRGs 653, 654, and 655).
Consequently, in many cases, the surgical hierarchy has an impact
on more than one MS-DRG. The methodology for determining the most
resource-intensive surgical class involves weighting the average
resources for each MS-DRG by frequency to determine the weighted
average resources for each surgical class. For example, assume surgical
class A includes MS-DRGs 001 and 002 and surgical class B includes MS-
DRGs 003, 004, and 005. Assume also that the average costs of MS-DRG
001 are higher than that of MS-DRG 003, but the average costs of MS-
DRGs 004 and 005 are higher than the average costs of MS-DRG 002. To
determine whether surgical class A should be higher or lower than
surgical class B in the surgical hierarchy, we would weigh the average
costs of each MS-DRG in the class by frequency (that is, by the number
of cases in the MS-DRG) to determine average resource consumption for
the surgical class. The surgical classes would then be ordered from the
class with the highest average resource utilization to that with the
lowest, with the exception of ``other O.R. procedures'' as discussed in
this final rule.
This methodology may occasionally result in assignment of a case
involving multiple procedures to the lower-weighted MS-DRG (in the
highest, most resource-intensive surgical class) of the available
alternatives. However, given that the logic underlying the surgical
hierarchy provides that the GROUPER search for the procedure in the
most resource-intensive surgical class, in cases involving multiple
procedures, this result is sometimes unavoidable.
We note that, notwithstanding the foregoing discussion, there are a
few instances when a surgical class with a lower average cost is
ordered above a surgical class with a higher average cost. For example,
the ``other O.R. procedures'' surgical class is uniformly ordered last
in the surgical hierarchy of each MDC in which it occurs, regardless of
the fact that the average costs for the MS-DRG or MS-DRGs in that
surgical class may be higher than those for other surgical classes in
the MDC. The ``other O.R. procedures'' class is a group of procedures
that are only infrequently related to the diagnoses in the MDC but are
still occasionally performed on patients with cases assigned to the MDC
with these diagnoses. Therefore, assignment to these surgical classes
should only occur if no other surgical class more closely related to
the diagnoses in the MDC is appropriate.
A second example occurs when the difference between the average
costs for two surgical classes is very small. We have found that small
differences generally do not warrant reordering of the hierarchy
because, as a result of reassigning cases on the basis of the hierarchy
change, the average costs are likely to shift such that the higher-
ordered surgical class has lower average costs than the class ordered
below it.
Based on the changes that we proposed to make for FY 2024, as
discussed in section II.C. of the preamble of the proposed rule and
this final rule, we proposed to modify the existing surgical hierarchy
for FY 2024 as follows.
We proposed to revise the surgical hierarchy for the MDC 04
(Diseases and Disorders of the Respiratory System) MS-DRGs as follows:
In the MDC 04 MS-DRGs, we proposed to sequence proposed new MS-DRG 173
(Ultrasound Accelerated and Other Thrombolysis with Principal Diagnosis
Pulmonary Embolism) above MDC 04 MS-DRGs 166, 167, and 168 (Other
Respiratory System O.R. Procedures with MCC, with CC, and without CC/
MCC, respectively) and below MS-DRGs 163, 164, and 165 (Major Chest
Procedures with MCC, with CC, and without CC/MCC, respectively).
As discussed in section II.C.2.b. of the preamble of the proposed
rule and this final rule, we proposed to revise the surgical hierarchy
for the MDC 05 (Diseases and Disorders of the Circulatory System) MS-
DRGs as follows: In the MDC 05 MS-DRGs, we proposed to sequence
proposed new MS-DRG 212 (Concomitant Aortic and Mitral Valve
Procedures) above MS-DRGs 216, 217, 218, 219, 220, and 221 (Cardiac
Valve & Other Major Cardiothoracic Procedure with and without Cardiac
Catheterization, with MCC, with CC, without CC/MCC, respectively) and
below MS-DRG 215 (Other Heart Assist System Implant). As discussed in
section II.C.4. of the preamble of the proposed rule and this final
rule, we proposed to delete 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).
Based on the changes we proposed to make for those MS-DRGs in MDC 05,
we proposed to sequence proposed new MS-DRG 275 (Cardiac Defibrillator
Implant with Cardiac Catheterization and MCC) above proposed new MS-DRG
276 (Cardiac Defibrillator Implant with MCC) and below MS-DRGs 231,
232, 233, 234, 235, and 236 (Coronary Bypass with or without PTCA, with
or without Cardiac Catheterization or Open Ablation, with and without
MCC, respectively). We proposed to sequence proposed new MS-DRG 276
(Cardiac Defibrillator Implant with MCC) above proposed new MS-DRG 277
(Cardiac Defibrillator Implant without MCC) and below proposed new MS-
DRG 275 (Cardiac Defibrillator Implant with Cardiac Catheterization and
MCC). We proposed to sequence proposed new MS-DRG 277 (Cardiac
Defibrillator Implant without MCC) above MS-DRGs 266 and 267
(Endovascular Cardiac Valve Replacement and Supplement Procedures with
MCC and without MCC, respectively) and below proposed new MS-DRG 276
(Cardiac Defibrillator Implant with MCC).
As discussed in section II.C.4. of the preamble of the proposed
rule and this final rule, we proposed to delete MDC 05 MS-DRGs 246 and
247 (Percutaneous Cardiovascular Procedures with Drug-Eluting Stent
with MCC or 4+ Arteries or Stents and without MCC, respectively). We
also proposed to delete MDC 05 MS-DRGs 248 and 249 (Percutaneous
Cardiovascular Procedures with Non-Drug-Eluting Stent with MCC or 4+
Arteries or Stents and without MCC, respectively). We proposed to
revise the titles for MS-DRGs 250 and 251 from ``Percutaneous
Cardiovascular Procedures without Coronary Artery Stent with MCC and
without MCC, respectively'' to ``Percutaneous Cardiovascular Procedures
without Intraluminal Device with MCC and without MCC, respectively.''
Based on the changes we proposed to make for those MS-DRGs in MDC 05,
we proposed to sequence proposed new MS-DRGs 323 and 324 (Coronary
Intravascular Lithotripsy with Intraluminal Device with MCC and without
MCC, respectively) above proposed new MS-DRG 325 (Coronary
Intravascular Lithotripsy without Intraluminal Device) and below MS-
DRGs 273 and 274 (Percutaneous and Other Intracardiac Procedures with
MCC and without MCC, respectively). We proposed to sequence proposed
new MS-DRG 325 (Coronary Intravascular Lithotripsy without Intraluminal
Device) above proposed new MS-DRGs 321 and 322 (Percutaneous
Cardiovascular Procedures with Intraluminal Device, with MCC or 4+
Arteries/Intraluminal Devices and
[[Page 58775]]
without MCC, respectively) and below proposed new MS-DRGs 323 and 324
(Coronary Intravascular Lithotripsy with Intraluminal Device with MCC
and without MCC, respectively). We proposed to sequence proposed new
MS-DRGs 321 and 322 (Percutaneous Cardiovascular Procedures with
Intraluminal Device with MCC or 4+ Arteries/Intraluminal Devices and
without MCC, respectively), above MS-DRGs 250 and 251 (Percutaneous
Cardiovascular Procedures without Intraluminal Device with MCC and
without MCC, respectively) and below proposed new MS-DRG 325 (Coronary
Intravascular Lithotripsy without Intraluminal Device).
In addition, based on the changes that we proposed to make as
discussed in section II.C.8.a. of the preamble of the proposed rule and
this final rule, we also proposed to sequence proposed new MDC 05 MS-
DRGs 278 and 279 (Ultrasound Accelerated and Other Thrombolysis of
Peripheral Vascular Structures with MCC and without MCC, respectively)
above MDC 05 MS-DRGs 252, 253, and 254 (Other Vascular Procedures with
MCC, with CC, and without CC/MCC, respectively) and below MS-DRGs 250
and 251 (Percutaneous Cardiovascular Procedures without Intraluminal
Device with and without MCC, respectively).
As discussed in section II.C.4. of the preamble of the proposed
rule and this final rule, we proposed to delete MS-DRGs 338, 339, and
340 (Appendectomy with Complicated Principal Diagnosis with MCC, with
CC, and without CC/MCC, respectively) and MS-DRGs 341, 342, and 343
(Appendectomy without Complicated Principal Diagnosis with MCC, with
CC, and without CC/MCC, respectively). Based on the changes we proposed
to make for those MS-DRGs in MDC 06 (Diseases and Disorders of the
Digestive System), we proposed to revise the surgical hierarchy for MDC
06 as follows: In MDC 06, we proposed to sequence proposed new MS-DRGs
397, 398, and 399 (Appendix Procedures with MCC, with CC, and without
CC/MCC, respectively) above MS-DRGs 344, 345, and 346 (Minor Small and
Large Bowel Procedures with MCC, with CC, and without CC/MCC,
respectively) and below MS-DRGs 335, 336, and 337 (Peritoneal
Adhesiolysis with MCC, with CC, and without CC/MCC, respectively).
Lastly, as discussed in section II.C.2.b. of the preamble of the
proposed rule and this final rule, we proposed to revise the title for
MDC 16 (Diseases and Disorders of Blood, Blood Forming Organs and
Immunologic Disorders) MS-DRGs 799, 800, and 801 from ``Splenectomy
with MCC, with CC, and without CC/MCC, respectively'' to ``Splenic
Procedures with MCC, with CC, and without CC/MCC, respectively.''
Our proposal for Appendix D MS-DRG Surgical Hierarchy by MDC and
MS-DRG of the ICD-10 MS-DRG Definitions Manual Version 41 is
illustrated in the following tables.
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[[Page 58776]]
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[GRAPHIC] [TIFF OMITTED] TR28AU23.125
Comment: Commenters supported the proposed additions, deletions,
and sequencing for the surgical hierarchy under MDCs 04, 05, 06, and
16. In response to the changes we proposed to make for MS-DRGs in MDC
05, a commenter stated this hierarchy is the most logical order given
the clinical complexity associated with cases
[[Page 58777]]
requiring coronary intravascular lithotripsy followed by the MS-DRGs
for percutaneous cardiovascular procedures with or without intraluminal
device.
We received a few public comments recommending that CMS consider an
alternate option for the surgical hierarchy in MDC 05. Specifically,
these commenters requested CMS consider switching--
MS-DRGs 270, 271, and 272 and MS-DRG 319 and 320 in the
surgical hierarchy so that MS-DRGs 270, 271, and 272 are sequenced
before MS-DRGs 319 and 320;
MS-DRG 245 with MS-DRGs 266 and 267 so that MS-DRG 245 is
sequenced before MS-DRGs 266 and 267; and
MS-DRGs 323, 324, and 325 to be sequenced after MS-DRGs
319 and 320 after these MS-DRGs are sequenced after MS-DRGs 270, 271,
and 272 as shown in the following table.
[GRAPHIC] [TIFF OMITTED] TR28AU23.126
A commenter displayed the proposed relative weights of MS-DRGs 245,
MS-DRGs 266-267, MS-DRGs 270-272, MS-DRGs 319-320, proposed new MS-DRGs
323-324 and proposed new MS-DRG 325 from Table 5.--List of Medicare
Severity Diagnosis-Related Groups (MS-DRGs), Relative Weighting
Factors, and Geometric and Arithmetic Mean Length of Stay--FY 2024,
associated with the proposed rule, in listing this alternative option.
However, these commenters did not provide any rationale for their
alternate recommendations.
Response: We appreciate the commenters' support of our proposal. We
also thank the commenters for their feedback. In response to the
commenters that provided an alternate recommendation for the surgical
hierarchy for MDC 05, we reviewed the suggestions from the commenters.
In the absence of additional information to support the suggested
modifications to our proposal, we continue to believe our proposed
revisions to the surgical hierarchy account for the resources expended
to address these complex procedures and do not believe any
modifications are warranted at this time. We believe sequencing as
discussed in the proposed rule more appropriately reflects resource
utilization when the assigned cardiac procedures are performed and will
result in the most suitable MS-DRG assignments. We will continue to
review the surgical hierarchy, consistent with our annual rulemaking,
to determine if other modifications are warranted in the future.
Therefore, after consideration of the public comments we received,
and based on the changes that we are finalizing for FY 2024, as
discussed in section II.C. of the preamble of the proposed rule and
this final rule, we are finalizing our proposals to modify the existing
surgical hierarchy, effective with the ICD-10 MS-DRGs Version 41,
without modification.
For issues pertaining to the surgical hierarchy, as with other MS-
DRG related requests, we encourage interested parties to submit
comments no later than October 20, 2023 via the new electronic intake
system, Medicare Electronic Application Request Information
SystemTM (MEARISTM) at https://mearis.cms.gov/public/home so that they can be considered for possible inclusion in
the annual proposed rule. We will consider these public comments for
possible proposals in future rulemaking as part of our annual review
process.
16. Maintenance of the ICD-10-CM and ICD-10-PCS Coding Systems
In September 1985, the ICD-9-CM Coordination and Maintenance
Committee was formed. This is a Federal interdepartmental committee,
co-chaired by the Centers for Disease Control and Prevention's (CDC)
National Center for Health Statistics (NCHS) and CMS, charged with
maintaining and updating the ICD-9-CM system. The final update to ICD-
9-CM codes was made on October 1, 2013. Thereafter, the name of the
Committee was changed to the ICD-10 Coordination and Maintenance
Committee, effective with the March 19-20, 2014, meeting. The ICD-10
Coordination and Maintenance Committee addresses updates to the ICD-10-
CM and ICD-10-PCS coding systems. The Committee is jointly responsible
for approving coding changes, and developing errata, addenda, and other
modifications to the coding systems to reflect newly developed
procedures and technologies and newly identified diseases. The
Committee is also responsible for promoting the use of Federal and non-
Federal educational programs and other communication techniques with a
view toward standardizing coding applications and upgrading the quality
of the classification system.
The official list of ICD-9-CM diagnosis and procedure codes by
fiscal year can be found on the CMS website at: https://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 or April 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 and other interested parties.
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
[[Page 58778]]
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. 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 2024 at a public meeting held on September 13-14,
2022, and finalized the coding changes after consideration of comments
received at the meetings and in writing by November 14, 2022.
The Committee held its 2023 meeting on March 7-8, 2023. The
deadline for submitting comments on these code proposals was April 7,
2023. 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 2023
would be included in the October 1, 2023, update to the ICD-10-CM
diagnosis and ICD-10-PCS procedure code sets.
As discussed in earlier sections of the preamble of this final
rule, there are new, revised, and deleted ICD-10-CM diagnosis codes and
ICD-10-PCS procedure codes that are captured in Table 6A.--New
Diagnosis Codes, Table 6B.--New Procedure Codes, Table 6C.--Invalid
Diagnosis Codes, Table 6D.--Invalid Procedure Codes, Table 6E.--Revised
Diagnosis Code Titles and Table 6F.-Revised Procedure Code Titles for
this final rule, which are available 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 in these tables for the IPPS proposed
and final rules, they are not subject to comment in the proposed or
final rule. Because of the length of these tables, they are not
published in the Addendum to the proposed or final rule. Rather, they
are available via the CMS website as discussed in section VI. of the
Addendum to the proposed rule and this final rule.
Recordings for the virtual meeting discussions of the procedure
codes at the Committee's September 13-14, 2022, meeting and the March
7-8, 2023, 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 13-14, 2022, meeting and March 7-8, 2023, meeting can be
found at: http://www.cdc.gov/nchs/icd/icd10cm_maintenance.html. These
websites also provide detailed information about the Committee,
including information on requesting a new code, participating in a
Committee meeting, timeline requirements and meeting dates.
We encourage commenters to submit questions and comments on coding
issues involving diagnosis codes via Email to: cdc.gov">nchsicd10cm@cdc.gov.
Questions and comments concerning the procedure codes should be
submitted via Email to: [email protected].
We stated in the proposed rule that in an effort to better enable
the collection of health-related social needs (HRSNs), defined as
individual-level, adverse social conditions that negatively impact a
person's health or healthcare, are significant risk factors associated
with worse health outcomes as well as increased healthcare utilization,
the Centers for Disease Control and Prevention's (CDC) National Center
for Health Statistics (NCHS) implemented 42 new diagnosis codes into
the ICD-10-CM classification, for reporting effective April 1, 2023.
The diagnosis codes are as follows:
[[Page 58779]]
[GRAPHIC] [TIFF OMITTED] TR28AU23.127
We refer the reader to the CDC web page at https://www.cdc.gov/nchs/icd/Comprehensive-Listing-of-ICD-10-CM-Files.htm for additional
details regarding the implementation of these new diagnosis codes.
As discussed in the proposed rule, we provided the MS-DRG
assignments for the 42 diagnosis codes effective with
[[Page 58780]]
discharges on and after April 1, 2023, consistent with our established
process for assigning new diagnosis codes. Specifically, we review the
predecessor diagnosis code and MS-DRG assignment most closely
associated with the new diagnosis code and consider other factors that
may be relevant to the MS-DRG assignment, including the severity of
illness, treatment difficulty, and the resources utilized for the
specific condition/diagnosis. We note that this process does not
automatically result in the new diagnosis code being assigned to the
same MS-DRG as the predecessor code. The assignments for the previously
listed diagnosis codes are reflected in Table 6A.--New Diagnosis Codes
associated with the proposed rule and available 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 in association with the proposed rule,
we solicited public comments on the most appropriate MDC, MS-DRG, and
severity level assignments for these codes for FY 2024, as well as any
other options for the GROUPER logic.
We did not receive any comments opposing the MDC, MS-DRG, and
severity level assignments for the listed codes and are therefore,
finalizing, without modification, the assignments as reflected in Table
6A.--New Diagnosis Codes in association with this final rule.
In addition, we noted in the proposed rule that CMS implemented 34
new procedure codes including laser interstitial thermal therapy (LITT)
of various vertebral body sites, bone marrow transfusions, and the
introduction or infusion of therapeutics, into the ICD-10-PCS
classification effective with discharges on and after April 1, 2023.
The procedure codes are as follows:
[[Page 58781]]
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[[Page 58782]]
[GRAPHIC] [TIFF OMITTED] TR28AU23.129
The 34 procedure codes are also reflected in Table 6B--New
Procedure Codes in association with the proposed rule and available on
the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-
Service-Payment/
[[Page 58783]]
AcuteInpatientPPS. As with the other new procedure codes and MS-DRG
assignments included in Table 6B in association with the proposed rule,
we solicited public comments on the most appropriate MDC, MS-DRG, and
operating room status assignments for these codes for FY 2024, as well
as any other options for the GROUPER logic.
We did not receive any comments opposing the MDC, MS-DRG, and
operating room status assignments for the listed codes and are
therefore, finalizing, without modification, the assignments as
reflected in Table 6B.--New Procedure Codes in association with this
final rule.
In the proposed rule, we also noted that Change Request (CR) 13034,
Transmittal 11746, titled ``April 2023 Update to the Medicare
Severity--Diagnosis Related Group (MS-DRG) Grouper and Medicare Code
Editor (MCE) Version 40.1 for the International Classification of
Diseases, Tenth Revision (ICD-10) Diagnosis Codes for Collection of
Health-Related Social Needs (HRSNs) and New ICD-10 Procedure Coding
System (PCS) Codes'', was issued on December 15, 2022 (available on the
CMS website at: https://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/Transmittals/r11746cp), regarding the release of an
updated version of the ICD-10 MS-DRG GROUPER and Medicare Code Editor
software, Version 40.1, effective with discharges on and after April 1,
2023, reflecting the new diagnosis and procedure codes. The updated
software, along with the updated ICD-10 MS-DRG V40.1 Definitions Manual
and the Definitions of Medicare Code Edits V40.1 manual is available
at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/MS-DRG-Classifications-and-Software.
In the September 7, 2001 final rule implementing the IPPS new
technology add-on payments (66 FR 46906), we indicated we would attempt
to include proposals for procedure codes that would describe new
technology discussed and approved at the Spring meeting as part of the
code revisions effective the following October.
Section 503(a) of Public Law 108-173 included a requirement for
updating diagnosis and procedure codes twice a year instead of a single
update on October 1 of each year. This requirement was included as part
of the amendments to the Act relating to recognition of new technology
under the IPPS. Section 503(a) of Public Law 108-173 amended section
1886(d)(5)(K) of the Act by adding a clause (vii) which states that the
Secretary shall provide for the addition of new diagnosis and procedure
codes on April 1 of each year, but the addition of such codes shall not
require the Secretary to adjust the payment (or diagnosis-related group
classification) until the fiscal year that begins after such date. This
requirement improves the recognition of new technologies under the IPPS
by providing information on these new technologies at an earlier date.
Data will be available 6 months earlier than would be possible with
updates occurring only once a year on October 1.
In the FY 2005 IPPS final rule, we implemented section
1886(d)(5)(K)(vii) of the Act, as added by section 503(a) of Public Law
108-173, by developing a mechanism for approving, in time for the April
update, diagnosis and procedure code revisions needed to describe new
technologies and medical services for purposes of the new technology
add-on payment process. We also established the following process for
making these determinations. Topics considered during the Fall ICD-10
(previously ICD-9-CM) Coordination and Maintenance Committee meeting
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 final rule, there were code proposals presented for an
April 1, 2023, implementation at the September 13-14, 2022, Committee
meetings. Following the receipt of public comments, the code proposals
were approved and finalized, therefore, there were new codes
implemented April 1, 2023.
As discussed in the FY 2024 IPPS/LTCH PPS proposed rule, consistent
with the process we outlined for the April 1 implementation date, we
announced the new codes in November 2022 and provided the updated code
files and ICD-10-CM Official Guidelines for Coding and Reporting in
January 2023. On January 30, 2023, the Federal Register (88 FR 5882)
notice for the March 7-8, 2023 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, 2023, we made available the updated V40.1
ICD-10 MS-DRG Grouper software and related materials on the 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
[[Page 58784]]
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/Comprehensive-Listing-of-ICD-10-CM-Files.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.
In the proposed rule, we noted that for FY 2023, there are
currently 73,674 diagnosis codes and 78,530 procedure codes. We also
noted that as displayed in Table 6A.--New Diagnosis Codes and in Table
6B.--New Procedure Codes associated with the proposed rule (and
available on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS), there are 395 new diagnosis
codes and 10 new procedure codes that had been finalized for FY 2024 at
the time of the development of the proposed rule. As discussed in
section II.C.13 of the preamble of this final rule, we are making Table
6A.--New Diagnosis Codes, Table 6B.--New Procedure Codes, Table 6C.--
Invalid Diagnosis Codes, Table 6D.--Invalid Procedure Codes, Table
6E.--Revised Diagnosis Code Titles and Table 6F.--Revised Procedure
Code Titles available on the CMS website at: https://www.cms.gov/
medicare/medicare-fee-for-service-payment/acuteinpatientpps in
association with this final rule. As shown in Table 6B.--New Procedure
Codes, there were procedure codes discussed at the March 7-8, 2023 ICD-
10 Coordination and Maintenance Committee meeting that were not
finalized in time to include in the proposed rule and are identified
with an asterisk. We refer the reader to Table 6B.--New Procedure Codes
associated with this final rule and available on the CMS website at:
https://www.cms.gov/medicare/medicare-fee-for-service-payment/
acuteinpatientpps for the detailed list of these additional 68 new
procedure codes. The addition of these 68 new procedure codes to the 10
procedure codes that had been finalized at the time of the development
of the proposed rule results in a total of 78 (10 + 68 = 78) new
procedure codes for FY 2024.
We also note, as reflected in Table 6C.--Invalid Diagnosis Codes
and in Table 6D.--Invalid Procedure Codes, there are a total of 25
diagnosis codes and 5 procedure codes that will become invalid
effective October 1, 2023. Based on these code updates, effective
October 1, 2023, there are a total of 74,044 ICD-10-CM diagnosis codes
and 78,603 ICD-10-PCS procedure codes for FY 2024 as shown in the
following table.
[GRAPHIC] [TIFF OMITTED] TR28AU23.130
As stated previously, the public is provided the opportunity to
comment on any requests for new diagnosis or procedure codes discussed
at the ICD-10 Coordination and Maintenance Committee meeting. The code
titles are adopted as part of the ICD-10 Coordination and Maintenance
Committee process. Thus, although we publish the code titles in the
IPPS proposed and final rules, they are not subject to comment in the
proposed or final rules.
17. Replaced Devices Offered Without Cost or With a Credit
a. Background
In the FY 2008 IPPS final rule with comment period (72 FR 47246
through 47251), we discussed the topic of Medicare payment for devices
that are replaced without cost or where credit for a replaced device is
furnished to the hospital. We implemented a policy to reduce a
hospital's IPPS payment for certain MS-DRGs where the implantation of a
device that subsequently failed or was recalled determined the base MS-
DRG assignment. At that time, we specified that we will reduce a
hospital's IPPS payment for those MS-DRGs where the hospital received a
credit for a replaced device equal to 50 percent or more of the cost of
the device.
In the FY 2012 IPPS/LTCH PPS final rule (76 FR 51556 through
51557), we clarified this policy to state that the policy applies if
the hospital received a credit equal to 50 percent or more of the cost
of the replacement device and issued instructions to hospitals
accordingly.
b. Changes for FY 2024
As discussed in section II.C.5. of the preamble of the proposed
rule and this final rule, for FY 2024, we proposed to delete MS-DRGs
222, 223, 224, 225, 226, and 227, add new MS-DRG 275 (Cardiac
Defibrillator Implant with Cardiac Catheterization and MCC) and new MS-
DRGs 276 and 277 (Cardiac Defibrillator Implant with MCC, and without
MCC, respectively), and to reassign a subset of the procedures
currently assigned to MS-DRGs 222 through 227 to proposed new MS-DRGs
275, 276, and 277.
As stated in the FY 2016 IPPS/LTCH PPS proposed rule (80 FR 24409),
we generally map new MS-DRGs onto the list when they are formed from
procedures previously assigned to MS-DRGs that are already on the list.
Currently, MS-DRGs 222 through 227 are on the list of MS-DRGs subject
to the policy for payment under the IPPS for replaced devices offered
without cost or with a credit as shown in the following table. A subset
of the procedures currently assigned to MS-DRGs 222 through 227 was
proposed for assignment to proposed new MS-DRGs 275, 276, and 277.
Therefore, we proposed that if the applicable proposed MS-DRG changes
are finalized, we also would add proposed new MS-DRGs 275, 276, and 277
to the list of MS-DRGs subject to the policy for payment under the IPPS
for replaced devices offered without cost or with a credit and make
conforming changes to delete MS-DRGs 222 through 227 from the list of
MS-DRGs subject to the policy. We also proposed to continue to include
the existing MS-DRGs currently subject to the policy.
As discussed in section II.C.5. of the preamble of this final rule,
we are finalizing our proposal to delete MS-DRGs 222, 223, 224, 225,
226, and 227. Additionally, we are finalizing our proposal to create
new MS-DRG 275 (Cardiac Defibrillator Implant with Cardiac
Catheterization and MCC) and new MS-DRGs 276 and 277 (Cardiac
Defibrillator Implant with MCC, and without MCC, respectively), and to
reassign a subset of the procedures currently assigned to MS-DRGs 222
[[Page 58785]]
through 227 to proposed new MS-DRGs 275, 276, and 277. We did not
receive any public comments opposing our proposal to delete MS-DRGs
222, 223, 224, 225, 226, and 227 from the list of MS-DRGs that will be
subject to the replaced devices offered without cost or with a credit
policy effective October 1, 2023. Additionally, we did not receive any
public comments opposing our proposal to add MS-DRGs 275, 276, and 277
to the list of MS-DRGs that will be subject to the policy for replaced
devices offered without cost or with credit or to continue to include
the existing MS-DRGs currently subject to the policy. Therefore, we are
finalizing the list of MS-DRGs in the following table that will be
subject to the replaced devices offered without cost or with a credit
policy effective October 1, 2023.
[GRAPHIC] [TIFF OMITTED] TR28AU23.131
[[Page 58786]]
[GRAPHIC] [TIFF OMITTED] TR28AU23.132
BILLING CODE 4120-01-C
The final list of MS-DRGs subject to the IPPS policy for replaced
devices offered without cost or with a credit will be issued to
providers in the form of a Change Request (CR).
18. Out of Scope Public Comments Received
We received public comments on MS-DRG related issues that were
outside the scope of the proposals included in the FY 2024 IPPS/LTCH
PPS proposed rule.
Because we consider these public comments to be outside the scope
of the proposed rule, we are not addressing them in this final rule. As
stated in
[[Page 58787]]
section II.D.1.b. of the preamble of this final rule, we encourage
individuals with comments about MS-DRG classifications to submit these
comments no later than October 20, 2023, via the new electronic intake
system, Medicare Electronic Application Request Information
SystemTM (MEARISTM) at: https://mearis.cms.gov/public/home, so that they can be considered for possible inclusion in
the annual proposed rule. We will consider these public comments for
possible proposals in future rulemaking as part of our annual review
process.
D. Recalibration of the FY 2024 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 2024, we proposed to use two data sources:
claims data and cost report data. The claims data source is the MedPAR
file, which includes fully coded diagnostic and procedure data for all
Medicare inpatient hospital bills. The FY 2022 MedPAR data used in this
final rule include discharges occurring on October 1, 2021, through
September 30, 2022, based on bills received by CMS through March 31,
2023, 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 2022 MedPAR file used in calculating the relative weights
includes data for approximately 6,991,373 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 2022 update of
the FY 2022 MedPAR file complies with version 5010 of the X12 HIPAA
Transaction and Code Set Standards, and includes a variable called
``claim type.'' Claim type ``60'' indicates that the claim was an
inpatient claim paid as fee-for-service. Claim types ``61,'' ``62,''
``63,'' and ``64'' relate to encounter claims, Medicare Advantage IME
claims, and HMO no-pay claims. Therefore, the calculation of the
relative weights for FY 2024 also excludes claims with claim type
values not equal to ``60.'' The data exclude CAHs, including hospitals
that subsequently became CAHs after the period from which the data were
taken. We note that the FY 2024 relative weights are based on the ICD-
10-CM diagnosis codes and ICD-10-PCS procedure codes from the FY 2022
MedPAR claims data, grouped through the ICD-10 version of the FY 2024
GROUPER (Version 41).
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 final rule, we used the March 2023
update of the FY 2021 HCRIS for calculating the FY 2024 cost-based
relative weights. Consistent with our historical practice, for this FY
2024 final rule, we are providing the version of the HCRIS from which
we calculated these 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 2024 IPPS Proposed
Rule Home Page'' or ``Acute Inpatient Files for Download.''
2. Methodology for Calculation of the Relative Weights
a. General
We calculated the FY 2024 relative weights based on 19 CCRs. The
methodology we proposed to use to calculate the FY 2024 MS-DRG cost-
based relative weights based on claims data in the FY 2022 MedPAR file
and data from the FY 2021 Medicare cost reports is as follows:
To the extent possible, all the claims were regrouped
using the FY 2024 MS-DRG classifications discussed in sections II.B.
and II.C. of the preamble of this final rule.
The transplant cases that were used to establish the
relative weights for heart and heart-lung, liver and/or intestinal, and
lung transplants (MS-DRGs 001, 002, 005, 006, and 007, respectively)
were limited to those Medicare-approved transplant centers that have
cases in the FY 2022 MedPAR file. (Medicare coverage for heart, heart-
lung, liver and/or intestinal, and lung transplants is limited to those
facilities that have received approval from CMS as transplant centers.)
Organ acquisition costs for kidney, heart, heart-lung,
liver, lung, pancreas, and intestinal (or multivisceral organs)
transplants continue to be paid on a reasonable cost basis.
Because these acquisition costs are paid separately from the
prospective payment rate, it is necessary to subtract the acquisition
charges from the total charges on each transplant bill that showed
acquisition charges before computing the average cost for each MS-DRG
and before eliminating statistical outliers.
Section 108 of the Further Consolidated Appropriations Act, 2020
provides that, for cost reporting periods beginning on or after October
1, 2020, costs related to hematopoietic stem cell acquisition for the
purpose of an allogeneic hematopoietic stem cell transplant shall be
paid on a reasonable cost basis. We refer the reader to the FY 2021
IPPS/LTCH PPS final rule for further discussion of the reasonable cost
basis payment for cost reporting periods beginning on or after October
1, 2020 (85 FR 58835 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, computed tomography (CT) scan charges, and
magnetic resonance imaging (MRI) charges were also deleted.
At least 92.6 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
[[Page 58788]]
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 2023, and consistent with how we have treated hospitals
that participated in the BPCI Initiative, for FY 2024, we continue to
believe it is appropriate to include all applicable data from the
subsection (d) hospitals participating in the BPCI Advanced model in
our IPPS payment modeling and ratesetting calculations because, as
noted previously, these hospitals are still receiving IPPS payments
under section 1886(d) of the Act. Consistent with the FY 2023 IPPS/LTCH
PPS final rule, we also proposed to include all applicable data from
subsection (d) hospitals participating in the Comprehensive Care for
Joint Replacement (CJR) Model in our IPPS payment modeling and
ratesetting calculations.
The charges for each of the 19 cost groups for each claim were
standardized to remove the effects of differences in area wage levels,
IME, and DSH payments, and for hospitals located in Alaska and Hawaii,
the applicable cost-of-living adjustment. Because hospital charges
include charges for both operating and capital costs, we standardized
total charges to remove the effects of differences in geographic
adjustment factors, cost-of-living adjustments, and DSH payments under
the capital IPPS as well. Charges were then summed by MS-DRG for each
of the 19 cost groups so that each MS-DRG had 19 standardized charge
totals. Statistical outliers were then removed. These charges were then
adjusted to cost by applying the proposed national average CCRs
developed from the FY 2021 cost report data.
The 19 cost centers that we used in the relative weight calculation
are shown in a supplemental data file, Cost Center HCRIS Lines
Supplemental Data File, posted via the internet on the CMS website for
this final rule and available at 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 19 national cost center CCRs. We stated in
the proposed rule that if we receive comments about the groupings in
this supplemental data file, we may consider these comments as we
finalize our policy. However, we did not receive any comments on the
groupings in this table, and therefore, we are finalizing the groupings
as proposed.
Consistent with historical practice, we account for rare situations
of non-monotonicity in a base MS-DRG and its severity levels, where the
mean cost in the higher severity level is less than the
[[Page 58789]]
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 the FY 2024
proposed rule, this calculation was applied to address non-monotonicity
for cases that grouped to MS-DRG 016 and MS-DRG 017. In the
supplemental file titled AOR/BOR File associated with the proposed
rule, we included statistics for the affected MS-DRGs both separately
and with cases combined.
We invited public comments on our proposals related to
recalibration of the proposed FY 2024 relative weights and the changes
in relative weights from FY 2023.
Comment: A commenter stated that CMS erred in calculating the
relative weights for MS-DRG 016 and MS-DRG 017. The commenter stated
that if the relative weight is going to be kept the same, the MS-DRGs
should be combined, as they are for allogenic bone marrow transplants.
Response: As discussed in the proposed rule, we intentionally
combined the cases across the two MS-DRGs because the mean cost in the
higher severity level is less than the mean cost in the lower severity
level, consistent with our historical practice for accounting for
situations of non-monotonicity in a base MS-DRG and its severity
levels. We may consider the suggestion to combine these two MS-DRGs for
future rulemaking.
Accordingly, for this FY 2024 final rule, this calculation was
applied to address non-monotonicity for cases that grouped to MS-DRG
016 and MS-DRG 017. In the supplemental file titled AOR/BOR File
associated with this final rule, we include statistics for the affected
MS-DRGs both separately and with cases combined.
Comment: A commenter requested that CMS implement an edit for
claims that group to MS-DRG 014, that would reject claims when an
inpatient type of bill 11X claim is received without charges mapped to
revenue code 0815. The commenter stated that this edit would help
ensure accurate claims reporting, ensure the accuracy of CMS' budget
neutrality calculations, and help ensure that CMS does not
inappropriately generate outlier payment on MS-DRG 014 claims (given
that CMS removes costs associated with revenue code 0815 from its
outlier calculation).
Response: We expect providers to appropriately report charges
associated with revenue code 0815 and do not believe that a novel
claims processing edit such as this is necessary at this time. We may
consider provider education materials regarding reporting Allogeneic
Stem Cell Acquisition/Donor Services in the future.
After consideration of the comments received, we are finalizing our
proposals related to the recalibration of the FY 2024 relative weights.
We summarize and respond to comments relating to the methodology for
calculating the relative weight for MS-DRG 018 in the next section of
this final rule.
b. Relative Weight Calculation for MS-DRG 018
In the FY 2021 IPPS/LTCH PPS final rule (85 FR 58451 through
58453), we created MS-DRG 018 for cases that include procedures
describing Chimeric Antigen Receptor (CAR) T-cell therapies. We also
finalized our proposal to modify 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 therapy outside of a clinical trial, while still accounting
for the clinical trial cases in the overall average cost for all MS-
DRGs (85 FR 58599 through 58600). Specifically, we stated that clinical
trial claims that group to new MS-DRG 018 will not be included when
calculating the average cost for MS-DRG 018 that is used to calculate
the relative weight for this MS-DRG, so that the relative weight
reflects the costs of the CAR T-cell therapy drug. We stated that we
identified clinical trial claims as claims that contain ICD-10-CM
diagnosis code Z00.6 or contain standardized drug charges of less than
$373,000, which was the average sales price of KYMRIAH and YESCARTA,
the two CAR T-cell biological products licensed to treat relapsed/
refractory large B-cell lymphoma as of the time of the development of
the FY 2021 final rule. In addition, we stated that: (a) when the CAR
T-cell therapy product is purchased in the usual manner, but the case
involves a clinical trial of a different product, the claim will be
included when calculating the average cost for new MS-DRG 018 to the
extent such cases can be identified in the historical data, and (b)
when there is expanded access use of immunotherapy, these cases will
not be included when calculating the average cost for new MS-DRG 018 to
the extent such cases can be identified in the historical data.
We also finalized our proposal to calculate 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 and for
purposes of budget neutrality and outlier simulations. We calculate
this adjustor by dividing the average cost for cases that we identify
as clinical trial cases by the average cost for cases that we identify
as non-clinical trial cases, 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 cases not
determined to be clinical trial cases to the extent such cases can be
identified in the historical data, 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 to the extent such cases can be identified in the historical
data. We stated that to the best of our knowledge, there were no claims
in the historical data used in the calculation of this 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.
In the FY 2021 IPPS/LTCH PPS final rule (85 FR 58842), we also
finalized an adjustment to the payment amount for applicable clinical
trial and expanded access use immunotherapy cases that group to MS-DRG
018, and indicated that we would provide instructions for identifying
these claims in separate guidance. Following the issuance of the FY
2021 IPPS/LTCH PPS final rule, we issued guidance \20\ stating that
providers may enter a Billing Note NTE02 ``Expand Acc Use'' on the
electronic claim 837I or a remark ``Expand Acc Use'' on a paper claim
to notify the Medicare administrative contractor (MAC) of expanded
access use of CAR T-cell therapy. In this case, the MAC would add
payer-only condition code ``ZB'' so that Pricer will apply the payment
adjustment in calculating payment for the case. In cases when the CAR
T-cell therapy product is
[[Page 58790]]
purchased in the usual manner, but the case involves a clinical trial
of a different product, the provider may enter a Billing Note NTE02
``Diff Prod Clin Trial'' on the electronic claim 837I or a remark
``Diff Prod Clin Trial'' on a paper claim. In this case, the MAC would
add payer-only condition code ``ZC'' so that the Pricer will not apply
the payment adjustment in calculating payment for the case.
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\20\ https://www.cms.gov/files/document/r10571cp.pdf.
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In the FY 2022 IPPS/LTCH PPS final rule, 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
44806). We also finalized our proposal to continue to use the proxy of
standardized drug charges of less than $373,000 (86 FR 44965) to
identify clinical trial claims.
In the FY 2023 IPPS/LTCH PPS final rule (87 FR 48894), we once
again finalized our policy to use a proxy of standardized drug charges
of less than $373,000. We also stated that we will continue to monitor
the data with respect to the clinical trial threshold. As in prior
years, we stated that we continue to believe to the best of our
knowledge there were 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 also stated, in response to comments, that we agreed that
the availability of condition code 90 obviates the need for the use of
the remarks field to identify expanded access claims that group to MS-
DRG 018 for the purposes of applying the clinical trial adjustment. We
stated that effective October 1, 2022, providers should submit
condition code 90 to identify expanded access claims that group to MS-
DRG 018, rather than the remarks field, and that the MACs will no
longer flag cases as expanded access claims based on information
submitted in the remarks field for claims submitted on or after October
1, 2022 (87 FR 48896). We also noted that we were 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, which
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 (87 FR 49080).
Following the issuance of the FY 2023 IPPS/LTCH PPS final rule, we
issued guidance \21\ stating where there is expanded access use of
immunotherapy, the provider may submit condition code ``90'' on the
claim so that Pricer will apply the payment adjustment in calculating
payment for the case. We stated that MACs would no longer append
Condition Code `ZB' to inpatient claims reporting Billing Note NTE02
``Expand Acc Use'' on the electronic claim 837I or a remark ``Expand
Acc Use'' on a paper claim, effective for claims for discharges that
occur on or after October 1, 2022.
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\21\ https://www.cms.gov/files/document/r11727cp.pdf.
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We stated in the proposed rule that while we have applied a proxy
of standardized drug charges of less than $373,000 to identify clinical
trial claims and expanded access use cases under our special
methodology for the calculation of the relative weight for MS-DRG 018
to date, we believe that because of changes that have occurred since
CMS initially adopted this policy, it may no longer be necessary to
apply this proxy to identify these claims. In the FY 2021 IPPS/LTCH PPS
final rule, we stated that because ICD-10-CM diagnosis code Z00.6 is
required to be included with clinical trial cases, we expect hospitals
to include this code for such cases grouping to MS-DRG 018 for FY 2021
and all subsequent years, and we believe that providers have continued
to gain experience with the use of ICD-10-CM diagnosis code Z00.6 to
report cases involving a clinical trial of CAR T-cell therapy. This is
supported by our observation that the percentage of claims reporting
standardized drug charges of less than $373,000 that do not report ICD-
10-CM code Z00.6 relative to all claims that group to MS-DRG 018 fell
significantly from the FY 2019 data (used in the FY 2021 ratesetting)
to the FY 2022 data (used in the FY 2024 ratesetting). For example, in
the FY 2019 MedPAR data used for the FY 2021 IPPS/LTCH PPS final rule,
cases that we identified as clinical trial cases (using our proxy of
standardized drug charges of less than $373,000) that did not contain
ICD-10-CM diagnosis code Z00.6 comprised 18 percent of all cases that
grouped to MS-DRG 018. In the FY 2022 MedPAR data used for the FY 2024
IPPS/LTCH PPS proposed rule, cases that we identified as clinical trial
cases using our proxy that did not contain ICD-10-CM diagnosis code
Z00.6 comprised 4 percent of all cases that grouped to MS-DRG 018. In
addition, prior to FY 2022, we were unable to identify cases in the
MedPAR claims data that were provided as part of expanded access use in
developing the relative weights. The December update of the FY 2022
MedPAR claims data now includes a field that identifies whether or not
the claim includes expanded access use of immunotherapy. For the FY
2022 MedPAR claims data, this field identifies whether or not the claim
includes condition code ZB. For the FY 2023 MedPAR data and for
subsequent years, this field will identify whether or not the claim
includes condition code 90. This allows us to exclude these claims,
similar to our methodology for clinical trial cases, in the calculation
of the relative weight for MS-DRG 018, without relying on a proxy. (We
noted that because the expanded access indicator was not available
prior to the FY 2022 MedPAR, the comparison of cases identified using
the proxy, as described previously, did not include the cases in the FY
2022 MedPAR data used for the FY 2024 IPPS/LTCH PPS proposed rule with
an expanded access indicator on the claim, as including these cases
would mean we were not comparing the same group of cases). We further
note that the MedPAR files now also include a variable that indicates
whether the claim includes the payer-only condition code ``ZC'', which
identifies a case involving the clinical trial of a different product
where the CAR T-cell, non-CAR T-cell, or other immunotherapy product is
purchased in the usual manner.
Therefore, in the FY 2024 IPPS/LTCH PPS proposed rule, we proposed
two changes to our methodology for identifying clinical trial claims
and expanded access use claims in MS-DRG 018. First, we proposed to
exclude claims with the presence of condition code ``90'' (or, for FY
2024 ratesetting, which is based on the FY 2022 MedPAR data, the
presence of condition code ``ZB'') and claims that contain ICD-10-CM
diagnosis code Z00.6 without payer-only code ``ZC'' that group to MS-
DRG 018 when calculating the average cost for MS-DRG 018. Second, for
the reasons described previously, we proposed to no longer use the
proxy of standardized drug charges of less than $373,000 to identify
clinical trial claims and expanded access use cases when calculating
the average cost for MS-DRG 018. Accordingly, we proposed that in
calculating the relative weight for MS-DRG 018 for FY 2024, only those
claims that group to MS-DRG 018 that (1) contain ICD-10-CM diagnosis
code Z00.6 and do not include payer-only code ``ZC'' or (2) contain
condition code
[[Page 58791]]
``ZB'' (or, for subsequent fiscal years, condition code ``90'') would
be excluded from the calculation of the average cost for MS-DRG 018.
Consistent with this proposal, we also proposed to modify our
calculation of the 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 assigned to MS-DRG
018 that either--(a) contain ICD-10-CM diagnosis code Z00.6 and do not
contain condition code ``ZC'' or (b) contain condition code 90 (or, for
FY 2024 ratesetting, condition code ``ZB'').
Calculate the average cost for all other cases 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 applicable clinical trial or expanded access
use cases, then add this adjusted case count to the non-clinical trial
case count prior to calculating the average cost across all MS-DRGs.
Applying this proposed methodology, based on the December 2022
update of the FY 2022 MedPAR file used for the proposed rule, we
estimated that the average costs of cases assigned to MS-DRG 018 that
are identified as clinical trial cases ($89,379) were 28 percent of the
average costs of the cases assigned to MS-DRG 018 that are identified
as nonclinical trial cases ($323,903). Accordingly, as we did for FY
2023, we proposed to adjust the transfer-adjusted case count for MS-DRG
018 by applying the proposed adjustor of 0.28 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 the proposed rule, each case identified as an
applicable clinical trial or expanded access use immunotherapy case was
adjusted by 0.28. As we did for FY 2023, we are applied this same
adjustor for the applicable cases that group to MS-DRG 018 for purposes
of budget neutrality and outlier simulations. We also proposed to
update the value of the adjustor based on more recent data for the
final rule.
Comment: Some commenters supported our proposal to remove the use
of the proxy of excluding cases with standardized drug charges of less
than $373,000, stating that it is consistent with existing hospital
billing practices and would simplify the reimbursement for chimeric
antigen receptor therapy (CAR-T) services. Many commenters opposed our
proposal, stating that it was premature to remove this trim. While
these commenters stated that provider charging practices are improving,
they expressed concern that some providers have limited experience
properly reporting claims for clinical trial and expanded access use
cases and some providers do not appear to have fully complied with CMS
guidance. A commenter requested that CMS maintain this trim for at
least one additional fiscal year.
A commenter also requested that CMS publish information on cases
included in the rate-setting methodology that are below the $373,000
threshold in the interest of transparency given the likely impact of
those cases on the base DRG payment. A commenter expressed concern that
4 percent of cases are still reporting standardized drug charges of
less than $373,000, given the relatively low volume of cases assigned
to MS-DRG 018. A commenter stated that the inclusion of the 4 percent
of cases would result in a potentially meaningful reduction in the base
DRG payment for CAR-T cases. Another commenter modeled the inclusion of
the 4 percent of cases and indicated that excluding them resulted in a
$3,100 reduction in the base payment for MS-DRG 018. Commenters
recommended that CMS monitor the impact of including these cases in
ratesetting to ensure base payments for DRG 018 remain stable prior to
removing the $373,000 low-cost threshold.
Response: We agree that removing the trim of excluding cases with
standardized drug charges of less than $373,000 would be consistent
with existing hospital billing practices. As discussed in the proposed
rule, we believe providers have continued to gain experience with the
use of ICD-10-CM diagnosis code Z00.6 to report cases involving a
clinical trial of CAR T-cell therapy, as well as coding of expanded
access use immunotherapy cases. This is supported by our observation
that the percentage of claims reporting standardized drug charges of
less than $373,000 that do not report ICD-10-CM code Z00.6 relative to
all claims that group to MS-DRG 018 fell significantly from the FY 2019
data (used in the FY 2021 ratesetting) to the FY 2022 data (used in the
FY 2024 ratesetting). While there continue to be a small percentage of
claims that report standardized drug charges of less than $373,000 and
do not report ICD-10-CM code Z00.6, we do not believe it is necessary
to continue to use the proxy until the number of these claims reaches
zero. We note that there is now only a very small percentage variation
in the relative weight with and without this proxy, unlike in prior
years. The $3,100 reduction referenced by the commenter in the range of
1 percent of the base DRG payment. With respect to the commenter who
requested that CMS publish the details regarding specific cases, we
note that information on obtaining the MedPAR Limited Data Set is
available on the CMS website, at https://www.cms.gov/Research-Statistics-Data-and-Systems/Files-for-Order/LimitedDataSets/MEDPARLDSHospitalNational.
After consideration of the public comments we received, we are
finalizing our proposals regarding the calculation of the relative
weight for MS-DRG 018. Applying this finalized methodology, based on
the March 2023 update of the FY 2022 MedPAR file used for this final
rule, we estimated that the average costs of cases assigned to MS-DRG
018 that are identified as clinical trial cases ($84,883) were 27
percent of the average costs of the cases assigned to MS-DRG 018 that
are identified as non-clinical trial cases ($314,862). Accordingly, as
we did for FY 2023, we are finalizing our proposal to adjust the
transfer-adjusted case count for MS-DRG 018 by applying the adjustor of
0.27 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 final rule, each
case identified as an applicable clinical trial or expanded access use
immunotherapy case was adjusted by 0.27. As we did for FY 2023, we are
applying this same adjustor for the applicable cases that group to MS-
DRG 018 for purposes of budget neutrality and outlier simulations.
c. Cap for Relative Weight Reductions
In the FY 2023 IPPS/LTCH PPS final rule, we finalized a permanent
10-percent cap on the reduction in an MS-DRG's relative weight in a
given fiscal year, beginning in FY 2023. We also finalized a budget
neutrality adjustment to the standardized amount for all hospitals to
ensure that application of the permanent 10-percent cap does not result
in an increase or decrease of estimated aggregate payments. We refer
the reader to the FY 2023 IPPS/LTCH PPS final rule for further
discussion of this policy. In the Addendum to this IPPS/LTCH PPS final
rule, we present
[[Page 58792]]
the budget neutrality adjustment for reclassification and recalibration
of the FY 2024 MS-DRG relative weights with application of this cap.
Table 5 contains the FY 2024 MS-DRG relative weights with and without
the application of this cap. For a further discussion of the budget
neutrality adjustment for FY 2024, we refer readers to the Addendum of
this final rule.
3. Development of National Average CCRs
We developed the national average CCRs as follows:
Using the FY 2021 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 relative weight. The FY
2024 cost-based relative weights were then normalized by an adjustment
factor of 1.941198 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. We then applied
the permanent 10-percent cap on the reduction in a MS-DRG's relative
weight in a given fiscal year; specifically for those MS-DRGs for which
the relative weight otherwise would have declined by more than 10
percent from the FY 2023 relative weight, we set the FY 2024 relative
weight equal to 90 percent of the FY 2023 relative weight. The relative
weights for FY 2024 as set forth in Table 5 associated with this final
rule and available on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS reflect the
application of this cap.
The 19 national average CCRs for FY 2024 are as follows:
BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TR28AU23.133
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
[[Page 58793]]
threshold of 10 cases as the minimum number of cases required to
compute a reasonable weight. We proposed to use that same case
threshold in recalibrating the proposed MS-DRG relative weights for FY
2024. Using data from the FY 2022 MedPAR file, there were 7 MS-DRGs
that contain fewer than 10 cases. For FY 2024, because we do not have
sufficient MedPAR data to set accurate and stable cost relative weights
for these low-volume MS-DRGs, we proposed to compute relative weights
for the low-volume MS-DRGs by adjusting their final FY 2023 relative
weights by the percentage change in the average weight of the cases in
other MS-DRGs from FY 2023 to FY 2024. The crosswalk table is as
follows.
[GRAPHIC] [TIFF OMITTED] TR28AU23.134
BILLING CODE 4120-01-C
Comment: A commenter requested that CMS utilize the ``other'' CCR
for CAR-T product charges associated with revenue code 0891 to mitigate
charge compression problems until CMS data is available for cost center
0078. The commenter stated that this would result in a more appropriate
case cost and a higher relative weight for MS-DRG 018.
Response: We do not believe it would be appropriate to utilize the
``other'' CCR for CART product charges associated with revenue code
0891. The categories assigned to the ``other'' cost center are
categorically not described by another cost center. This is not the
case for CAR-T product charges, as the drug cost center describes the
same type of product. Therefore, we do not believe it is necessary to
make changes to the CCR used for CAR T-cell product charges.
After consideration of the public comments we received, we are
finalizing our proposals without modification.
E. Add-On Payments for New Services and Technologies for FY 2024
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
[[Page 58794]]
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 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 2024
are presented in a data file that is available, along with the other
data files associated with the FY 2023 IPPS/LTCH PPS final rule and
correction notification, 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 2025 were
presented in a data file that is available on the CMS website, along
with the other data files associated with the FY 2024 proposed rule, by
clicking on the FY 2024 IPPS Proposed Rule Home Page at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index. We noted that, for the reasons discussed in
section I.F. of the preamble of the FY 2024 IPPS/LTCH PPS proposed rule
(88 FR 26777) and this final rule, we proposed to use the FY 2022
MedPAR claims data for FY 2024 ratesetting. Consistent with this
proposal, for the FY 2025 proposed threshold values, we proposed to use
the FY 2022 claims data to set the proposed thresholds for applications
for new technology add-on payments for FY 2025.
As discussed in section I.E. of the preamble of this final rule, we
are finalizing our proposal to use the FY 2022 MedPAR claims data for
FY 2024 ratesetting. Accordingly, in this final rule, we are finalizing
that we will use FY 2022 claims data to set the thresholds for
applications for new technology add-on payments for FY 2025. The
finalized thresholds for applications for new technology add-on
payments for FY 2025 are presented in a data file that is available on
the CMS website, along with the other data files associated with this
FY 2024 final rule, by clicking on the FY 2024 IPPS Final Rule Home
Page at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.
In the September 7, 2001 final rule that established the new
technology add-on payment regulations (66 FR 46917), we discussed that
applicants should submit a significant sample of data to demonstrate
that the medical service or technology meets the high-cost threshold.
Specifically, applicants should submit a sample of sufficient size to
enable us to undertake an initial validation and analysis of the data.
We also discussed in the September 7, 2001 final rule (66 FR 46917) the
issue of whether the Health Insurance Portability and Accountability
Act (HIPAA) Privacy Rule at 45 CFR parts 160 and 164 applies to claims
information that providers submit with applications for new medical
service or technology add-on payments. We refer readers to the FY 2012
IPPS/LTCH PPS final rule (76 FR 51573) for 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, 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;
[[Page 58795]]
++ 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 (84 FR
42288 through 42292) 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 while FDA has 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
services and 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, a medical device designated under
FDA's Breakthrough Devices Program that has received FDA marketing
authorization 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) as a Breakthrough Device, for the indication
covered by the Breakthrough Device designation, 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 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
[[Page 58796]]
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 that, 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 FDA 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.
We note that, consistent with the prospective nature of the IPPS,
we finalize the new technology add on payment amount for technologies
approved or conditionally approved for new technology add-on payments
in the final rule for each fiscal year and do not make mid-year changes
to new technology add-on payment amounts. Updated cost information may
be submitted and included in rulemaking for the following fiscal year.
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
[[Page 58797]]
the technology otherwise meets the applicable add-on payment criteria.
Under this policy, cases involving eligible antimicrobial products
would begin receiving the new technology add-on payment sooner,
effective for discharges the quarter after the date of FDA marketing
authorization provided that the technology receives FDA marketing
authorization by July 1 of the particular fiscal year for which the
applicant applied for new technology add-on payments.
As discussed in more detail in section II.E.9. of the preamble of
this final rule, in the FY 2024 IPPS/LTCH PPS proposed rule (88 FR
26779 through 26780), beginning with the new technology add-on payment
applications for FY 2025, we proposed, for technologies that are not
already FDA market authorized, to require applicants to have a complete
and active FDA market authorization request at the time of new
technology add-on payment application submission, and to provide
documentation of FDA acceptance or filing to CMS at the time of
application submission. We also proposed that, beginning with FY 2025
applications, in order to be eligible for consideration for the new
technology add-on payment for the upcoming fiscal year, an applicant
for new technology add-on payments must have received FDA approval or
clearance by May 1 rather than July 1 of the year prior to the
beginning of the fiscal year for which the application is being
considered (except for an application that is submitted under the
alternative pathway for certain antimicrobial products). Please refer
to section II.E.9. of the preamble of this final rule for a full
discussion of these proposals, the comments we received on these
proposals, and our final policies.
e. New Technology Liaisons
Many interested parties (including device/biologic/drug developers
or manufacturers, industry consultants, others) engage CMS for
coverage, coding, and payment questions or concerns. In order to
streamline 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 interested parties. This team is available to
assist with all of the following:
Help to point interested parties to or provide information
and resources where possible regarding process, requirements, and
timelines.
Coordinate and facilitate opportunities for interested
parties to engage with various CMS components.
Serve as a primary point of contact for interested parties
and provide updates on developments where possible or appropriate.
We receive many questions from parties interested in pursuing new
technology add-on payments who may not be entirely familiar with
working with CMS. While we encourage interested parties 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. Interested
parties 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 2025 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 2025, once the application deadline has closed, CMS will post on
its website a list of the applications submitted, along with a brief
description of each technology as provided by the applicant.
As discussed in the FY 2023 IPPS/LTCH PPS final rule (87 FR 48986
through 48990), we finalized our proposal to publicly post online new
technology add-on payment. applications, including the completed
application forms, certain related materials, and any additional
updated application information submitted subsequent to the initial
application submission (except certain volume, cost and other
information identified by the applicant as confidential), beginning
with the application cycle for FY 2024, at the time the proposed rule
is published. We also finalized that with the exception of information
included in a confidential information section of the application, cost
and volume information, and materials identified by the applicant as
copyrighted and/or not otherwise releasable to the public, the contents
of the application and related materials may be posted publicly, and
that we will not post applications that are withdrawn prior to
publication of the proposed rule. We refer the reader to the FY 2023
IPPS/LTCH PPS final rule (87 FR 48986 through 48990) for further
information regarding this policy.
We note that the burden associated with this information collection
requirement is the time and effort required to collect and submit the
data in the formal request for add-on payments for new medical services
and technologies to CMS. The aforementioned burden is subject to the
PRA and approved under OMB control number 0938-1347, and has an
expiration date of November 30, 2023.
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
[[Page 58798]]
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 2024 prior
to publication of the FY 2024 IPPS/LTCH PPS proposed rule, we published
a notice in the Federal Register on October 3, 2022 (87 FR 59793), and
held a virtual town hall meeting on December 14, 2022. 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 2024 new medical
service and technology add-on payment applications before the
publication of the FY 2024 IPPS/LTCH IPPS proposed rule.
Approximately 180 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 22, 2022,
deadline, in our evaluation of the new technology add-on payment
applications for FY 2024 in the development of the FY 2024 IPPS/LTCH
PPS proposed rule. In response to the published notice and the December
14, 2022 New Technology Town Hall meeting, we received written comments
regarding the applications for FY 2024 new technology add on payments.
As explained earlier and in the Federal Register notice announcing the
New Technology Town Hall meeting (87 FR 59793 through 59795), 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 2024. Therefore, we did not
summarize any written comments in the proposed rule that were unrelated
to the substantial clinical improvement criterion. In section II.E.6.
of the preamble of the proposed rule, we summarized 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/Coding/ICD10, including
guidelines for ICD-10-PCS Section ``X'' codes. We encourage providers
to view the material provided on ICD-10-PCS Section ``X'' codes.
4. 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 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 (86 FR 45162). As the PHE ended
on May 11, 2023, as planned by the Department of Health and Human
Services (HHS),\22\ discharges involving eligible products will
continue to be eligible for the NCTAP through September 30, 2023 (that
is, through the end of FY 2023). The NCTAP will expire at the end of FY
2023 and no NCTAP will be made beginning in FY 2024 (that is, for
discharges on or after October 1, 2023).
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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.
Comment: We received public comments related to NCTAP. A commenter
expressed appreciation for continued NCTAP through Sept. 30, 2023. A
few commenters recommended that CMS continue NCTAP, including a
commenter who recommended that CMS continue NCTAP through December 31,
2023, in order to provide financial assistance for COVID-19 treatments
as hospitals navigate the public health emergency (PHE) unwinding. A
commenter also recommended that when NCTAP does end, that CMS
automatically add any newly developed COVID-19 treatments to the new
technology add-on payment list without application. Some
[[Page 58799]]
commenters recommended that CMS monitor Medicare beneficiaries' access
to COVID-19 treatments in the hospital inpatient setting after NCTAP
expires to determine whether there is a reduction in beneficiaries'
access to treatment, with a commenter further recommending that CMS
take steps to minimize any barriers that could restrict the ability of
Medicare beneficiaries to receive lifesaving treatments after the
sunsetting of the NCTAP and other COVID-19 payment adjustments.
Response: We thank the commenters for their input. 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 did not make any proposals to extend or modify NCTAP in
this year's proposed rule, and NCTAP will end on September 30, 2023, as
previously finalized in the FY 2022 IPPS/LTCH PPS final rule (86 FR
45160 through 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. FY 2024 Status of Technologies Receiving New Technology Add-On
Payments for FY 2023
In this section of the final rule, we discuss the FY 2024 status of
24 technologies approved for FY 2023 new technology add-on payments, as
set forth in the tables that follow. In the FY 2024 IPPS/LTCH PPS
proposed rule (88 FR 26781 through 26785) we presented our proposals to
continue the new technology add-on payments for FY 2024 for those
technologies that were approved for the new technology add-on payment
for FY 2023 and which would still be considered ``new'' for purposes of
new technology add-on payments for FY 2024. We also presented our
proposals to discontinue new technology add-on payments for FY 2024 for
those technologies that were approved for the new technology add-on
payment for FY 2023 and which would no longer be considered ``new'' for
purposes of new technology add-on payments for FY 2024.
Additionally, we noted that we conditionally approved
DefenCathTM (a formulation of taurolidine/heparin) for FY
2023 new technology add-on payments under the alternative pathway for
certain antimicrobial products (87 FR 26955 through 26957), subject to
the technology receiving FDA marketing authorization by July 1, 2023.
In the FY 2024 IPPS/LTCH PPS proposed rule, we proposed that if
DefenCathTM receives FDA marketing authorization before July
1, 2023, we would continue making new technology add-on payments for
DefenCathTM for FY 2024. We proposed that if
DefenCathTM does not receive FDA marketing authorization by
July 1, 2023, then it would not be eligible for new technology add-on
payments for FY 2023, and therefore would not be eligible for the
continuation of new technology add-on payments for FY 2024. Because
DefenCathTM did not receive FDA approval by July 1, 2023, no
new technology add-on payments will be made for cases involving the use
of DefenCathTM for FY 2023, and DefenCathTM is
therefore not eligible for the continuation of new technology add-on
payments for FY 2024. We note that the applicant for
DefenCathTM also submitted an application for new technology
add-on payments for FY 2024 under the name taurolidine/heparin, and we
refer the reader to section II.E.7.b.(1). of the preamble of this final
rule for discussion of our conditional approval of the FY 2024
application for new technology add on payments for taurolidine/heparin.
Our policy is that a medical service or technology may continue to
be considered ``new'' for purposes of new technology add-on payments
within 2 or 3 years after the point at which data begin to become
available reflecting the inpatient hospital code assigned to the new
service or technology. Our practice has been to begin and end new
technology add-on payments on the basis of a fiscal year, and we have
generally followed a guideline that uses a 6-month window before and
after the start of the fiscal year to determine whether to extend the
new technology add-on payment for an additional fiscal year. In
general, we extend new technology add-on payments for an additional
year only if the 3-year anniversary date of the product's entry onto
the U.S. market occurs in the latter half of the fiscal year (70 FR
47362).
In the FY 2024 IPPS/LTCH PPS proposed rule (88 FR 26783), we
provided a table listing the technologies for which we proposed to
continue making new technology add-on payments for FY 2024 because they
are still considered ``new'' for purposes of new technology add-on
payments. This table also presented 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 fiscal years, proposed maximum add-on payment amount, and
coding assignments for each technology. We referred 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 invited public comments on our proposals to continue new
technology add-on payments for FY 2024 for the technologies listed in
the table in the proposed rule.
Comment: We received multiple comments in support of our proposed
continuation of new technology add-on payments for FY 2024 for those
technologies that were approved for the new technology add-on payment
for FY 2023 and which would still be considered ``new'' for purposes of
new technology add-on payments for FY 2024.
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
finalizing our proposals to continue new technology add-on payments for
FY 2024 for the technologies that were approved for new technology add-
on payment for FY 2023 and would still be considered ``new'' for
purposes of new technology add-on payments for FY 2024, as listed in
the proposed rule and in the following Table II.F.-01 in this section
of this final rule.
Table II.F.-01 in this final rule 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 fiscal years, maximum add-on payment amount, and coding
assignments. We refer readers to the final rules cited in the following
table for a complete discussion of the new technology add-on payment
application, coding and payment amount for these technologies,
including the applicable indications and discussion of the newness
start date.
BILLING CODE 4120-01-P
[[Page 58800]]
[GRAPHIC] [TIFF OMITTED] TR28AU23.135
In the FY 2024 IPPS/LTCH PPS proposed rule (88 FR 26785), we
provided Table II.P.-02 listing the technologies for which we proposed
to discontinue making new technology add-on payments for FY 2024
because
[[Page 58801]]
they are no longer ``new'' for purposes of new technology add-on
payments. This table also presented 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, and relevant final rule
citations from prior fiscal years. We referred readers to the cited
final rules in the table for a complete discussion of each new
technology add-on payment application and the coding and payment amount
for these technologies, including the applicable indications and
discussion of the newness start date.
In the FY 2024 IPPS/LTCH PPS proposed rule (88 FR 26784), we noted,
as discussed in the FY 2023 IPPS/LTCH PPS final rule (87 FR 48939) and
in previous rulemaking, the intent of section 1886(d)(5)(K) of the Act
and regulations under Sec. 412.87(b)(2) is to pay for new medical
services and technologies for the first 2 to 3 years that a product
comes on the market, during the period when the costs of the new
technology are not yet fully reflected in the 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 emergency use authorization (EUA)
could become available as soon as the date of the EUA issuance and
prior to receiving FDA approval or clearance (86 FR 45159). With
respect to the Hemolung RAS, which received an EUA on April 22, 2020,
when used for patients with COVID-19, we discussed whether the newness
period for the use of the Hemolung RAS for patients with COVID-19
should begin on the date of its EUA (April 22, 2020), when the product
became available on the market for this indication. We described a
public comment submitted by the applicant for Hemolung RAS which stated
that the newness period for COVID-19 Hemolung RAS cases should begin on
November 15, 2021 (the date of commercial availability of the De Novo
classified device), instead of April 22, 2020 (the date of the Hemolung
RAS EUA). The applicant indicated that it provided the Hemolung RAS to
hospitals free or at cost to swiftly respond to the global pandemic,
and that it did not profit from EUA therapies. The applicant stated
that additionally, during the EUA period, hospitals were not seeking
payment for Hemolung RAS therapy. The applicant stated that, therefore,
cost data collected during the EUA period and prior to FDA clearance do
not accurately reflect the added cost of Hemolung RAS therapy. In our
response, we noted that, while the commenter stated that it provided
the Hemolung RAS to hospitals free or at cost, and that hospitals were
not seeking payment for the Hemolung RAS therapy during the EUA period,
additional information regarding whether hospitals charged for use of
the Hemolung RAS therapy between the date of its EUA and the date of
commercial availability of the De Novo classified device, and how it
impacts whether use of the technology may be reflected in the data,
would be helpful in determining that data reflecting the cost of the
product did not become available until the date of commercial
availability of the De Novo classified device.
We stated in the FY 2024 IPPS/LTCH PPS proposed rule (88 FR 26784),
that in the absence of additional information to support a conclusion
that data reflecting the cost of the Hemolung RAS when used for
patients with COVID-19 did not begin to become available as of the
issuance of the EUA on April 22, 2020, we were proposing to discontinue
new technology add-on payments for FY 2024 for Hemolung RAS patients
with hypercapnic respiratory failure related to COVID-19, as the
technology will no longer be considered new for this indication. We
further stated that, as discussed in the FY 2023 IPPS/LTCH PPS final
rule, we continued to welcome additional information regarding whether
hospitals charged for use of the Hemolung RAS therapy between the date
of its EUA and the date of commercial availability of the De Novo
classified device, and how it impacts whether use of the technology may
be reflected in the data. We further noted, as set forth in Table
II.P.-01 of the FY 2024 IPPS/LTCH PPS proposed rule (88 FR 26783), that
we were proposing to continue the new technology add-on payment in FY
2024 for the use of the Hemolung RAS for patients with other causes of
hypercapnic respiratory failure unrelated to COVID-19, for which we
considered the beginning of the newness period to commence on the date
of commercial availability of the De Novo classified device (November
15, 2021), as discussed in the FY 2023 IPPS/LTCH PPS final rule (87 FR
48939). In order to identify use of Hemolung RAS unrelated to COVID-19,
we proposed to identify cases eligible for new technology add-on
payment with ICD-10-PCS code 5A0920Z without ICD-10-CM diagnosis code
U07.1 (COVID-19).
We invited public comments on our proposals to discontinue new
technology add-on payments for FY 2024 for the technologies listed in
Table II.P.-02 in the proposed rule.
Comment: A commenter disagreed with defining the newness start date
as the date of commercial availability/FDA approval date for cell and
gene therapies, and requested that CMS extend new technology add-on
payments into FY 2024 for both ABECMA[supreg] and CARVYKTITM
as the newness start date being utilized is extremely close to the mid-
year benchmark and also likely to be functionally inaccurate. The
commenter stated that while it does not have sales or ordering
information for ABECMA[supreg] and CARVYKTITM, it believes
that it is likely that the first commercial shipment of ABECMA[supreg]
took place weeks after FDA approval (which occurred March 26, 2021) and
would have crossed the April 1 threshold date, enabling these
technologies to be eligible for a third year of add-on payments. The
commenter explained that this delay is due to the fact that CAR T-cell
products take weeks to manufacture, in addition to the certification of
treatment sites as required under a product's REMS. The commenter
stated that it is far more logical to use the definition of ``market
date'' described in the May 2023 Medicaid proposed rule with regard to
covered outpatient drugs, which is the date on which the drug was first
sold (88 FR 34257), for cell and gene therapies due to their unique
manufacturing parameters. The commenter also requested that CMS
consider a standard third-year extension of new technology add-on
payments for cell and gene therapies in general, due to the unique
manufacturing process and low volume nature of the diseases treated.
Response: We thank the commenter for its input. We note that the
timeframe that a new technology can be eligible to receive new
technology add-on payments begins when data become available (69 FR
49003, 85 FR 58610). Consistent with the statute, a technology no
longer qualifies as ``new'' once it is more than 2 to 3 years old,
irrespective of how frequently it has been used in the Medicare
population. Therefore, if a product is more than 2 to 3 years old, we
consider its costs to be included in the MS-DRG relative weights
whether its use in the Medicare population has been frequent or
infrequent. In addition, while CMS may consider a documented delay in
the technology's market availability in our determination of newness,
our policy for determining
[[Page 58802]]
whether to extend new technology add-on payments for an additional year
generally applies regardless of the volume of claims for the technology
after the beginning of the newness period (83 FR 41280). We do not
consider the date of first sale of a product, or first shipment of a
product, as an indicator of the entry of a product onto the U.S.
market; neither of these dates indicate when a technology in fact
became available for sale. Similarly, our policy for determining
whether to extend new technology add-on payments for a third year
generally applies regardless of the claims volume for the technology
after the start of the newness period (85 FR 58610). We further note
that, as discussed in the FY 2023 IPPS/LTCH PPS final rule (87 FR
48911), in response to a comment from the applicant for Abecma[supreg]
stating that the date of first sale for this technology was May 10,
2021, and that add-on payments for Abecma[supreg] should therefore
extend past FY 2023, we requested additional information from the
applicant for Abecma[supreg] on when the technology first became
available for sale. We stated that, absent such additional information
from the applicant, we cannot determine a newness date based on a
documented delay in the technology's availability on the U.S. market.
The applicant did not submit further information related to the
availability of Abecma[supreg] for this final rule, nor did the
commenter provide such information. Accordingly, we are finalizing that
we consider March 26, 2021, to be the date the technology became
available on the market and the beginning of its newness period. As
discussed in the FY 2023 IPPS/LTCH PPS final rule (87 FR 48925),
because we determined that CARVYKTITM is substantially
similar to ABECMA[supreg], we consider the beginning of the newness
period for CARVYKTITM to be March 26, 2021 as well.
Comment: A commenter requested that CMS consider at least another
year of new technology add-on payments for aprevoTM, which
has a newness start date of December 3, 2020 for its ALIF and LLIF
indications, as many surgeries were not performed in 2020 due to the
COVID-19 pandemic. The commenter stated that with hospital revenue
trending negatively, this is an opportunity for hospitals to provide
exceptional care with appropriate reimbursement due to the clinical
benefits of this technology.
Response: We thank the commenter for its input. Consistent with the
statute and our implementing regulations, a technology is no longer
considered as ``new'' once it is more than 2 to 3 years old,
irrespective of how frequently the medical service or technology has
been used in the Medicare population (70 FR 47349, 85 FR 58610). As
such, once a technology has been available on the U.S. market for more
than 2 to 3 years, we consider the costs to be included in the MS-DRG
relative weights regardless of whether the technology's use in the
Medicare population has been frequent or infrequent. We further note
that we are renewing the TLIF indication for aprevoTM, which
has a newness start date of June 30, 2021, for FY 2024 as noted in the
previous table, as this indication will still be considered ``new''.
After consideration of the public comments we received, we are
finalizing our proposal to discontinue new technology add-on payments
for the technologies as listed in the proposed rule and in the
following Table II.F.-02 of this final rule for FY 2024 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, and relevant final rule citations from prior
fiscal years. We also refer readers to the final rules cited 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 dates.
[[Page 58803]]
[GRAPHIC] [TIFF OMITTED] TR28AU23.136
[[Page 58804]]
6. FY 2024 Applications for New Technology Add-On Payments (Traditional
Pathway)
As discussed previously, in the FY 2023 IPPS/LTCH PPS final rule,
we finalized our policy to publicly post online applications for new
technology add-on payment beginning with FY 2024 applications (87 FR
48986 through 48990). As noted in the FY 2023 IPPS/LTCH PPS final rule,
we stated in the proposed rule that we are continuing to summarize each
application in the proposed rule. However, we stated that while we are
continuing to provide discussion of the concerns or issues we
identified with respect to applications submitted under the traditional
pathway, we are providing 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. We refer
readers to https://mearis.cms.gov/public/publications/ntap for the
publicly posted FY 2024 new technology add-on payment applications and
supporting information (with the exception of certain cost and volume
information, and information or materials identified by the applicant
as confidential or copyrighted). In addition, we noted that we made
available separate tables listing the ICD-10-CM codes, ICD-10-PCS
codes, and/or MS-DRGs related to the analyses of the cost criterion for
certain technologies for the FY 2024 new technology add-on payment
applications in Table 10 associated with the FY 2024 IPPS/LTCH PPS
proposed rule, available via the internet 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 2024 IPPS Proposed Rule Home Page'' or ``Acute Inpatient--
Files for Download.'' Please see section VI of the Addendum of the
proposed rule for additional information regarding tables associated
with the proposed rule.
We received 27 applications for new technology add-on payments for
FY 2024 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. Eight applicants
withdrew their applications prior to the issuance of the proposed rule.
Subsequently, four applicants withdrew their respective applications
for sabizabulin, DuraGraft, VEST, and omidubicel prior to the issuance
of this FY 2024 IPPS/LTCH PPS final rule. In addition, two applicants,
Daiichi Sankyo and Pfizer, for Vanflyta and elranatamab respectively,
did not receive FDA approval for their technologies by July 1, 2023.
Therefore, Vanflyta and elranatamab are not eligible for consideration
for new technology add-on payments for FY 2024. Consistent with our
standard approach, we are not including in this final rule the
description and discussion of applications that were withdrawn or that
are ineligible for consideration for FY 2024 due to not meeting the
July 1 deadline, described previously, which were included in the FY
2024 IPPS/LTCH PPS proposed rule. We are also not summarizing nor
responding to public comments received regarding these withdrawn or
ineligible applications in this final rule. Of the remaining 13
applications, we are not approving the applications for
NexoBridTM, SeptiCyte[supreg] RAPID, and
XENOVIEWTM for the reasons discussed in the following
sections. We are approving the remaining 10 applications, with 4 of the
applications considered as 2 technologies due to substantial
similarity, for a total of 8 new approvals for new technology add-on
payments for FY 2024. A discussion of these 13 applications is
presented in the following sections.
a. CYTALUX[supreg] (Pafolacianine), First Indication
On Target Laboratories submitted an application for new technology
add-on payments for CYTALUX[supreg] for use in ovarian cancer for FY
2024. The applicant stated that CYTALUX[supreg] is the first targeted
intraoperative molecular imaging agent that illuminates ovarian cancer
in real time, enabling the detection of more cancer for resection.
CYTALUX[supreg] is an optical imaging agent comprised of a folic acid
analog conjugated with a fluorescent dye which binds to folate receptor
positive cancer cells and illuminates malignant lesions during surgery.
Per the applicant, CYTALUX[supreg] is used in adult patients with
ovarian cancer as an adjunct for intraoperative identification of
malignant lesions. CYTALUX[supreg] is to be used with a near-infrared
imaging system (NIR) cleared by the FDA for specific use with
CYTALUX[supreg]. We note that On Target Laboratories also submitted a
second application for new technology add-on payments for
CYTALUX[supreg] for FY 2024 for use in lung cancer, as discussed
separately in this section.
Please refer to the online application posting for CYTALUX[supreg],
available at https://mearis.cms.gov/public/publications/ntap/NTP221017X8NAN, for additional detail describing the technology and the
disease treated by the technology.
With respect to the newness criterion, the applicant stated that a
new drug application (NDA) for CYTALUX[supreg] was approved by FDA on
November 29, 2021, as an optical imaging agent indicated in adult
patients with ovarian cancer as an adjunct for intraoperative
identification of malignant lesions. According to the applicant,
CYTALUX[supreg] had market availability delayed until April 15, 2022,
due to supply/product availability. The recommended dose of
CYTALUX[supreg] is a single intravenous infusion of 0.025 mg/kg diluted
in 250 mL of 5% Dextrose Injection, administered prior to surgery over
60 minutes using a dedicated infusion line.
The applicant submitted a request for a unique ICD-10-PCS procedure
codes for CYTALUX[supreg] and was granted approval to use the following
procedure codes effective October 1, 2023: 8E0U0EN (Fluorescence guided
procedure of female reproductive system using pafolacianine, open
approach), 8E0U3EN (Fluorescence guided procedure of female
reproductive system using pafolacianine, percutaneous approach),
8E0U4EN (Fluorescence guided procedure of female reproductive system
using pafolacianine, percutaneous endoscopic approach), 8E0U7EN
(Fluorescence guided procedure of female reproductive system using
pafolacianine, via natural or artificial opening), and 8E0U8EN
(Fluorescence guided procedure of female reproductive system using
pafolacianine, via natural or artificial opening endoscopic). The
applicant provided a list of diagnosis codes that may be used to
currently identify this indication for CYTALUX[supreg], and
differentiate it from the lung cancer indication, under the ICD-10-CM
coding system. Please refer to the online application posting for the
complete list of ICD-10-CM codes provided by the applicant.
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 substantial similarity criteria, the applicant
believed that CYTALUX[supreg] is not substantially similar to other
currently
[[Page 58805]]
available technologies because there are no other optical imaging
agents with the same active ingredient, nor the same mechanism of
action for the same indication of ovarian cancer, and that therefore,
the technology meets the newness criterion. The following table
summarizes the applicant's assertions regarding the substantial
similarity criteria. Please see the online application posting for
CYTALUX[supreg] for the applicant's complete statements in support of
its assertion that CYTALUX[supreg] is not substantially similar to
other currently available technologies.
[GRAPHIC] [TIFF OMITTED] TR28AU23.137
We invited public comments on whether CYTALUX[supreg] is
substantially similar to existing technologies and whether
CYTALUX[supreg] meets the newness criterion.
Comment: The applicant reiterated that there are no existing FDA-
approved drugs/biological products that are used as an adjunct for
intraoperative identification of malignant lesions in adults with
ovarian cancer other than CYTALUX[supreg]. The applicant also
reiterated that there is no other drug marketed under the same active
ingredient category or generic name, nor which has the same mechanism
of action to target the folate receptor to illuminate cancerous
lesions. In terms of newness, the applicant asserted that the
appropriate newness date for CYTALUX[supreg] for ovarian cancer is
April 15, 2022, the date on which a supply of CYTALUX[supreg] was first
made available for sale. The applicant stated that CYTALUX[supreg]
experienced a documented and verifiable delay in market entry, as
CYTALUX[supreg] was approved for ovarian cancer in November 2021 but
experienced a delay in commercialization primarily due to external
circumstances. The applicant further explained that as CYTALUX[supreg]
was not available before April 15, 2022, and there were no clinical
uses of CYTALUX[supreg] between the date of FDA approval and its market
entry, the newness period for the technology should begin on April 15,
2022.
In addition, the applicant noted that initial clinical use of
CYTALUX[supreg] involved 20 cases that were performed at only three
select centers between May and June 2022 during a small commercial
pilot with remaining product lots manufactured specifically to support
planned clinical development. The applicant explained that the batch of
CYTALUX[supreg] expired at the end of June 2022, thereby rendering it
impossible to perform additional cases. The applicant further explained
that due to the removal of the FDA cleared imaging system for use with
CYTALUX[supreg] from the market, a commercial lot was not initiated
again until there was strong confidence that the FDA would approve
CYTALUX[supreg] for lung cancer, and that therefore, the first full
commercial lot was released in June 2023, coinciding with the newness
date for CYTALUX[supreg] for lung cancer, as discussed separately in
this section.
Response: We thank the applicant for its comment. Based on our
review of comments received and information submitted by the applicant
as part of its FY 2024 new technology add-on payment application for
CYTALUX[supreg], we agree with the applicant that CYTALUX[supreg] is
the only adjunct for intraoperative identification of malignant lesions
in adults with ovarian cancer with a mechanism of action to target the
folate receptor to illuminate cancerous lesions. Therefore, we believe
that CYTALUX[supreg] is not substantially similar to existing treatment
options and meets the newness criterion. We consider the beginning of
the newness period to commence when CYTALUX[supreg] became commercially
available on April 15, 2022.
With respect to the cost criterion, to identify potential cases
representing patients who may be eligible for CYTALUX[supreg], the
applicant searched the FY 2021 Inpatient Standard Analytic File (IPSAF)
for cases reporting a combination of ICD-10-CM/PCS codes for ovarian
cancer that may require an adjunct for intraoperative identification of
malignant lesions. Using the inclusion/exclusion criteria described in
the following table, the applicant identified 3,281 claims mapping to
five MS-DRGs. The applicant noted that it limited its search to these
five MS-DRGs as 99 percent of cases map to these MS-DRGs. Please see
Table 10.8.A.--CYTALUX[supreg] (ovarian) Codes--FY 2024 associated with
the proposed rule for the complete list of codes that the applicant
indicated were included in its cost analysis. The applicant followed
the order of operations described in the following table and calculated
a final inflated average case-weighted standardized charge per case of
$133,657, which exceeded the average case-weighted threshold amount of
$93,649. Because the final inflated average case-weighted standardized
charge per case exceeded the average case-weighted threshold amount,
the
[[Page 58806]]
applicant asserted that CYTALUX[supreg] meets the cost criterion.
[GRAPHIC] [TIFF OMITTED] TR28AU23.138
We invited public comments on whether CYTALUX[supreg] meets the
cost criterion.
Comment: The applicant submitted a public comment reiterating that
because the final inflated average case-weighted standardized charge
per case exceeded the average case-weighted threshold amount,
CYTALUX[supreg] meets the cost criterion.
Response: We thank the applicant for its comment. We agree that the
final inflated average case-weighted standardized charge per case
exceeded the average case-weighted threshold amount. Therefore,
CYTALUX[supreg] meets the cost criterion.
With regard to the substantial clinical improvement criterion, the
applicant asserted that CYTALUX[supreg] represents a substantial
clinical improvement over existing technologies because CYTALUX[supreg]
enables the surgeon to identify cancer intraoperatively in real time
that otherwise would have been missed, enabling the surgeon to achieve
more complete resection in cytoreductive surgery for ovarian cancer.
Per the applicant, the results of the Phase 3 study confirm that
CYTALUX[supreg] serves as an adjunct to the surgeon, helping them to
identify additional cancer which otherwise would not have been
identified, enabling the surgeon to achieve more complete resection,
which is the goal of cytoreductive surgery. The applicant provided two
studies to support these claims as well as 11 background articles. The
background articles included studies to demonstrate the importance of
removing all residual disease (lesions) to improve patients' survival;
studies that showed that lesions can be diffuse and numerous, of
various sizes, and often not readily visible in the surgical field; a
study that showed, when CYTALUX[supreg] was used in a murine tumor
model and in early clinical studies, that it enabled identifying occult
tumor nodules and showed potential to eliminate positive tumor margins;
a study demonstrating that the folate receptor was expressed in most
ovarian cancers; and a study and a review supporting the use of
fluorescence in real-time to improve cancer surgery.\23\ The following
table summarizes the applicant's assertions regarding the substantial
clinical improvement criterion. Please see the online posting for
CYTALUX[supreg] for the applicant's complete statements regarding the
substantial clinical improvement criterion and the supporting evidence
provided.
---------------------------------------------------------------------------
\23\ Background articles are not included in the following table
but can be accessed via the online posting for the technology.
---------------------------------------------------------------------------
[[Page 58807]]
[GRAPHIC] [TIFF OMITTED] TR28AU23.139
[[Page 58808]]
[GRAPHIC] [TIFF OMITTED] TR28AU23.140
BILLING CODE 4120-01-C
In the FY 2024 IPPS/LTCH proposed rule (88 FR 26789 through 26790),
after review of the information provided by the applicant, we stated we
had the following concerns regarding whether CYTALUX[supreg] meets the
substantial clinical improvement criterion. We noted that
CYTALUX[supreg] showed a false positive rate of 24.8 percent that led
to resections in the Phase 3, randomized, multicenter, single-dose,
open-label study of this technology.\24\ While the applicant submitted
a separate comment stating there was no worsening in the safety profile
for patients with false positive results, we continued to question the
impact on patient outcomes when taking additional tissues that were
false positives. In addition, while the applicant provided background
citations to support the assertion that optimal or improved
cytoreduction of tumor results in improved survival in ovarian
adenocarcinoma, we noted that the Phase 3 study of CYTALUX[supreg]
appears to have been designed to assess the efficacy of the technology
rather than clinical outcomes such as survival, recurrence, or rate of
additional procedures. We noted that we would be interested in
additional or longer-term data demonstrating that CYTALUX[supreg]
results in improved outcomes such as improved survival or a reduced
rate of recurrence to support an assessment of whether CYTALUX[supreg]
represents a substantial clinical improvement.
---------------------------------------------------------------------------
\24\ Tanyi JL, Randall LM, Chambers SK, Butler KA, Winer IS,
Langstraat CL, Han ES, Vahrmeijer AL, Chon HS, Morgan MA, Powell MA,
Tseng JH, Lopez A, Wenham RM. A Randomized Phase 3 Study of
Pafolacianine Injection (OTL38) for Intraoperative Imaging of Folate
Receptor Positive Ovarian Cancer. J Clin Oncol. 2022. doi:10.1200/
JCO.22.00291.
---------------------------------------------------------------------------
We invited public comments on whether CYTALUX[supreg] meets the
substantial clinical improvement criterion.
Comment: Several commenters supported the application for
CYTALUX[supreg]. A commenter explained that ovarian cancer remains the
most lethal gynecologic cancer, and that complete surgical
cytoreduction is the single most important prognostic indicator for
survival. The commenter explained that although bulky disease can be
easily recognized, sub-centimeter implants are often difficult to
discriminate from adjacent normal tissue and may not be recognized and
[[Page 58809]]
resected. The commenter further noted that intraoperatively, a surgeon
has only two tools to improve the outcome of the tumor resections:
visual inspection and palpation, and thus, surgeons need tools to
augment these approaches. The commenter explained that the Phase 3
study of CYTALUX[supreg] demonstrates that the technology provides an
important real-time adjunct to current surgical approaches for ovarian
cancer, identifying malignant lesions that would not have been resected
without CYTALUX[supreg].
Another commenter stated that CYTALUX[supreg] allowed discovery of
more lesions which were not seen with the naked eye and these lesions
were removed safely to achieve the surgical goal of removal of all
visible tumor. The commenter asserted that during interval debulking
surgery after chemotherapy, as CYTALUX[supreg] improved detection of
viable tumor from scar tissue, lesions were removed and sent for quick
pathology evaluation, leading to efficiency of the surgical procedure,
reducing operative time and less surgical morbidity. The commenter
stated that additional removal of lesions discovered by CYTALUX[supreg]
use did not lead to an increase of surgical morbidities.
Response: We thank the commenters for their input and have taken it
into consideration in determining whether CYTALUX[supreg] meets the
substantial clinical improvement criterion, discussed later in this
section.
Comment: The applicant submitted a public comment regarding the
substantial clinical improvement criterion, and provided responses to
concerns raised by CMS in the proposed rule. In response to concerns on
how CYTALUX[supreg] improves health outcomes and changes patient
management, the applicant asserted that CYTALUX[supreg] helps surgeons
detect ovarian cancer that is currently undetectable during surgery,
allowing them to diagnose and treat additional cancer lesions earlier.
The applicant stated that in the CYTALUX[supreg] Phase 3 trial, the use
of CYTALUX[supreg] identified additional ovarian cancer on tissue that
was not part of the preoperative surgical plan and not otherwise
planned for resection in 27 percent of imaged patients.\25\ The
applicant stated that the surgeons involved in the Phase 3 study
responded that use of CYTALUX[supreg] led to a revision in their
surgical plan for 56 percent of patients and more complete debulking
was achieved in 51 percent of patients.\26\ The applicant stated that
identifying additional cancer on tissue not planned for resection in
the preoperative plan led to a change in the management of the patient,
allowing the surgeon to treat additional cancer which otherwise would
have been left behind and may not have been discovered and treated
until the patient presented with a recurrence. Therefore, the applicant
believes that CYTALUX[supreg] not only allowed identification of
cancerous lesions that would have otherwise remained undetected, but
that it also may potentially shorten the amount of treatment time for a
given patient by potentially reducing the risk of recurrence of ovarian
cancer. The applicant asserted that CYTALUX[supreg] improves health
outcomes through the more complete resection of residual disease. The
applicant added that, consistent with the goal of achieving R0 (no
remaining visible disease after surgery), following what surgeons
deemed to be complete (R0) resection with conventional methods of
identifying cancer during surgery, the surgeons indicated that
intraoperative imaging with CYTALUX[supreg] enabled them to achieve
``R(-1),'' having found additional disease that they otherwise would
not have found.
---------------------------------------------------------------------------
\25\ Tanyi JL, Randall LM, Chambers SK, Butler KA, Winer IS,
Langstraat CL, Han ES, Vahrmeijer AL, Chon HS, Morgan MA, Powell MA,
Tseng JH, Lopez A, Wenham RM. A Randomized Phase 3 Study of
Pafolacianine Injection (OTL38) for Intraoperative Imaging of Folate
Receptor Positive Ovarian Cancer. J Clin Oncol. 2022. doi:10.1200/
JCO.22.00291.
\26\ Tanyi JL, Randall LM, Chambers SK, Butler KA, Winer IS,
Langstraat CL, Han ES, Vahrmeijer AL, Chon HS, Morgan MA, Powell MA,
Tseng JH, Lopez A, Wenham RM. A Randomized Phase 3 Study of
Pafolacianine Injection (OTL38) for Intraoperative Imaging of Folate
Receptor Positive Ovarian Cancer. J Clin Oncol. 2022. doi:10.1200/
JCO.22.00291.
---------------------------------------------------------------------------
In addition, the applicant asserted that CYTALUX[supreg] improves
health outcomes through the more complete resections of residual
disease, which is supported by a wealth of peer-reviewed literature and
longstanding bedrock principles relating to the treatment of cancer.
The applicant stated that in the CYTALUX[supreg] Phase 3 trial, in 70
percent of patients in which additional ovarian cancer was detected by
CYTALUX[supreg] and not by white light palpation, the specimen size of
malignant lesions plus the tissue margin was greater than 1cm. The
applicant stated that in its Phase 3 trial, CYTALUX[supreg]
demonstrated the ability to aid surgeons by identifying additional
cancer intraoperatively otherwise unknown to the surgeon and on tissue
not planned for resection, in real time, enabling the surgeon to
achieve a more complete resection in cytoreductive surgery for ovarian
cancer and therefore improving clinical outcomes for these patients.
According to the applicant, substantial clinical literature
demonstrates that complete resections are associated with improved
survival in ovarian cancer, with a steep drop in survival with residual
tumors greater than 1 cm remaining following cytoreductive surgery. The
applicant asserted that CYTALUX[supreg] is not a therapeutic agent, and
stated that it therefore believes that long-term survival studies are
not necessary to prove the clinical improvement CYTALUX[supreg] can add
to help surgeons identify and diagnose additional cancer they may have
otherwise missed, thus supporting them in achieving the surgical goal.
With regard to the false positive rates, the applicant asserted
that CYTALUX[supreg]'s false positive rates do not meaningfully alter
CYTALUX[supreg]'s significant clinical improvement analysis. The
applicant conducted an analysis to compare false positives under white
light palpation and CYTALUX[supreg] with NIR imaging. The applicant
stated that rates and specimen size of false positives are comparable
between those identified and removed by the surgeon under standard
methods of white light and palpation and those identified and removed
by the surgeon under NIR imaging with CYTALUX[supreg]. The applicant
stated that, for CYTALUX[supreg] the presence of false positive results
did not cause negative patient outcomes or additional unnecessary
treatments as the removal of benign tissue is often a consequence of
standard surgical resection. Additionally, the applicant stated that
the false positive results after use of CYTALUX[supreg] were comparable
to those following standard treatment; and the false positive results
from use of CYTALUX[supreg] led to only a small amount of noncancerous
tissue being removed.
Response: We thank the applicant for its comment and the additional
information provided regarding the substantial clinical improvement
criterion.
Based on the additional information received, we agree with the
applicant and commenters that CYTALUX[supreg] represents a substantial
clinical improvement over existing technology because CYTALUX[supreg]
can detect ovarian cancer that is currently undetectable during
surgery, which enables the surgeon to diagnose and treat additional
cancer earlier, and affects the management of the patient by
identifying additional ovarian cancer not otherwise planned for
resection, leading to revisions in the surgical plan that result in
more complete resection of the cancer.
After consideration of the information included in the applicant's
new technology add-on payment application
[[Page 58810]]
and the comments received, we have determined that CYTALUX[supreg]
meets the criteria for approval for new technology add-on payment.
Therefore, we are approving new technology add-on payments for this
technology for FY 2024. Cases involving the use of CYTALUX[supreg] that
are eligible for new technology add-on payments will be identified by
ICD-10-PCS codes: 8E0U0EN (Fluorescence guided procedure of female
reproductive system using pafolacianine, open approach), 8E0U3EN
(Fluorescence guided procedure of female reproductive system using
pafolacianine, percutaneous approach), 8E0U4EN (Fluorescence guided
procedure of female reproductive system using pafolacianine,
percutaneous endoscopic approach), 8E0U7EN (Fluorescence guided
procedure of female reproductive system using pafolacianine, via
natural or artificial opening), or 8E0U8EN (Fluorescence guided
procedure of female reproductive system using pafolacianine, via
natural or artificial opening endoscopic).
In its application, the applicant estimated that the cost of
CYTALUX[supreg] is $4,250 per single-use vial (one vial is used per
patient). Under Sec. 412.88(a)(2), we limit new technology add-on
payments to the lesser of 65 percent of the average cost of the
technology, or 65 percent of the costs in excess of the MS-DRG payment
for the case. As a result, the maximum new technology add-on payment
for a case involving the use of CYTALUX[supreg] is $2,762.50 for FY
2024.
b. CYTALUX[supreg] (Pafolacianine), Second Indication
On Target Laboratories submitted an application for new technology
add-on payments for CYTALUX[supreg] for use in lung cancer for FY 2024.
The applicant stated that CYTALUX[supreg] is the first targeted
intraoperative molecular imaging agent that illuminates lung cancer in
real time, enabling the detection of more cancer for resection.
CYTALUX[supreg] is an optical imaging agent comprised of a folic acid
analog conjugated with a fluorescent dye which binds to folate receptor
positive cancer cells and illuminates malignant lesions during surgery.
Per the applicant, CYTALUX[supreg] is used in adult patients with known
or suspected cancer in the lung as an adjunct for intraoperative
identification of pulmonary lesions. CYTALUX[supreg] is to be used with
a NIR cleared by the FDA for specific use with CYTALUX[supreg].
CYTALUX[supreg] is used by surgeons to illuminate cancer in real time
during surgery. We note that On Target Laboratories also submitted a
separate application for new technology add-on payments for
CYTALUX[supreg] for FY 2024 for use in ovarian cancer, as discussed
previously in this section.
Please refer to the online application posting for CYTALUX[supreg],
available at https://mearis.cms.gov/public/publications/ntap/NTP221017ED6BY, for additional detail describing the technology and the
disease treated by the technology.
With respect to the newness criterion, the applicant stated that
CYTALUX[supreg] received FDA approval in a supplemental new drug
application (sNDA), effective December 16, 2022, to include an
additional indication for lung cancer, following approval of the
original NDA for use in ovarian cancer. CYTALUX[supreg] is indicated as
an adjunct for intraoperative identification of malignant and non-
malignant pulmonary lesions in adult patients with known or suspected
cancer in the lung. According to the applicant, CYTALUX[supreg] will
have market availability delayed until approximately the middle of 2023
due to supply/product availability. The recommended dose of
CYTALUX[supreg] is a single intravenous infusion of 0.025 mg/kg diluted
in 250 mL of 5% Dextrose Injection, administered prior to surgery over
60 minutes using a dedicated infusion line. We noted that, as discussed
previously, the applicant stated that CYTALUX[supreg] for ovarian
cancer became commercially available on April 15, 2022. We were
interested in additional information regarding whether the versions or
formulations for CYTALUX[supreg] for use in lung cancer and ovarian
cancer are different, or further explanation regarding the longer delay
for the market availability for CYTALUX[supreg] for lung cancer.
The applicant submitted a request for unique ICD-10-PCS procedure
codes for CYTALUX[supreg] and was granted approval to use the following
procedure codes effective October 1, 2023: 8E0W0EN (Fluorescence guided
procedure of trunk region using pafolacianine, open approach), 8E0W3EN
(Fluorescence guided procedure of trunk region using pafolacianine,
percutaneous approach), 8E0W4EN (Fluorescence guided procedure of trunk
region using pafolacianine, percutaneous endoscopic approach), 8E0W7EN
(Fluorescence guided procedure of trunk region using pafolacianine, via
natural or artificial opening), and 8E0W8EN (Fluorescence guided
procedure of trunk region using pafolacianine, via natural or
artificial opening endoscopic). The applicant provided a list of
diagnosis codes that may be used to currently identify this indication
for CYTALUX[supreg], and differentiate it from the ovarian cancer
indication, under the ICD-10-CM coding system. Please refer to the
online application posting for the complete list of ICD-10-CM codes
provided by the applicant.
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 substantial similarity criteria, the applicant
believed that CYTALUX[supreg] is not substantially similar to other
currently available technologies because there are no other optical
imaging agents with the same active ingredient, nor same mechanism of
action, for the same indication, and that therefore, the technology
meets the newness criterion. The following table summarizes the
applicant's assertions regarding the substantial similarity criteria.
Please see the online application posting for CYTALUX[supreg] for the
applicant's complete statements in support of its assertion that
CYTALUX[supreg] is not substantially similar to other currently
available technologies.
BILLING CODE 4120-01-P
[[Page 58811]]
[GRAPHIC] [TIFF OMITTED] TR28AU23.141
We invited public comments on whether CYTALUX[supreg] is
substantially similar to existing technologies and whether
CYTALUX[supreg] meets the newness criterion.
Comment: The applicant submitted a public comment regarding the
newness criterion. The applicant reiterated that there are no existing
FDA approved drugs/biological products that are used as an adjunct for
intraoperative identification of malignant and non-malignant pulmonary
lesions in adult patients with known or suspected cancer in the lung
other than CYTALUX[supreg]. The applicant also reiterated that there is
no other drug marketed under the same active ingredient category or
generic name, nor which has the same mechanism of action to target the
folate receptor to illuminate cancerous lesions in the lung. In terms
of newness, the applicant asserted that the appropriate newness date
for CYTALUX[supreg] for lung cancer is June 5, 2023, the date
CYTALUX[supreg] became available for purchase. The applicant explained
that while CYTALUX[supreg] was approved in December 2022 to assist
surgeons in identifying lung lesions in adult patients with known or
suspected lung cancer, the product has never been sold or made
available to the market after its approval for use in lung cancer. As
discussed previously in this section, the applicant explained that
although the use of CYTALUX[supreg] for ovarian cancer was briefly
available on the market for a small limited pilot of 20 cases from
April through June 2022 at three select centers, the technology was
subsequently taken off the market due to the market withdrawal of the
necessary imaging system, and therefore a commercial lot of
CYTALUX[supreg] was not initiated again until there was strong
confidence that the FDA would approve CYTALUX[supreg] for use in lung
cancer. The applicant further stated that on June 5, 2023, the first
commercial lot of CYTALUX[supreg] became available for use in lung
cancer. The applicant asserted that therefore, because CYTALUX[supreg]
was not available on the market following FDA approval of
CYTALUX[supreg] for lung cancer, the appropriate newness date for
CYTALUX[supreg] for lung cancer would be June 5, 2023, the market
availability of the product.
Response: We thank the applicant for its comments. Based on our
review of comments received and information submitted by the applicant
as part of its FY 2024 new technology add-on payment application for
CYTALUX[supreg], we agree with the applicant that CYTALUX[supreg] is
the only adjunct for intraoperative identification of malignant and
non-malignant pulmonary lesions in adult patients with known or
suspected cancer in the lung with a mechanism of action to target the
folate receptor to illuminate cancerous lesions in the lung. Therefore,
we believe that CYTALUX[supreg] is not substantially similar to
existing treatment options and meets the newness criterion. We consider
the beginning of the newness period to commence when CYTALUX[supreg]
became commercially available on June 5, 2023.
With respect to the cost criterion, to identify potential cases
representing patients who may be eligible for CYTALUX[supreg], the
applicant searched the FY 2021 IPSAF for cases reporting a combination
of ICD-10-CM/PCS codes for malignant or suspected lung lesions. Using
the inclusion/exclusion criteria described in the following table, the
applicant identified 15,033 claims mapping to three MS-DRGs. The
applicant noted that it limited its search to these three MS-DRGs as 99
percent of cases map to these MS-DRGs. Please see Table 10.9.A.--
CYTALUX[supreg] (lung) Codes--FY 2024 associated with the proposed rule
for the complete list of codes that the applicant included in its cost
analysis. The applicant followed the order of operations described in
the following table and calculated a final inflated average case-
weighted standardized charge per case of $122,700, which exceeded the
average case-weighted threshold amount of $101,584. Because the final
inflated average case-weighted standardized charge per case exceeded
the average case-weighted threshold amount, the applicant asserted that
CYTALUX[supreg] meets the cost criterion.
[[Page 58812]]
[GRAPHIC] [TIFF OMITTED] TR28AU23.142
We invited public comments on whether CYTALUX[supreg] meets the
cost criterion.
Comment: The applicant submitted a comment reiterating that because
the final inflated average case-weighted standardized charge per case
exceeded the average case-weighted threshold amount, CYTALUX[supreg]
meets the cost criterion.
Response: We thank the applicant for its comment. We agree that the
final inflated average case-weighted standardized charge per case
exceeded the average case-weighted threshold amount. Therefore,
CYTALUX[supreg] meets the cost criterion.
With regard to the substantial clinical improvement criterion, the
applicant asserted that CYTALUX[supreg] represents a substantial
clinical improvement over existing technologies because CYTALUX[supreg]
enables the surgeon to visualize cancer intraoperatively, in real time,
that otherwise may have gone undetected. Per the applicant, the use of
the CYTALUX[supreg] during pulmonary resection for lung cancer
represents a significant potential advancement over current standards
of surgery by enhancing the intraoperative localization of pulmonary
nodules, improving the ability to remove them with clean margins, and
reducing the probability of leaving otherwise undetected malignant
synchronous lesions behind. The applicant provided six studies to
support these claims and nine background articles. The background
articles included studies about the importance of complete cancer
tissue resection to overall survival, the limitations of thoracoscopic
surgery by localizing the exact location of a pulmonary nodule for
resection, the low 5-year survival for lung cancer patients, and the
high rates of local recurrence after lung cancer surgery; one study
demonstrating that contrasted chest computed tomography (CT) scan is
not sufficient to identify pulmonary nodules that need resection; one
study supporting the need for cleaner margins during resection to
reduce local recurrence of lung cancer; one study supporting the use of
the folate receptor as an appropriate tumor specific marker; one study
indicating that folate-targeted agents may have a place in cancer
treatment before, as well as, after chemotherapy; and a study showing
that the folate receptor is expressed in the majority of lung cancers
and that CYTALUX[supreg] targets and binds to folate receptors and thus
the mechanism of action is a viable target for lung cancer.\27\ The
following table summarizes the applicant's assertions regarding the
substantial clinical improvement criterion. Please see the online
posting for CYTALUX[supreg] for the applicant's complete statements
regarding the substantial clinical improvement criterion and the
supporting evidence provided.
---------------------------------------------------------------------------
\27\ Background articles are not included in the following table
but can be accessed via the online posting for the technology.
---------------------------------------------------------------------------
[[Page 58813]]
[GRAPHIC] [TIFF OMITTED] TR28AU23.143
[[Page 58814]]
[GRAPHIC] [TIFF OMITTED] TR28AU23.144
[[Page 58815]]
[GRAPHIC] [TIFF OMITTED] TR28AU23.145
BILLING CODE 4120-01-C
In the FY 2024 IPPS/LTCH proposed rule (88 FR 26795), after review
of the information provided by the applicant, we stated we had the
following concerns regarding whether CYTALUX[supreg] meets the
substantial clinical improvement criterion. We noted that
CYTALUX[supreg] showed a false positive rate
[[Page 58816]]
of 25.8 percent that led to resections in the Phase 3, multicenter
study of this technology.\28\ While the applicant submitted a separate
comment stating there was no worsening in the safety profile for
patients with false positive results, we continued to question the
impact on patient outcomes when taking additional tissues that were
false positive. We noted that the authors discussed in the results of
the Phase 3 trial that there was a decreased rate of subsequent
diagnostic intervention. We questioned if they were referring to fewer
resections in future surgical procedure, and/or if this also implied a
subsequent positive outcome of reduced mortality. While the studies
provided in support of CYTALUX[supreg] measure identification of
lesions and changes in the scope of the surgical procedure, we noted
that the applicant did not provide data indicating that these endpoints
directly lead to improved clinical outcomes (for example, reduction in
mortality, hospitalizations, subsequent procedures, and/or rate of
recurrence) based on use of CYTALUX[supreg]. Rather, we stated that
improved outcomes were inferred by relying on the assumption that
increased or decreased scope of resection results in better outcomes.
We noted that we were interested in additional information or long-term
data measuring the impact of the technology on treatment outcomes or
the management of the patient to support that CYTALUX[supreg] results
in an improvement over the standard of care.
---------------------------------------------------------------------------
\28\ Singhal S, Sarkaria I., Martin L, Rice D, Blackmon S, Slade
H. Pafolacianine for Intraoperative Molecular Imaging for Cancer in
the Lung--The ELUCIDATE Trial (Manuscript in preparation). 2022.
---------------------------------------------------------------------------
We invited public comments on whether CYTALUX[supreg] meets the
substantial clinical improvement criterion.
Comment: The applicant submitted a public comment regarding the
substantial clinical improvement criterion and provided responses to
CMS's concerns from the proposed rule. With regard to improvement of
patient management, the applicant asserted that CYTALUX[supreg]
objectively improves surgeons' management of the patient through
enabling use of tissue-sparing procedures and by helping surgeons to
identify and more completely resect undetected cancerous lesions during
surgery. The applicant stated that as demonstrated in the Phase 3
ELUCIDATE trial, use of CYTALUX[supreg] allowed surgeons to localize
the primary lesion in 19 percent of patients whose lesion could not be
seen by white light and otherwise localized by the surgeon using
standard techniques and a positive/close margin (<10mm from the
resection line) in 38 percent of patients.\29\
---------------------------------------------------------------------------
\29\ Sarkaria IS, Martin LW, Rice DC, Blackmon SH, Slade HB,
Singhal S; ELUCIDATE Study Group. Pafolacianine for intraoperative
molecular imaging of cancer in the lung: The ELUCIDATE trial. J
Thorac Cardiovasc Surg. 2023 Mar 3:S0022-5223(23)00185-X. doi:
10.1016/j.jtcvs.2023.02.025. Epub ahead of print. PMID: 37019717.
---------------------------------------------------------------------------
In addition, the applicant asserted that the surgeon was able to
identify the lesion more quickly with CYTALUX[supreg] as compared to
preoperative localization techniques, thus improving the management of
the patient through reducing the amount of time the patient is under
anesthesia. The applicant stated that in the Phase 3 ELUCIDATE trial,
the median time to localize the primary nodule was 1 minute (range <1-
23), compared with another study showing that the mean procedural time
for robotic navigational bronchoscopy, which is a preferred method for
preoperative localization, was 67 minutes (range 37-97).\30\
---------------------------------------------------------------------------
\30\ Value of Robotic Navigational Bronchoscopy to Enhance
Diagnostic Yield and Guide Oncological Strategy in Treatment of
Pulmonary Nodules. Abstract presented at the 2023 American
Association of Thoracic Surgeons Annual Meeting.
---------------------------------------------------------------------------
Moreover, the applicant asserted that CYTALUX[supreg] aids
surgeons' ability to perform tissue-sparing procedures by providing
visualization of the precise location and borders of the tumor, which
helps surgeons determine where to resect tissue while ensuring a proper
margin. The applicant stated that results from the Phase 3 ELUCIDATE
trial indicated the maximum depth of lesions detected by
CYTALUX[supreg] alone was 27.9mm increasing to 37.7mm with both
CYTALUX[supreg] and white light while the minimum size of lesions
identified by CYTALUX[supreg] and not by standard white light was as
small as 2mm for synchronous lesions and 5mm for primary lesions.\31\
The applicant stated that Phase 2 and Phase 2 clinical trial date
showed CYTALUX[supreg] increased the surgeon's ability to detect the
primary lesion intraoperatively from 72 percent to 94 percent of
patients. The applicant stated that across all lesions in the Phase 2
and Phase 3 trials, 94 percent were folate receptor alpha or beta
positive, demonstrating the efficacy of CYTALUX[supreg]'s mechanism of
action across a multitude of cancer histologies in both primary lung
cancer and metastatic disease.
---------------------------------------------------------------------------
\31\ Abbas A, Kadakia S, Ambur V, Muro K, Kaiser L.
Intraoperative electromagnetic navigational bronchoscopic
localization of small, deep, or subsolid pulmonary nodules. J Thorac
Cardiovasc Surg. 2017 Jun;153(6):1581-1590. doi: 10.1016/
j.jtcvs.2016.12.044. Epub 2017 Feb 7. PMID: 28314525.
---------------------------------------------------------------------------
Additionally, the applicant asserted that appropriate staging is a
critical area to guide long-term treatment plans adjuvant to surgery,
since correct staging ensures improved patient care, enabling earlier
notification of the extent of disease and faster time to optimal
treatment. According to the applicant, in clinical trials,
CYTALUX[supreg] detected additional synchronous malignant lesions which
were not identified on preoperative imaging. The applicant stated that
one trial, the detection of 9 synchronous lesions in 8 percent of
patients (n = 7 out of 92) resulted in each of the 7 patients being
upstaged, enabling alterations to adjuvant treatment plans to reflect
the greater extent of disease.\32\ The applicant stated that in the
Phase 3 ELUCIDATE trial, CYTALUX[supreg] allowed the surgeon to
identify one more or additional synchronous malignant lesions that were
previously unidentified on preoperative scans nor intraoperatively in 8
percent of patients, with the majority outside the planned field of
resection.\33\
---------------------------------------------------------------------------
\32\ Gangadharan S, Sarkaria IN, Rice D, Murthy S, Braun J,
Kucharczuk J, Predina J, Singhal S. Multiinstitutional Phase 2
Clinical Trial of Intraoperative Molecular Imaging of Lung Cancer.
Ann Thorac Surg. 2021 Oct;112(4):1150-1159. doi: 10.1016/
j.athoracsur.2020.09.037. Epub 2020 Nov 19. PMID: 33221195.
\33\ Sarkaria IS, Martin LW, Rice DC, Blackmon SH, Slade HB,
Singhal S; ELUCIDATE Study Group. Pafolacianine for intraoperative
molecular imaging of cancer in the lung: The ELUCIDATE trial. J
Thorac Cardiovasc Surg. 2023 Mar 3:S0022-5223(23)00185-X. doi:
10.1016/j.jtcvs.2023.02.025. Epub ahead of print. PMID: 37019717.
---------------------------------------------------------------------------
In response to concerns on improvement of patient outcomes, the
applicant claimed that CYTALUX[supreg] improves health outcomes through
the more complete resection of otherwise undetected cancer, which is
supported by substantial peer-reviewed literature and longstanding
bedrock principles relating to the treatment of cancer. According to
the applicant, CYTALUX[supreg] improves surgeons' ability to treat the
disease more completely via resection, which thereby may reduce the
risk of recurrence and has the potential to increase the likelihood of
patient survival by assisting the surgeon to overcome each of these
established surgical challenges. The applicant stated that among the
Phase 3 ELUCIDATE participants, 53 percent had a clinically significant
event from use of CYTALUX[supreg]: in 19 percent of patients,
CYTALUX[supreg] was able to localize the primary lesion otherwise not
found by the surgeon using standard techniques; in 8 percent of
patients, CYTALUX[supreg] identified an unknown occult synchronous
lesions; and in 38 percent
[[Page 58817]]
of patients, CYTALUX[supreg] was able to identify a close resection
margin less than or equal to 10 mm.\34\ The applicant stated that use
of CYTALUX[supreg] led to a change in the overall scope of surgical
procedure for 29 percent of patients.\35\
---------------------------------------------------------------------------
\34\ Singhal S, Martin L, Rice D, Blackmon S, Murthy S,
Gangadharan S, Reddy R, Sarkaria I. Randomized, Multi Center Phase 3
Trial of Pafolacianine during Intraoperative Molecular Imaging of
Cancer in the Lung: Results of the ELUCIDATE Trial. AATS 102nd
Annual Meeting. Boston MA. May 2022.
\35\ Singhal S, Martin L, Rice D, Blackmon S, Murthy S,
Gangadharan S, Reddy R, Sarkaria I. Randomized, Multi Center Phase 3
Trial of Pafolacianine during Intraoperative Molecular Imaging of
Cancer in the Lung: Results of the ELUCIDATE Trial. AATS 102nd
Annual Meeting. Boston MA. May 2022.
---------------------------------------------------------------------------
In response to CMS's questioning if the noted CYTALUX[supreg]
``decreased rate of subsequent diagnostic intervention'' refers to
``fewer resections in future surgical procedure, and/or if this also
implies a subsequent positive outcome of reduced mortality'', the
applicant stated that the ELUCIDATE trial was not designed to follow
patients long term to determine reduction in additional procedures,
oncologic outcomes, nor mortality rates. According to the applicant,
considering existing preoperative procedures commonly utilized today to
provide localization aides to surgeons, CYTALUX[supreg] has the
potential to reduce preoperative localization procedures, including
endobrochial dye marking, microcoil placement, fiducial marker
placement, and transthoracic percutaneous hook wire placement. The
applicant stated that the ELUCIDATE phase 3 trial demonstrated that,
without the use of CYTALUX, synchronous malignant lesions would have
been left behind in 8 percent of patients, confirming similar findings
from the phase 2 trial. The applicant stated that as the synchronous
lesions increased in size, they would have been identified on follow up
scans, and additional surgeries are likely to have been required to
remove these lesions increasing the risk of complications and mortality
in these patients. The applicant stated that the ability to perform a
more complete resection during the initial procedure using a targeted
imaging agent has the potential to reduce the need for future
intervention (for example, additional surgery) and the associated
morbidity risks thus addressing the goal of the surgeon and
patients.\36\
---------------------------------------------------------------------------
\36\ Mohiuddin K, Haneuse S, Sofer T, et al. Relationship
between margin distance and local recurrence among patients
undergoing wedge resection for small (<=2 cm) non-small cell lung
cancer. J Thorac Cardiovasc Surg. 2014 Apr;147(4):1169-75;
discussion 1175-7. doi: 10.1016/j.jtcvs.2013.11.056. Epub 2014 Jan
2. PMID: 24507406.
---------------------------------------------------------------------------
With regards to CMS's concerns about false positives, the applicant
stated that false positive rates for CYTALUX[supreg] do not
meaningfully alter the substantial clinical improvement analysis
presented in the application. The applicant stated that in the Phase 3
trial, the false positive rate for primary lesions in patients with
confirmed cancer was low, at 1.4 percent, demonstrating the ability of
CYTALUX[supreg] to correctly identify malignant lesions with multiple
histologies in the lung, and that in patients with suspected or
confirmed cancer in the lung, the false positive rate was 12.7 percent.
Per the applicant, the difference between 1.4 percent and the 12.7
percent accounts for situations in which the patient did not have a
confirmed diagnosis prior to surgery. Additionally, the applicant
stated that clinical trial results across 769 patients from multiple
clinical trials with CYTALUX[supreg] showed there were no drug-related
serious adverse events among participants. The applicant stated that
patients who had false positive lesions removed showed no associated
increase in respiratory or pulmonary adverse events as compared to
events occurring during standard of care resections. The applicant also
asserted that the presence of false positive results did not cause
negative patient outcomes. The applicant stated that additionally, the
false-positive results after use of CYTALUX[supreg] were comparable to
those following standard treatment without CYTALUX[supreg].
We also received several additional comments in support of the
application for CYTALUX[supreg], stating that the technology represents
a substantial clinical improvement over existing technologies. These
commenters stated that the Phase 3 trial presented in the application
for CYTALUX[supreg] highlighted key challenges in the operative
landscape namely localization of lesions, margin control and occult
synchronous lesions. Commenters stated that CYTALUX[supreg] facilitates
minimally invasive lung cancer surgery, improves the ability to detect
smaller than 1 cm tumors and otherwise undetectable lesions without
unreliable procedurally placed surrogates (for example, percutaneous
wires, dye-marking, or coils) or larger procedures to locate lesions.
Commenters asserted that CYTALUX[supreg] is easy for patients because
they just undergo intravenous safe infusion of a medication
preoperatively. Commenters asserted that CYTALUX[supreg] demonstrated a
better option to visualize occult disease compared to advanced imaging
or standard visualization techniques that fail to reveal occult lesions
during initial operative intervention. Commenters stated that
CYTALUX[supreg] allowed the discovery of synchronous adenocarcinomas
that were not identified by standard CT scan procedures, aided in
confirming the location of a metastatic renal cell carcinoma lesion in
the lung of a patient and allowed more precise detection and
localization of lesions both for primary lung cancer and metastatic
disease to the lung (pancreatic adenocarcinoma and pleomorphic
liposarcoma). Commenters stated that CYTALUX[supreg] provided surgeons
the ability to visually assess margin distance to ensure an adequate
margin was obtained in real time. A commenter asserted that
CYTALUX[supreg] allows the surgeon to see the tumor during stapler
firing to visualize the margin prior to a point that could leave an
inadequate margin or require moving to a full lobectomy procedure.
Commenters believed that CYTALUX[supreg] can transform surgical
techniques, increase operative efficiency, and decrease risk for local
recurrence or inaccurate staging. Commenters believed that
CYTALUX[supreg] offers the possibility to improve cancer surgery
outcomes by enabling surgeons to better identify primary tumors, detect
occult synchronous lesions, ensure adequate margins of resection, and
ensure resection of a related lesion that will upstage the cancer and
likely necessitate adjuvant systemic therapy. A commenter stated that
CYTALUX[supreg] will impact patient outcomes now that more sublobar
resections are occurring as a result of earlier diagnosis of lung
lesions. Another commenter encouraged CMS to assign new technology add-
on payment status for new technologies like CYTALUX[supreg] supporting
personalized medicine; stating this will remove barriers to accessing
innovative tools that advance this approach to care. Another commenter
believed that false positives are not significantly impactful, as very
little tissue is removed to determine histology, and added that as more
experience is gained with CYTALUX[supreg], surgeons will learn how to
better interpret the intraoperative imaging.
Response: We thank the applicant and other commenters for their
comments regarding the substantial clinical improvement criterion.
Based on the additional information received, we agree with the
applicant that CYTALUX[supreg] represents a substantial clinical
improvement over existing technology because CYTALUX[supreg] can
identify lung cancer that is otherwise undetectable using standard
methods, which enables more precise removal of
[[Page 58818]]
the cancer by the surgeon and affects patient management, as the
detection of synchronous lesions using CYTALUX[supreg] results in the
upstaging of patient care, enabling alterations to adjuvant treatment
plans to reflect the greater extent of disease.
After consideration of the information included in the applicant's
new technology add-on payment application, we have determined that
CYTALUX[supreg] meets the criteria for approval for new technology add-
on payment. Therefore, we are approving new technology add-on payments
for this technology for FY 2024. Cases involving the use of
CYTALUX[supreg] that are eligible for new technology add-on payments
will be identified by ICD-10-PCS codes: 8E0W0EN (Fluorescence guided
procedure of trunk region using pafolacianine, open approach), 8E0W3EN
(Fluorescence guided procedure of trunk region using pafolacianine,
percutaneous approach), 8E0W4EN (Fluorescence guided procedure of trunk
region using pafolacianine, percutaneous endoscopic approach), 8E0W7EN
(Fluorescence guided procedure of trunk region using pafolacianine, via
natural or artificial opening), or 8E0W8EN (Fluorescence guided
procedure of trunk region using pafolacianine, via natural or
artificial opening endoscopic).
In its application, the applicant estimated that the cost of
CYTALUX[supreg] is $4,250 per single-use vial (one vial is used per
patient). Under Sec. 412.88(a)(2), we limit new technology add-on
payments to the lesser of 65 percent of the average cost of the
technology, or 65 percent of the costs in excess of the MS-DRG payment
for the case. As a result, the maximum new technology add-on payment
for a case involving the use of CYTALUX[supreg] is $2,762.50 for FY
2024.
c. EPKINLYTM (Epcoritamab-bysp) and COLUMVITM
(Glofitamab-gxbm)
Two manufacturers, Genmab US and Genentech, Inc., submitted
separate applications for new technology add-on payments for FY 2024
for EPKINLYTM (epcoritamab-bysp) and COLUMVITM
(glofitamab-gxbm), respectively. We note that we discussed both of
these technologies in the proposed rule at 88 FR 26809 and 26816 using
their generic names, epcoritamab and glofitamab, respectively, which
received FDA Marketing Authorization after the proposed rule and are
updated to EPKINLYTM (epcoritamab-bysp) and
COLUMVITM (glofitamab-gxbm), respectively in this final
rule. Both of these technologies are bispecific antibodies used for the
treatment of patients with relapsed/refractory (R/R) large B-cell
lymphoma (LBCL) after two or more prior therapies, with
COLUMVITM specifically targeting the largest subset of LBCL,
diffuse LBCL (DLBCL). The bispecific antibodies directly bind two types
of clusters of differentiation CD simultaneously, CD20 expressing B-
cells and CD3 expressing T-cells, to induce activation, proliferation
and cytotoxic activity of the T-cells against the malignant B-cells. In
the FY 2024 IPPS/LTCH PPS proposed rule we discussed these applications
as two separate technologies. After further consideration and as
discussed later in this section, we believe EPKINLYTM and
COLUMVITM are substantially similar to each other and that
it is appropriate to evaluate both technologies as one application for
new technology add-on payments under the IPPS. We refer the reader
below for a complete discussion regarding our analysis of the
substantial similarity of EPKINLYTM and
COLUMVITM.
Please refer to the online application postings for
EPKINLYTM available at https://mearis.cms.gov/public/publications/ntap/NTP221012JQM0G, and for COLUMVITM
available at https://mearis.cms.gov/public/publications/ntap/NTP221017RK2RD, for additional detail describing the technologies and
the disease treated by the technologies.
With respect to the newness criterion, the applicant for
EPKINLYTM stated that it was seeking Biologic License
Application (BLA) approval from FDA for the indication of treatment of
adult patients with R/R LBCL after two or more lines of systemic
therapy. The applicant for EPKINLYTM stated that
EPKINLYTM is intended for subcutaneous administration with
patients receiving 0.16 milligram (mg) priming and 0.87 mg intermediate
dose before the first full dose of 48 mg. This is administered weekly
in cycles one through three, every 2 weeks in cycles four through nine,
and every 4 weeks in cycles 10 and onward until disease progression.
According to the applicant, in the EPCORE NHL-1 study, all patients
were required per protocol to be hospitalized for 24 hours on the third
dose, which was the first full dose of 48 mg. According to the
applicant, the mean per patient dose, including when provided during or
related to inpatient stays across all 28 injection visits, is 44.61 mg.
The applicant subsequently received BLA approval from FDA for
EPKINLYTM on May 19, 2023, for the indication of treatment
of adult patients with relapsed or refractory diffuse large B-cell
lymphoma (DLBCL), not otherwise specified, including DLBCL arising from
indolent lymphoma, and high-grade B-cell lymphoma after two or more
lines of systemic therapy.
With regard to COLUMVITM, the applicant received BLA
approval from FDA on June 15, 2023, for the indication of treatment of
adult patients with relapsed or refractory diffuse large B-cell
lymphoma (DLBCL), not otherwise specified, including DLBCL arising from
follicular lymphoma after two or more lines of systemic therapy. The
applicant for COLUMVITM stated that COLUMVITM is
administered as an intravenous infusion through a dedicated infusion
line according to a dose step-up schedule leading to the recommended
dosage of 30 mg, after completion of pre-treatment with obinutuzumab on
cycle day 1, where each cycle is 21 days. The applicant recommends
treatment for a maximum of 12 cycles or until the disease progresses to
unmanageable toxicity. According to the applicant, the administration
of COLUMVITM will be treated as part of an inpatient stay
and reimbursed through the DRG when a patient is admitted within 72
hours of the outpatient administration to treat a condition that
results from the administration such as developing grade two or higher
cytokine release syndrome (CRS). The applicant stated that, in clinical
trials, when Grade 2, 3, or 4 CRS developed, 69 percent of the time it
occurred after a 2.5 mg dose, 27 percent of the time it developed after
a 10 mg dose, and 4 percent after a 30 mg dose. Therefore, according to
the applicant, the expected average dose of COLUMVITM
associated with an inpatient hospital stay is ((2.5 mg * 0.69) + (10 mg
* 0.27) + (30mg * 0.04)) = 5.625 mg.
The applicant for EPKINLYTM submitted a request for a
unique ICD-10-PCS code for EPKINLYTM beginning in FY 2024
and was granted approval for the following procedure code effective
October 1, 2023: XW013S9 (Introduction of epcoritamab monoclonal
antibody into subcutaneous tissue, percutaneous approach, new
technology group 9). The applicant for COLUMVITM submitted a
request for a unique ICD-10-PCS code for COLUMVITM beginning
in FY 2024 and was granted approval for the following procedure codes
effective October 1, 2023: XW033P9 (Introduction of glofitamab
antineoplastic into peripheral vein, percutaneous approach, new
technology group 9 and XW043P9 (Introduction of glofitamab
antineoplastic into central vein, percutaneous approach, new technology
group 9). The applicants provided lists of diagnosis codes that may be
used to
[[Page 58819]]
currently identify the indication for EPKINLYTM and
COLUMVITM under the ICD-10-CM coding system. Please refer to
the online application postings for the complete list of ICD-10-CM
codes provided by each applicant.
As stated earlier and for the reasons discussed further later in
this section, we believe that EPKINLYTM and
COLUMVITM are substantially similar to each other such that
it is appropriate to analyze these two applications as one technology
for purposes of new technology add-on payments, in accordance with our
policy. We discuss the information provided by the applicants, as
summarized in the proposed rule, regarding whether EPKINLYTM
and COLUMVITM are substantially similar to existing
technologies prior to their approval by the FDA and their release onto
the U.S. market. As discussed earlier, if a technology meets all three
of the substantial similarity criteria, it would be considered
substantially similar to an existing technology and would not be
considered ``new'' for purposes of new technology add-on payments.
With respect to the substantial similarity criteria, whether a
product uses the same or a similar mechanism of action to achieve a
therapeutic outcome, the applicant for EPKINLYTM asserted
that the mechanism of action of EPKINLYTM is not the same as
or similar to an existing technology. The applicant described
EPKINLYTM as an anti-CD3xCD20 bispecific antibody with a
unique mechanism of action that will be the first of its kind for the
treatment of R/R LBCL. The following table summarizes the applicant's
assertions regarding the substantial similarity criteria. Please see
the online application posting for EPKINLYTM for the
applicant's complete statements in support of its assertion that
EPKINLYTM is not substantially similar to other currently
available technologies.
BILLING CODE 4120-01-P
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[[Page 58820]]
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[[Page 58821]]
[GRAPHIC] [TIFF OMITTED] TR28AU23.148
The applicant for COLUMVITM asserted that
COLUMVITM offers a novel mechanism of action for the
treatment of R/R DLBCL with two or more prior lines of therapy patients
and is not substantially similar to other currently available
technologies because the mechanism of action of COLUMVITM is
distinct from other available DLBCL therapies because
COLUMVITM does not treat the same or similar type of disease
or patient population, and that therefore, the technology meets the
newness criterion. The applicant's assertions regarding substantial
similarity are summarized briefly in the following table. Please see
the online application posting for COLUMVITM for the
applicant's complete statements in support of its assertion that
COLUMVITM is not substantially similar to other currently
available technologies.
[GRAPHIC] [TIFF OMITTED] TR28AU23.149
[[Page 58822]]
[GRAPHIC] [TIFF OMITTED] TR28AU23.150
BILLING CODE 4120-01-C
In the FY 2024 IPPS/LTCH PPS proposed rule (88 FR 26811 and 88 FR
26817), we noted that EPKINLYTM and COLUMVITM may
have a similar mechanism of action, for the treatment of adult patients
with R/R LBCL/DLBCL after three or more prior lines of therapy. We
noted that COLUMVITM's mechanism of action is described as
bivalent binding of CD20 on malignant B-cells and CD3 on T-cells,
bringing them into close proximity inducing proliferation and targeted
killing of B-cells. According to COLUMVITM's application,
the 2:1 structure of COLUMVITM enables high-avidity,
bivalent binding to CD20 that can result in activity against malignant
B-cells even under low effector-to-target cells. Because of the
potential similarity with the mechanism of binding of the CD3xCD20
bispecific antibody and other actions, we stated our belief that the
mechanism of action for EPKINLYTM may be the same or similar
to that of COLUMVITM. While the applicant for
COLUMVITM stated that the use of COLUMVITM does
not involve treatment of the same or similar patient population when
compared to existing technology, there are existing therapies approved
for LBCL/DLBCL patients with three or more lines of therapy including
CAR-T-cell therapies and others such as POLIVY[supreg], XPOVIO[supreg],
and ZYNLONTA[supreg]. We therefore stated our belief that
COLUMVITM may treat the same or similar patient population
as these existing FDA-approved treatments.
We further stated our belief that EPKINLYTM and
COLUMVITM may treat the same or similar disease (LBCL/DLBCL)
in the same or similar patient population (R/R patients who have
previously received two or more lines of therapy), which is also the
same disease and population as existing treatments for R/R LBCL.
Accordingly, we stated that as it appears that EPKINLYTM and
COLUMVITM are purposed to achieve the same therapeutic
outcome using the same or similar mechanism of action and would be
assigned to the same MS-DRG, we believed that these technologies may be
substantially similar to each other such that they should be considered
as a single application for purposes of new technology add-on payments.
We were interested in information on how these two technologies may
differ from each other with respect to the substantial similarity
criteria and newness criterion, to inform our analysis of whether
EPKINLYTM and COLUMVITM are substantially similar
to each other and therefore should be considered as a single
application for purposes of new technology add-on payments.
We invited public comment on whether EPKINLYTM and
COLUMVITM meet the newness criterion, including whether
EPKINLYTM and COLUMVITM are substantially similar
to each other and therefore should be evaluated as a single technology
for purposes of new technology add-on payments.
Comment: The applicant for EPKINLYTM submitted a letter
maintaining that EPKINLYTM meets the newness criterion. The
applicant stated that EPKINLYTM is an IgG1-bispecific
antibody created using Genmab's proprietary DuoBody[supreg] technology
platform and is administered subcutaneously, designed to simultaneously
bind to CD3 on T-cells and CD20 on B-cells to induce T-cell mediated
killing of CD20+ B-cells. The applicant stated that the DuoBody[supreg]
platform enables controlled Fab-arm exchange to generate whole IgG1
monoclonal antibodies employing specific point mutations while
preserving the natural architecture. The applicant stated that
EPKINLYTM's mechanism of action differs from CAR T-cell
therapy as well as chemotherapy or conventional CD20-targeting
monoclonal antibodies as these
[[Page 58823]]
therapies primarily affect either cellular processes or functions of
rapidly dividing cells through interference with DNA, RNA, or protein
synthesis. We note that the applicant did not discuss whether it
believed EPKINLYTM is substantially similar to
COLUMVITM in its comment.
The applicant for COLUMVITM submitted a letter
maintaining that COLUMVITM meets the newness criterion. With
respect to whether COLUMVITM uses the same or a similar
mechanism or action when compared to an existing technology, the
applicant commented that COLUMVITM is a novel bispecific
antibody that binds to the target B-cell antigen CD20 bivalently,
eliciting a complete response in heavily pre-treated patients with R/R
DLBCL in the third line setting.
With respect to the request for comment on whether
COLUMVITM is substantially similar to EPKINLYTM
and whether these technologies should be evaluated as a single
technology for the purposes of new technology add-on payments, the
applicant for COLUMVITM, while recognizing the
COLUMVITM and EPKINLYTM have similarities, stated
that there are key distinctions between the two bispecific antibodies
and compared the two CD20 binding domains in COLUMVITM as
substantially different than a single CD20 binding domain in
EPKINLYTM. Specifically, the applicant for
COLUMVITM stated that COLUMVITM is a bispecific
antibody with a unique 2:1 configuration, which enables bivalent
binding of CD20 on B cells and monovalent binding of CD3 on T cells,
making COLUMVITM the only bivalent bispecific antibody
available for patients with R/R DLBCL, whereas EPKINLYTM
includes a 1:1 configuration with monovalent binding of CD20 and CD3, a
configuration common to other bispecific antibodies. Furthermore, the
applicant for COLUMVITM stated that COLUMVITM
elicits complete responses (CRs) faster than EPKINLYTM
(citing a median of 1.4 months to CR versus 2.7 months) and is
administered with a dosing schedule that requires fewer total treatment
visits for patients compared with EPKINLYTM. The applicant
for COLUMVITM also stated that COLUMVITM is
administered as a fixed-duration treatment, allowing patients the
benefit of time off therapy while EPKINLYTM requires
continuous administration until disease progression or intolerability.
With respect to CMS's concern regarding existing FDA-approved
therapies that are used to treat R/R DLBCL patients with 3 or more
lines of therapy including CAR T-cell therapies, POLIVY[supreg],
XPOVIO[supreg], and ZYNLONTA[supreg], the applicant stated that there
are significant limitations that render patients ineligible for or
unable to benefit from these therapies. For CAR T-cell therapy, the
applicant stated that despite promising response rates, they have
adverse effect profiles that may not be manageable for some patients
with R/R DLBCL, especially those with comorbidities and who are older.
For POLIVY[supreg], the applicant stated that limitations include
serious adverse effects, such as peripheral neuropathy (40% all grades
and 2.3% grades 3 or higher), which is reflected in the 31 percent
discontinuation rate reported in the U.S. prescribing information. For
XPOVIO[supreg], the applicant stated that XPOVIO[supreg] has shown low
responses (29% ORR and 13% CR) and high toxicity rates, including 80
percent patients that experienced any-grade gastrointestinal events
(13% grade 3 or higher). Lastly, for ZYNLONTA[supreg], the applicant
stated that challenges with ZYNLONTA[supreg] include a low CR rate in
patients (24%) and limited durability in responses (median duration of
response was 10.3 months). Additionally, the applicant stated that the
CD19-targeting MOA of ZYNLONTA[supreg] may impact how the treatment is
sequenced for patients considering CAR T-cell therapy or who have
relapsed after treatment. Lastly, the applicant stated that
ZYNLONTA[supreg] has adverse effects of edema and skin reactions
(including grade 3 or higher).
Response: We thank the applicants for their comments. After
consideration of the public comments we received, although we recognize
that there may be slight molecular differences, we believe
EPKINLYTM and COLUMVITM both fall into the same
class of IG1 bispecific antibodies and are therefore substantially
similar to one another. While COLUMVITM has bivalent binding
domains as opposed to monovalent binding domains for
EPKINLYTM, we do not believe number of domains meaningfully
differentiate the mechanism of action, as discussed in prior rulemaking
(87 FR 48924), and we instead believe that the technologies are
purposed to achieve the same therapeutic outcome using the same or
similar mechanism of action using bispecific CD20 and CD3 binding
antibodies. Further, while COLUMVITM may have a different
administration schedule, we do not believe the administration schedule
affects or substantiates a new mechanism of action. In addition, while
COLUMVITM may elicit a faster time to CR in comparison to
EPKINLYTM, we believe that these differences relate to an
assessment of whether the technologies meet the substantial clinical
improvement criterion, rather than the newness criterion. For these
reasons, while the applicant for COLUMVITM highlighted
differences between COLUMVITM and EPKINLYTM, we
are not convinced that these differences result in the use of a
different mechanism of action, therefore, we believe that the two
technologies' mechanisms of action are the same. Furthermore, we
believe that EPKINLYTM and COLUMVITM are
substantially similar to one another because the technologies are
intended to treat the same or similar disease in the same or similar
patient population--patients with R/R LBCL/DLBCL with two or more prior
lines of therapy, and that potential cases representing patients who
may be eligible for treatment would be assigned to the same MS-DRGs.
We also believe EPKINLYTM and COLUMVITM are
not substantially similar to any other existing technologies because,
as both applicants asserted in their FY 2024 new technology add-on
payment applications and in their comments that they are anti-CD3xCD20
bispecific antibodies with a unique mechanism of action that will be
the first of its kind for the treatment of R/R DLBCL after two or more
lines of prior therapy, the technologies do not use the same or similar
mechanism of action to achieve a therapeutic outcome as any other
existing drug or therapy assigned to the same or different MS-DRG.
Based on the information described in this section, we believe
EPKINLYTM and COLUMVITM meet the newness
criterion.
Based on the previous discussion, we are making one determination
regarding approval for new technology add-on payments that will apply
to both applications, and in accordance with our policy, we use the
earliest market availability date submitted as the beginning of the
newness period for both EPKINLYTM and COLUMVITM.
We believe our current policy for evaluating new technology payment
applications for two technologies that are substantially similar to
each other is consistent with the authority and criteria in section
1886(d)(5)(K) of the Act. We note that CMS is authorized by the Act to
develop criteria for the purposes of evaluating new technology add-on
payment applications. For the purposes of new technology add-on
payments, when technologies are substantially similar to each other, we
believe it is appropriate to evaluate both technologies as one
application for new
[[Page 58824]]
technology add-on payments under the IPPS, for the reasons we discussed
earlier and consistent with our evaluation of substantially similar
technologies in prior rulemaking (82 FR 38120).
With respect to the newness criterion, as previously stated,
EPKINLYTM received FDA approval on May 19, 2023, and
COLUMVITM received FDA approval on June 15, 2023. In
accordance with our policy, because these technologies are
substantially similar to each other, we use the earliest market
availability date submitted as the beginning of the newness period for
both technologies. Therefore, based on our policy, with regard to both
technologies, if the technologies are approved for new technology add-
on payments, we believe that the beginning of the newness period would
be the date on which EPKINLYTM received FDA approval, which
is May 19, 2023.
The applicants submitted separate cost and clinical data, and in
the proposed rule, we reviewed and discussed each set of data
separately. However, as stated previously, for this final rule, we will
make one determination regarding new technology add-on payments that
will apply to both applications. We believe that this is consistent
with our policy statements in the past regarding substantial similarity
(85 FR 58679).
If substantially similar technologies are submitted for review in
different (and subsequent) years, rather than the same year, we
evaluate and make a determination on the first application and apply
that same determination to the second application. However, because the
technologies have been submitted for review in the same year, and
because we believe they are substantially similar to each other, we
consider both sets of cost data and clinical data in making a
determination, and we do not believe that it is possible to choose one
set of data over another set of data in an objective manner.
As we discussed in the proposed rule and as stated previously, each
applicant submitted separate analyses regarding the cost criterion for
each of their products, and both applicants maintained that their
product meets the cost criterion. We summarize each analysis in this
section.
With respect to the cost criterion, the applicant for
EPKINLYTM provided multiple analyses to demonstrate that it
meets the cost criterion. For each analysis, the applicant searched the
FY 2021 MedPAR file using different ICD-10-CM codes to identify
potential cases representing patients who may be eligible for
EPKINLYTM. Each analysis followed the order of operations
described in the following table.
For the first analysis, the applicant searched for cases that
represent potential patients who are being treated for CRS arising from
the administration of EPKINLYTM with a diagnosis code for
DLBCL. The applicant used the inclusion/exclusion criteria described in
the following table. Under this analysis, the applicant identified 33
claims mapping to two MS-DRGs. The applicant calculated a final
inflated average case-weighted standardized charge per case of
$114,027, which exceeded the average case-weighted threshold amount of
$59,550.
For the second analysis, the applicant searched for cases reporting
diagnosis codes for CRS. The applicant used the inclusion/exclusion
criteria described in the following table. Under this analysis, the
applicant identified 101 claims mapping to three MS-DRGs. The applicant
calculated a final inflated average case-weighted standardized charge
per case of $88,482, which exceeded the average case-weighted threshold
amount of $56,682. Because the final inflated average case-weighted
standardized charge per case exceeded the average case-weighted
threshold amount in both scenarios, the applicant maintained that
EPKINLYTM meets the cost criterion.
BILLING CODE 4120-01-P
[[Page 58825]]
[GRAPHIC] [TIFF OMITTED] TR28AU23.151
With respect to the cost criterion, the COLUMVITM
applicant searched the FY 2021 MedPAR file for potential cases
representing patients who may be eligible for COLUMVITM,
defining two cohorts of patients who may be eligible for treatment and
merging the cases for the cost criterion analysis.
For the first cohort, the applicant searched for cases representing
potential patients who, as a result of developing CRS following
outpatient administration of COLUMVITM, require an inpatient
admission within the 3-day payment window following the outpatient
[[Page 58826]]
administration. Using the inclusion/exclusion criteria described in the
following table, the applicant identified 101 claims mapping to 3 MS-
DRGs.
For the second cohort, the applicant searched for cases
representing a potential subset of patients who are admitted as
inpatients for the purposes of being administered COLUMVITM
based on the clinical judgment of their provider. Using the inclusion/
exclusion criteria described in the following table, the applicant
identified 4,705 claims mapping to 9 MS-DRGs.
The applicant combined these two cohorts as there was no overlap
between the MS-DRGs of the two cohorts (see the table that follows for
a list of MS-DRGs for each cohort). The applicant followed the order of
operations described in the following table and calculated a final
inflated average case-weighted standardized charge per case of $134,690
which exceeded the average case-weighted threshold amount of $96,417.
Because the final inflated average case-weighted standardized charge
per case exceeded the average case-weighted threshold amount, the
applicant asserted that COLUMVITM meets the cost criterion.
[GRAPHIC] [TIFF OMITTED] TR28AU23.152
[[Page 58827]]
We invited public comment on whether EPKINLYTM or
COLUMVITM meet the cost criterion.
Comment: The applicant for EPKINLYTM submitted a comment
referring to the two cost analyses submitted with the application; one
scenario using DLBCL diagnosis codes for patients who are being treated
for cytokine release syndrome arising from the outpatient
administration of EPKINLYTM that would require inpatient
admission within the 3-day payment window and the other scenario of
cases reporting diagnosis codes for cytokine release syndrome. Given
the availability of the wholesale acquisition cost (WAC) of EPINKLY,
the applicant re-calculated the cost threshold analyses using the cost
of $11,463.61 ($317.20/mg * 36.14 mg) for EPKINLYTM per
patient to the hospital. The applicant reiterated that
EPKINLYTM meets the cost criterion under both scenarios
where the final inflated case weighted standardized charge per case of
$176,329 exceeds the case weighted threshold of $59,550 by $116,779 in
the first scenario and where the final inflated case weighted
standardized charge per case of $150,780 exceeds the case weighted
threshold of $56,682 by $94,103 in the second scenario.
The applicant for COLUMVITM submitted a comment
reiterating that COLUMVITM meets the cost criterion because
the final inflated average case-weighted standardized charge per case
exceeded the average case-weighted threshold amount in the cost
criterion analysis submitted in its new technology add-on payment
application.
Response: We thank the applicants for their comments. We agree that
the final inflated average case-weighted standardized charge per case
exceeded the average case-weighted threshold amount for both
technologies. Therefore, both EPKINLYTM and
COLUMVITM meet the cost criterion.
With regard to the substantial clinical improvement criterion, the
applicant asserted that EPKINLYTM represents a substantial
clinical improvement over existing technologies because it offers a
treatment option with improved efficacy and safety for R/R LBCL
patients unresponsive to currently available treatments (for example,
CAR T-cell therapies such as KYMRIAH[supreg], YESCARTA[supreg], and
Breyanzi[supreg], and non-CAR T-cell therapies such as POLIVY[supreg],
ADCETRIS[supreg], XPOVIO[supreg], and ZYNLONTA[supreg]); and it
significantly improves clinical outcomes among R/R LBCL patients as
they progress through lines of therapy. The applicant provided two
studies to support these claims, and nine background articles about
other treatments available for R/R DLBCL patients and clinical outcomes
for patients treated with other therapies such as Breyanzi[supreg],
ZYNLONTA[supreg], YESCARTA[supreg], XPOVIO[supreg], KYMRIAH[supreg],
and POLIVY[supreg].\37\ The following table summarizes the applicant's
assertions regarding the substantial clinical improvement criterion.
---------------------------------------------------------------------------
\37\ Background articles are not included in the following table
but can be accessed via the online posting for the technology.
---------------------------------------------------------------------------
[[Page 58828]]
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[[Page 58829]]
[GRAPHIC] [TIFF OMITTED] TR28AU23.154
In the FY 2024 IPPS/LTCH PPS proposed rule (88 FR 26816), after
review of the information provided by the applicant, we had the
following concerns regarding whether EPKINLYTM meets the
substantial clinical improvement criterion. With respect to whether the
technology offers a treatment option for a patient population
unresponsive to, or ineligible for, currently available treatments, the
applicant described EPKINLYTM as having stronger efficacy
data in comparison to other 3L+ treatment options available. We noted
that the applicant provided many background studies regarding R/R DLBCL
treatment options. However, they were unable to provide the complete
study of EPKINLYTM (EPCORE NHL-1) in support of its claim of
EPKINLYTM's stronger efficacy data in comparison to other
3L+ treatment options, providing only the presentation of partial
results used for the European Hematology Association meeting of 2022.
Therefore, we stated we were limited in our ability to fully evaluate
and assess the supporting evidence for this claim. Furthermore, we
noted that there may be other available treatments for this specific
population, including CAR T-cell therapies. We also noted that it is
unclear which patient population is ineligible for these available
treatment options. With respect to whether the technology improves
clinical outcomes relative to services or technologies previously
available, the applicant described EPKINLYTM as having
better safety profiles and efficacy than existing treatments. However,
the comparisons are not matched cases within a comparative study, and
we questioned whether there are differences between the trials, such as
differences in the patient populations included and the way outcomes
are defined, that should be considered in assessing the comparison of
clinical outcomes across these studies. We were interested in
additional information to demonstrate that EPKINLYTM has
significantly better efficacy and safety profiles than other available
treatments.
With regard to the substantial clinical improvement criterion, the
applicant asserted that COLUMVITM represents a substantial
clinical improvement over existing technologies because it offers a
treatment option for R/R DLBCL patients who have progressed after three
or more lines of therapy that engages T-cells in its mechanism of
action with off-the-shelf access and a fixed-treatment duration; and it
significantly improves clinical outcomes among R/R DLBCL patients with
three or more lines of therapy as compared to placebo. The applicant
provided two studies to support these claims, as well as 41 background
articles about current therapies for R/R DLBCL patients including
access and clinical outcomes for this patient population.\38\ The
following table summarizes the applicant's assertions regarding the
substantial clinical improvement. Please see the online posting for
COLUMVITM for the applicant's complete statements regarding
the substantial clinical improvement criterion and the supporting
evidence provided.
---------------------------------------------------------------------------
\38\ Background articles are not included in the following table
but can be accessed via the online posting for the technology.
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[[Page 58830]]
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[[Page 58831]]
[GRAPHIC] [TIFF OMITTED] TR28AU23.156
[[Page 58832]]
[GRAPHIC] [TIFF OMITTED] TR28AU23.157
BILLING CODE 4120-01-C
In the FY 2024 IPPS/LTCH PPS proposed rule (88 FR 26823), after
review of the information provided by the applicant, we stated we had
the following concerns regarding whether COLUMVITM meets the
substantial clinical improvement criterion. To support its assertion
that COLUMVITM offers a treatment option for a patient
population unresponsive to, or ineligible for, currently available
treatments, the applicant asserted that COLUMVITM expands
treatment options for R/R DLBCL patients who have progressed after
other 2L or 3L+ therapies. However, we noted that there are other
technologies and treatments approved for this specific population, as
mentioned earlier, such that it is not clear that this would represent
a patient population unresponsive to, or ineligible for, currently
available treatments. With respect to the applicant's claim that
COLUMVITM reduces mortality of patients who had progressed
after ASCT or CAR T-cell therapy, we noted that the applicant provided
several background studies 39 40 41 42 regarding other
existing treatments for R/R DLBCL as well as the main
COLUMVITM study, however, as this conclusion was based on
the comparison of results across these independent studies, we stated
we would be interested in additional information regarding the
comparability of these findings regarding mortality reduction for each
respective technology. With respect to the applicant's claims that
COLUMVITM is an off-the-shelf therapy without any delay due
to personalized manufacturing, such as CAR T-cell therapy, and that
COLUMVITM can be made available across various geographies
for patients with DLBCL, we questioned whether other available
therapies, such as POLIVY[supreg], XPOVIO[supreg], and
ZYNLONTA[supreg], that may be used to treat patients with multiple
relapses or who are refractory to other therapies, also would not have
those limitations.
---------------------------------------------------------------------------
\39\ Gisselbrecht C, et al. J Clin Oncol 2010; 28(27):4184-90.
\40\ Schuster SJ, et al. Lancet Oncol 2021;21:1403-15.
\41\ Abramson JS, et al. The Lancet. 2020;396(10254):839-52.
\42\ Locke FL, et al. Lancet Oncol 2019;20:31-42.
---------------------------------------------------------------------------
With respect to the applicant's claims that COLUMVITM
improves outcomes as compared to existing treatments, including safety
and rate of treatment discontinuations, we noted that only one single
arm trial with no comparators was provided in support of this claim. We
further noted that the comparisons of the supporting evidence
43 44 provided for other existing technologies to the main
COLUMVITM study are not matched cases; for example, the
studies do not adjust for type and severity of AEs. Therefore, we
questioned whether these comparisons can be used to demonstrate a
significant difference in safety or efficacy.
---------------------------------------------------------------------------
\43\ Salles G, et al. Lancet Oncol 2020;21(7):978-88.
\44\ MONJUVI[supreg] (tafasitamab) [prescribing information].
Boston, MA: Morphosys US Inc.; June 2021.
---------------------------------------------------------------------------
With respect to the applicant's claim that COLUMVITM is
a fixed-treatment duration therapy, providing patients with time off
treatment and the potential to improve patient quality of life, we
noted that this appears to be an inference, as the applicant did not
provide any evidence that a fixed-treatment improves quality of life.
According to the applicant, during the first cycle (each cycle is 21
days), the patient is required to receive the drug infusion once a
week. After cycle 1, the frequency of infusion is reduced to once a
month. While COLUMVITM provides a fixed-treatment, it
requires weekly up to monthly infusions in comparison to CAR-T cell
therapy, which is a one-time treatment. We were interested in
additional information regarding the association between treatment type
and duration and quality of life, particularly how
COLUMVITM's treatment type and duration results in higher
quality of life as compared to the treatment type and duration of
existing technologies.
We invited public comments on whether EPKINLYTM or
COLUMVITM meet the substantial clinical improvement
criterion.
Comment: The applicant for EPKINLYTM submitted a comment
regarding the substantial improvement criterion and provided responses
to concerns raised by CMS in the proposed rule. In response to CMS's
request for additional support of the claim that EPKINLYTM
has stronger efficacy in comparison to other 3L+ treatment options
available, the applicant for EPKINLYTM stated
EPKINLYTM was shown to have significantly better clinical
outcomes compared to chemoimmunotherapy in two indirect treatment
comparisons. The applicant stated that R/R DLBCL patients face
significant disease burden and poor clinical outcomes. The applicant
further stated that for patients who have failed two or more prior
lines of therapy (LOT), there is no standard of care; although
chemoimmunotherapy (CIT) regimens are commonly used, they do not
provide optimal outcomes. The applicant also stated that while direct
[[Page 58833]]
treatment comparisons have not yet been made, real world indirect
comparisons have shown that compared to chemoimmunotherapy,
EPKINLYTM offers a substantially higher chance of response
and significantly lower risks of progression and
mortality.45 46 The applicant also stated that
EPKINLYTM demonstrated clinically meaningful outcomes
compared to polatuzumab vedotin and tafasitamab plus lenalidomide in a
matched cohort comparative analysis. Furthermore, the applicant stated
that two indirect treatment comparison studies have been conducted
comparing EPKINLYTM and CAR T-cell therapy in patients with
R/R LBCL, and that in both studies, EPKINLYTM was shown to
have no statistically significant difference in efficacy compared to
CAR T-cell therapy. The applicant stated that EPKINLYTM is
an off-the-shelf therapy that may be effective for patients who cannot
easily access CAR T-cell therapy, who are ineligible for CAR T-cell
therapy, or who have progressed from CAR T-cell therapy. The applicant
indicated that access to CAR T-cell therapy is limited due to its
availability only at approximately 200 centers in specialized medical
centers to which older adults may be unable to travel to. In addition,
the applicant indicated that an estimated 35 percent to 50 percent of
patients would not be eligible for second line CAR T-cell therapy and
that this number likely increases in third and subsequent lines of
therapy.\47\ The applicant stated that in a real-world analysis of
patients who received CAR T-cell therapy, ~60 percent of patients never
respond to treatment with a median failure at only 49 days. For these
patients, who relapse or who are refractory to CAR T-cell therapy, a
standard of care has not been established.\48\ The applicant concluded
that EPKINLYTM would be effective for those patients who are
either ineligible or have progressed from CAR T-cell therapy, and that
because EPKINLY is an off-the-shelf therapy, it is not constrained by
the same individualized manufacturing timelines and associated
challenges that can delay patient starts on CAR T-cell therapy.
---------------------------------------------------------------------------
\45\ Ip, A., et al. Comparison of Real-World Clinical Outcomes
in Patients With Relapsed/Refractory Large B-cell Lymphoma Treated
With Epcoritamab vs Chemoimmunotherapy. The European Hematology
Association Abstract Library. 2023.
\46\ Ip, A., et al. Comparison of Real-World Clinical Outcomes
in Patients With Relapsed/Refractory Large B-cell Lymphoma Treated
With Epcoritamab vs Chemoimmunotherapy. The European Hematology
Association Abstract Library. 2023.
\47\ Puckrin R., et al. Real-World Eligibility for Second-Line
Chimeric Antigen Receptor T Cell Therapy in Large B Cell Lymphoma: A
Population-Based Analysis. Transplant Cell Ther. 2022
Apr;28(4):218.e1-218.
\48\ Dodero, A., et al. Patients Outcome after Chimeric Antigen
Receptor (CAR) T-Cells Failure in Aggressive B-Cell Lymphomas: Role
of Immunotherapy and Prognostic Factors. Blood 2022; 140 (Supplement
1): 9468-9469.
---------------------------------------------------------------------------
Another commenter submitted a comment in support of the approval of
the new technology add-on payment application for EPKINLYTM,
citing its efficacy in the third line setting in patients with R/R LBCL
with an overall response rate of 63.1 percent and a complete response
rate of 39 percent based on Lugano criteria and a manageable safety
profile.\49\ Furthermore, the commenter stated that despite recent
approval and expanded utilization of CAR T-cell therapy, there remains
no clear standard of care for treatment of many patients with R/R LBCL
due to issues surrounding access. The commenter stated that CAR T-cell
therapy is offered at only ~210 centers in the U.S, often concentrated
in major metropolitan areas, creating significant barriers for patients
living in remote or rural areas.\50\ The commenter further stated that
even when CAR T-cell therapy is accessible, CAR T-cell therapy poses
several challenges for patients, starting with the potentially lengthy
manufacturing process that includes pre-treatment procedures like
leukapheresis, to collect T-cells, and then genetically modifying T-
cells to express CARs, which can take up to several weeks.\51\ Lastly,
the commenter stated that approximately 40 percent of DLBCL patients
were ineligible for CAR T-cell therapy due to factors such as organ
dysfunction, active infections or prior stem cell transplantation,
while around 18-20 percent of those that were eligible underwent
leukapheresis but did not receive CAR T-cells due to disease
progression, adverse events, or clinical deterioration.52 53
The commenter concluded that, in summary, the significant challenges
associated with CAR T-cell therapy including limited access, lengthy
manufacturing processes, eligibility restrictions, and risk of
treatment failure, underscore the need for effective treatments with
comparable clinical benefits and broader patient reach.
---------------------------------------------------------------------------
\49\ Thieblemont C., et al. Epcoritamab, a Novel, Subcutaneous
CD3xCD20 Bispecific T-Cell-Engaging Antibody, in Relapsed or
Refractory Large B-Cell Lymphoma: Dose Expansion in a Phase I/II
Trial. J Clin Oncol. 2023 Apr 20;41(12):2238-2247.
\50\ Snyder S., et al. Access to Chimeric Antigen Receptor T
Cell Therapy for Diffuse Large B Cell Lymphoma. Adv Ther. 2021
Sep;38(9):4659-4674.
\51\ Bishop M., et al. Second-Line Tisagenlecleucel or Standard
Care in Aggressive B-Cell Lymphoma. N Engl J Med. 2022; 386: 629-39.
\52\ Schuster S., et al. Tisagenlecleucel in Adult Relapsed or
Refractory Diffuse Large B-Cell Lymphoma. N Engl J Med.
2019;380(1):45-5.
\53\ Jacobson C., et al. Axicabtagene Ciloleucel in the Non-
Trial Setting: Outcomes and Correlates of Response, Resistance, and
Toxicity. J Clin Oncol. 2020;38(27):3095-3106.
---------------------------------------------------------------------------
The applicant for COLUMVITM submitted comments in
response to CMS's concerns in the FY 2024 IPPS/LTCH PPS proposed rule
regarding whether COLUMVITM meets the substantial clinical
improvement criterion. The applicant reiterated its support for
COLUMVITM stating that COLUMVITM significantly
improves clinical outcomes of patients with R/R DLBCL after at least
two prior systemic therapies.
With respect to CMS's concern that the existence of other
technologies and treatments approved for the R/R DLBCL patients with
two or more lines of therapy made it unclear that this would represent
a patient population unresponsive to or ineligible for currently
available treatments, the applicant stated that COLUMVITM
expands treatment options for three key subsets of patients in the R/R/
DLBCL setting receiving and inadequately treated by existing therapies,
including: patients who are ineligible for or who cannot access ASCT or
CAR T-cell therapy, patients who have progressed after ASCT or CAR T-
cell therapy, and patients who have progressed after two or more other
lines of approved therapies. The applicant stated that
COLUMVITM is a treatment option for patients who are
ineligible for or cannot access ASCT or CAR T-cell therapy, indicating
that about half of patients with R/R DLBCL with three or more lines of
therapies are ineligible for ASCT or CAR T-cell therapies because of
treatment-related toxicities. The applicant stated that this patient
population is further vulnerable to accessing ASCT or CAR T-cell
therapy as there are limited treatment sites and manufacturing delays.
The applicant cited a retrospective study which showed that in patients
with R/R DLBCL receiving three or more lines of treatment (3L) post CAR
T-cell therapy approval, less than 20 percent of patients received CAR
T-cell therapy in 3L between October 2017 and March 2020.\54\ The
applicant further stated COLUMVITM is a new option for
patients who have progressed after ASCT or CAR T-cell therapy, stating
that about two-thirds of patients with R/R DLBCL relapse after ASCT,
and about half of patients receiving CAR T-cell therapies experience
disease
[[Page 58834]]
progression.55 56 The applicant stated that many patients in
the 3L+ setting have low response rates to available therapies, and
that tolerability of approved treatments can be poor with a range of
potential adverse events (AEs) associated with these therapies. The
applicant stated that tolerability of COLUMVITM was
demonstrated by low rates of treatment discontinuation and an overall
favorable safety profile with AEs that are more tolerable than those
associated with other treatment options in the 3L+ setting.
---------------------------------------------------------------------------
\54\ Xie, J., et al. 2021. ``Characteristics and Treatment
Patterns of Relapsed/Refractory Diffuse Large B-Cell Lymphoma in
Patients Receiving >=3 Therapy Lines in Post-CAR-T Era.'' Curr Med
Res Opin 37, no. 10 (Oct): 1789-1798.
\55\ Dickinson, M. J., et al. 2022. ``Glofitamab for Relapsed or
Refractory Diffuse Large B-Cell Lymphoma.'' N Engl J Med 387, no. 24
(Dec 15): 2220-2231.
\56\ Sehn, L. H., et al. 2021. ``Diffuse Large B-Cell
Lymphoma.'' N Engl J Med 384, no. 9 (Mar 4): 842-858.
---------------------------------------------------------------------------
With respect to CMS's concern that the applicant provided several
background studies regarding other existing treatments for R/R DLBCL as
well as the main COLUMVITM study to support the applicant's
claim that COLUMVITM reduces mortality of patients who had
progressed after ASCT or CAR T-cell therapy, the applicant for
COLUMVITM stated that while ASCT can produce long-term
remissions in about one-third of patients who undergo the procedure,
the remaining patients who experience disease progression have poor
outcomes. The applicant stated that effective treatments for patients
who progress after ASCT is an unmet need in R/R DLBCL and cited the
CORAL \57\ study where patients who relapsed after ASCT had a median
overall survival (OS) of 10 months and an estimated 1-year OS of 39
percent whereas for patients who relapse within 6 months the median OS
was 5.7 months. The applicant further stated that about half of
patients receiving CAR T-cell therapy experience disease progression
with 48 percent of patients who receive CAR T-cell therapy in 3L began
a 4L treatment within 4 months. The applicant stated there is limited
data on how patients progress after CAR T-cell therapy progression and
patient response to salvage treatment given the recent introduction of
commercial CAR T-cell therapy. The applicant indicated the outcomes
from limited data are poor and cited a recent analysis of 298 patients
who received CAR T-cells in the United Kingdom, 54 percent experienced
disease with a median of 2.4 months to progression and had a median OS
of 4.4 months.\58\ The applicant further stated that patients who went
on to additional therapies had a median OS of 8.8 months with only 22
percent achieving a CR whereas patients who did not receive further
treatment had a median OS of 1.7 months.\59\ The applicant stated that
among currently approved 3L+ options, there is either no data or a lack
of efficacy for patients after CAR T-cell therapy, indicating that in a
trial of one therapy, enrolled patients with prior ASCT and CAR T-cell
therapy 29 percent and 15 percent respectively achieved CRs.\60\ The
applicant indicated that COLUMVITM study patients with prior
ASCT and CAR T-cell therapy achieved CRs at rates of 67 percent and 35
percent respectively indicating that this is a substantial clinical
improvement for a patient population with an unmet need.
---------------------------------------------------------------------------
\57\ Van Den Neste, E., et al. 2016. ``Outcome of Patients with
Relapsed Diffuse Large B-Cell Lymphoma Who Fail Second-Line Salvage
Regimens in the International CORAL Study.'' Bone Marrow Transplant
51, no. 1 (Jan): 51-7.
\58\ Xie, J., et al. 2021. ``Characteristics and Treatment
Patterns of Relapsed/Refractory Diffuse Large B-Cell Lymphoma in
Patients Receiving >/=3 Therapy Lines in Post-CAR-T Era.'' Curr Med
Res Opin 37, no. 10 (Oct): 1789-1798.
\59\ Kuhnl, A., et al. 2021. ``Outcome of Large B-Cell Lymphoma
Patients Failing CD19 Targeted CAR T Therapy.'' ICML Oral 087.
\60\ Caimi, P. F., et al. 2021. ``Loncastuximab Tesirine in
Relapsed or Refractory Diffuse Large B-Cell Lymphoma (LOTIS-2): A
Multicentre, Open-Label, Single-Arm, Phase 2 Trial.'' The Lancet
Oncol 22, no. 6: 790-800.
---------------------------------------------------------------------------
With respect to CMS's concerns as to whether other available
therapies, such as POLIVY[supreg], XPOVIO[supreg], and
ZYNLONTA[supreg], may be used to treat patients with multiple relapses
and do not require personalized manufacturing such as CAR T-cell
therapy, the applicant for COLUMVITM stated that although
these therapies are available off the shelf, COLUMVITM is an
off-the-shelf therapy that provides a substantial clinical improvement
via efficacy, durability, and low toxicity in a heavily pretreated,
highly refractory patient population.
With respect to CMS's concerns as to whether COLUMVITM
improves outcomes as compared to existing treatments, including safety
and rate of treatment discontinuations, the applicant for
COLUMVITM stated that head-to-head data of therapies in 3L+
are not available and that while direct comparisons across different
trials are subject to confounding and bias because of systematic
differences, consideration of outcomes in clinical trials for currently
approved therapies indicate the outcomes are in line with historical
rates of response in the 3L+ setting where typically less than half of
patients respond to conventional 3L therapies and the median OS of
patients in the 3L setting is 4-10 months.61 62 63 The
applicant further stated that single-arm studies are an important
mechanism to facilitate faster access to novel therapies, particularly
for patients who have exhausted other approved options.
---------------------------------------------------------------------------
\61\ Gisselbrecht, C., et al. 2010. ``Salvage Regimens with
Autologous Transplantation for Relapsed Large B-Cell Lymphoma in the
Rituximab Era.'' J Clin Oncol 28, no. 27 (Sep 20): 4184-90.
\62\ Van Den Neste, E., et al. 2017. ``Outcomes of Diffuse Large
B-Cell Lymphoma Patients Relapsing after Autologous Stem Cell
Transplantation: An Analysis of Patients Included in the CORAL
Study.'' Bone Marrow Transplant 52, no. 2 (Feb): 216-221.
\63\ Crump, M., et al. 2017. ``Outcomes in Refractory Diffuse
Large B=Cell Lymphoma: Results from the International SCHOLAR-1
Study.'' Blood 130: 1800-1809.
---------------------------------------------------------------------------
With respect to our request for additional information regarding
the association between treatment type and the applicant for
COLUMVITM's claim that COLUMVITM is a fixed-
treatment duration therapy that provides patients with time off
treatment and the potential to improve patient quality of life, the
applicant responded that while there is no data available on this
subject in 3L+ DLBCLs yet, fixed-duration versus continuous therapy
have been studied in other therapeutic areas and a range of benefits
have been associated with fixed-duration therapies. The applicant
indicated that the time off treatment may be associated with
improvement in quality of life based on a nonrandomized study of
patients with chronic myeloid leukemia whose patient-reported outcomes
included improvement in treatment-related adverse effects when
discontinuing a tyrosine kinase inhibitor treatment.\64\ The applicant
indicated that patients prefer fixed-duration therapies to continuous
therapies citing surveys of patients with chronic lymphocytic leukemia
and Waldenstrom's macroglobulinemia identified fixed duration therapy
as a positive attribute when compared to continuous
therapy.65 66 The applicant for COLUMVITM further
stated that fixed-duration therapy can reduce costs as compared to
continuous treatment options.
---------------------------------------------------------------------------
\64\ Atallah, E., et al. 2021. ``Assessment of Outcomes after
Stopping Tyrosine Kinase Inhibitors among Patients with Chronic
Myeloid Leukemia: A Nonrandomized Clinical Trial.'' JAMA Oncol 7,
no. 1 (Jan 1): 42-50.
\65\ Ravelo, A, et al. 2022. ``Understanding Patient Preferences
for Chronic Lymphocytic Leukemia Treatments.'' Blood 140, no.
Supplement 1: 10803-10805.
\66\ Amaador, K., et al. 2023. ``Patient Preferences Regarding
Treatment Options for Waldenstrom's Macroglobulinemia: A Discrete
Choice Experiment.'' Cancer Med 12, no. 3 (Feb): 3376-3386.
---------------------------------------------------------------------------
Response: We thank the commenters for their comments regarding the
[[Page 58835]]
substantial clinical improvement criterion. Based on the additional
information received, we agree that EPKINLYTM and
COLUMVITM represent a substantial clinical improvement over
existing technologies because these technologies offer treatment
options for patients with R/R DLBCL after two or more prior therapies
who are unresponsive to, or ineligible for, currently available
treatments, who are ineligible due to factors such as organ
dysfunction, active infection, or prior stem cell transplantation, or
for whom CAR T-cell therapy is not an available treatment option.
After consideration of the public comments we received, and the
information included in both the applicants' new technology add-on
payment applications, we have determined that EPKINLYTM and
COLUMVITM meet all of the criteria for approval of new
technology add-on payments. Therefore, we are approving new technology
add-on payments for EPKINLYTM and COLUMVITM for
FY 2024. As previously stated, cases involving EPKINLYTM
that are eligible for new technology add-on payments will be identified
by ICD-10-PCS procedure code XW013S9 (Introduction of epcoritamab
monoclonal antibody into subcutaneous tissue, percutaneous approach,
new technology group 9). Cases involving COLUMVITM that are
eligible for new technology add-on payments will be identified by ICD-
10-PCS procedure code XW033P9 (Introduction of glofitamab
antineoplastic into peripheral vein, percutaneous approach, new
technology group 9) or XW043P9 (Introduction of glofitamab
antineoplastic into central vein, percutaneous approach, new technology
group 9).
Each of the applicants submitted cost information for its
application. The manufacturer of EPKINLYTM stated that the
cost of its technology is $11,463.61 per patient. The applicant
projected that 117 cases will involve the use of EPKINLYTM
in FY 2024. The manufacturer of COLUMVITM stated that the
cost of its technology is $5,748.53. The applicant projected that 40
cases will involve the use of COLUMVITM in FY 2024. Because
the technologies are substantially similar to each other, we believe
using a single cost for purposes of determining the new technology add-
on payment amount is appropriate for EPKINLYTM and
COLUMVITM even though each applicant has its own set of
codes. We also believe using a single cost provides predictability
regarding the add on payment when using EPKINLYTM or
COLUMVITM for the treatment of patients with R/R DLBCL. As
such, consistent with prior rulemaking (85 FR 58684), we believe that
the use of a weighted average of the cost of EPKINLYTM and
COLUMVITM based on the projected number of cases involving
each technology to determine the maximum new technology add-on payment
would be most appropriate. To compute the weighted cost average, we
summed the total number of projected cases for each of the applicants,
which equaled 157 cases (117 plus 40). We then divided the number of
projected cases for each of the applicants by the total number of
cases, which resulted in the following case-weighted percentages: 74.5
percent for EPKINLYTM and 25.5 percent for
COLUMVITM. We then multiplied the cost per case for the
manufacturer specific drug by the case-weighted percentage (0.745 *
$11,463.61 = $8,540.39 for EPKINLYTM and 0.255 * $5,748.53 =
$1,465.87 for COLUMVITM). This resulted in a case-weighted
average cost of $10,006.26 for the technology. Under Sec.
412.88(a)(2), we limit new technology add-on payments to the lesser of
65 percent of the average cost of the technology, or 65 percent of the
costs in excess of the MS-DRG payment for the case. As a result, the
maximum new technology add-on payment for a case involving the use of
EPKINLYTM or COLUMVITM is $6,504.07 for FY 2024.
d. LunsumioTM (Mosunetuzumab)
Genentech, Inc. submitted an application for new technology add-on
payments for LunsumioTM for FY 2024. Per the applicant,
LunsumioTM is a novel, full-length, humanized,
immunoglobulin G1 (IgG1) bispecific antibody that is designed to
concomitantly bind CD3 on T cells and CD20 on B cells, in the treatment
of adults with relapsed/refractory (R/R) follicular lymphoma (FL) who
have received at least 2 (>=2) prior systemic therapies (also referred
to herein as 3L+FL). The applicant further stated that target B cell
killing occurs only upon simultaneous binding to both targets, as it is
a conditional agonist. We note that Genentech, Inc submitted an
application for new technology add-on payments for
LunsumioTM for FY 2023 under the name mosunetuzumab, as
summarized in the FY 2023 IPPS/LTCH PPS proposed rule (87 FR 28261
through 28274), that it withdrew prior to the issuance of the FY 2023
IPPS/LTCH PPS final rule (87 FR 48920).
Please refer to the online application posting for
LunsumioTM, available at https://mearis.cms.gov/public/publications/ntap/NTP221017LJLDM, for additional detail describing the
drug and the disease treated by the technology.
With respect to the newness criterion, LunsumioTM was
granted accelerated approval of its BLA from FDA on December 22, 2022,
for the treatment of adult patients with relapsed or refractory
follicular lymphoma after two or more lines of systemic therapy.
According to the applicant, LunsumioTM was not commercially
available immediately after FDA approval. The applicant stated that
LunsumioTM was made available for sale after the new year
with the first order occurring on January 6, 2023, due to a companywide
holiday shutdown and to provide manufacturing time. We noted in the FY
2024 IPPS/LTCH PPS proposed rule (88 FR 26824), for the purposes of new
technology add-on payments, we do not consider the date of first sale
as an indicator of the entry of a product onto the U.S. market.
According to the applicant, LunsumioTM is sold in a 1 mg and
30 mg single dose vial and is administered for eight cycles according
to the dosage schedule in the following table unless patients
experience unacceptable toxicity or disease progression. Per the
applicant, most of the inpatient usage of LunsumioTM will
occur as the result of adverse events, mainly CRS, that develop after
outpatient administration of the drug. The applicant stated that
clinical protocols require that inpatient hospitalization occur for
most Grade 2 CRS patients, and for all patients with Grade 3 or 4 CRS.
In clinical trials, when Grade 2, 3, or 4 CRS developed, 75 percent of
the time it occurred after a 60 mg dose, 20 percent of the time it
developed after a 1 mg dose, and 5 percent after a 2 mg dose. Based on
this information, it seems that the weighted average inpatient dose
would be 45.3 mg.
BILLING CODE 4120-01-P
[[Page 58836]]
[GRAPHIC] [TIFF OMITTED] TR28AU23.158
According to the applicant, effective October 1, 2022, the
following ICD-10-PCS procedure codes may be used to distinctly identify
administration of LunsumioTM: XW03358 (Introduction of
mosunetuzumab antineoplastic into peripheral vein, percutaneous
approach, new technology group 8) or XW04358 (Introduction of
mosunetuzumab antineoplastic into central vein, percutaneous approach,
new technology group 8). The applicant stated that diagnosis code C82
(Follicular lymphoma) may be used to currently identify the indication
for LunsumioTM under the ICD-10-CM coding system.
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 substantial similarity criteria, the applicant
asserted that LunsumioTM is not substantially similar to
other currently available technologies because it does not use the same
or a similar mechanism of action compared to any existing technology
approved for treatment of 3L+ FL and because the use of
LunsumioTM in 3L+ FL does not involve the treatment of the
same or a similar type of disease or the same or similar patient
population when compared to an existing technology. The following table
summarizes the applicant's assertions regarding the substantial
similarity criteria. Please see the online application posting for
LunsumioTM for the applicant's complete statements in
support of its assertion that LunsumioTM is not
substantially similar to other currently available technologies.
[[Page 58837]]
[GRAPHIC] [TIFF OMITTED] TR28AU23.159
In the FY 2024 IPPS/LTCH PPS proposed rule (88 FR 26825), we stated
that while the applicant indicated that the technology does not involve
the treatment of the same or similar patient population as compared to
existing technology, we noted 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 stated our belief that LunsumioTM would be used
for the same disease and patient population when compared to other
therapies approved to treat FL in 3L+ settings.
We invited public comments on whether LunsumioTM is
substantially similar to existing technologies and whether
LunsumioTM meets the newness criterion.
[[Page 58838]]
Comment: The applicant submitted a public comment regarding the
newness criterion. In response to CMS's questions related to newness,
the applicant stated that although several treatment regimens have been
developed and approved for R/R FL in the U.S., there are no preferred
treatment options for patients in the 3L+ setting. The applicant
further stated that although currently available therapies for patients
with R/R FL who have had two or more prior therapies may be appropriate
for certain patients, substantial clinical factors impact whether a
patient can benefit from these 3L+ treatment options (for example,
copanlisib, tazemetostat, axicabtagene ciloleucel, and
tisagenlecleucel). The applicant noted these include high-risk features
such as refractoriness to prior therapy, double refractoriness to prior
alkylator and anti-CD20 monoclonal antibody therapy, POD24 of 1L
chemoimmunotherapy, FLIPI score of 3-5, or older age. The applicant
further stated that certain treatment options for patients with R/R FL
who have had two or more prior therapies have their own limitations
that may restrict the eligible patient population. The applicant used
copanlisib, tazemetosib, and CAR T-cell therapy as examples. According
to the applicant, copanlisib is associated with severe toxicities and
suboptimal responses that limit its use in patients with R/R FL who
have received 2+ prior systemic therapies. With regard to tazemetostat,
the applicant stated that it offers limited efficacy to patients with
R/R FL who have received >=2 prior systemic therapies and do not have
an EZH2 mutation. The applicant stated that while tazemetostat is still
approved for patients with wildtype EZH2, the label includes language
that tazemetostat is indicated for the treatment of ``Adult patients
with relapsed or refractory follicular lymphoma who have no
satisfactory alternative treatment options,'' and that because EZH2
mutations are found in less than 30 percent of FL cases, 70 percent of
the patients who progress after 2+ prior systemic treatments can
benefit from additional options. With regard to CAR T-cell therapy, the
applicant maintained that benefits of this treatment in patients with
R/R FL who have received 2+ prior systemic therapies are limited by
tolerability and accessibility. The applicant stated that patients aged
65 years or older make up about 35 percent of CAR T-cell recipients
(25%-41%) and may experience higher rates of CRS and neurological AEs
than patients under 65 years of age, and that unlike treatment-emergent
AEs with other therapies, CAR T cells cannot be dose-reduced or delayed
managing these AEs, nor can treatment be discontinued once
administered.
According to the applicant, additional treatment options are needed
for patients who may not be candidates for CAR T-cell therapies or who
cannot access the therapy. The applicant argued that even for patients
who are fit enough to tolerate CAR T-cell therapy toxicities, access to
treatment remains a significant barrier. The applicant noted that
twelve states currently have no available CAR T-cell therapy sites. The
applicant stated that even for those with access to a treatment center,
additional barriers limit the number of patients who can receive CAR T-
cell therapy, such as with ensuring that a manufacturing slot is
available when a patient's cells are collected (if frozen cells are not
an option), or obtaining necessary reagents.
The applicant asserted that LunsumioTM is efficacious in
patients with R/R FL who have received 2+ lines of systemic therapy.
According to the applicant, LunsumioTM is efficacious across
all subgroups, including those who are heavily pretreated and highly
refractory, and those who aged 65 years or older, and has a generally
manageable safety profile. In addition, the applicant maintained that
the tolerability of LunsumioTM compared with currently
approved 3L+ treatment options is a substantial clinical improvement.
Per the applicant, LunsumioTM is anticipated to be a
reasonable treatment option for patients who have progressed after CAR
T-cell therapy, substantially improving access to 3L+ treatment for
these patients. According to the applicant, as an off-the-shelf therapy
that does not require patient-specific manufacturing,
LunsumioTM will be widely available at hospitals and clinics
across the country, substantially improving access to treatment
compared with CAR T-cell therapies. The applicant expected that
LunsumioTM will fill an unmet need left by other approved
3L+ therapies and therefore does not treat the same or similar type of
disease in the same or similar patient population when compared with
existing technologies.
Another commenter submitted a public comment supporting the newness
of LunsumioTM in the treatment of multiply relapsed FL, as
the first approved CD20xCD3 bispecific antibody. According to the
commenter, while there are other agents approved for the treatment of
multiply relapsed FL, they have clinical limitations that significantly
constrain their utility, such as lower response rates, inferior
durability of response, treatment schedules that limit routine use, and
key toxicities. The commenter also explained that the use of CAR-T cell
therapies for FL are limited by toxicity and by access to centers of
excellence with the resources to administer such treatment. The
commenter asserted that LunsumioTM represents a critical
innovation for patients with multiply relapsed FL, offers a potent
immunotherapy appropriate for outpatient and community-based use, and
has a new and unique mechanism of action.
Response: We thank the applicant and commenter for their comments.
We disagree with the commenter and continue to believe that
LunsumioTM would be used for the same disease in a similar
patient population when compared to other therapies approved to treat
FL in 3L+ settings. We note that according to the applicant, treatment
options are available for R/R FL patients, though limitations impact
which patients can benefit from these available 3L+ treatment options.
However, we believe that these limitations relate to an assessment of
whether the technology meets the substantial clinical improvement
criterion rather than the newness criterion. As a result, we believe
that LunsumioTM treats the same or similar disease in the
same or similar patient population when compared to existing treatments
for FL in 3L+ settings. Based on our review of the comments received
and information submitted by the applicant as part of its FY 2024 new
technology add-on payment application for LunsumioTM, we
agree with the applicant that LunsumioTM has a unique
mechanism of action as a CD20xCD3 bispecific monoclonal antibody for
the treatment of 3L+ FL. Therefore, we believe that
LunsumioTM is not substantially similar to existing
treatment options and meets the newness criterion. As we have discussed
in prior rulemaking (77 FR 53348), generally, our policy is to begin
the newness period on the date of FDA approval or clearance or, if
later, the date of availability of the product on the U.S. market. The
applicant stated that LunsumioTM was FDA approved for 3L+
treatment of adult patients with R/R FL on December 22, 2022, and
became available for sale after the new year with a date of first sale
on January 6, 2023. However, it is unclear from the information
provided whether the technology would have been available for sale
prior to January 6, 2023. Nonetheless, we note that using either
[[Page 58839]]
the FDA approval date of December 22, 2022, or the date suggested by
manufacturer of January 6, 2023, LunsumioTM is still new for
FY 2024 because the 3-year anniversary date (December 22, 2025, or
January 6, 2026, respectively) would occur after FY 2024. Because we
did not receive any additional information about whether the technology
was available for sale before January 6, 2023, we therefore consider
the beginning of the newness period to commence on December 22, 2022.
With respect to the cost criterion, the applicant provided multiple
analyses to demonstrate that it meets the cost criterion. For each
analysis, the applicant searched the FY 2021 MedPAR file using
different ICD-10-CM codes to identify potential cases representing
patients who may be eligible for LunsumioTM. The applicant
explained that it used different codes to identify different cohorts
that may be eligible for the technology. Each analysis followed the
order of operations described in the following table.
For the first analysis, the applicant searched for cases reporting
ICD-10-CM diagnosis codes for follicular lymphoma without a
corresponding chemotherapy administration code. The applicant used the
inclusion/exclusion criteria described in the following table. Under
this analysis, the applicant identified 704 claims mapping to 12 MS-
DRGs. The applicant followed the order of operations described in the
following table and calculated a final inflated average case-weighted
standardized charge per case of $104,824, which exceeded the average
case-weighted threshold amount of $96,820.
For the second analysis, the applicant searched for cases reporting
ICD-10-CM diagnosis codes for follicular lymphoma excluding follicular
lymphoma grade 3B (FL3B) without a corresponding chemotherapy
administration code. The applicant used the inclusion/exclusion
criteria described in the following table. Under this analysis, the
applicant identified 687 claims mapping to 12 MS-DRGs. The applicant
followed the order of operations described in the following table and
calculated a final inflated average case-weighted standardized charge
per case of $103,171, which exceeded the average case-weighted
threshold amount of $96,578.
For the third analysis, the applicant searched for cases reporting
ICD-10-CM diagnosis codes for follicular lymphoma with accompanying
chemotherapy administration codes. The applicant used the inclusion/
exclusion criteria described in the following table. Under this
analysis, the applicant identified 844 claims mapping to 13 MS-DRGs.
The applicant followed the order of operations described in the
following table and calculated a final inflated average case-weighted
standardized charge per case of $101,992, which exceeded the average
case-weighted threshold amount of $98,198.
For the fourth analysis, the applicant searched for cases reporting
ICD-10-CM diagnosis codes for follicular lymphoma excluding FL3B with
accompanying chemotherapy administration codes. The applicant used the
inclusion/exclusion criteria described in the following table. Under
this analysis, the applicant identified 813 claims mapping to 13 MS-
DRGs. The applicant followed the order of operations described in the
following table and calculated a final inflated average case-weighted
standardized charge per case of $99,322, which exceeded the average
case-weighted threshold amount of $97,505.
[[Page 58840]]
[GRAPHIC] [TIFF OMITTED] TR28AU23.160
We invited public comments on whether LunsumioTM meets
the cost criterion.
Comment: The applicant submitted a comment that summarized the
results of the four analyses discussed in the proposed rule, and
reiterated that regardless of the criteria for selecting the cases for
the analysis, the final inflated average case-weighted standardized
charge per case exceeded the average case-weighted threshold amount.
Response: We thank the applicant for their comment. We agree that
the final inflated average case-weighted standardized charge per case
exceeded the average case-weighted threshold amount. Therefore,
LunsumioTM meets the cost criterion.
With regard to the substantial clinical improvement criterion, the
applicant asserted that LunsumioTM represents a substantial
clinical improvement over existing technologies because it will expand
access to patients for whom existing therapies are not adequate and
because it offers patients with 3L+ FL multiple substantial clinical
benefits, including high efficacy with significant tolerability; broad
efficacy across patients with 3L+; and the opportunity to achieve
sustained remission without continuous treatment. The applicant
provided 13 studies to support these claims as well as 34 background
articles. The following table summarizes the applicant's assertions
regarding the substantial clinical improvement criterion. Please see
the online posting for LunsumioTM for the applicant's
complete statements regarding the substantial clinical improvement
criterion and the supporting evidence provided.
[[Page 58841]]
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[[Page 58842]]
[GRAPHIC] [TIFF OMITTED] TR28AU23.162
[[Page 58843]]
[GRAPHIC] [TIFF OMITTED] TR28AU23.163
BILLING CODE 4120-01-C
In the FY 2024 IPPS/LTCH PPS proposed rule (88 FR 26830), after
review of the information provided by the applicant, we stated that we
had the following concerns regarding whether LunsumioTM
meets the substantial clinical improvement criterion. We noted that the
applicant provided a single-arm, phase II trial of 90 patients, sub-
study analysis, and another single-arm phase I/II trial of 15 patients
to support its claims of substantial clinical improvement. As noted in
the previous table, the studies evaluated complete response rates or
indicators of safety, but did not evaluate survival as a primary
outcome. They were also single-arm, without comparison to other
existing treatments for the patient population. The applicant compared
outcomes of the phase II trial with LunsumioTM to outcomes,
including QOL and AE from background studies of other
technologies.67 68 69 However, we noted 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 LunsumioTM without more
detailed adjustment for patient characteristics. Without a direct
comparison of outcomes between these therapies, we were concerned as to
whether the differences in outcomes identified by the applicant
translate to clinically meaningful differences or improvements for
patients treated with LunsumioTM as compared to historical
rates for other treatments.
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\67\ Cheah, Y.C. et al. (2022), op.cit.
\68\ Morschhauser, F., H. Tilly, A. Chaidos, et al. (2020)
Tazemetostat for patients with relapsed or refractory follicular
lymphoma: an open-label, single-arm, multicenter, phase 2 trial.
Lancet Oncology. 21(11):1433-1442. doi:10.1016/S1470-2045(20)30441-
1.
\69\ Budde, L. et al. (2022), op.cit.
---------------------------------------------------------------------------
We invited public comments on whether LunsumioTM meets
the substantial clinical improvement criterion.
Comment: The applicant submitted a public comment in response to
CMS's concerns regarding substantial clinical improvement. In response
to the issue of study design, the applicant responded that there are
benefits and limitations to single-arm studies in the 3L+ FL setting.
The applicant noted that single-arm studies are an important mechanism
to facilitate faster access to novel therapies, especially for patients
who have exhausted other approved options. According to the applicant,
investigating LunsumioTM for patients in the 3L+ FL setting
is an example of using a single-arm clinical trial strategy to bring a
novel treatment to patients who have an unmet need. Other benefits of
single-arm trials are smaller sample size requirements, shorter
completion time, and the ability to identify signs of efficacy early in
drug development.70 71 At the same time, the applicant
acknowledged that single-arm studies are most appropriate for assessing
response rates and since they lack a comparator arm, time-to-event
endpoints, such as progression-free survival and overall survival, can
only be understood in the context of a historical control. The
applicant also noted that evaluation of safety outcomes is likewise
limited by a lack of a comparator arm.72 73 Nonetheless, the
applicant maintained that despite these limitations, single-arm trials
are a valuable tool for drug discovery.
---------------------------------------------------------------------------
\70\ Nierengarten, M.B. 2023. ``Single-Arm Trials for US Food
and Drug Administration Cancer Drug Approvals.'' Cancer 129, no. 11
(Jun 1): 1626.
\71\ Agrawal, S., et al. 2023. ``Use of Single-Arm Trials for US
Food and Drug Administration Drug Approval in Oncology, 2002-2021.''
JAMA Oncol 9, no. 2 (Feb 1): 266-272.
\72\ Budde, L.E., et al. 2022. ``Safety and Efficacy of
Mosunetuzumab, a Bispecific Antibody, in Patients with Relapsed or
Refractory Follicular Lymphoma: A Single-Arm, Multicentre, Phase 2
Study.'' Lancet Oncol 23, no. 8: 1055-1065.
\73\ Salles, G.A., et al. 2022. ``Efficacy Comparison of
Tisagenlecleucel vs Usual Care in Patients with Relapsed or
Refractory Follicular Lymphoma.'' Blood Adv (Aug 16).
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With regard to the use of historical control without adjusting for
potential confounders, the applicant stated that
[[Page 58844]]
head-to-head data comparing LunsumioTM to other approved 3L+
treatments are not available. The applicant acknowledged that direct
comparisons across different trials are subject to confounding and bias
because of systematic differences including study population,
comparators, and outcomes between or among trials being compared.
Nonetheless, the applicant argued that information regarding how
pivotal studies of other therapies were carried out may still be useful
when considering clinical trial outcomes.
With regard to the absence of endpoints related to survival, the
applicant asserted that the response criteria used to assess responses
in LunsumioTM were similar to those in pivotal clinical
trials for other currently available therapies. The applicant noted
that for instance, the response rates for LunsumioTM in
patients with R/R FL who have received 2+ prior therapies were assessed
using the International Working Group Revised Response Criteria for
Malignant Lymphoma, for which a response was defined as a CR (that is,
positron emission tomography [PET]-negative response) even if a mass of
any size is persistent, and a PR was defined as a regression of
measurable disease via at least a 50 percent decrease in sum of the
product of the diameters (SPD) of up to six of the largest dominant
nodes or nodal masses and no new sites.\74\ The applicant also argued
that the response rates for copanlisib and tazemetostat in patients
with R/R indolent lymphoma and patients with mutated or wild type EZH2
R/R FL, respectively, were assessed using the same International
Working Group Revised Response Criteria for Malignant Lymphoma. The
applicant added that the response rates for axicabtagene ciloleucel in
adult patients with indolent NHL after 2+ lines of prior therapy and
tisagenlecleucel in adult patients with R/R FL after 2+ lines of prior
therapy were assessed using the 2014 Lugano classification, which
defines CR as a complete metabolic response even with a persistent
mass, and defines PR as a decrease by more than 50 percent in the SPD
of up to six representative nodes or extranodal lesions, which are
consistent with the definitions from the International Working Group
Revised Response Criteria for Malignant Lymphoma.75 76 The
applicant asserted that therefore, the criteria used to assess response
in patients with R/R FL who had 2+ prior systemic therapies across all
pivotal trials reflects a similar approach to assessing antitumor
activity for each therapeutic option.
---------------------------------------------------------------------------
\74\ Cheson, B.D., et al. 2007. ``Revised Response Criteria for
Malignant Lymphoma.'' J Clin Oncol 25, no. 5 (Feb 10): 579-86.
\75\ Cheson, B.D., et al. 2014. ``Recommendations for Initial
Evaluation, Staging, and Response Assessment of Hodgkin and Non-
Hodgkin Lymphoma: The Lugano Classification.'' J Clin Oncol 32, no.
27 (Sep 20): 3059-68.
\76\ Cheson et al., 2007, op.cit.
---------------------------------------------------------------------------
In addition, the applicant included results of an updated analysis
of the pivotal LunsumioTM study (that is, Budde et al. 2022)
in their comments. According to the applicant, the median duration of
complete response (DOCR) was not reached (median time on study was 28.6
months). The 24-month DOCR rate after first CR was 65 percent (95% CI,
39-90). Also, the applicant stated that median Physician Fee Schedule
(PFS) was not reached; 24-month PFS rate was 77 percent (95% CI, 63-
91). Per the applicant, two years after the end of fixed-duration
treatment, 67 percent of these 49 patients remained free of progressive
disease or death.\77\ The applicant maintained that these outcomes
approached the best ORRs and CRs reported with axicabtagene ciloleucel
and tisagenlecleucel (ORRs of 91% and 86% and CRs of 60% and 68%,
respectively)78 79 and were substantially better than the
best outcomes with copanlisib (ORR of 59% and CR 14%) and tazemetostat
(mutant EZH2 was 69% ORR and 12% CR; wild-type EZH2 was 34% ORR and 4%
CR).80 81 The applicant stated that in addition, at 22.8
months, the median DOR with LunsumioTM was longer than both
copanlisib (DOR: 12.2 months) and tazemetostat (mutant EZH2 DOR of 10.9
months, wild-type EZH2 was 10.9 months).82 83 84
---------------------------------------------------------------------------
\77\ Sehn, L., et al. 2023. ``Mosunetuzumab Demonstrates Durable
Responses in Patients with Relapsed and/or Refractory Follicular
Lymphoma Who Have Received >=2 Prior Therapies: Updated Analysis of
a Pivotal Phase II Study.'' EHA Annual Meeting Abstract P1078.
\78\ Kymriah (Tisagenlecleucel) [Prescribing information]. East
Hanover, NJ: Novartis Pharmaceuticals Corporation; 2022.
\79\ Yescarta (Axicabtagene Ciloleucel) [Prescribing
information]. Santa Monica, CA: Kite Pharma Inc.; 2017.
\80\ Aliqopa (Copanlisib) [Prescribing information]. Whippany,
NJ: Bayer Healthcare Pharmaceuticals In; 2017.
\81\ Tazverik (Tazemetostat) [Prescribing information].
Cambridge, MA: Epizyme, Inc.; 2020.
\82\ LunsumioTM (mosunetuzumab-axgb). 1 DNA Way South
San Francisco, CA. Genentech, Inc.; 2022.
\83\ Tazverik (Tazemetostat) [Prescribing information].
Cambridge, MA: Epizyme, Inc.; 2020.
\84\ Aliqopa (Copanlisib) [Prescribing information]. Whippany,
NJ: Bayer Healthcare Pharmaceuticals Inc.; 2017.
---------------------------------------------------------------------------
Response: We thank the applicant for their comment regarding the
substantial clinical improvement criterion. Based on the additional
information received, we agree that LunsumioTM represents a
substantial clinical improvement over existing technologies for the
treatment of patients with 3L+FL because LunsumioTM offers a
treatment option for a patient population unresponsive to, or
ineligible for, currently available treatments, in particular: R/R FL
patients who have undergone 2+ prior treatments, but cannot access any
of the four PI3K inhibitors or EZH2 inhibitor approved by FDA for 3L+
treatment of R/R FL; patients with EZH2 mutation, who are contra-
indicated for tazemetostat, an EZH2 inhibitor approved for R/R FL; and
patients who were unable to tolerate CAR T-cell therapy.
After consideration of the public comments received and the
information included in the applicant's new technology add-on payment
application, we have determined that LunsumioTM meets the
criteria for approval for new technology add-on payment. Therefore, we
are approving new technology add-on payments for this technology for FY
2024. Cases involving the use of LunsumioTM that are
eligible for new technology add-on payments will be identified by ICD-
10-PCS codes: XW03358 (Introduction of mosunetuzumab antineoplastic
into peripheral vein, percutaneous approach, new technology group 8),
or XW04358 (Introduction of mosunetuzumab antineoplastic into central
vein, percutaneous approach, new technology group 8).
Per the applicant, the WAC of LunsumioTM is $594.06 for
a 1 mg single dose vial. As stated previously, according to the
applicant, LunsumioTM is sold in a 1 mg and 30 mg single
dose vial (we note, a 30 mg single dose vial is priced at the 1 mg
single dose vial x 30 = $17,821.80). According to the applicant, most
of the inpatient usage would occur as the result of adverse events,
mainly CRS, that develop after outpatient administration of the drug,
and that in clinical trials, when Grade 2, 3, or 4 CRS developed, 75
percent of the time it occurred after a 60 mg dose, 20 percent of the
time it developed after a 1 mg dose, and 5 percent after a 2 mg dose.
Based on this information, we determined a weighted average inpatient
dose of 45.3 mg. Therefore, the average cost per patient for
LunsumioTM is $26,910.92 (45.3 mg * $594.06 per 1 mg vial).
Under Sec. 412.88(a)(2), we limit new technology add-on payments to
the lesser of 65 percent of the average cost of the technology, or 65
percent of the costs in excess of the MS-DRG payment for the case. As a
result, the maximum new technology add-on payment for a
[[Page 58845]]
case involving the use of LunsumioTM is $17,492.10 for FY
2024.
e. NexoBrid\TM\ (Anacaulase-bcdb)
Vericel Corporation submitted an application for new technology
add-on payments for NexoBrid\TM\ for FY 2024. According to the
applicant, NexoBrid\TM\ is a novel, non-surgical option for eschar
removal (debridement) in adult patients with deep partial thickness
(DPT) and/or full thickness (FT) thermal burns. Per the applicant,
NexoBrid\TM\ is a botanical and biologic product for topical use
consisting of a concentrate of proteolytic enzymes enriched in
bromelain extracted from pineapple stems. We note that Vericel
Corporation submitted an application for new technology add-on payments
for NexoBrid\TM\ for FY 2022, as summarized in the FY 2022 IPPS/LTCH
PPS proposed rule (86 FR 25286 through 25291), that it withdrew prior
to the issuance of the FY 2022 IPPS/LTCH PPS final rule (86 FR 44774).
Please refer to the online application posting for NexoBrid\TM\,
available at https://mearis.cms.gov/public/publications/ntap/NTP221017WGWTP, for additional detail describing the technology and the
condition treated by the technology.
With respect to the newness criterion, according to the applicant,
NexoBrid\TM\ was granted BLA approval from FDA on December 28, 2022,
for eschar removal (debridement) in adults with DPT and/or FT thermal
burns. According to the applicant, NexoBrid\TM\ is expected to be
commercially available the end of June or beginning of July 2023 in the
U.S. market as manufacturing preparations are currently underway.
NexoBrid\TM\ is applied topically to the wound at 2-gram lyophilized
powder with 20-gram gel vehicle per 1% total body surface area (TBSA),
or 5-gram lyophilized powder with 50-gram gel vehicle per 2.5% TBSA, up
to an area of up to 15% TBSA in one application. The applicant
estimated that the average U.S. patient will receive approximately 2.8
5-gram packs of NexoBrid\TM\ per inpatient stay, based upon the average
NexoBrid\TM\-treated area of 6.28% TBSA in the DETECT clinical trial
with an expected wastage assumption of approximately 10 percent, as
well as commercial use of the technology in Europe.
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 NexoBrid\TM\: XW00X27 (Introduction of bromelain-enriched
proteolytic enzyme into skin, external approach, new technology group
7) and XW01X27 (Introduction of bromelain-enriched proteolytic enzyme
into subcutaneous tissue, external approach, new technology group 7).
As previously discussed, if a technology meets all three of the
substantial similarity criteria under the newness criterion, it would
be considered substantially similar to an existing technology and would
not be considered ``new'' for the purpose of new technology add-on
payments.
With respect to the substantial similarity criteria, the applicant
asserted that NexoBrid\TM\ is not substantially similar to other
currently available technologies because NexoBrid\TM\ has a novel
mechanism of action and is the first enzymatic technology to achieve
rapid, consistent eschar removal; the applicant further asserted that
the active ingredient in NexoBrid\TM\ has never been approved in any
application under section 505(b)(1) of the Federal Food, Drug, and
Cosmetic Act (FD&C Act) of 1938 or section 351(a) of the Public Health
Service (PHS) Act; and no existing technology under the existing burn
DRGs is similar to NexoBrid\TM\, and that therefore, the technology
meets the newness criterion. The following table summarizes the
applicant's assertions regarding the substantial similarity criteria.
Please see the online application posting for NexoBrid\TM\ for the
applicant's complete statements in support of its assertion that
NexoBrid\TM\ is not substantially similar to other currently available
technologies.
BILLING CODE 4120-01-P
[[Page 58846]]
[GRAPHIC] [TIFF OMITTED] TR28AU23.164
BILLING CODE 4120-01-C
However, we had the following concerns with regard to the newness
criterion. We noted in the FY 2024 IPPS/LTCH PPS proposed rule (88 FR
26831) that as discussed in the FY 2022 IPPS/LTCH PPS proposed rule (86
FR 25288), while the applicant discussed the differences between
NexoBrid\TM\ and collagenase-based products, we did not receive enough
information regarding the specific composition of the proteolytic
enzymes used within the NexoBrid\TM\ active pharmaceutical ingredient
and its mechanism of action. Specifically, it was unclear whether the
proteolytic enzymes act similarly to existing collagenase-based
enzymatic debridement products since the applicant claimed that
NexoBrid\TM\ debrides denatured collagen in the wound. We also noted
that the applicant asserted that NexoBrid\TM\ is not assigned to the
same MS-DRGs as existing technologies used for burns, although it
seemed that NexoBrid\TM\ would be assigned to the same burn MS-DRGs as
other enzymatic and surgical debridement technologies.
We invited public comments on whether NexoBrid\TM\ is substantially
similar to existing technologies and whether NexoBrid\TM\ meets the
newness criterion.
Comment: A commenter stated that NexoBrid\TM\ does not meet the
newness criterion because it has been commercially available in the
European Union for a decade. Additionally, the commenter noted fruit-
based enzymatic debridement products have been utilized for decades and
marketed under various trade names, including Accuzyme[supreg],
Allanzyme, Ethezyme, GladaseTM, Kovia, and Panafil. The
commenter explained that these enzymatic debridement products utilize
papain extract from papaya fruit (Carica papaya) and exhibit identical
activation catalytic mechanisms as NexoBrid\TM\'s pineapple-derived
enzymes. The commenter further explained that papain and bromelain are
fruit-derived cysteine proteases, also known as thiol proteases, with
non-specific degradation profiles and proteolytic mechanisms of action.
The commenter added that in addition to the fruit-based enzymatic
debridement products mentioned, SANTYL[supreg] Collagenase Ointment is
an enzymatic debridement product that has been commercially available
since its approval in 1965 and is utilized to treat chronic dermal
ulcers and severe burns.
Response: We thank the commenter and have taken it into
consideration in determining whether NexoBrid\TM\ meets the newness
criterion, discussed later in this section.
[[Page 58847]]
Comment: The applicant submitted a comment reiterating its
assertion that NexoBrid\TM\ has a novel mechanism of action that
satisfies the newness criterion. The applicant stated that the active
pharmaceutical ingredient in NexoBrid\TM\, anacaulase-bcbd, is a
mixture of proteolytic enzymes extracted from the stems of pineapple
plants and is composed mainly (80% to 95% weight by weight [w/w]) of
stem bromelain, ananain, jacalin-like lectin, bromelain inhibitors,
phytocystatin inhibitor, small molecule metabolites, and saccharides,
as both free monosaccharides and the N-linked glycan of stem
bromelain.\85\ The applicant further explained that bromelain is a
combination of thiol endopeptidases and other components, such as
phosphatases, glucosidases, peroxidases, cellulases, glycoproteins,
carbohydrates, and several protease inhibitors.\86\
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\85\ NexoBrid[supreg] Prescribing Information. Vericel
Corporation. Cambridge, MA. 20222. Page 9.
\86\ Pavan R, Jain S, Kumar A. Properties and therapeutic
application of bromelain: a review. Biotechnology research
international. 2012. Page 2
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In response to CMS's concern regarding NexoBrid\TM\'s mechanism of
action, the applicant stated that NexoBrid\TM\ degrades collagen by
bromelain via a combination of endopeptidases and other enzymes. The
applicant further explained that this degradation by bromelain results
in a wide range of reactions beyond hydrolysis, such as peroxidases
catalyze oxidation reactions,\87\ and acts on a group of substrates,
including gelatin, chromogenic tripeptides, and casein.\88\
Additionally, the applicant noted, in the context of eschar removal, it
has been hypothesized that the presence of multiple proteolytic enzymes
likely results in the degradation of multiple substrates contained
within the eschar in addition to denatured collagen.\89\ The applicant
stated that NexoBrid\TM\'s combination of enzymes is unique and
distinct from collagenase-based debridement agents, which are primarily
composed of collagenase derived from Clostridium histolyticum in
petrolatum USP.\90\ The applicant explained that clostridial
collagenase-based debridement agents are based on proteolysis of a
collagen substrate through hydrolysis reactions \91\ and result in
cleavage of necrotic tissue at seven specific sites along the denatured
collagen strand.\92\
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\87\ Pavan R, Jain S, Kumar A. Properties and therapeutic
application of bromelain: a review. Biotechnology research
international. 2012. Page 2.
\88\ Chakraborty AJ, Mitra S, Tallei TE, Tareq AM, Nainu F,
Cicia D, Dhama K, Emran TB, Simal-Gandara J, Capasso R. Bromelain a
Potential Bioactive Compound: A Comprehensive Overview from a
Pharmacological Perspective. Life. 2021; 11(4):317.
\89\ Singer AJ, Goradia EN, Grandfield S, Zhang N, Shah K,
McClain SA, et al. A Comparison of Topical Agents for Eschar Removal
in a Porcine Model: Bromelain-enriched vs Traditional Collagenase
Agents. Journal of Burn Care & Research. 2023;44(2):408-13. Page
408, ``The bromelain-enriched enzymatic debridement agent is derived
from the stems of pineapples and contains a mixture of other
proteolytic enzymes including at least four distinct cysteine
proteinases: ananain1, ananain2, stem bromelain, and comosain. The
presence of multiple proteolytic enzymes likely results in the
degradation of multiple substrates contained within the eschar in
addition to denatured collagen.''
\90\ SANTYL[supreg] Prescribing Information. Smith & Nephew,
Inc. Fort Worth, TX. 2016. Page 1.
\91\ Eckhard U, Sch[ouml]nauer E, Brandstetter H. Structural
Basis for Activity Regulation and Substrate Preference of
Clostridial Collagenases G, H, and T*. Journal of Biological
Chemistry. 2013; 288(28): 20184.
\92\ Shi L, Ermis R, Garcia A, Telgenhoff D, Aust D. Degradation
of human collagen isoforms by Clostridium collagenase and the
effects of degradation products on cell migration. International
Wound Journal. 2010;7(2): 94.
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The applicant also asserted that since the mechanism of action of
NexoBridTM differs significantly from collagenase-based
debridement agents, the dosage and administration, as well as resulting
clinical outcome, is also different. The applicant explained that
NexoBridTM is applied to the burn wound once (in some cases
twice, for a four-hour period) and was shown in clinical studies to
achieve complete eschar removal (>=95% eschar removal) in 93 percent of
patients, while on the other hand, collagenase-based debridement agents
are typically used daily, as a continuous application for multiple days
with varying results.
In response to CMS's concern regarding the MS-DRG assignment for
procedures in which NexoBrid\TM\ is administered, the applicant stated
that it may be appropriate for NexoBrid\TM\ administration to be
assigned to existing burn MS-DRGs (for example, 927, 928, 929, 933,
934, 935); however, the payment associated with these MS-DRGs would not
adequately account for NexoBrid\TM\'s cost.
Response: We appreciate the additional information from the
applicant and commenters with respect to whether NexoBridTM
is substantially similar to existing technologies.
As stated in the preamble of this section, 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. Therefore, we disagree with the commenter that
NexoBridTM would not be considered new because it was
launched a decade ago in the European Union, as the available data to
reflect the cost of the technology would not have been available for
CMS to recalibrate the MS-DRGs for those administrations.
We also disagree with the commenter that fruit-based enzymatic
debridement products that have not received FDA marketing authorization
are appropriate existing technology comparators for evaluating whether
a new technology is substantially similar to an existing technology. As
stated in the preamble of this section, 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. We believe that technologies that receive FDA marketing
authorization have met regulatory standards that provide a reasonable
assurance of safety and efficacy. We maintain that our intent in
requiring applicants to receive FDA marketing authorization was to
exclude technologies that lack FDA marketing authorization. Therefore,
we do not believe that medical products that have not received FDA
marketing authorization are appropriate comparators for evaluating if a
new technology 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 regard to the first criterion, whether a technology uses the
same or similar mechanism of action to achieve a therapeutic outcome,
we agree with the commenter that there is an existing enzymatic
debrider, the SANTYL Collagenase Ointment, that is commercially
available for the treatment of burn and chronic wounds. We note that
the applicant asserted that NexoBridTM has a novel
composition because it contains a unique pharmaceutical ingredient
derived from pineapple and therefore has a unique combination of
proteolytic enzymes as compared to collagenase-based debridement agents
that are derived from Clostridium histolyticum. However, we note that
the composition/ingredients of a technology does not represent the
mechanism of action. Further, while the applicant asserted that
NexoBridTM degrades collagen via multiple reactions beyond
hydrolysis, while clostridial collagenase degradation is based on
hydrolysis reactions, we note that the applicant hypothesizes, but does
not demonstrate that the presence of multiple proteolytic
[[Page 58848]]
enzymes by NexoBridTM results in the degradation of multiple
substrates contained within the eschar in addition to denatured
collagen. In addition, although we recognize that NexoBridTM
has a different use case than collagenase-based debridement agents with
respect to the dosage and administration, these differences do not
result in a substantially different therapeutic mechanism of action,
and in our view, any differences in the resulting clinical outcome
relate to an assessment of whether NexoBridTM meets the
substantial clinical improvement criterion. Therefore, even though
there may be differences in composition between bromelain and
clostridial collagenase, resulting in collagen degradation through
hydrolysis and other reactions, these two technologies use a similar
mechanism of action to achieve the same therapeutic outcome: the
enzymatic degradation of collagen to debride eschar for the treatment
of burns.
In regard to the second criterion, whether a technology is assigned
to the same or a different MS-DRG, we note that the applicant
acknowledged that the use of NexoBridTM may be assigned
under the existing MS-DRGs (for example, 927, 928, 929, 933, 934, 935),
but stated the payment associated with these MS-DRGs does not
adequately account for the cost of NexoBridTM. We agree with
the applicant that NexoBridTM would be assigned to these
same burn MS-DRGs as other enzymatic and surgical debridement
technologies used in the treatment of burns. However, we believe that
inadequate payment for the technology associated with these MS-DRGs
relates to an assessment of whether NexoBridTM meets the
cost criterion, rather than an assessment of substantial similarity.
In regard to the third criterion, whether a technology treats the
same or similar type of disease and patient populations, we agree with
the applicant's assertion in its application that use of the technology
would involve the treatment of a similar type of disease and a similar
patient population when compared to existing approaches for eschar
removal.
Because NexoBridTM meets all three of the substantial
similarity criteria, we believe the NexoBridTM is
substantially similar to an existing collagenase-based debridement
agent, SANTYL Collagenase Ointment. Therefore, we consider the
beginning of the newness period for NexoBridTM to begin on
the date on which SANTYL Collagenase Ointment received FDA approval for
the treatment of burns. Since SANTYL Collagenase Ointment has been on
the U.S. market for many years, the 3-year anniversary date of its
entry onto the market occurred prior to FY 2024,\93\ and therefore,
NexoBridTM does not meet the newness criterion and is not
eligible for new technology add-on payments for FY 2024. We note that
we received public comments with regard to the cost and substantial
clinical improvement criteria for this technology, but because we have
determined that the technology does not meet the newness criterion and
therefore is not eligible for approval for new technology add-on
payments for FY 2024, we are not summarizing comments received or
making a determination on those criteria in this final rule.
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\93\ CDER Therapeutic Biologic Products, https://www.fda.gov/media/76650/download.
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f. REBYOTATM (Fecal Microbiota, Live-jslm) and
VOWSTTM (Fecal Microbiota Spores, Live-brpk)
Two manufacturers, Ferring Pharmaceuticals, Inc., an affiliate of
the manufacturer, Rebiotix Inc., and Seres Therapeutics, Inc.,
submitted separate applications for new technology add-on payments for
FY 2024 for REBYOTATM (fecal microbiota, live-jslm, referred
to as `RBX2660' in the proposed rule) and VOWSTTM (fecal
microbiota spores, live-brpk, referred to as `SER-109' in the proposed
rule), respectively. Both of these technologies are microbiota-based
treatments indicated for the reduction or prevention of recurrence of
Clostridioides difficile infection (CDI) in individuals 18 years of age
and older, following antibiotic treatment for recurrent CDI (rCDI). In
the FY 2024 IPPS/LTCH PPS proposed rule, we discussed these
applications as two separate technologies. After further consideration,
and as discussed elsewhere, we believe REBYOTATM and
VOWSTTM are substantially similar to each other and that it
is appropriate to evaluate both technologies as one application for new
technology add-on payments under the IPPS. We refer the reader
elsewhere for a complete discussion regarding our analysis of the
substantial similarly of REBYOTATM and VOWSTTM.
Please refer to the online application posting for
REBYOTATM, available at https://mearis.cms.gov/public/publications/ntap/NTP221017WUDXM, and the online application posting
for VOWSTTM, available at https://mearis.cms.gov/public/publications/ntap/NTP221016VHL8B, for additional detail describing the
technologies and the disease treated by the technologies.
With respect to the newness criterion, the applicant for
REBYOTATM received BLA approval from FDA on November 30,
2022, for the prevention of rCDI in individuals 18 years of age and
older, following antibiotic treatment for rCDI. According to the
applicant, REBYOTATM is a broad consortium microbiota-based
live biotherapeutic suspension indicated for the prevention of
recurrence of CDI in individuals 18 years of age and older, following
antibiotic treatment for rCDI. Per the applicant, REBYOTATM
is administered rectally, 24 to approximately 72 hours after the last
dose of antibiotics for CDI. The applicant stated that each 150mL dose
of REBYOTATM contains between 1x10\8\ and 5x10\10\ colony
forming units (CFU) per mL of fecal microbes including more than
1x10\5\ CFU/mL of Bacteroides and contains not greater than 5.97 grams
of PEG3350 in saline. Per the applicant, REBYOTATM first
became commercially available on January 23, 2023, as the process to
create packaging components and then start the packaging process could
not start until FDA approval was received.
The applicant for VOWSTTM stated that it received BLA
approval from FDA on April 26, 2023, for the prevention of the
recurrence of CDI in individuals 18 years of age and older following
antibacterial treatment for rCDI. The applicant stated that the dose is
four capsules taken orally once daily on an empty stomach before the
first meal of the day for 3 consecutive days. The applicant stated that
VOWSTTM is an oral microbiome therapeutic administered to
reduce CDI recurrence as part of a two-pronged treatment approach of
(1) antibiotics to kill vegetative C. diff bacteria, followed by (2)
VOWSTTM to repair the microbiome to manage CDI and prevent
its recurrence. According to the applicant, VOWSTTM is a
consortium of purified Firmicutes bacteria spores collected from
healthy stool donors. The applicant stated that engraftment of spore
producing Firmicutes bacteria is a necessary first step in microbiome
repair, as Firmicutes bacteria produce metabolites, such as secondary
bile acids, which inhibit C. diff spore germination and vegetative
growth.
The applicant for REBYOTATM stated that, effective
October 1, 2022, the following ICD-10-PCS code may be used to uniquely
describe procedures involving the use of REBYOTATM: XW0H7X8
(Introduction of broad consortium microbiota-based live biotherapeutic
suspension into lower GI, via natural or artificial opening, new tech.
group 8). The applicant for VOWSTTM submitted a request for
approval for a unique ICD-10-PCS code for VOWSTTM beginning
in FY 2024 and
[[Page 58849]]
was granted approval for the following ICD-10-PCS procedure code,
effective October 1, 2023: XW0DXN9 (Introduction of SER-109 into mouth
and pharynx, external approach, new technology group 9). Both
applicants stated that diagnosis codes A04.71 (Enterocolitis due to
Clostridium difficile, recurrent) and A04.72 (Enterocolitis due to
Clostridium difficile, not otherwise specified as recurrent) may be
used to currently identify the indication for their technologies under
the ICD-10-CM coding system.
As stated earlier and for the reasons discussed later in this
section, we believe that REBYOTATM and VOWSTTM
are substantially similar to each other such that it is appropriate to
analyze these two applications as one technology for the purposes of
new technology add-on payments, in accordance with our policy. We
discuss the information provided by the applicants, as summarized in
the FY 2024 IPPS/LTCH PPS proposed rule, regarding whether
REBYOTATM and VOWSTTM are substantially similar
to existing technologies. As discussed earlier, if a technology meets
all three of the substantial similarity criteria, it would be
considered substantially similar to an existing technology and would
not be considered ``new'' for purposes of new technology add-on
payments.
With respect to the substantial similarity criteria, whether a
product uses the same or a similar mechanism of action to achieve a
therapeutic outcome, in the FY 2024 IPPS/LTCH PPS proposed rule (88 FR
26853 through 26854), the applicant for REBYOTATM stated
that REBYOTATM is not substantially similar to other
currently available technologies to reduce rCDI because
REBYOTATM has a new mechanism of action and is approved to
treat a broader patient population than existing therapies (including
standard of care antibiotics (for example, DIFICID[supreg],
FIRVANQ[supreg]), Fecal Microbiota Transplantation (FMT), and
ZINPLAVATM), and that therefore, the technology meets the
newness criterion. The following table summarizes the applicant's
assertions regarding the substantial similarity criteria. Please see
the online application posting for REBYOTATM for the
applicant's complete statements in support of its assertion that
REBYOTATM is not substantially similar to other currently
available technologies.
BILLING CODE 4120-01-P
[[Page 58850]]
[GRAPHIC] [TIFF OMITTED] TR28AU23.165
In the FY 2024 IPPS/LTCH PPS proposed rule (88 FR 26854), we noted
the following concern with regard to the newness criterion for
REBYOTA\TM\. We noted that the applicant stated that
ZINPLAVATM is restricted to high-risk patients, and we
questioned whether these high-risk patients were the same or a similar
patient population as that treated with REBYOTATM, which is
indicated for patients who have already had at least one recurrence of
rCDI. In addition, we noted that the indication for
ZINPLAVATM does not exclude patients with a history of CHF
and the labeling has no listed contraindications. Therefore, we sought
clarification from the applicant regarding the differences in patient
populations for ZINPLAVATM and REBYOTATM.
In the FY 2024 IPPS/LTCH PPS proposed rule (88 FR 26874 through
26875), according to the applicant for VOWSTTM,
VOWSTTM is not substantially similar to other currently
available technologies because VOWSTTM does not have the
same or a similar mechanism of action as any currently FDA-approved CDI
treatment and does not involve treatment of the same or similar type of
disease or patient population as there are currently no approved
therapies indicated to repair a disrupted microbiome as a treatment
intervention to prevent recurrence in patients with rCDI. Therefore,
the applicant asserted that VOWSTTM meets the newness
criterion. The following table summarizes the applicant's assertions
regarding the substantial similarity criteria. Please see the online
application posting for
[[Page 58851]]
VOWSTTM for the applicant's complete statements in support
of its assertion that VOWSTTM is not substantially similar
to other currently available technologies.
[GRAPHIC] [TIFF OMITTED] TR28AU23.166
In the FY 2024 IPPS/LTCH PPS proposed rule (88 FR 26875 through
26876), we noted the following concern with regard to the newness
criterion for VOWST\TM\. The applicant asserted that VOWSTTM
can be administered to patients with CHF and stated that the use of
ZINPLAVA\TM\ (bezlotoxumab) should be reserved in this patient
population. We noted that the indication for ZINPLAVATM does
not exclude patients with a history of CHF
[[Page 58852]]
and the labeling has no listed contraindications. We sought
clarification from the applicant regarding the differences in patient
populations for ZINPLAVATM and VOWSTTM.
In the FY 2024 IPPS/LTCH PPS proposed rule (88 FR 26854 through
26855 and 26875 through 26876), we noted that REBYOTA\TM\ and
VOWSTTM may have similar mechanism of actions, and both are
microbiome therapeutic agents for which we received an application for
new technology add-on payments for FY 2024 to reduce the recurrence of
rCDI in adults following antibiotic treatment for rCDI, inclusive of
the first recurrence. We stated that notably, the exact mechanism of
action for each biological product was not yet known; however, both
appeared to act on the gut microbiome to suppress C.diff. and thereby
prevent rCDI. Both REBYOTA\TM\ and VOWSTTM appeared to lead
to compositional changes in the gastrointestinal microbiome that
restore the diversity of gut flora which enabled each of these
therapeutics to suppress outgrowth of C.diff. and rCDI, following
standard-of-care treatment with antibiotics for rCDI. Further, we
stated that both technologies appeared to map to the same MS-DRGs as
each other and as existing technologies, and to treat the same or
similar disease (rCDI) in the same or similar patient population
(patients who have previously received standard-of-care antibiotics for
CDI or rCDI). Accordingly, since it appeared that REBYOTA\TM\ and
VOWSTTM were purposed to achieve the same therapeutic
outcome using a similar mechanism of action and would be assigned to
the same MS-DRG, we stated we believed that these technologies may be
substantially similar to each other such that they should be considered
as a single application for purposes of new technology add-on payments.
We stated that we believe that if these technologies are
substantially similar to each other, it is appropriate to use the
earliest market availability date submitted as the beginning of the
newness period for both technologies (83 FR 41286 through 41287).
Therefore, with regard to both technologies, we believed that the
beginning of the newness period would be the date on which
REBYOTATM became commercially available, January 23, 2023.
We noted that although our policy is generally to begin the newness
period on the date of FDA approval or clearance, we may consider a
documented delay in the technology's market availability in our
determination of newness (87 FR 48977 and 77 FR 53348).
We invited public comment on whether REBYOTA\TM\ or
VOWSTTM is substantially similar to existing technologies
and whether it meets the newness criterion, including whether
REBYOTA\TM\ and VOWSTTM are substantially similar to each
other and therefore should be evaluated as a single technology for
purposes of new technology add-on payments.
Comment: The applicant for REBYOTATM submitted a comment
in response to our question as to whether REBYOTATM is
substantially similar to VOWSTTM. The applicant stated that
VOWSTTM is an oral microbiome therapeutic consisting of
gram-positive Firmicutes, and that administration of VOWSTTM
cannot begin until at least 8 hours after bowel prep and after 2 to 4
days of completing antibacterial treatment for rCDI. The applicant also
noted that administration requirements may be burdensome on both
patients and hospitals since patients must take 4 capsules daily on an
empty stomach prior to the first meal of the day for 3 consecutive
days, and that oral administration issues should be a consideration in
older patients. The applicant stated that in comparison,
REBYOTATM is a microbiota suspension that is delivered via
rectal administration, contains both gram-positive and gram-negative
bacteria, can be administered 24 to 72 hours following the last dose of
antibiotics for recurrent CDI, and does not have pretreatment
requirements. The applicant also noted that REBYOTATM
studies reported safety and efficacy in older adult (age >=65 years)
patients with comorbid conditions, such as CHF, and that therefore,
REBYOTATM is safe and effective for a broader population of
patients.
The applicant for REBYOTATM also stated that
REBYOTATM is not substantially similar to
ZINPLAVATM because it is available to a broader patient
population than those considered high risk for recurrence of CDI, as
unlike ZINPLAVATM, REBYOTATM use is not
restricted to high-risk patients and can be administered after the
first recurrence of CDI. The applicant noted the different mechanism of
action of ZINPLAVATM, which is a human monoclonal antibody
that is administered through intravenous infusion and that neutralizes
the effect of the C.diff toxin by binding to it. The applicant also
acknowledged that although the mechanism of action of
REBYOTATM has not been established, in comparison,
REBYOTATM consists of live fecal microbes, including
Bacteroidia and Clostridia classes, which in studies, results in
clinically significant changes in patients' gut microbiome associated
with restorative microbiome changes that may help resist C. diff
colonization and recurrence.
The applicant for VOWSTTM also submitted a comment
maintaining that CMS should not evaluate VOWSTTM and
REBYOTA\TM\ as a single applicant because the technologies are not
substantially similar, arguing that since the mechanism of action for
both therapies is unknown, it is not possible to state that the
mechanism for both products is the same. The applicant for
VOWSTTM argued that there is reason to believe its mechanism
of action differs from REBYOTA\TM\'s in terms of therapeutic
composition, manufacturing process, route of administration, dosage,
and storage, stating that in contrast to REBYOTA\TM\,
VOWSTTM has a low pill burden, containing ~1 percent
residual mass comprised of defined consortia of Firmicutes bacterial
spores recovered from healthy donor stool. The applicant further stated
that the manufacturing process mitigates risk of transmission of agents
of infection by including ethanolic inactivation of potential pathogens
and removal of non-spore biomass. The applicant also provided an
overview of the clinical and scientific evidence for
VOWSTTM, noting differences in effectiveness, safety, and
patient care in contrast to REBYOTATM.
The applicant for VOWSTTM also stated that
VOWSTTM is not substantially similar to
ZINPLAVATM because the FDA labeling for VOWSTTM
does not include a warning or precaution for heart failure, nor a
contraindication for any patient population; and that in contrast, the
FDA-approved labeling for ZINPLAVATM concludes that, in
patients with a history of CHF, ZINPLAVATM ``should be
reserved for use when the benefit outweighs the risk.''
Response: We appreciate the additional information from both
applicants with respect to whether their products are substantially
similar to one another or to existing technologies. After consideration
of the public comments we received, although we recognize that the
exact mechanism of action for each technology is not fully defined, and
that the technologies may not be completely the same in terms of their
manufacturing process, route of administration, dosage, and storage, we
are not convinced that these differences result in a substantially
different therapeutic mechanism of action. Both applicants provide
sufficient data to
[[Page 58853]]
suggest that their mechanisms of action relate to repopulation of the
gastrointestinal microbiome. We believe that differences in the
clinical and scientific evidence on effectiveness, safety,
tolerability, and patient care between REBYOTATM and
VOWSTTM relate to an assessment of whether the technologies
meet the substantial clinical improvement criterion rather than the
newness criterion.
With regard to the commenters noting differences in therapeutic
composition, as both technologies are derived from donor human stool,
where REBYOTATM contains both gram-positive and gram-
negative bacteria including Bacteroidia and Clostridia classes, and
VOWSTTM consists of a defined consortia of gram-positive
Firmicutes bacteria, we also believe that there is, in fact, an
overlap, and that the Firmicutes contained in VOWSTTM would
also exist in the broad consortium of microorganisms contained in the
REBYOTATM suspension. Although there might be slight
differences in their proportional contributions to specific downstream
molecular pathways, we believe that these two technologies achieve the
same therapeutic outcome and overall clinical mechanism of action, as
each restores the gut microbiome and resolves dysbiosis to prevent the
recurrence of CDI in patients following antibacterial treatment for
rCDI by restoring the diversity and composition to one that resembles a
healthy microbiome. Furthermore, we believe REBYOTA\TM\ and
VOWSTTM are substantially similar to one another because the
technologies are intended to treat the same or similar disease in the
same or similar patient population--indicated for individuals 18 years
of age and older, for the prevention of recurrence of CDI, following
antibiotic treatment for rCDI, and that potential cases representing
patients who may be eligible for treatment would be assigned to the
same MS-DRGs.
We also believe REBYOTA\TM\ and VOWSTTM are not
substantially similar to any other existing technologies because, as
both applicants asserted in their FY 2024 new technology add-on payment
applications and in their comments, the technologies do not use the
same or similar mechanism of action to achieve a therapeutic outcome as
any other existing drug or therapy assigned to the same or different
MS-DRG. Based on the information described in this section, we believe
REBYOTA\TM\ and VOWSTTM meet the newness criterion.
Based on the previous discussion, we are making one determination
regarding approval for new technology add-on payments that will apply
to both applications, and in accordance with our policy, we use the
earliest market availability date submitted as the beginning of the
newness period for both REBYOTA\TM\ and VOWSTTM.
We believe our current policy for evaluating new technology payment
applications for two technologies that are substantially similar to
each other is consistent with the authority and criteria in section
1886(d)(5)(K) of the Act. We note that CMS is authorized by the Act to
develop criteria for the purposes of evaluating new technology add-on
payment applications. For the purposes of new technology add-on
payments, when technologies are substantially similar to each other, we
believe it is appropriate to evaluate both technologies as one
application for new technology add-on payments under the IPPS, for the
reasons we discussed previously and consistent with our evaluation of
substantially similar technologies in prior rulemaking (85 FR 58679 and
82 FR 38120).
With respect to the newness criterion, as previously stated,
REBYOTA\TM\ received BLA approval from FDA on November 30, 2022, and
became commercially available on January 23, 2023. VOWSTTM
received BLA approval from FDA on April 26, 2023. In accordance with
our policy, because these technologies are substantially similar to
each other, we use the earliest market availability date submitted as
the beginning of the newness period for both technologies. Therefore,
with regard to both technologies, we believe that the beginning of the
newness period would be the date on which REBYOTATM became
commercially available: January 23, 2023. We note that although our
policy is generally to begin the newness period on the date of FDA
approval or clearance, we may consider a documented delay in the
technology's market availability in our determination of newness (87 FR
48977 and 77 FR 53348).
The applicants submitted separate cost and clinical data, and in
the proposed rule, we reviewed and discussed each set of data
separately. However, as stated previously, for this final rule, we will
make one determination regarding new technology add-on payments that
will apply to both applications. We believe that this is consistent
with our policy statements in the past regarding substantial similarity
(85 FR 58679).
If substantially similar technologies are submitted for review in
different (and subsequent) years, rather than the same year, we
evaluate and make a determination on the first application and apply
that same determination to the second application. However, because
these technologies have been submitted for review in the same year, and
because we believe they are substantially similar to each other, we
consider both sets of cost data and clinical data in making a
determination, and we do not believe that it is possible to choose one
set of data over another set of data in an objective manner. As we
discussed in the proposed rule and as stated previously, each applicant
submitted separate analyses regarding the cost criterion for each of
their products, and both applicants maintained that their product meets
the cost criterion.
With respect to the cost criterion, to identify cases that may be
eligible for REBYOTATM, the applicant searched the FY 2021
MedPAR file for claims using ICD-10-CM code A04.71 (Enterocolitis due
to Clostridium difficile, recurrent). Using the inclusion/exclusion
criteria described in the following table, the applicant identified
14,653 claims mapping to 398 MS-DRGs. Please see Table 10.17.A.--
REBYOTATM Codes--FY 2024 associated with the proposed rule
for the complete list of MS-DRGs that the applicant indicated were
included in its cost analysis. The applicant followed the order of
operations described in the following table and calculated a final
inflated average case-weighted standardized charge per case of
$156,292, which exceeded the average case-weighted threshold amount of
$71,397. Because the final inflated average case-weighted standardized
charge per case exceeded the average case-weighted threshold amount,
the applicant asserted that REBYOTATM meets the cost
criterion.
[[Page 58854]]
[GRAPHIC] [TIFF OMITTED] TR28AU23.167
With respect to the cost criterion, the applicant for
VOWSTTM conducted the following analysis to demonstrate that
VOWSTTM meets the cost criterion. To identify cases that may
be eligible for the use of VOWSTTM, the applicant searched
the FY 2021 MedPAR file for cases reporting ICD-10-CM code A04.71
(Enterocolitis due to Clostridium difficile, recurrent). Using the
inclusion/exclusion criteria described in the following table, the
applicant identified 14,497 claims mapping to 392 MS-DRGs. Please see
Table 10.22.A.--SER-109 Codes--FY 2024 associated with the proposed
rule for the complete list of MS-DRGs the applicant indicated were
included in its cost analysis. The applicant followed the order of
operations described in the following table and calculated a final
inflated average case-weighted standardized charge per case of
$175,157, which exceeded the average case-weighted threshold amount of
$69,830. Because the final inflated average case-weighted standardized
charge per case exceeded the average case-weighted threshold amount,
the applicant maintained that VOWSTTM meets the cost
criterion.
[[Page 58855]]
[GRAPHIC] [TIFF OMITTED] TR28AU23.168
We invited public comment on whether VOWSTTM or
REBYOTATM meet the cost criterion.
Comment: The applicant for REBYOTATM submitted a comment
regarding an updated cost analysis utilizing its updated final
wholesale acquisition cost (WAC). The applicant stated that in the new
cost analysis, the final inflated case-weighted average standardized
charge per case of $153,574 exceeded the case-weighted threshold of
$71,397, demonstrating that the applicant continued to meet the cost
criterion.
The applicant for VOWSTTM submitted a comment regarding
an updated cost analysis utilizing its updated final WAC to confirm
their belief that VOWSTTM meets the cost criterion because
cost threshold analysis demonstrated the final inflated case-weighted
standardized charge per case of $329,947 exceeded the case weighted
threshold of $95,859, therefore the applicant met the cost criterion.
Response: We thank the applicants for their comments and appreciate
the updated cost analyses. We agree that the final inflated average
case-weighted standardized charge per case exceeded the average case-
weighted threshold amount for both REBYOTATM and
VOWSTTM. Therefore, both REBYOTATM and
VOWSTTM meet the cost criterion.
With respect to the substantial clinical improvement criterion, the
applicant for REBYOTATM asserted that REBYOTATM
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 because the use of REBYOTA\TM\ significantly improves
clinical outcomes relative to the treatment options previously
available. The applicant provided eight studies to support these
claims, as well as background articles about occurrence and treatment
of CDI and rCDI.\94\ The following table summarizes the applicant's
assertions regarding the substantial clinical improvement criterion.
Please see the online posting for REBYOTA\TM\ for the applicant's
complete statements regarding the substantial clinical improvement
criterion and the supporting evidence provided.
---------------------------------------------------------------------------
\94\ Background articles are not included in the table in this
section but can be accessed via the online posting for the
technology.
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In the FY 2024 IPPS/LTCH PPS proposed rule (88 FR 26859 through
26860), we stated that we had the following concerns regarding whether
REBYOTATM meets the substantial clinical improvement
criterion. Regarding the assertion that REBYOTATM is an FDA-
approved therapeutic option for some patients who may not be eligible
for treatment with ZINPLAVA\TM\ due to patient population restrictions
(for example, high-risk patients) or contraindications (for example,
history of congestive heart failure [CHF]), and that there is no
evidence that REBYOTATM poses an increased risk of serious
AEs in patients with a history of CHF, the applicant cited a
retrospective study of REBYOTATM reported by Feuerstadt et
al.\95\ in which 94 participants with comorbid conditions commonly
found in people with rCDI were treated with REBYOTATM. The
analysis showed a treatment success rate of 82.8 percent, with no
observable difference between participants who received one dose
(83.3%) vs. two doses (82.5%). We noted that the comorbid conditions
represented in this population included: gastroesophageal reflux
disease (47.9%); irritable bowel syndrome (17%); gastritis (11.7%);
constipation (8.5%); microscopic colitis (7.4%); diverticulitis (6.4%);
Crohn's disease (5.3%); and ulcerative colitis (4.3%) but did not
include patients with CHF as a comorbidity. We believed additional
information regarding whether REBYOTATM was tested in
patients with CHF to determine clinical outcomes would be helpful to
evaluate the applicant's assertion. The applicant also referenced a
poster presentation by Braun et al.\96\ that presents the safety data
from five prospective studies in which 749 pooled participants received
at least one dose of REBYOTATM, and 83 participants received
placebo only to support its assertion. We stated that additional
information demonstrating whether REBYOTATM is safe for the
patient population with CHF would help inform our assessment of whether
REBYOTATM demonstrates substantial clinical improvement over
existing technologies.
---------------------------------------------------------------------------
\95\ Feuerstadt P, Harvey A, Bancke L. REBYOTATM, an
investigational live microbiota-based biotherapeutic, improves
outcomes of Clostridioides difficile infection in a real-world
population: a retrospective study of use under an FDA enforcement
discretion. Abstract for ACG2021.
\96\ Braun T, Guthmueller B, Harvey A. Safety of investigational
microbiota-based live biotherapeutic REBYOTA\TM\ in individuals with
recurrent Clostridioides difficile infection: data from five
prospective clinical studies. Abstract presented at: 10th Annual
IDWeek; September 29, 2021.
---------------------------------------------------------------------------
Regarding the claim of sustained clinical response, the applicant
referenced an abstract of an open-label trial of REBYOTATM
by Orenstein et al. This trial was a Phase 2 open-label trial where
participants with multiple rCDI received two doses of
REBYOTATM administered 7 + 2 days apart. Researchers
conducted a 2-year analysis of the clinical safety, efficacy, and
durability of REBYOTATM. The absence of rCDI was compared
between the REBYOTATM and a historical control cohort that
received standard-of-care antibiotic therapy. Durability was defined as
continued absence of CDI episodes beyond 8 weeks, and was assessed at
3, 6, 12, and 24 months by assessing changes in stool samples. While
the applicant submitted results from both a phase 2 trial of
REBYOTATM,\97\ and the PUNCH CD3 phase 3 trial \98\ to
demonstrate the superiority of REBYOTATM over placebo, we
questioned whether other treatment options indicated to prevent rCDI,
such as ZINPLAVATM, would be a more appropriate comparator.
We noted that additional information regarding clinical outcomes as a
result of treatment with REBYOTATM compared to
ZINPLAVATM would be helpful to assess the substantial
clinical improvement criterion. In summary, while we understood that
there were no head-to-head trials comparing REBYOTATM to
ZINPLAVATM, we indicated that additional information would
help inform our assessment of whether REBYOTATM demonstrated
a substantial clinical improvement over existing technologies.
---------------------------------------------------------------------------
\97\ Blount KF, Shannon WD, Deych E, Jones C. Restoration of
bacterial microbiome composition and diversity among treatment
responders in a phase 2 trial of REBYOTATM: an
investigational microbiome restoration therapeutic. Open Forum
Infect Dis. 2019;6(4):ofz095.
\98\ Blount K, Walsh D, Gonzalez C, et al. Treatment success in
reducing recurrent Clostridioides difficile infection with
investigational live biotherapeutic REBYOTATM is
associated with microbiota restoration: consistent evidence from a
phase 3 clinical trial. Abstract presented at: 10th Annual IDWeek;
September 29, 2021.
---------------------------------------------------------------------------
With regard to the substantial clinical improvement criterion, the
applicant for VOWSTTM asserted that VOWSTTM
represents a substantial clinical improvement over existing
technologies because VOWSTTM treats patients unresponsive to
antibiotic treatment for rCDI and can be used in patients ineligible
for ZINPLAVATM due to CHF. The applicant also asserted that
it improves clinical outcomes by reducing rCDI, increasing resolution
of the disease process by expediting microbiome repair, and reducing
carriage of antimicrobial resistance genes. The applicant provided five
studies to support these claims, as well as 11 background articles
about CDI recurrence and risks of increased exposure to antibiotic
therapies in a hospital setting for rCDI and cardiac risk of
prescribing existing treatments, such as ZINPLAVATM, to
patients with pre-existing heart failure.\99\ The following table
summarizes the applicant's assertions regarding the substantial
clinical improvement criterion. Please see the online posting for
VOWSTTM for the applicant's complete statements regarding
the substantial clinical improvement criterion and the supporting
evidence provided.
---------------------------------------------------------------------------
\99\ Background articles are not included in the following table
but can be accessed via the online posting for the technology.
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In the FY 2024 IPPS/LTCH proposed rule (88 FR 26881 through 26882),
after reviewing the information provided by the applicant, we noted
that we had the following concerns regarding whether VOWSTTM
meets the substantial clinical improvement criterion. We stated that to
demonstrate that VOWSTTM reduces rates of CDI recurrence
compared to standard of care therapies, the application primarily cited
to the ECOSPOR phase II trial and ECOSPOR III phase III trial. The
application also cited an abstract of the open-label single-arm ECOSPOR
IV trial which did not appear to provide a comparison against currently
available therapies. We stated that the major limitation of these data
was that patients who received ZINPLAVATM in the prior 3
months were excluded. We stated that while the study provided data
comparing the effectiveness of VOWSTTM to antibiotics alone,
no data comparing the treatment of rCDI utilizing antibiotics plus
ZINPLAVATM, as was recommended for rCDI, against antibiotics
plus VOWSTTM (with or without ZINPLAVATM) was
provided. Without a comparison against such currently available
therapies, we
[[Page 58867]]
questioned whether the information provided by the applicant was
sufficient to support the applicant's statements that
VOWSTTM is well-tolerated and mitigates the safety concerns
of other alternative therapies, and that VOWSTTM can be used
in patients ineligible for ZINPLAVATM due to diagnosis of
CHF.
With regard to the claim that VOWSTTM can be used safely
in patients with CHF, the cited trials either did not identify or
document effects on participants with comorbid CHF to support this
conclusion. The ECOSPOR trial specifically excluded patients with poor
concurrent medical risks or clinically significant co-morbid disease
such that, in the opinion of the investigator, the subject should not
be enrolled. We stated that it was not clear whether this criterion
necessarily excluded individuals with known pre-existing CHF from the
study group and that it was also not clear how many individuals
diagnosed with CHF prior to or during the study were identified in the
study populations. We considered whether a lack of participants with
CHF could potentially account for the low incidence of adverse effects,
rather than being attributable to the safety of VOWSTTM
relative to ZINPLAVATM for patients with CHF. Absent
additional information, we stated that it was difficult to confirm that
VOWSTTM offers a treatment option for patients ineligible
for ZINPLAVATM due to CHF.
The applicant stated that there is an increased resolution of the
disease process because VOWSTTM expedites microbiome repair
during the window of vulnerability, identified as 1-4 weeks after
antibiotic discontinuation, by ensuring more rapid engraftment of
beneficial Firmicutes bacteria needed to decrease germination of C.
diff. spores and prevent recurrence. For this claim, the applicant
cited three articles: two randomized controlled trials and one
unpublished abstract. While the results of the Phase III randomized
controlled trial \100\ demonstrated the superiority of
VOWSTTM over placebo, we questioned whether other treatment
options indicated to prevent rCDI, such as ZINPLAVATM, would
have been a more appropriate comparator. We stated that additional
information regarding clinical outcomes as a result of treatment with
VOWSTTM compared to such treatment options, instead of
placebo, would have been helpful in our assessment of the substantial
clinical improvement criterion. With respect to the applicant's claim
that VOWSTTM may reduce the number of future
hospitalizations or physician visits for patients diagnosed with rCDI,
the applicant cited the Feuerstadt study to suggest that reduced rates
of rCDI shown in Phase III clinical trials would likely lead to fewer
days in hospital. However, we stated that the study did not address
this measure directly; rather, this was an inference by the applicant.
We welcomed additional data to support the claim VOWSTTM may
reduce the number of future hospitalizations or physician visits for
patients with rCDI.
---------------------------------------------------------------------------
\100\ Feuerstadt P, Louie TJ, Lashner B, et al.,
VOWSTTM (SER-109), an oral microbiome therapy for
recurrent Clostridioides difficile infection. N Engl J Med
2022;386:220-9. DOI: 10.1056/NEJMoa2106516.
---------------------------------------------------------------------------
With respect to the claim that VOWSTTM reduces the
abundance of antimicrobial resistance genes (ARGs) and associated taxa
compared to placebo, which accelerates microbiome recovery from
antibiotics, we stated that the applicant cited one unpublished study
showing treatment with VOWSTTM led to a significant decrease
in ARG abundance versus placebo, which was both rapid and sustained
through week eight. However, the authors stated that further studies
were needed to determine if the significant reduction of ARGs is
associated with prevention of subsequent infections with drug resistant
bacteria in CDI patients.
We invited public comments on whether REBYOTATM or
VOWSTTM meet the substantial clinical improvement criterion.
Comment: The applicants for REBYOTATM and
VOWSTTM each submitted comments in response to CMS's
concerns in the FY 2024 IPPS/LTCH PPS proposed rule regarding whether
REBYOTATM and VOWSTTM meet the substantial
clinical improvement criterion.
In the applicant for VOWSTTM's comment regarding
substantial clinical improvement, it asserted that VOWSTTM
significantly improves clinical outcomes relative to services or
technologies previously available as most CDI recurrences occur within
2 weeks of antibiotic discontinuation, and VOWSTTM expedites
microbiome repair during the ``window of vulnerability.'' The applicant
further stated that reduction of CDI recurrence as a result of
VOWSTTM may potentially lessen future healthcare costs,
morbidity, and rCDI-related hospitalizations. The applicant also
asserted that VOWSTTM offers a therapeutic option to a
patient population with a suboptimal response to, or ineligible for,
currently available treatments, specifically, patients who developed
rCDI following antibiotic treatment due to continued disruption of the
gut microbiome by antibiotics themselves. The applicant noted that
ZINPLAVATM does not address the underlying gut microbiome
dysbiosis, and that no data suggest that VOWSTTM cannot be
used in patients diagnosed with CHF, who may be at an increased risk of
heart failure associated with treatment with ZINPLAVATM. The
applicant noted that its oral administration process may enhance the
patient experience, in part, because the product can be taken at home
compared to REBYOTATM.
The applicant for VOWSTTM further stated, with regard to
the concerns whether the information provided by the applicant is
sufficient to support the applicant's statements that
VOWSTTM is well-tolerated and mitigates the safety concerns
of other alternative therapies, and whether VOWSTTM can be
used in patients ineligible for ZINPLAVATM due to CHF, that
treatment with VOWSTTM did not result in adverse events, nor
deaths, in patients with CHF. The applicant noted that in the ECOSPOR
III (SERES-012) and IV (SERES-013) Phase 3 clinical trials, 109 of 349
(31%) participants had cardiac disease as a concomitant illness, and 24
subjects with CHF who received VOWSTTM. The applicant stated
that adverse event profile of VOWST in subjects with cardiac disease
was consistent with that observed in the overall subject population.
With regard to our question about whether other treatment options
indicated to prevent rCDI, such as ZINPLAVATM, would have
been a more appropriate comparator for VOWSTTM, rather than
a placebo, the applicant for VOWSTTM stated that it
consulted with the FDA on the design of the Phase 3 studies and was
required to evaluate VOWSTTM against placebo. The applicant
anticipated capability of collecting real world evidence of
VOWSTTM against other preventative modalities as
VOWSTTM becomes standard of care.
With regard to CMS's concern that one unpublished study was used as
evidence to show treatment with VOWSTTM led to a significant
decrease in ARG abundance versus placebo, the applicant for
VOWSTTM stated that a manuscript is in final redaction with
the authors with an anticipated June 30 submission to an infectious
diseases journal for publication.
In the applicant for REBYOTATM's comment regarding
substantial clinical improvement, with regard to the request for
additional information demonstrating the safety of REBYOTATM
in the patient population with CHF, the applicant presented
[[Page 58868]]
results from a post hoc subgroup analysis of the PUNCH CD3 trial by
Tillotson et al.\101\ that was published in January 2023. The applicant
stated that the subgroup of patients with cardiac disorders included
patients with CHF, described as ``Cardiac failure congestive.'' Per the
applicant, results from the Tillotson et al. subgroup analysis showed
that REBYOTATM treatment success was better than placebo in
older adults with cardiac disorders (69% [n = 25/36]), and that overall
treatment success of older adults with comorbidities was similar to the
total REBYOTATM-treated population (70.6%). The applicant
also stated that the subgroup analysis of adverse events further
supports REBYOTATM is safe for CHF patients, and that,
unlike the CHF warning included with ZINPLAVA[supreg], the FDA did not
issue a warning about CHF on the approved label for
REBYOTATM.
---------------------------------------------------------------------------
\101\ Glenn Tillotson et. al.; Microbiota-Based Live
Biotherapeutic RBX2660 for the Reduction of Recurrent Clostridioides
difficile Infection in Older Adults With Underlying Comorbidities,
Open Forum Infectious Diseases, Volume 10, Issue 1, January 2023,
ofac703, https://doi.org/10.1093/ofid/ofac703.
---------------------------------------------------------------------------
The applicant for REBYOTATM also provided additional
details regarding the absence of comparative data using
ZINPLAVATM. The applicant stated that due to the limited use
of ZINPLAVATM in real-world practice, it was not considered
in a recent cost-effective analysis comparing REBYOTATM with
standard-of-care. The applicant also noted that the different routes of
administration for each of ZINPLAVATM (given by IV infusion)
and REBYOTATM (via rectal administration) would make it
difficult to blind the study and would require that the study sites be
equipped to accommodate infusion administration, in addition to being
overly burdensome to the study participants.
Response: We thank the applicants for their comments regarding the
substantial clinical improvement criterion. After consideration of the
information previously submitted in the applications for
REBYOTATM and VOWSTTM and summarized in this
final rule, and after review of the comments we received, we agree that
both REBYOTATM and VOWSTTM represent a
substantial clinical improvement over existing technologies because the
technologies improve clinical outcomes by increasing resolution of the
disease process over placebo without serious adverse effects for
patients who have previously received standard of care antibiotics for
rCDI. We believe that these two technologies restore the gut microbiome
and resolve dysbiosis to prevent the recurrence of CDI in patients
following antibacterial treatment for rCDI. In summary, we have
determined that REBYOTATM and VOWSTTM meet all of
the criteria for approval of new technology add-on payments. Therefore,
we are approving new technology add-on payments for
REBYOTATM and VOWSTTM for FY 2024. As previously
stated, cases involving REBYOTATM that are eligible for new
technology add-on payments will be identified by ICD-10-PCS procedure
code XW0H7X8 (Introduction of broad consortium microbiota-based live
biotherapeutic suspension into lower GI, via natural or artificial
opening, new technology group 8). Cases involving VOWSTTM
that are eligible for new technology add-on payments will be identified
by ICD-10-PCS procedure code XW0DXN9 (Introduction of SER-109 into
mouth and pharynx, external approach, new technology group 9).
Each of the applicants submitted cost information for its
technology. The applicant for REBYOTATM stated that the cost
of its technology is $9,000.00 per patient, and projected that 2,180
cases will involve the use of REBYOTATM in FY 2024. The
manufacturer of VOWSTTM stated that the cost of its
technology is $17,500.00 and projected that 448 cases will involve the
use of VOWSTTM in FY 2024. Because the technologies are
substantially similar to each other, we believe using a single cost for
purposes of determining the new technology add-on payment amount is
appropriate for REBYOTATM and VOWSTTM even though
each applicant has its own set of codes. We also believe using a single
cost provides predictability regarding the add-on payment when using
REBYOTATM or VOWSTTM for the prevention of
recurrence of CDI following antibiotic treatment for rCDI. As such,
consistent with prior rulemaking (85 FR 58684), we believe that the use
of a weighted average of the cost of REBYOTATM and
VOWSTTM based on the projected number of cases involving
each technology to determine the maximum new technology add-on payment
would be most appropriate. To compute the weighted cost average, we
summed the total number of projected cases for each of the applicants,
which equaled 2,628 cases (2,180 plus 448). We then divided the number
of projected cases for each of the applicants by the total number of
cases, which resulted in the following case-weighted percentages: 83
percent for REBYOTATM and 17 percent for VOWSTTM.
We then multiplied the cost per case for the specific drug by the case-
weighted percentage (0.83 * $9,000 = $7,470 for REBYOTATM
and 0.17 * $17,500 = $2,975 for VOWSTTM). This resulted in a
case-weighted average cost of $10,445 for the technology. Under Sec.
412.88(a)(2), we limit new technology add-on payments to the lesser of
65 percent of the average cost of the technology, or 65 percent of the
costs in excess of the MS-DRG payment for the case. As a result, the
maximum new technology add-on payment for a case involving the use of
REBYOTATM or VOWSTTM is $6,789.25 for FY 2024.
g. SeptiCyte[supreg] RAPID
Immunexpress, Inc. submitted an application for new technology add-
on payments for SeptiCyte[supreg] RAPID for FY 2024. Per the applicant,
SeptiCyte[supreg] RAPID is a gene expression assay used in conjunction
with clinical assessments and other laboratory findings as an aid to
differentiate infection-positive (sepsis) from infection-negative
systemic inflammatory response syndrome (SIRS) in patients suspected of
sepsis on their first day of intensive care unit (ICU) admission.
According to the applicant, the test is performed in a fully integrated
cartridge, which runs on the Biocartis Idylla system, with sample to
answer turnaround time of approximately 60 minutes. The applicant
stated that SeptiCyte[supreg] RAPID generates a score
(SeptiScore[supreg]) ranging from 0 to 15 that falls within one of four
discrete Interpretation Bands based on the increasing likelihood of
infection-positive systemic inflammation, also known as sepsis.
Please refer to the online application posting for
SeptiCyte[supreg] RAPID, available at https://mearis.cms.gov/public/publications/ntap/NTP2210170WWBT, for additional detail describing the
technology and diagnostic indications.
With respect to the newness criterion, according to the applicant,
SeptiCyte[supreg] RAPID received 510(k) clearance (K203748) from FDA on
November 29, 2021, for the following indication: SeptiCyte[supreg]
RAPID is indicated as a gene expression assay using reverse
transcription polymerase chain reaction to quantify the relative
expression levels of host response genes isolated from whole blood
collected in the PAXgene[supreg] Blood RNA Tube. The SeptiCyte[supreg]
RAPID test is used in conjunction with clinical assessments and other
laboratory findings as an aid to differentiate infection-positive
(sepsis) from infection-negative systemic inflammation in patients
suspected of sepsis on their first day of ICU admission. The
SeptiCyte[supreg] RAPID test
[[Page 58869]]
generates a score (SeptiScore[supreg]) that falls within one of four
discrete Interpretation Bands based on the increasing likelihood of
infection-positive systematic inflammation. SeptiCyte[supreg] RAPID is
intended for in-vitro diagnostic use on the Biocartis
IdyllaTM System. The applicant stated the SeptiCyte[supreg]
RAPID was commercially available immediately after FDA clearance. Per
the applicant, Septicyte[supreg] RAPID was cleared based on substantial
equivalency to the predicate device SeptiCyte[supreg] LAB (K163260),
which received 510(k) clearance \102\ from the FDA on April 6, 2017.
The applicant described differences between the two versions of the
technology including: the automatic extraction of material from
SeptiCyte[supreg] RAPID versus the manual extraction for
SeptiCyte[supreg] LAB; reverse transcription polymerase chain reaction
(RT-PCR) and dry format for SeptiCyte[supreg] RAPID versus reverse
transcription-quantitative polymerase chain reaction (RT-qPCR) and wet
format for SeptiCyte[supreg] LAB; use of the Biocartis
IdyllaTM System for SeptiCyte[supreg] RAPID versus ABI 7500
Fast Dx for SeptiCyte[supreg] LAB; different fluorescent probes and
quenchers between SeptiCyte[supreg] RAPID and SeptiCyte[supreg] LAB;
and use of MS2 phage internal sample processing control for
SeptiCyte[supreg] RAPID versus three external controls for
SeptiCyte[supreg] LAB.
---------------------------------------------------------------------------
\102\ https://www.accessdata.fda.gov/cdrh_docs/reviews/K163260.pdf.
---------------------------------------------------------------------------
The applicant stated that effective October 1, 2022, the following
ICD-10-PCS code may be used to uniquely describe procedures involving
the use of SeptiCyte[supreg] RAPID: XXE5X38 (Measurement of infection,
whole blood nucleic acid-base microbial detection, new technology group
5). We note that the correct descriptor for this code appears to be
(Measurement of infection, whole blood reverse transcription and
quantitative real-time polymerase chain reaction, new technology group
8).
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 substantial similarity criteria, the applicant
asserted that SeptiCyte[supreg] RAPID is not substantially similar to
other currently available technologies because SeptiCyte[supreg] RAPID
differs in mechanism, performance, and turnaround time from all current
sepsis diagnostic tools by leveraging the host's immune response to
systemic inflammation of infectious origin via measurement of the gene
expression ratio between upregulated and downregulated genes, and
therefore, the technology meets the newness criterion. The following
table summarizes the applicant's assertions regarding the substantial
similarity criteria. Please see the online application posting for
SeptiCyte[supreg] RAPID for the applicant's complete statements in
support of its assertion that SeptiCyte[supreg] RAPID is not
substantially similar to other currently available technologies.
[GRAPHIC] [TIFF OMITTED] TR28AU23.180
[[Page 58870]]
In the FY 2024 IPPS/LTCH PPS proposed rule (88 FR 26867 through
26868), after reviewing of the information provided by the applicant,
we stated that we had the following concerns with regard to the newness
criterion. We noted that the applicant did not include
SeptiCyte[supreg] LAB, the predicate device for SeptiCyte[supreg] RAPID
which was cleared by FDA on April 6, 2017, in its discussion of
existing technologies. While the applicant described differences
between the two versions of the technology, we explained that it does
not appear that these differences materially affect the mechanism of
action of the technology. We noted that both devices utilize a gene
expression assay using reverse transcription polymerase chain reaction
to quantify the relative expression levels of host response genes.\103\
We further noted that the applicant also appears to consider the
devices as similar, as they rely on studies conducted using the
SeptiCyte[supreg] LAB to demonstrate substantial clinical improvement.
---------------------------------------------------------------------------
\103\ https://www.accessdata.fda.gov/cdrh_docs/reviews/K163260.pdf.
---------------------------------------------------------------------------
We also noted that the applicant did not explain how
SeptiCyte[supreg] RAPID targets a different disease or patient
population compared to existing sepsis diagnostic testing. Instead, the
applicant stated that SeptiCyte[supreg] RAPID does not diagnose the
same patient population compared to existing technology, because it
allows for early diagnosis, guides treatment decisions, and has high
accuracy. While this may be relevant to the assessment of substantial
clinical improvement, it did not appear to be related to newness, and
it was unclear how the patient population tested with Septicyte[supreg]
RAPID differs from other patients tested for sepsis, including those
tested with Septicyte[supreg] LAB. As the applicant stated that
Septicyte[supreg] RAPID maps to the same MS-DRG as existing
technologies, and it appears to have a similar mechanism of action and
is used in the same patient population as SeptiCyte[supreg] LAB, we
stated our belief these technologies may be substantially similar to
each other. We noted that if Septicyte[supreg] RAPID is substantially
similar to SeptiCyte[supreg] LAB, we believe the newness period for
this technology would begin on April 6, 2017, with the 510(k) clearance
date for SeptiCyte[supreg] LAB and, therefore, because the 3-year
anniversary date of the technology's entry onto the U.S. market (April
6, 2020) occurred in FY 2020, the technology would no longer be
considered new and would not be eligible for new technology add-on
payments for FY 2024.
We invited public comments on whether SeptiCyte[supreg] RAPID is
substantially similar to existing technologies and whether
SeptiCyte[supreg] RAPID meets the newness criterion.
Comment: The applicant submitted a comment in response to CMS's
concerns pertaining to the newness criterion. Regarding our concern
whether SeptiCyte[supreg] RAPID uses the same or similar mechanism of
action as existing technology, the applicant clarified that
SeptiCyte[supreg] LAB, the predicate device to SeptiCyte[supreg] RAPID,
was never manufactured, commercialized, or sold in the U.S. The
applicant stated that it does not believe SeptiCyte[supreg] RAPID is
substantially similar to SeptiCyte[supreg] LAB, because
SeptiCyte[supreg] RAPID applies the technology to an improved,
streamlined methodology consisting of fewer steps that result in a 1-
hour turnaround time. However, the applicant also noted that
SeptiCyte[supreg] RAPID demonstrates a high correlation (r\2\ = 0.94)
to SeptiCyte[supreg] LAB, which were developed and validated using the
same underlying polymerase chain reaction technology.
The applicant stated its belief that even if CMS considers
SeptiCyte[supreg] RAPID to be substantially similar to
SeptiCyte[supreg] LAB, SeptiCyte[supreg] RAPID should be considered new
because SeptiCyte[supreg] LAB was never commercially available in the
U.S. The applicant explained that FDA cleared SeptiCyte[supreg] LAB on
April 6, 2017, but Immunexpress Inc. never manufactured or sold the
device in the U.S. due to the market access impediment of a 6-hour test
turnaround time, when clinical management of sepsis needs to meet a 3-
hour sepsis bundle of care, according to the CMS Severe Sepsis and
Septic Shock Management Bundle core measure. The applicant stated that
while FDA subsequently granted 510(k) clearance to SeptiCyte[supreg]
RAPID on November 29, 2021, it believes the newness date for
SeptiCyte[supreg] RAPID should begin on the date of the device's first
sale, which was April 20, 2022. The applicant noted that it provided
SeptiCyte[supreg] RAPID free of charge for evaluations and quality
improvement initiatives between its FDA clearance on November 29, 2021,
and April 20, 2022, the date of first sale. The applicant stated its
belief because the date of first sale occurred after a substantial
delay from the date of FDA clearance on November 29, 2021, it should
therefore be the newness date for the purposes of new technology add-on
payments.
Regarding our concern that SeptiCyte[supreg] RAPID targets the same
disease or patient population as existing sepsis diagnostic testing,
the applicant stated that all sepsis diagnostic tools target the same
population. The applicant stated that no existing diagnostic technology
can accurately or rapidly differentiate sepsis from non-infectious
systemic inflammation as SeptiCyte[supreg] RAPID does.
Response: We thank the applicant for its comment and the additional
information provided.
Based on our review of comments received and information submitted
by the applicant as part of its FY 2024 new technology add-on payment
application for SeptiCyte[supreg] RAPID, we agree with the applicant
that SeptiCyte[supreg] RAPID has a unique mechanism of action as the
first commercially available gene expression assay using reverse
transcription polymerase chain reaction to aid in differentiating
infection-positive (sepsis) from infection-negative systemic
inflammation. Therefore, we believe that SeptiCyte[supreg] RAPID is not
substantially similar to existing diagnostic options and meets the
newness criterion.
In regard to the first criterion, whether a technology uses the
same or similar mechanism of action to achieve a therapeutic outcome,
we continue to believe that SeptiCyte[supreg] RAPID uses the same or
similar mechanism of action as the predicate device, SeptiCyte[supreg]
LAB, as gene expression assays using reverse transcription polymerase
chain reaction to aid in differentiating infection-positive (sepsis)
from infection-negative systemic inflammation. Although the applicant
states that SeptiCyte[supreg] RAPID applies the technology to an
improved methodology, which impacts clinical utility for rapid results
to aid the clinician in suspected sepsis, we believe that improvements
in clinical utility do not result in a substantially different
mechanism of action, and these differences instead relate to an
assessment of whether SeptiCyte[supreg] RAPID meets the substantial
clinical improvement criterion. We also believe that regardless of
whether the procedural steps have changed, the manner in which
SeptiCyte[supreg] RAPID functions is unchanged from SeptiCyte[supreg]
LAB. For example, we note that the applicant stated that
SeptiCyte[supreg] RAPID was developed and validated using the same
underlying PCR technology as SeptiCyte[supreg] LAB (RT-PCR). In
addition, we note that the analytes assessed by SeptiCyte[supreg] RAPID
(PLAC8; PLA2G7) are a subset of those assessed by SeptiCyte[supreg] LAB
(PLAC8; PLA2G7; LAMP1; CEACAM4); and as noted previously, studies
conducted using SeptiCyte[supreg] LAB were used to demonstrate
substantial clinical improvement for SeptiCyte[supreg] RAPID.
Therefore, we believe that the SeptiScore[supreg] results
[[Page 58871]]
obtained by SeptiCyte[supreg] RAPID are the same or similar as to those
that would have been obtained with SeptiCyte[supreg] LAB, and that
differences in methodology between the two technologies do not
represent a new mechanism of action.
Furthermore, we agree with the applicant that the two versions of
the technology map to the same MS-DRGs and are intended to treat the
same or similar disease in the same or similar patient population--
patients tested for sepsis to differentiate sepsis from infection-
negative systemic inflammation. Because SeptiCyte[supreg] RAPID meets
all three of the substantial similarity criteria, we believe
SeptiCyte[supreg] RAPID is substantially similar to the predicate
technology, SeptiCyte[supreg] LAB.
In accordance with our policy, because these technologies are
substantially similar to each other, we use the earliest market
availability date submitted as the beginning of the newness period for
both technologies. However, we note that the applicant stated that
SeptiCyte[supreg] LAB, although FDA cleared, was never manufactured,
commercialized or sold in the U.S. market due to the market access
impediment of a 6-hour test turnaround time. As we have discussed in
prior rulemaking, generally, our policy is to begin the newness period
on the date of FDA approval or clearance or, if later, the date of
availability of the product on the U.S. market, and we may consider a
documented delay in the technology's market availability in our
determination of newness (77 FR 53348 and 70 FR 47341). Since
SeptiCyte[supreg] LAB has not been available for sale on the U.S.
market, we are unable to establish the beginning of the newness period
for SeptiCyte[supreg] LAB. Therefore, we believe it is appropriate to
use the earliest market availability date submitted for
SeptiCyte[supreg] RAPID as the beginning of the newness period for both
technologies.
We note that, as stated previously, while CMS may consider a
documented delay in the technology's market availability in our
determination of newness, our policy for determining whether to extend
new technology add-on payments for an additional year generally applies
regardless of the volume of claims for the technology after the
beginning of the newness period (83 FR 41280). We do not consider the
date of first sale of a product as an indicator of its entry onto the
U.S. market. The applicant stated that the date of first sale of
SeptiCyte[supreg] RAPID was April 20, 2022, but it is unclear from the
information provided when the technology first became available for
sale and, absent additional information from the applicant, we cannot
determine a newness date based on a documented delay in the
technology's availability on the U.S. market. Therefore, we consider
the beginning of the newness period for SeptiCyte[supreg] RAPID to
commence on November 29, 2021, when SeptiCyte[supreg] RAPID received
FDA marketing authorization.
With respect to the cost criterion, the applicant searched the FY
2021 MedPAR file for potential cases representing patients who may be
eligible for SeptiCyte[supreg] RAPID. The applicant identified three
different types of patient cases where SeptiCyte[supreg] RAPID could be
used: patients with sepsis as an admission diagnosis; patients who
develop sepsis after hospital admission; and patients with symptoms
similar to sepsis patients. To identify these patients, the applicant
used MS-DRGs and ICD-10-CM codes. These three groups were combined into
one analysis with no overlap in cases between the three groups. Please
see Table 10.21.A.--SeptiCyte[supreg] RAPID Codes--FY 2024 associated
with the proposed rule for the complete list of MS-DRGs and codes
provided by the applicant. Using the inclusion/exclusion criteria
described in the following table, the applicant identified 3,460,256
claims mapping to 691 MS-DRGs. The applicant followed the order of
operations described in the following table and calculated a final
inflated average case-weighted standardized charge per case of $88,326,
which exceeded the average case-weighted threshold amount of $72,992.
Because the final inflated average case-weighted standardized charge
per case exceeded the average case-weighted threshold amount, the
applicant maintained that SeptiCyte[supreg] RAPID meets the cost
criterion.
[[Page 58872]]
[GRAPHIC] [TIFF OMITTED] TR28AU23.181
We invited public comments on whether SeptiCyte[supreg] RAPID meets
the cost criterion.
Comment: The applicant submitted a comment reiterating that
SeptiCyte[supreg] RAPID meets the cost criterion because the inflated
average case-weighted standardized charge per case exceeded the average
case-weighted threshold amount.
Response: We thank the applicant for its comment. We agree the
final inflated average case-weighted standardized charge per case
exceeded the average case-weighted threshold amount. Therefore,
SeptiCyte[supreg] RAPID meets the cost criterion.
With regard to the substantial clinical improvement criterion, the
applicant asserted that SeptiCyte[supreg] RAPID represents a
substantial clinical improvement over existing technologies because
SeptiCyte[supreg] RAPID is the only technology to accurately
differentiate sepsis versus non-infectious systemic inflammation in 1
hour, allowing for early, appropriate intervention in suspected sepsis
patients and driving prompt source control investigation, while
outperforming currently used sepsis diagnostic tools. The applicant
asserted that for these reasons, SeptiCyte[supreg] RAPID offers the
ability to diagnose sepsis earlier than allowed by currently available
diagnostic methods and significantly improves clinical outcomes
relative to current technologies. The applicant provided eight studies
to support these claims, as well as 12 background articles about sepsis
clinical guidelines, screening criteria, and treatment.\104\ The
following table summarizes the applicant's assertions regarding the
substantial clinical improvement criterion. Please see the online
posting for SeptiCyte[supreg] RAPID for the applicant's complete
statements regarding the substantial clinical improvement criterion and
the supporting evidence provided.
---------------------------------------------------------------------------
\104\ Background articles are not included in the following
table but can be accessed via the online posting for the technology.
---------------------------------------------------------------------------
[[Page 58873]]
[GRAPHIC] [TIFF OMITTED] TR28AU23.182
[[Page 58874]]
[GRAPHIC] [TIFF OMITTED] TR28AU23.183
[[Page 58875]]
[GRAPHIC] [TIFF OMITTED] TR28AU23.184
[[Page 58876]]
[GRAPHIC] [TIFF OMITTED] TR28AU23.185
BILLING CODE 4120-01-C
In the FY 2024 IPPS/LTCH PPS proposed rule (88 FR 26873), after
reviewing the information provided by the applicant, we stated that we
had the following concerns regarding whether SeptiCyte[supreg] RAPID
meets the substantial clinical improvement criterion. First, we noted
that the applicant submitted two studies 105 106 of
SeptiCyte[supreg] LAB, the predicate device, to support its assertions
as to why SeptiCyte[supreg] RAPID represents a substantial clinical
improvement. The applicant did not present any clinical data to compare
SeptiCyte[supreg] RAPID to SeptiCyte[supreg] LAB. Second, the studies
provided showed that SeptiCyte[supreg] RAPID is not a definitive test
and that resulting SeptiScores[supreg] in Bands 2 and 3 are
inconclusive. We noted that the applicant stated that SeptiCyte[supreg]
RAPID should be used in conjunction with clinical assessments and other
laboratory findings. If additional diagnostic tests are needed in
conjunction with SeptiCyte[supreg] RAPID to determine a diagnosis of
sepsis or SIRS, we questioned whether SeptiCyte[supreg] RAPID can
provide an earlier diagnosis and affect the management of the patient.
In addition, we stated that the applicant did not provide evidence for
this claim other than the 1-hour turnaround time for SeptiCyte[supreg]
RAPID to provide test results. Additionally, we noted that the
applicant did not provide any clinical data demonstrating that the
SeptiCyte[supreg] RAPID affects the management of the patient, or that
it improves clinical outcomes.
---------------------------------------------------------------------------
\105\ Balk, R, Esper AM, Martin GS, et al. Validation of
SeptiCyte[supreg] RAPID to discriminate sepsis from non-infectious
systemic inflammation. Submitted for review and publication
September 2022. Available as pre-print at https://doi.org/10.1101/2022.07.20.22277648.
\106\ McHugh, L.C. (2018). Modeling Improved Patient Management
and Hospital Savings with SeptiCyte[supreg] LAB in the Diagnosis of
Sepsis at ICU admission. Abstract at IDWeek 2018.
---------------------------------------------------------------------------
We invited public comments on whether SeptiCyte[supreg] RAPID meets
the substantial clinical improvement criterion.
Comment: We received several comments in support of new technology
add-on payments for SeptiCyte[supreg] RAPID. A few of the commenters
stated their belief that SeptiCyte[supreg] RAPID has the potential to
greatly improve patient care because of its high level of sensitivity,
short turnaround time, and advantages over existing sepsis diagnostic
tools. A commenter who recently evaluated SeptiCyte[supreg] RAPID's
impact on sepsis bundle compliancy at their community hospital
emergency department stated they had very encouraging findings and
believe SeptiCyte[supreg] RAPID has the potential for clinical utility
in the care of its sepsis patients, as well as the potential for
improved antibiotic stewardship and reduced costs. A few commenters
also explained that SeptiCyte[supreg] RAPID provides clinicians with
the probability of sepsis to facilitate real-time decision making in
patients with suspected sepsis. One commenter noted that
SeptiCyte[supreg] RAPID has the potential to impact the morbidity and
mortality of critically ill patients. A few commenters stated their
support for approval of SeptiCyte[supreg] RAPID's new technology add-on
payment application because approval for the payments would encourage
adoption of the technology by hospitals and health systems who may
otherwise delay usage of SeptiCyte[supreg] RAPID.
[[Page 58877]]
Response: We thank the commenters for their input and have taken it
into consideration in our determination of whether SeptiCyte[supreg]
RAPID meets the substantial clinical improvement criterion, discussed
later in this section.
Comment: The applicant submitted a public comment regarding the
substantial clinical improvement criterion and provided responses to
concerns raised in the proposed rule. With respect to whether studies
of SeptiCyte[supreg] LAB accurately represent clinical data from
SeptiCyte[supreg] RAPID, the applicant stated that SeptiCyte[supreg]
RAPID was compared to SeptiCyte[supreg] LAB and the two devices had a
high correlation (r\2\ = 0.94), which measured the linear association
between the two tests.
With respect to CMS's concern about whether SeptiCyte[supreg] RAPID
is a definitive test and that SeptiScores[supreg] in Bands 2 and 3 are
inconclusive, the applicant stated that SeptiCyte[supreg] RAPID scores
indicate the sepsis likelihood ratios based upon its four bands with
high specificity and sensitivity for 80 percent of all patients. The
applicant explained that for the remaining 20 percent of patients,
whose SeptiScores[supreg] fall into Band 3, probability can be derived
in conjunction with other lab variables. The applicant further
explained that the high sensitivity of Band 1 and the high specificity
of the test in Band 4 provides clinicians with rule-in or rule-out
information, which is strong patient management information that is
unavailable with current technologies.\107\
---------------------------------------------------------------------------
\107\ Balk, R, Esper AM, Martin GS, et al. Validation of
SeptiCyte[supreg] RAPID to discriminate sepsis from non-infectious
systemic inflammation. Submitted for review and publication
September 2022. Available as pre-print at https://doi.org/10.1101/2022.07.20.22277648.
---------------------------------------------------------------------------
With respect to whether SeptiCyte[supreg] RAPID should be used in
conjunction with clinical assessments and other laboratory findings,
the applicant stated that with the lack of a ``Gold Standard'' to
effectively define sepsis, currently available diagnostic tools for
suspected sepsis are inadequate, with high false positivity rates due
to limited specificity (for example, C-reactive protein (CRP)), lengthy
turnaround time for actionable results, and low sensitivity (for
example, blood cultures). The applicant further stated that when used
in conjunction with clinical assessments, vital signs, and laboratory
findings, SeptiCyte[supreg] RAPID alone, or in combination with
typically used biomarkers, is superior to existing technologies in
differentiating sepsis from non-infectious systemic inflammation.\108\
The applicant also asserted that SeptiCyte[supreg] RAPID significantly
differentiated between sepsis and non-infectious systematic
inflammation in 143 patients where an expert panel of sepsis physicians
was unable to retroactively diagnose sepsis or non-infectious systemic
inflammation. In addition, the applicant noted that SeptiCyte[supreg]
RAPID has been independently clinically validated for its role in
triage and risk stratification of patients with severe COVID, which
according to the applicant is a proxy for sepsis.
---------------------------------------------------------------------------
\108\ Balk, R, Esper AM, Martin GS, et al. Validation of
SeptiCyte[supreg] RAPID to discriminate sepsis from non-infectious
systemic inflammation. Submitted for review and publication
September 2022. Available as pre-print at https://doi.org/10.1101/2022.07.20.22277648.
---------------------------------------------------------------------------
With respect to whether SeptiCyte[supreg] RAPID can provide an
earlier diagnosis and affect the management of the patient, the
applicant reasserted that SeptiCyte[supreg] RAPID allows for earlier
differentiation of sepsis from non-infectious systematic inflammation,
thereby impacting the management of patients by allowing for earlier
therapeutic intervention as well as antibiotic and diagnostic
stewardship. The applicant stated that literature provides well
documented evidence that patient management aligned with Surviving
Sepsis Campaign guidelines and meeting CMS quality metrics of 1- or 3-
hour bundles improves care and clinical outcomes for sepsis patients.
The applicant explained that this evidence supports its belief that the
1-hour turnaround time and significant likelihood ratios of
SeptiCyte[supreg] RAPID for differentiating sepsis versus non-
infectious systemic inflammation can impact sepsis bundle compliance
and clinical outcomes.
With respect to CMS's concern about the absence of clinical data
demonstrating that the SeptiCyte[supreg] RAPID affects the management
of the patient or that it improves clinical outcomes, the applicant
reiterated its belief that by providing early and accurate
differentiation between sepsis and non-infectious systemic
inflammation, SeptiCyte[supreg] can decrease the time to diagnoses and
treat sepsis resulting in improved outcomes and reduced mortality. To
support this claim, the applicant included eight case studies which
they stated demonstrate SeptiCyte[supreg] RAPID's impact on the care
process, antibiotic stewardship, and diagnostic stewardship. More
specifically, the applicant provided a case study to demonstrate
SeptiCyte[supreg] RAPID's utility in each of the following: (1)
monitoring patients post-operatively for secondary hospital acquired
sepsis; (2) monitoring severe burn patients to differentiate infection
negative systemic inflammation from infection positive systemic
inflammation and sepsis; (3) diagnosing sepsis in an immunocompromised
patient admitted with neutropenia and a recurrence of cancer who
received chemotherapy; (4) confirming the presence of sepsis despite
negative blood cultures; (5) evaluating the probability of sepsis in a
patient with a change in clinical status and determining whether a de-
escalation of antibiotics was appropriate; (6) differentiating
infection negative systemic inflammation from infection positive
systemic inflammation and sepsis; and (7/8) aiding the diagnosis of
secondary sepsis following a central nervous system bleed and surgical
procedure.
The first case study provided by the applicant pertains to a 64-
year-old female admitted for a right hemi hepatectomy for hepatobiliary
carcinoma. After 19 days in the hospital, the patient exhibited
clinical deterioration and an altered mental status. The patient was
transferred to the intensive care unit (ICU), where the patient
underwent blood cultures, SeptiCyte[supreg] RAPID, and an abdominal
computed (CT) scan. The SeptiScore[supreg] was 7.5, within Band 4,
indicating a high probability of sepsis. The CT showed a perihepatic
abscess, which was drained, and the fluid was cultured. As a result of
these tests, the patient started antibiotics. After 24 hours,
SeptiCyte[supreg] RAPID showed a SeptiScore[supreg] of 8.8, within Band
4, and blood cultures showed Escherichia coli and Candida, confirming
sepsis. The patient received treatment for 7 days and was transferred
from the ICU to the ward with a SeptiScore[supreg] of 7.1, within Band
3, indicating an intermediate risk of sepsis. The applicant stated that
the patient developed a post-operative infection and an abscess, and
SeptiCyte[supreg] RAPID was used to confirm sepsis and to monitor the
patient for evidence of secondary hospital acquired sepsis.
The second case study included in the applicant's comment pertains
to a 40-year-old male admitted to the burn unit with thermal burns
covering 30 percent of his total body surface area (TBSA), with 10
percent of his TBSA deeply burned. At admission, SeptiCyte[supreg]
RAPID was administered showing a SeptiScore[supreg] of 4, within Band
1, indicating a low probability of sepsis. During day 3 of admittance,
the patient developed increased respiratory distress and another
SeptiCyte[supreg] RAPID was administered. The SeptiScore[supreg] was
[[Page 58878]]
12.8, within Band 4, indicating a high probability of sepsis. The
patient's sputum sample showed great Haemophilus influenzae and blood
cultures were negative. As a result, the patient started antibiotics.
On day 10, the patient developed fever, tachycardia, and leukocytosis.
As a result, blood, urine, and cutaneous cultures were drawn and
SeptiCyte[supreg] RAPID was administered. The SeptiScore[supreg] was
10.1, within Band 4, indicating a high probability of sepsis. The
cutaneous cultures showed Enterococcus faecalis and Pseudomonas
aeruginosa. The patient received antibiotics. The applicant stated that
severe burn patients frequently develop an inflammatory response due to
repeated surgeries, debridement, thrombotic complications, and other
treatments. The applicant also stated that this case study demonstrates
the use of SeptiCyte[supreg] RAPID to monitor the patient following a
baseline low SeptiScore[supreg] on admission and repeating the
SeptiCyte[supreg] RAPID test at the time of developing SIRS and
possible infection. The applicant explained that the high
SeptiScore[supreg] in the presence of SIRS supports the early diagnosis
of a hospital acquired infection and sepsis.
The applicant stated that the third case study is intended to
demonstrate the role of SeptiCyte[supreg] RAPID in the diagnosis of
sepsis in an immunocompromised patient with neutropenia and recurrence
of cancer who was receiving chemotherapy. A 47-year-old patient with a
history of cervical cancer considered to be in remission was admitted
with a hemorrhagic stroke. An examination revealed recurrence of the
cancer with hepatic and cerebral metastatic lesions. As a result, the
patient began chemotherapy. On day 7, the patient developed a fever and
had an absolute neutrophil count of 200 per microliter. Blood and urine
cultures were negative, and the patient was treated with antibiotics
for seven days, after which chemotherapy was restarted. On day 30, the
patient developed fever, tachycardia, anuria, and hypotension. The
patient received blood tests and a clinical assessment that showed a
decrease in neutrophils to 0 per microliter, down from 170 two days
prior; a c-reactive protein 0 of 166 mg/L; and a blood pressure of 70/
40 mmHg. The patient was admitted to the ICU where volume and
vasopressors were started, and blood and urine cultures obtained. In
addition, the patient's SeptiScore[supreg] was 9, within Band 4,
representing a high probability of sepsis. These clinical tests also
showed growth of Enterococcus faecalis in the urine, and the patient
started triple antibiotics and discontinued chemotherapy. The applicant
stated that this case demonstrates SeptiCyte[supreg] RAPID's diagnostic
capability of detecting sepsis much earlier in a patient with severe
neutropenia and immunosuppression, confirming sepsis and prompting
initiation of antibiotics and cessation of chemotherapeutics.
The applicant explained that the fourth case study represented an
example of how SeptiCyte[supreg] RAPID is used to confirm the presence
of sepsis despite negative blood cultures. A 79-year-old male with
diabetes mellitus and chronic obstructive pulmonary disease was
admitted for endoscopic devolvulation of a sigmoid volvulus. The
patient developed dyspnea and productive cough with decreasing
consciousness and increasing work of breathing. The patient was
intubated and admitted to the ICU where he was placed on vasopressors
and intermittent mandatory ventilation. The patient had a Sequential
Organ Failure Assessment (SOFA) score of 9, a white blood cell count of
14,000, a lactate of 1.6 mm/L, a negative urine antigen test, and a
chest x-ray that showed diffuse bilateral infiltrates. The patient's
SeptiScore[supreg] was 7.7, within Band 4, indicating a high
probability of sepsis. Blood and urine cultures were also obtained. The
patient started triple antibiotics. The applicant stated that the
SeptiScore[supreg] confirmed a high probability of sepsis resulting in
early initiation of appropriate antibiotics and early source
investigation and control.
The applicant explained that the fifth case study is an example of
how SeptiCyte[supreg] RAPID was used to evaluate an in-hospital change
in clinical status and de-escalation of antibiotic therapy. A 63-year-
old male with a history of diabetes mellitus and non-dialysis chronic
renal failure was admitted to the ICU with bilateral SARS-CoV-2
pneumonia and respiratory failure. The patient's 78 day stay in the ICU
included mechanical ventilation, tracheostomy, dialysis for acute renal
failure, ventilator-associated pneumonia from Enterobacter cloacae, and
two episodes of hospital-acquired bacteremia with Enterococcus faecalis
and Staphylococcus aureus. Once the patient was transferred to the
ward, his tracheostomy was removed, and dialysis was discontinued. Five
days later, the patient presented a low-grade fever, shortness of
breath, purulent sputum, and tachypnea and was readmitted to the ICU
with hypoxic respiratory failure and intubated. At this time, the
patient had a blood pressure of 70/50 mmHg, a SOFA score of 8, a white
blood cell count of 9.800 with 89 percent neutrophils, and a chest x-
ray that showed bilateral infiltrates and pulmonary edema. Blood and
sputum cultures were also obtained, and the patient began antibiotics.
The patient's SeptiScore[supreg] was 3.7, within Band 1, representing a
low probability of sepsis. Considering prompt clinical improvement with
ventilation and diuresis, no culture growth after 24 hours, and a
SeptiScore[supreg] of 3.7, antibiotics were discontinued. The applicant
explained that this case study shows how SeptiCyte[supreg] RAPID
confirms low probability of sepsis in the presence of negative cultures
and clinical improvement allowed for the appropriate discontinuation of
antibiotics, driving antibiotic stewardship and de-escalation of
unnecessary therapy.
The applicant described in the sixth case study how
SeptiCyte[supreg] RAPID was used to differentiate infection negative
systemic inflammation from infection positive systemic inflammation or
sepsis in a 74-year-old patient with deteriorating mental status, loss
of consciousness and tachypnea. The patient had normal initial
diagnostic and laboratory studies and blood, sputum, urine cultures
were ordered, and results were pending. The patient had
SeptiCyte[supreg] RAPID which showed a SeptiScore[supreg] of 5, Band 1
which is a low risk of sepsis. The care team discontinued antibiotics
due to SeptiCyte[supreg] RAPID in conjunction with negative cultures
after 3 days. Further evaluation showed mass in left upper lobe of the
lung with metastases in adrenal gland.
The applicant stated that, in the seventh and eighth case studies,
SeptiCyte[supreg] RAPID aided in the diagnosis of sepsis after CNS
bleed and surgical procedure. There were two patients who were both
admitted to the ICU post subarachnoid hemorrhage with complicating
secondary hydrocephalus requiring external ventricular drain placement.
During the ICU stay, both patients developed fever and delirium, and
both received CSF analysis with results that came back after 3 hours
that showed high WBC count and protein but was gram stain negative. The
patients received SeptiCyte[supreg] RAPID SeptiScore[supreg]'s of 8.8
and 7, respectively, both elevated with high probability of sepsis with
a 1-hour turnaround. The CSF culture grew Klebsiella pneumoniae 24
hours after collection. The applicant stated that SeptiCyte[supreg]
RAPID's 1-hour turnaround time confirmed the presence of systemic
infection in both patients, prompting
[[Page 58879]]
early appropriate antibiotic therapy pending bacterial confirmation and
sensitivity testing.
Response: We thank the applicant and other commenters for their
input. After further review, we continue to have concerns as to whether
SeptiCyte[supreg] RAPID meets the substantial clinical improvement
criterion to be approved for new technology add-on payments. Based on
the additional information we received, we remain unclear whether
SeptiCyte[supreg] RAPID offers the ability to diagnose a medical
condition earlier in a patient population than allowed by currently
available methods or that it changes the management of patients. While
the applicant asserted that the technology allows for earlier
differentiation of sepsis from SIRS, and thereby impacts the management
of patients, it has not demonstrated that Septicyte[supreg] RAPID
actually leads to changes in the management of patients such as
initiating or discontinuing antibiotics. We note that the applicant
stated it believes that the 1-hour time to results with
SeptiCyte[supreg] RAPID can impact sepsis bundle compliance, and cited
literature that meeting sepsis guidelines and quality metrics improves
outcomes for sepsis patients. However, no evidence was presented to
demonstrate that the technology improves compliance with guidelines or
improves outcomes; this is only inferred. Although the applicant
asserted that SeptiCyte[supreg] RAPID was independently clinically
validated for its role in triage and risk stratification of patients
with severe COVID-19, we could not determine that this is a proxy for
sepsis. The applicant included case studies in support of
SeptiCyte[supreg] RAPID's ability to improve monitoring of patients at
risk of sepsis, or as a confirmation test, and a diagnostic aid. We are
unable to determine, based on these case studies, that the clinical
data demonstrates that SeptiCyte[supreg] RAPID itself directly affects
management of patients or improves clinical outcomes. For example, we
believe that in the clinical scenarios presented, antibiotics would
have been started or stopped based on clinical presentation alone in
some cases, and with the additional diagnostic tests in other cases.
The case studies did not describe when SeptiCyte[supreg] RAPID was
performed or when results were received in relation to the other tests
performed, and also did not describe at what point during the timeline
of tests the antibiotics were started/discontinued (that is, before or
after the results of the SeptiCyte[supreg] RAPID test or other tests
were received. Therefore, it did not appear that any change in
management was initiated directly as a result of receiving the
SeptiCyte[supreg] RAPID test results in any of the scenarios, despite
the 1-hour turnaround time. Instead, it appears that, in these
scenarios, SeptiCyte[supreg] RAPID was used to confirm results from
standard of care procedures, rather than providing actionable results
resulting in a change in patient antibiotic use before blood culture or
molecular pathogen detection results. For example, with regards to Case
Study #1, it appears that patient clinical deterioration and altered
mental status following high risk abdominal surgery prompted standard
of care procedures, and that antibiotics were started after an
abdominal CT noted a perihepatic abscess, with results confirmed by
blood and abscess cultures and SeptiCyte[supreg] RAPID results.
Further, it is unclear how substantial clinical improvement based on
these scenarios can be demonstrated without a comparison to diagnosis
and management of these patients using standard of care (SOC) methods
alone. While other commenters stated that SeptiCyte[supreg] RAPID has
the potential to improve health outcomes and patient management,
clinical evidence to support those statements was not provided.
After review of the information submitted by the applicant as part
of its FY 2024 new technology add-on payment application for
SeptiCyte[supreg] RAPID and consideration of the comments received, we
are unable to determine that SeptiCyte[supreg] RAPID meets the
substantial clinical improvement criteria for the reasons discussed in
the proposed rule and in this final rule, and therefore we are not
approving new technology add-on payments for SeptiCyte[supreg] RAPID
for FY 2024.
h. SPEVIGO[supreg] (Spesolimab)
Boehringer Ingelheim Pharmaceuticals, Inc. (BIPI), submitted an
application for new technology add-on payments for SPEVIGO[supreg] for
FY 2024. SPEVIGO[supreg] is a humanized antagonistic monoclonal
immunoglobulin G1 antibody blocking human IL36R signaling for the
treatment of flares in adult patients with generalized pustular
psoriasis (GPP). We noted that the applicant submitted an application
for new technology add-on payments for SPEVIGO[supreg] for FY 2023,
under the name spesolimab, as summarized in the FY 2023 IPPS/LTCH PPS
proposed rule (87 FR 28108 through 28746), but the technology did not
meet the deadline of July 1, 2022, for FDA approval or clearance of the
technology and, therefore, was not eligible for consideration for new
technology add-on payments for FY 2023 (87 FR 48920).
Please refer to the online application posting for SPEVIGO[supreg],
available at https://mearis.cms.gov/public/publications/ntap/NTP2210146275W, for additional detail describing the technology and the
disease treated by the technology.
With respect to the newness criterion, according to the applicant,
the BLA for SPEVIGO[supreg] was approved by FDA on September 1, 2022,
for the treatment of GPP flares in adults. According to the applicant,
SPEVIGO[supreg] 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. The applicant indicated that, while
there may be cases where a second dose is needed, there is insufficient
frequency to impact the reported weighted average of one dose per
patient.
The applicant stated that effective October 1, 2022, the following
ICD-10-PCS code may be used to uniquely describe procedures involving
the use of SPEVIGO[supreg]: XW03308 (Introduction of spesolimab
monoclonal antibody into peripheral vein, percutaneous approach, new
technology group 8). The applicant stated that L40.1 (Generalized
pustular psoriasis) may be used to currently identify the indication
for SPEVIGO[supreg] under the ICD-10-CM coding system.
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.
[[Page 58880]]
With respect to the substantial similarity criteria, the applicant
asserted that SPEVIGO[supreg] is not substantially similar to other
currently available technologies because, in the absence of an FDA-
approved therapy specifically indicated for GPP, immunomodulatory
therapies, including biologic products, are used in the treatment of
GPP despite these medications being approved for plaque psoriasis,
which is a different subtype of psoriasis. Additionally, there is
limited evidence on the efficacy and safety of these therapies in the
treatment of GPP. Due to the rarity of the disease, there are no high-
quality clinical trials providing evidence for treatment options in
GPP. Therefore, the applicant asserts that the technology meets the
newness criterion. The following table summarizes the applicant's
assertions regarding the substantial similarity criteria. Please see
the online application posting for SPEVIGO[supreg] for the applicant's
complete statements in support of its assertion that SPEVIGO[supreg] is
not substantially similar to other currently available technologies.
[GRAPHIC] [TIFF OMITTED] TR28AU23.186
In the FY 2024 IPPS/LTCH PPS proposed rule (88 FR 26882), we stated
the following concerns with regard to the newness criterion, similar to
concerns raised in the FY 2023 IPPS/LTCH PPS proposed rule (87 FR
28280). First, we noted that, when describing current treatments for
the disease, the applicant stated that there are no FDA-approved
therapies specifically indicated for GPP. However, we questioned
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 requested additional information on any
such treatments and how they compare to SPEVIGO[supreg] with regard to
substantial similarity. We also noted that while the applicant stated
that SPEVIGO[supreg] 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 believed these are the same MS-DRGs to
which other treatments for GPP would map.
We invited public comments on whether SPEVIGO[supreg] is
substantially similar to existing technologies and whether
SPEVIGO[supreg] meets the newness criterion.
Comment: The applicant submitted a comment to address CMS's
concerns regarding the newness criterion. With respect to the request
for additional information on currently available treatments and how
they compare to SPEVIGO[supreg], the applicant stated that
SPEVIGO[supreg] is the only FDA approved therapy for the treatment of
GPP flares in adults. The applicant noted that prior to
SPEVIGO[supreg], there was no consensus standard of care for GPP
flares. Per the applicant, due to historical lack of robust clinical
trial evidence or previously approved therapies for GPP flares,
systemic agents were experimented with clinically in patients with GPP
flares, based mainly on clinical experience in patients with plaque
psoriasis (PSO). The applicant stated that even with treatment with
these agents, many patients still had residual symptoms. Patients with
GPP report a poorer quality of life compared with those with PSO, with
greater severity of itch, pain, and fatigue, and a greater impact on
work and daily activities. Per the applicant, treatments approved for
PSO, including oral systemic therapies and biologic products, may have
a slow time to response in patients with GPP flares. Regarding
currently available treatments indicated for PSO and their on-label use
for GPP, the applicant stated that aside from SPEVIGO[supreg], there
are no FDA-approved therapies indicated for the treatment of GPP flares
in adults. The applicant noted that GPP flares have acute systemic
presentation, with unpredictable and rapid periods of worsening disease
and complications resulting from systemic inflammation and neutrophilic
influx, often requiring hospitalization; PSO, on the other hand, is a
chronic disease affecting mainly the skin, and is typically managed in
an outpatient setting. The applicant noted that although historically
considered a variant of PSO, GPP is a phenotypically, genetically, and
histopathologically distinct entity from PSO.109 110 111
According to the applicant, GPP is characterized clinically by
widespread eruption of neutrophilic, non-infectious pustules, while PSO
is characterized by localized discrete plaques with excess scale
resulting from abnormal differentiation of keratinocytes.\112\ The
applicant stated that the pathways driving GPP and PSO are distinct.
This is relevant to specifically targeting GPP. Specifically, GPP
results from dysregulation of the innate immune system involving
disruption of the interleukin IL-36 signaling pathway leading to
uncontrolled systemic inflammation and a large influx of
[[Page 58881]]
neutrophils. On the other hand, PSO is driven by the adaptive immune
system, with dysregulation of the IL-17/IL-23 pathway being a key
characteristic, leading to an inflammatory impact that is mainly
observed on the skin.\113\ The applicant maintained that because of its
extreme systemic impact, GPP has a considerable clinical burden, and
symptoms related to GPP have been reported to affect everyday tasks
such as walking and sleeping.\114\ Patients with GPP report a poorer
quality of life compared with patients with PSO with greater severity
of itch, pain, and fatigue, and a greater impact on work and daily
activities).\115\ Per the applicant, without a consensus standard of
care for GPP flares (prior to SPEVIGO), various off-label PSO
treatments have been used in an attempt to control flare symptoms. Due
to the historical lack of robust clinical trial evidence and no
previously approved therapies for GPP flares, systemic agents have been
experimented with clinically in patients with GPP flares, based mainly
on clinical experience in patients with PSO. According to the
applicant, an important result of this is that, even with treatment
with these agents, many patients still have residual
symptoms.116 117 118 Treatments approved for PSO, including
oral systemic therapies and biologic products, may have a slow time to
response in patients with GPP flares. The applicant stated that in a
recently published consensus, a panel of international dermatology
experts agreed that rapid response was critical to alleviate systemic
and potentially life-threatening symptoms of GPP flares.\119\ In
addition, there are well-documented safety concerns with long-term use
of some of these systemic agents, making them inappropriate for
continuous use. To name a few examples, retinoids are associated with
teratogenic effects, liver toxicity, and skeletal abnormalities; \120\
cyclosporine has been associated with systemic hypertension and
nephrotoxicity; \121\ and respiratory complications, myelosuppression,
and hepatic impairment have reported with methotrexate.\122\ The
applicant noted that with respect to biologic products used for
treating PSO, many are specifically indicated for and tested in
randomized, controlled trials of patients with PSO; however, there have
been no results from randomized, placebo-controlled trials of any agent
other than SPEVIGO[supreg] in patients with GPP flares; therefore,
comparisons (even cross-trial) cannot be made, nor can assumptions that
PSO agents would benefit patients with GPP flares. Per the applicant,
some of these agents approved for the treatment of PSO have been
studied in patients with GPP in Japan; however, none of the studies
were randomized, controlled trials, most of the patient populations
were mixed and included a small number of patients with GPP, and all of
the trials used endpoints that were not specific to GPP. The applicant
also stated that no study, aside from those of SPEVIGO[supreg], has
specifically reported the outcome of pustular clearance, and there are
limited data on systemic improvements with these
agents.123 124 125 126 With regard to whether
SPEVIGO[supreg] may be mapped to the same MS-DRGs as other current
treatments for GPP, the applicant maintained that since SPEVIGO[supreg]
is the only FDA approved treatment for GPP flares, it would be the only
therapy to be mapped for patients with GPP flares. The applicant also
argued that once approved, other off-label therapies would not be
expected to be used for treating GPP flares.
---------------------------------------------------------------------------
\109\ Bachelez H, Barker J, Burden AD, et al. (Oct 2022).
Generalized pustular psoriasis is a disease distinct from psoriasis
vulgaris: evidence and expert opinion. Expert Rev Clin Immunol.
18(10):1033-1047. doi: 10.1080/1744666X.2022.2116003. Epub 2022 Sep
20. PMID: 36062811.
\110\ Navarini AA, Burden AD, Capon F, et al.; for the ERASPEN
Network. European consensus statement on phenotypes of pustular
psoriasis. J Eur Acad Dermatol Venereol. 201 (1): 1792-1799
doi:lO.lll l/jdv.14386.
\111\ Gooderham MJ, Van Voorhees AS, Lebwohl MG. (Sep 2019). An
update on generalized pustular psoriasis. Expert Rev Clin Immunol.
15(9):907-919. doi: 10.1080/1744666X.2019.1648209. Epub 2019 Sep 5.
PMID: 31486687.
\112\ Bachelez, et al. (2022), op.cit.
\113\ Ibid.
\114\ Burden AD, Choon SE, Gottlieb AB, et al. (Jan 2022).
Clinical Disease Measures in Generalized Pustular Psoriasis. Am J
Clin Dermatol. 23(Suppl 1):39-50. doi: 10.1007/s40257-021-00653-0.
Epub 2022 Jan 21. PMID: 35061231; PMCID: PMC8801406.
\115\ Lebwohl M, Langley RG, Paul C, et al. (2022). Evolution of
Patient Perceptions of Psoriatic Disease: Results from the
Understanding Psoriatic Disease Leveraging Insights for Treatment
(UPLIFT) Survey. Dermatol Ther (Heidelb). 12(1):61-78. doi: 10.1007/
s13555-021-00635-4. Epub 2021 Oct 25. Erratum in: Dermatol Ther
(Heidelb). PMID: 34704231; PMCID: PMC8547901.
\116\ Kara Polat, A.; Alpsoy, E.; Kalkan, G.; et al. (2022).
Sociodemographic, clinical, laboratory, treatment and prognostic
characteristics of 156 generalized pustular psoriasis patients in
Turkey: A multicentre case series. J. Eur. Acad. Dermatol. Venereol.
36, 1256-1265.
\117\ Choon SE, Lai NM, Mohammad NA, et al. (2014). 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. 53(6):676-684. doi:10.1111/
ijd.12070.
\118\ Strober B, Kotowsky N, Medeiros R, et al. (2021). Unmet
medical needs in the treatment and management of generalized
pustular psoriasis flares: evidence from a survey of Corrona
registry dermatologists. Dermatol Ther (Heidelb). 1 1 (2):529-541.
doi: O. 1007/s 13555-021-00493-0.
\119\ Puig, L, Choon, SE, Gottlieb, AB, et al. (2023).
Generalized pustular psoriasis: A global Delphi consensus on
clinical course, diagnosis, treatment goals and disease management.
J Eur Acad Dermatol Venereol. 37: 737- 752. https://doi.org/10.1111/jdv.18851.
\120\ David M, Hodak E, Lowe NJ. (Jul-Aug 1988) Adverse effects
of retinoids. Med Toxicol Adverse Drug Exp. 3(4):273-88. doi:
10.1007/BF03259940. PMID: 3054426.
\121\ Neoral. Prescribing Information. 2009 (available at
https://www.accessdata.fda.gov/drugsatfda_docs/label/2009/050715s027,050716s028lbl.pdf).
\122\ Kim BR, Ohn J, Choi CW, et al. (Jun 2017). Methotrexate in
a Real-World Psoriasis Treatment: Is It Really a Dangerous
Medication for All? Ann Dermatol. 29(3):346-348. doi: 10.5021/
ad.2017.29.3.346. Epub 2017 May 11. PMID: 28566915; PMCID:
PMC5438945.
\123\ Imafuku S, Honma M, Okubo Y, et al. (Sep 2016). Efficacy
and safety of secukinumab in patients with generalized pustular
psoriasis: A 52-week analysis from phase III open-label multicenter
Japanese study. J Dermatol. 43(9):1011-7. doi: 10.1111/1346-
8138.13306. Epub 2016 Feb 26. PMID: 26919410.
\124\ Sano S, Kubo H, Morishima H, et al. (May 2018).
Guselkumab, a human interleukin-23 monoclonal antibody in Japanese
patients with generalized pustular psoriasis and erythrodermic
psoriasis: Efficacy and safety analyses of a 52-week, phase 3,
multicenter, open-label study. J Dermatol. 45(5):529-539. doi:
10.1111/1346-8138.14294. Epub 2018 Mar 22. PMID: 29569397; PMCID:
PMC5947137.
\125\ Saeki H, Kabashima K, Tokura Y (Aug 2017). Efficacy and
safety of ustekinumab in Japanese patients with severe atopic
dermatitis: a randomized, double-blind, placebo-controlled, phase II
study. Br J Dermatol. 177(2):419-427. doi: 10.1111/bjd.15493. Epub
2017 Jun 27. PMID: 28338223.
\126\ Morita A, Yamazaki F, Matsuyama T, et al. (Dec 2018).
Adalimumab treatment in Japanese patients with generalized pustular
psoriasis: Results of an open-label phase 3 study. J Dermatol.
45(12):1371-1380. doi: 10.1111/1346-8138.14664. Epub 2018 Oct 10.
PMID: 30302793; PMCID: PMC6585693.
---------------------------------------------------------------------------
Response: We thank the applicant for its comment regarding the
newness criterion. Based on our review of comments received and
information submitted by the applicant as part of its FY 2024 new
technology add-on payment application for SPEVIGO[supreg], we agree
with the applicant that SPEVIGO[supreg] has a new mechanism of action
because it is a humanized anti-interleukin-36 (IL-36) receptor
monoclonal antibody that targets the IL-36 pathogenetic pathway in the
treatment of GPP. Therefore, we agree with the applicant that
SPEVIGO[supreg] is not substantially similar to existing treatment
options and meets the newness criterion. We consider the beginning of
the newness period to commence on September 1, 2022, when
SPEVIGO[supreg] was FDA approved for the treatment of GPP flares in
adults.
With respect to the cost criterion, to identify potential cases
representing patients who may be eligible for SPEVIGO[supreg], the
applicant searched the FY 2021 MedPAR file for cases reporting ICD-10-
CM diagnosis code L40.1 (Generalized pustular psoriasis). Using the
inclusion/exclusion criteria described in the following table, the
applicant identified 64 cases mapping to 4 MS-DRGs listed in the table
in this section. The applicant followed the order of operations
described in the following table and calculated a final inflated
average case-weighted standardized charge per case of $387,414, which
exceeded the average case-weighted threshold amount of
[[Page 58882]]
$46,244. Because the final inflated average case-weighted standardized
charge per case exceeded the average case-weighted threshold amount,
the applicant asserted that SPEVIGO[supreg] meets the cost criterion.
BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TR28AU23.187
In the FY 2024 IPPS/LTCH PPS proposed rule (88 FR 26825), we noted
the applicant stated that removing charges for prior technology was not
applicable to SPEVIGO[supreg]; however, to the extent patients were
treated with other treatments before SPEVIGO[supreg], we questioned
whether it may be appropriate to remove some portion of these charges
to avoid inappropriately inflating the average charge per case. We
invited public comments on whether it may be appropriate to remove
charges for the prior technology and whether SPEVIGO[supreg] meets the
cost criterion.
Comment: The applicant submitted a comment in response to our
concerns pertaining to cost criterion. With respect to the
appropriateness of not removing charges for prior technologies
SPEVIGO[supreg], the applicant responded that because there are no
approved therapies specifically indicated for the treatment of GPP
flares, and due to the severe condition of patients with GPP flares,
off-label treatments may be experimented with, including those
indicated for PSO. As a result, patients receiving SPEVIGO[supreg] may
have altered utilization of the first- or second-line off-label
therapies historically used to treat GPP flares. The applicant
maintained that SPEVIGO[supreg] will replace the off-label PSO
treatments as the primary standard of care based on the substantial
clinical improvement demonstrated by SPEVIGO[supreg] in a robust
clinical trial. The applicant stated that while removal of charges can
be difficult with no consensus off-label standard of care previously,
they provided an updated cost analysis in which they have removed all
drug cost center charges (one of the 19 cost centers defined by CMS as
part of the relative weight calculation process) to avoid any concern
of costs from prior off-label therapies. According to the applicant's
updated cost analysis, the final inflated case-weighted average
standardized charge per case of $361,189 exceeded the case-weighted
threshold of $46,244, and the applicant therefore maintained that
SPEVIGO[supreg] meets the cost criterion.
Response: We thank the applicant for the updated cost analysis.
Based on the additional information received, we agree that the final
inflated average case-weighted standardized charge per case exceeded
the average case-weighted threshold amount. Therefore, SPEVIGO[supreg]
meets the cost criterion.
With regard to the substantial clinical improvement criterion, the
applicant asserted that SPEVIGO[supreg] represents a substantial
clinical improvement over existing technologies by being the first FDA
approved drug for GPP, and existing treatments were associated with
slow resolution of GPP flares and complete clearance of pustules and
skin was not always achieved. The applicant further stated that in
clinical trials, SPEVIGO[supreg] was associated with clinically
significant improvements in patient-reported psoriasis symptoms,
including fatigue, and significant decreases in markers of systemic
inflammation. The applicant provided one study to support these claims.
The following table summarizes the applicant's assertions regarding the
substantial clinical improvement criterion. Please see the online
posting for SPEVIGO[supreg] for the applicant's complete statements
regarding the substantial clinical improvement criterion and the
supporting evidence provided.
[[Page 58883]]
[GRAPHIC] [TIFF OMITTED] TR28AU23.188
In the FY 2024 IPPS/LTCH PPS proposed rule (88 FR 26886), after
review of the information provided by the applicant, we stated that we
had the following concerns regarding whether SPEVIGO[supreg] meets the
substantial clinical improvement criterion. With regard to the
Effisayil-1 study, we noted that it is not designed to compare
SPEVIGO[supreg] to current treatment options. While the applicant
stated that SPEVIGO[supreg] will be the first GPP treatment targeting
the IL-36 pathway, we noted that per the applicant, other treatments
are available, and we therefore questioned whether placebo was the most
appropriate comparator. In particular, we noted that the Effisayil-1
trial primarily assessed clearance of skin manifestations, not systemic
symptoms which the applicant noted differentiates GPP from other forms
of psoriasis. We noted the applicant has stated in its application that
existing treatments for
[[Page 58884]]
GPP are not specifically indicated for GPP and that it would not be
appropriate to consider these treatments on-label for GPP. However, we
noted that there are treatments that are indicated for psoriasis
generally, such as methotrexate \127\ or retinoids,\128\ which may be
considered an on-label use for subtypes of psoriasis such as GPP.
Therefore, it was unclear whether there is a patient population
ineligible for or unresponsive to existing technologies that could be
treated with SPEVIGO[supreg]. In addition, although the applicant
stated that SPEVIGO[supreg] represents a substantial clinical
improvement over existing technologies where complete clearances were
not always achieved, it seemed that complete clearance is also not
always achieved with SPEVIGO[supreg]. As demonstrated in the Effisayil-
1 study cited by the applicant, 54.3 percent of the patients achieved
complete pustular clearance in the SPEVIGO[supreg] arm.
---------------------------------------------------------------------------
\127\ https://www.accessdata.fda.gov/drugsatfda_docs/label/2020/008085Orig1s071lbl.pdf.
\128\ https://www.accessdata.fda.gov/drugsatfda_docs/label/2017/019821s028lbl.pdf.
---------------------------------------------------------------------------
We noted that GPP occurs most frequently between the ages of 15-20
years with a smaller peak occurring at 55-60 years.\129\ The mean age
in the Effisayil-1 study was 43.2 years for the SPEVIGO[supreg] arm and
42.6 years for the placebo group. Given the age range of patients, we
questioned the generalizability of the outcomes demonstrated in a study
of otherwise generally healthy patients with GPP to patients with GPP
in the Medicare population who would likely be eligible for Medicare
based on disabilities that could potentially present comorbidities for
which SPEVIGO[supreg] would not be appropriate or effective. In
addition, the study administered SPEVIGO[supreg] to the placebo group
after one week, after which only outcomes with SPEVIGO[supreg] were
assessed, and the study concluded at 12 weeks. Given that the applicant
did not provide any comparative data on existing technologies to
demonstrate improved outcomes with SPEVIGO[supreg], in addition to the
short duration of the single study provided and the often variable,
remitting, and intermittent course of the disease in which most flares
last between 2 and 5 weeks, we questioned whether the information we
had supports a finding of substantial clinical improvement. We stated
that additional information to support the applicant's assertion of
superiority over existing technologies would be helpful in better
informing our assessment of this criterion.130 131
---------------------------------------------------------------------------
\129\ Samotij et al. Generalized pustular psoriasis: divergence
of innate and adaptive immunity. Int J Mol Sci 2021;22(16):9048.
\130\ Krueger et al. Treatment options and goals for patients
with generalized pustular psoriasis. Am J Clin Dermatol
2022:23(suppl 1):51-64.
\131\ Choon et al. Clinical course and characteristics of
generalized pustular psoriasis. Am J Clin Dermatol 2022;23(suppl
1):21-9.
---------------------------------------------------------------------------
We invited public comments on whether SPEVIGO[supreg] meets the
substantial clinical improvement criterion.
Comment: The applicant submitted a comment in response to CMS's
concerns pertaining to the substantial clinical improvement criterion.
With respect to the appropriateness of comparing SPEVIGO[supreg] to
placebo instead of other current treatment options and of the sparsity
of systemic end points, the applicant maintained that because there has
been no established standard of care for GPP flares prior to the
approval of SPEVIGO[supreg], numerous biologic and oral systemic agents
indicated for PSO have been used anecdotally in clinical practice in
attempts to treat GPP flares. The applicant stated that no other
treatment approved for PSO has been tested in a randomized controlled
trial in GPP flares, and evidence for these treatments come from small,
single-arm, uncontrolled studies of mixed patient populations that did
not evaluate clinically robust endpoints specific to GPP. The applicant
further noted that because these treatments have variable efficacy and
safety profiles, it becomes challenging to propose one of them as an
active comparator for a trial in GPP flares. According to the
applicant, due to the lack of FDA-approved treatments as well as
consensus on standard of care for GPP flares, placebo can be considered
an appropriate comparator. Per the applicant, FDA also considered
placebo to be appropriate and requested the inclusion of the placebo
arm for a robust and well controlled study. Regarding the selection of
endpoints, the applicant mentioned that while the primary endpoint of
the Effisayil-1 trial was complete pustular clearance, the trial also
examined the impact of SPEVIGO[supreg] on additional endpoints,
including measures of systemic inflammation like C-reactive protein
(CRP) levels and neutrophil count over time. Per the applicant, both
the CRP levels and neutrophil count over time were shown, in
conjunction with skin clearance, to improve to normal levels in the
trial and were maintained throughout the course of the trial. With
regard to whether there is a patient population ineligible for or
responsive to existing technologies that could be treated with
SPEVIGO[supreg], the applicant noted that there are distinct
differences in the dysregulation of IL pathways between GPP and PSO. As
the only GPP-indicated therapy, SPEVIGO[supreg] offers patients an
effective therapy targeting the GPP-specific IL-36 pathway. According
to the applicant, it has been well-documented that GPP and psoriasis
vulgaris (PV, also called plaque psoriasis) are separate clinical
conditions, requiring specific treatment approaches.\132\ The applicant
cited a recent longitudinal case series of patients with GPP as an
example of the limited efficacy of the nontargeted immunomodulatory
therapies (for example, methotrexate, retinoids) to treat GPP flares.
\133\ Per the applicant, the result of these studies showed that
despite the use of methotrexate and retinoids, which were among the
most frequently used agents for treating GPP flares, the rates of
emergency department visits and hospitalizations among GPP patients
during the follow-up period remained at approximately 40 percent. Per
the applicant, this suggested that these systemic agents are inadequate
for controlling GPP flares. With regard to the result of the Effisayil-
1 study that 54.3 percent of the patients achieved complete pustular
clearance in the SPEVIGO[supreg] arm, the applicant cited recent
guidance, based on global expert consensus, that the goals of treatment
of GPP flares are to achieve rapid and sustained clearance of pustules,
inflammatory erythema, scaling, crust, and skin lesions; and to rapidly
alleviate systemic symptoms and reduce pain while maintaining a
favorable safety profile.\134\ According to the applicant, the primary
endpoint was a Generalized Pustular Psoriasis Physician Global
Assessment (GPPGA) pustulation subscore of zero at week 1, a highly
stringent endpoint, according to many international dermatology
experts. According to the applicant, 54.3 percent of the patients from
the Effisayil-1 study achieved the GPPGA pustulation subscore of zero
(complete pustular clearance) in the SPEVIGO[supreg] arm after one
dose. Moreover, in patients who received up to 2 doses of
SPEVIGO[supreg], 66 percent achieved a GPPGA pustulation subscore of
zero at week 2. The applicant added that of the patients randomized to
placebo and who received a dose of SPEVIGO[supreg] at week 1, 73
percent had a GPPGA pustulation score of zero at week 2 (one week after
receiving their first dose of SPEVIGO[supreg]) and 60 percent of
patients maintained a GPPGA pustulation subscore of 0 out to week 12.
The applicant asserted that,
[[Page 58885]]
based upon the data from Effisayil-1, SPEVIGO[supreg] treatment of GPP
flares was associated with rapid pustular clearance within 1 week with
clinically significant and prolonged normalizations in inflammatory
markers, like CRP and neutrophil count in a robust, randomized clinical
trial. The applicant maintained that these results were consistent with
some of the treatment goals set forth by international dermatology
experts and demonstrated substantial clinical improvement in this
extremely burdensome and potentially life-threatening disease for which
no standard of care previously existed. With regard to the
generalizability of Effisayil-1 study results to the Medicare
population, the applicant stated that the median onset of GPP is
between 40 to 60 years of age, and while it is true that the average
patient age was younger than the Medicare population in the Effisayil-1
study, most patients with GPP are not considered by dermatology experts
to be generally healthy, particularly during a flare. The applicant
stated that patients with GPP often have multiple comorbidities,
including hyperlipidemia, type 2 diabetes, chronic obstructive
pulmonary disease (COPD), chronic kidney disease, and
obesity28, making these patients not so dissimilar to the
Medicare population. The applicant also noted that patients with these
comorbidities were not excluded from the Effisayil-1 trial. According
to the applicant, based on their internal data, 30 percent of treated
patients since launch were Medicare beneficiaries. The applicant also
stated that Medicare beneficiaries, including those with disabilities
or comorbidities, are not excluded per the FDA label. With regard to
the adequacy of the study length, the applicant argued that despite the
short duration of the placebo-controlled portion of the Effisayil-1
trial, it was compelling that 54 percent of patients in the
SPEVIGO[supreg] arm experienced complete pustule resolution at week 1,
and 60 percent of these patients maintained pustule resolution out to
12 weeks, given the disease burden of GPP and its negative impact on
daily activities. Per the applicant, these results demonstrated a stark
clinical improvement, compared to the residual symptoms that many GPP
patients experienced on the current off-label treatments. The applicant
also noted that both the placebo and SPEVIGO[supreg] arms were eligible
to receive a single, open-label, dose of SPEVIGO[supreg] at week 1 if a
patient had prolonged symptoms, since it would be unethical to prevent
GPP patients from receiving treatment after prolonged GPP flare
symptoms.
---------------------------------------------------------------------------
\132\ Bachelez et al, 2022, op.cit.
\133\ Noe et al. (2022), op.cit.
\134\ Bachelez et al (2022), op.cit.
---------------------------------------------------------------------------
Response: We thank the applicant for their comments regarding the
substantial clinical improvement criterion. Based on the additional
information received, we agree that SPEVIGO[supreg] represents a
substantial clinical improvement because the technology offers a
treatment option for generalized pustular psoriasis (GPP) flares in
adults, for which it is the first FDA approved treatment.
After consideration of the public comments, we have determined that
SPEVIGO[supreg] meets the criteria for approval for new technology add-
on payment. Therefore, we are approving new technology add-on payments
for this technology for FY 2024. Cases involving the use of
SPEVIGO[supreg] that are eligible for new technology add-on payments
will be identified by ICD-10-PCS code XW03308 (Introduction of
spesolimab monoclonal antibody into peripheral vein, percutaneous
approach, new technology group 8).
In its application, the applicant estimated that the average
inpatient cost of SPEVIGO[supreg] is $51,133 for one 900 mg dose,
comprised of two 450 mg/7.5 mL (60 mg/mL) vials. Therefore, the average
cost per patient for SPEVIGO[supreg] is $51,133. Under Sec.
412.88(a)(2), we limit new technology add-on payments to the lesser of
65 percent of the average cost of the technology, or 65 percent of the
costs in excess of the MS-DRG payment for the case. As a result, the
maximum new technology add-on payment for a case involving the use of
SPEVIGO[supreg] is $33,236.45 for FY 2024.
i. TECVAYLITM (Teclistamab-cqyv)
Johnson & Johnson Health Care Systems, Inc. submitted an
application for new technology add-on payments for
TECVAYLITM for FY 2024. According to the applicant,
TECVAYLITM is the only bispecific antibody approved for the
treatment of multiple myeloma (MM), specifically adult patients with
relapsed or refractory multiple myeloma (RRMM) who have received at
least four prior lines of therapy, including a proteasome inhibitor, an
immunomodulatory agent, and an anti-cluster of differentiation (CD)38
monoclonal antibody. The applicant stated that the structure of
TECVAYLITM is advantageous versus other bispecific platforms
since its full size is designed to mimic naturally-occurring
immunoglobulin G (IgG) antibodies. We note that Johnson & Johnson
Health Care Systems, Inc. submitted an application for new technology
add-on payments for TECVAYLITM for FY 2023 under the name
teclistamab, as summarized in the FY 2023 IPPS/LTCH PPS proposed rule
(87 FR 28283 through 28287) and withdrew it prior to the issuance of
the FY 2023 IPPS/LTCH PPS final rule (87 FR 48920).
Please refer to the online application posting for
TECVAYLITM, available at https://mearis.cms.gov/public/publications/ntap/NTP221017MFYGL, for additional detail describing the
technology and the disease treated by the technology.
With respect to the newness criterion, according to the applicant,
TECVAYLITM was granted BLA approval from FDA on October 25,
2022, for the treatment of adult patients with RRMM who have received
at least four prior lines of therapy, including a proteasome inhibitor,
an immunomodulatory agent, and an anti-CD38 monoclonal antibody.
According to the applicant, the product became commercially available
on November 9, 2022. Commercial availability was delayed because of the
need to complete final supply chain readiness activities. Per the
applicant, patients in the hospital for their initial
TECVAYLITM treatment will receive three doses
subcutaneously--a 0.06 mg/kg loading dose, a 0.30 mg/kg loading dose,
and the first 1.5 mg/kg treatment dose--during the hospital stay. The
applicant stated that patients who are under 102 kgs will use two 30 mg
and one 153 mg vials during their hospitalization. Patients over 102 kg
will use three 30 mg and two 153 mg vials during their hospitalization.
According to real world evidence and clinical studies, 89 percent of
TECVAYLITM patients will be less than 102 kg. Due to the
risk of CRS and neurologic toxicity, patients should be hospitalized
for 48 hours after administration of all doses within the step-up
dosing schedule. Therefore, according to the applicant, all three doses
will be administered in a single inpatient hospitalization.
The applicant stated that effective October 1, 2022, the following
ICD-10-PCS code may be used to uniquely describe procedures involving
the use of TECVAYLITM: XW01348 (Introduction of teclistamab
antineoplastic into subcutaneous tissue, percutaneous approach, new
technology group 8).
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 substantial similarity criteria, the applicant
asserted that TECVAYLITM is not substantially
[[Page 58886]]
similar to other currently available technologies because it has a
distinct mechanism of action, with a novel approach to engage a
patient's own T-cells to generate a myeloma-specific immune response
and is the first therapy of its type for the treatment of RRMM, and
therefore meets the newness criterion. The following table summarizes
the applicant's assertions regarding the substantial similarity
criteria. Please see the online application posting for
TECVAYLITM for the applicant's complete statements in
support of its assertion that TECVAYLITM is not
substantially similar to other currently available technologies.
[GRAPHIC] [TIFF OMITTED] TR28AU23.189
In the FY 2024 IPPS/LTCH PPS proposed rule (88 FR 26887), we noted
that TECVAYLITM may have a similar mechanism of action to
that of elranatamab, for which we received an application for new
technology add-on payments for FY 2024 for the treatment of adult
patients with relapsed or refractory multiple myeloma after three or
more prior therapies, including an immunomodulatory agent, a proteasome
inhibitor, and an anti-CD38 monoclonal antibody. Per the application
for elranatamab, elranatamab is substantially similar to
TECVAYLITM. Elranatamab's mechanism of action is described
as a bispecific antibody, meaning it has two parts, one that recognizes
the cancer cell and one that recognizes and engages the T-cell, and
brings them together to facilitate T-cell killing of the MM cell. For
elranatamab, the two targets are barcoded medication administration
(BCMA) (which has high specific expression on normal plasma cells and
on MM cells) and CD3 (which is expressed on T-cells). Elranatamab binds
to the CD3 on the T-cells and binds to the BCMA on the MM cells thereby
bringing the cells in close proximity. The engagement of the CD3 on the
T-cell activates the T-cell, leading to the T-cells releasing cytokines
that result in the killing of the close-proximity MM cell. Because of
the apparent similarity with the bispecific antibody that uses binding
domains that simultaneously bind the BCMA target on tumor cells and the
CD3 T cell receptor, we believed that the mechanism of action for
TECVAYLITM may be the same or similar to that of
elranatamab.
We believed that TECVAYLITM and elranatamab may also
treat the same or similar disease (RRMM) in the same or similar patient
population (patients who have previously received a proteasome
inhibitor (PI), an immunomodulatory agent (IMiD), and an anti-CD38
antibody). Accordingly, as it appears
[[Page 58887]]
that TECVAYLITM and elranatamab are purposed to achieve the
same therapeutic outcome using the same or similar mechanism of action
and would be assigned to the same MS-DRG, we believed that these
technologies may be substantially similar to each other such that they
should be considered as a single application for purposes of new
technology add-on payments if elranatamab receives FDA approval by July
1, 2023. We stated that we were interested in information on how these
two technologies may differ from each other with respect to the
substantial similarity criteria and newness criterion, to inform our
analysis of whether TECVAYLITM and elranatamab are
substantially similar to each other and therefore should be considered
as a single application for purposes of new technology add-on payments.
We invited public comment on whether TECVAYLITM meets
the newness criterion, including whether TECVAYLITM is
substantially similar to elranatamab and whether these technologies
should be evaluated as a single technology for purposes of new
technology add-on payments.
Comment: The applicant submitted a comment regarding the newness
criterion, reiterating that TECVAYLI[supreg] meets the overall
requirements of the newness criterion as it does not meet all three
criteria required to be deemed substantially similar to existing
technology. With regard to whether TECVAYLITM and
elranatamab are substantially similar and should be treated as a single
technology for the purposes of new technology add-on payments, the
applicant stated that while elranatamab and TECVAYLITM are
both bispecific antibodies, the antibody for each product is
meaningfully different, and therefore the mechanism of action for these
two products should be considered distinct. The applicant explained
that TECVAYLITM is a humanized IgG4 antibody, whereas
elranatamab is a humanized IgG2a antibody, and IgG4 antibodies have a
high affinity for Fc gamma receptor subtype I (Fc[gamma]RI) but weak
affinities for all other Fc gamma receptor subtypes and are poor
inducers of Fc-mediated effector functions, while IgG2 antibodies have
a high affinity for the H131 form of Fc gamma receptor subtype IIA
(Fc[gamma]RIIA) but no measurable or weak affinity for Fc[gamma]RI and
all other Fc gamma receptors. The applicant agreed that both
TECVAYLITM and elranatamab are bispecific T-cell engaging
antibodies that exert their efficacy primarily by re-directing the
patient's own T-cells to BCMA-expressing multiple myeloma cells, but
stated they are distinctly and importantly different in regards to the
whether the binding of the bispecific antibodies to Fc gamma receptors
may activate immune effector cells that may lead to a pro-inflammatory
state and contribute to cytokine release syndrome and other toxicities.
The applicant asserted that the biological difference between
TECVAYLITM and elranatamab may result in meaningful clinical
differences, and that therefore, CMS should consider these technologies
separately for new technology add-on payments. The applicant added that
elranatamab is not yet FDA-approved and therefore should not be
considered as an existing technology for inclusion in meeting the
substantial similarity criteria.
Another commenter, the manufacturer for elranatamab, stated that it
believed that TECVAYLITM and elranatamab are substantially
similar and should be considered under a single application on the
basis of (1) the mechanism of action (BCMA-directed bispecific
antibody), (2) the patient population and disease intended to be
treated (RRMM in patients who have received four or more prior lines of
therapy including a proteasome inhibitor (PI), immunomodulatory drug
(IMiD), and anti-CD38 monoclonal antibody), and (3) MS-DRG assignment.
Response: We thank the applicant and other commenter for their
comments regarding newness. As discussed previously, elranatamab has
not been FDA approved as of the July 1 deadline and is therefore no
longer eligible for consideration for new technology add-on payments
for FY 2024, and we further note that the technology has not yet been
FDA approved as of the time of the development of this final rule.
Therefore, we agree with the applicant that elranatamab is not
considered an existing technology for the purposes of the substantial
similarity determination at this time.
Based on our review of comments received and information submitted
by the applicant as part of its FY 2024 new technology add-on payment
application for TECVAYLITM, we agree with the applicant that
TECVAYLITM has a unique mechanism of action as a bispecific
antibody containing 2 distinct binding domains that simultaneously bind
the BCMA target on myeloma cells and the CD3 T-cell receptor to treat
RRMM. Therefore, we believe that TECVAYLITM is not
substantially similar to existing treatment options and meets the
newness criterion. We consider the beginning of the newness period to
commence on the date the product became commercially available, on
November 9, 2022.
With respect to the cost criterion, to identify potential cases
representing patients who may be eligible for TECVAYLITM,
the applicant searched the FY 2021 MedPAR file for cases reporting one
of the following ICD-10-CM codes in one of the first five diagnosis
code positions: C90.00 (Multiple myeloma not having achieved
remission), C90.01 (Multiple myeloma in remission), or C90.02 (Multiple
myeloma in relapse). The applicant provided calculations for 2 cohorts.
Based on the clinical advice of experts, for the first cohort, the
applicant limited the analysis to cases assigned to MS-DRGs 846
(Chemotherapy Without Acute Leukemia as Secondary Diagnosis with MCC),
847 (Chemotherapy Without Acute Leukemia as Secondary Diagnosis with
CC) and 848 (Chemotherapy Without Acute Leukemia as Secondary Diagnosis
without CC/MCC), because the experts believed that
TECVAYLITM would mostly likely be administered in cases
assigned to these MS-DRGs. This analysis was completed prior to the
drug being available. Based on additional information gathered since
TECVAYLITM was FDA approved, the applicant included in the
second cohort the following MS-DRGs in addition to the MS-DRGs included
in the first cohort: 840 (Lymphoma and Non-Acute Leukemia with MCC),
841 (Lymphoma and Non-Acute Leukemia with CC), and 842 (Lymphoma and
Non-Acute Leukemia without CC/MCC). For both cohorts, no cases were
identified for MS-DRG 848 (Chemotherapy Without Acute Leukemia as
Secondary Diagnosis without CC/MCC). Using the inclusion/exclusion
criteria described in the following table, the applicant identified 600
claims for cohort 1 and 4,335 claims for cohort 2. The applicant
followed the order of operations described in the following table and
calculated a final inflated average case-weighted standardized charge
per case of $119,279 for cohort 1 and $145,374 for cohort 2, both of
which exceeded the average case-weighted threshold amount of $58,291
and $73,551, respectively. Because the final inflated average case-
weighted standardized charge per case exceeded the average case-
weighted threshold amount in both scenarios, the applicant asserted
that TECVAYLITM meets the cost criterion.
[[Page 58888]]
[GRAPHIC] [TIFF OMITTED] TR28AU23.190
We invited public comments on whether TECVAYLITM meets
the cost criterion.
Comment: The applicant submitted a comment describing the analyses
provided in the proposed rule and reiterating that, because the average
charge per case for cases eligible for TECVAYLI[supreg] exceeded the
threshold in both analyses, TECVAYLI[supreg] meets the cost criterion.
Response: We thank the applicant for its comment. We agree that the
final inflated average case-weighted standardized charge per case
exceeded the average case-weighted threshold amount. Therefore,
TECVAYLITM meets the cost criterion.
With regard to the substantial clinical improvement criterion, the
applicant asserted that TECVAYLITM represents a substantial
clinical improvement over existing technologies because its indication
is less restrictive than some other treatments, making it available to
patients who do not qualify for the other drugs that treat RRMM. In
addition, the applicant stated that TECVAYLITM may be more
immediately accessible than the BCMA CAR T-cell therapies due to
restrictions in site of care, manufacturing complexities, and other
concerns with respect to the BCMA CAR T-cell therapies. Finally, the
applicant stated that TECVAYLITM improves clinical outcomes
and results in less serious side effects than other off the shelf RRMM
therapies. The applicant provided one study to support these
[[Page 58889]]
claims, as well as 11 background articles about other available
treatments for RRMM.\135\ The following table summarizes the
applicant's assertions regarding the substantial clinical improvement
criterion. Please see the online posting for TECVAYLITM for
the applicant's complete statements regarding the substantial clinical
improvement criterion and the supporting evidence provided.
---------------------------------------------------------------------------
\135\ Background articles are not included in the following
table but can be accessed via the online posting for the technology.
[GRAPHIC] [TIFF OMITTED] TR28AU23.191
BILLING CODE 4120-01-C
In the FY 2024 IPPS/LTCH PPS proposed rule (88 FR 26890 through
26891), after review of the information provided by the applicant, we
had the following concerns regarding whether TECVALITM meets
the substantial clinical improvement criterion. The applicant claimed
that other therapies have indications and side effects that restrict
the treatment population and TECVAYLITM is available to some
of these restricted patient populations. Regarding this claim, the
applicant discussed restrictions for two other treatment options for
RRMM in its application, XPOVIO[supreg] (selinexor) and BLENREP
(belantamab mafodotin-blmf). However, there are two other therapies for
RRMM, ciltacabtagene autoleucel and idecabtagene vicleucel, that the
applicant did not discuss that have a similar indication to
TECVAYLITM and appear to target a similar population.
Therefore, we questioned the basis for the applicant's assertion that
TECVAYLITM will fill a gap for patients unresponsive to or
ineligible for current treatments.
With regard to the claim that TECVAYLITM may be a
preferred treatment for patients unable to access CAR T-cell therapy,
the applicant provided data on the number of patients who received CAR
T-cell therapy from studies for CD19 CAR T-cell therapies used for B-
cell lymphomas. For example, the applicant provided data from a survey
of CAR T-cell treatment centers across the U.S. indicating only 25
percent of potential patients were reported to receive CD19 CAR T-cell
[[Page 58890]]
therapy, with a median wait time of 6 months.\136\ The applicant noted
that the data was for CAR T-cell therapy used to treat B-cell lymphoma,
because these treatments were approved prior to approvals for CAR T-
cell therapies for MM, so there is more accumulated evidence for the
former. However, given that B-cell lymphoma is a different disease than
MM and the T-cell therapies used to treat these two diseases are
different, we questioned whether the evidence related to B-cell
lymphoma is applicable to T-cell therapies used to treat MM.
---------------------------------------------------------------------------
\136\ Kourelis T, Bansal R, Patel KK, et al. Ethical challenges
with CAR T slot allocation with idecabtagene vicleucel manufacturing
access. Journal of Clinical Oncology. 2022;40(16_suppl):e20021-
e20021.
---------------------------------------------------------------------------
The applicant claimed that CRS is less serious and less frequent
for patients treated with TECVAYLITM than with BCMA CAR T-
cell therapies. Notably, the applicant compared data from separate,
single-arm, open-label studies of these
technologies.137 138 139 In review, CRS occurrence rates
were 72.1 percent, 95 percent and 84 percent for TECVAYLITM,
ciltacabtagene autoleucel, and idecabtagene vicleucel, respectively. In
addition, only 0.6 percent of the CRS events for TECVAYLITM
were of grade 3 or higher, compared to 4 percent for ciltacabtagene
autoleucel and 5 percent for idecabtagene vicleucel. This improved
safety claim, however, focused on only a single metric in the studies'
overall assessment of the safety and efficacy of these three drugs. The
overall response rates reported in the studies were 63 percent, 97
percent and 73 percent for TECVAYLITM, ciltacabtagene
autoleucel, and idecabtagene vicleucel respectively. When comparing
across studies, other metrics of efficacy noted in these studies also
appeared to support a superiority of the CAR T-cell therapies compared
to TECVAYLITM in the treatment of patients with RRMM.
However, we also noted these comparisons are not matched cases within a
comparative study. Therefore, we questioned the conclusions drawn by
the applicant regarding the relative efficacy and safety profiles
across these studies.
---------------------------------------------------------------------------
\137\ Moreau P, Garfall AL, van de Donk NWCJ, et al. Teclistamab
in relapsed or refractory multiple myeloma. NEJM. 2022; 387(6): 495-
505.
\138\ Berdeja JG, Madduri D, Usmani SZ, Jakubowiak A, Agha M et
al. (2021). 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 398 (10297): 314-324.
\139\ Munshi NC, Anderson LD, Jr., Shah N, Madduri D, Berdeja J
et al. (2021). Idecabtagene Vicleucel in Relapsed and Refractory
Multiple Myeloma. N Engl J Med 384 (8): 705-716.
---------------------------------------------------------------------------
The applicant claimed that TECVAYLITM improves clinical
outcomes relative to other off-the-shelf therapies. The applicant
stated the overall response rate (ORR) for XPOVIO[supreg] and BLENREP
were 25 percent and 31 percent, while the ORR for TECVAYLITM
was 63 percent. However, this claim did not consider the higher ORR for
CAR T-cell therapies compared to TECVAYLITM when comparing
across studies, as previously mentioned. While this claim compared
TECVAYLITM only to other off-the-shelf therapies, which
would not include CAR T-cell therapies, we questioned whether there is
significant clinical improvement compared to existing therapies, which
include CAR T-cell therapies.
We invited public comments on whether TECVAYLITM meets
the substantial clinical improvement criterion.
Comment: We received a public comment stating that BCMA-directed
bispecific antibody therapies indicated for the treatment of RRMM
represent a substantial clinical improvement over existing treatment
options. Specifically, the commenter stated while XPOVIO[supreg] may be
an option for late-line patients with RRMM who are ineligible for or
unable to access CAR T-cell therapies, they are unlikely to be treated
with XPOVIO[supreg] due to the unfavorable benefit/risk ratio.
Additionally, the commenter pointed out that BLENREP is no longer
available on the U.S. market and is therefore not a treatment option
for these patients. Furthermore, the commenter stated many patients do
not have access to CAR T-cell therapies because of general access
issues or because the disease is progressing quickly, and they are
unable to wait for CAR T-cell therapy. Thus, the commenter continued
that for nearly all RRMM patients, the choice will not be CAR T-cell
therapy or a BCMA-directed bispecific antibody, it will be a BCMA-
directed bispecific antibody therapy or potentially nothing.
Response: We thank the commenter for its input and have taken it
into consideration in our determination of whether TECVAYLI[supreg]
meets the substantial clinical improvement criterion, discussed later
in this section.
Comment: The applicant submitted a comment reiterating that
TECVAYLI[supreg] meets the substantial clinical improvement criterion
because the technology demonstrates improved clinical outcomes for
patients with RRMM and plays an important role in addressing an unmet
need for patients, including Medicare beneficiaries, who are otherwise
ineligible for, or unable to access, other treatments for RRMM. The
applicant also responded to the concerns raised by CMS in the proposed
rule. With respect to whether CAR T-cell therapies are also options for
patients ineligible for XPOVIO[supreg] and BLENREP, the applicant
claimed certain beneficiaries are ineligible to receive CAR T-cell
therapies based on their clinical profile. Specifically, the applicant
stated beneficiaries that are not clinically fit, including those with
poor performance status and inadequate organ function, are not always
appropriate candidates for CAR T-cell therapy and its related safety
profile. Based on CAR T-cell therapy clinical trials and their
labeling, the applicant noted that some of the medically significant
factors that might limit a patient's ability to receive a BCMA CAR T-
cell therapy include any cardiac conditions (that is, upper limit of
normal and left ventricular ejection fraction <45%), pre-existing
cytopenias prior to the start of therapy (that is, absolute neutrophil
count <1000 cells/mm3 and platelet count <50,000/mm3), or impaired
renal function (that is, creatinine clearance <40-45 mL/min).
With respect to whether CAR T-cell therapy availability data was in
reference to B-cell lymphoma, the applicant stated that, in contrast
with TECVAYLITM, even with very strong CAR T-cell therapy
patient support programs, the requirements on the patient and their
family can be both financially and logistically challenging. For
example, the applicant stated patients are required to have a personal
caregiver present for several weeks following dosing, and such
caregiver requirements may not be possible for some beneficiaries. The
applicant added, unlike TECVAYLITM, CAR T-cell therapies
require a specialized healthcare setting certification necessary for
the collection and handling of patient cells prior to and after the
engineering of the product. The applicant stated while steadily
increasing, only a limited number of institutions in the U.S. have the
necessary requirements to obtain this certification, and it will take
time for additional centers to ramp up, therefore limiting the
availability of CAR T-cell therapies to those patients who can access
the certified centers. The applicant noted this growth has increased
demand for certified CAR T-cell therapy centers and has further
compounded the access issues, with the certified CAR T-cell therapy
centers experiencing limited availability and
[[Page 58891]]
waitlists. Since the approvals of the CAR T-cell technologies in the MM
space, the applicant stated studies have highlighted the lack of
accessibility of CAR T-cell products to MM patients. The applicant
specified one study published this year showed that out of 20 centers
with MM CAR T-cell therapies that were surveyed, 17 have a median
allotment of one patient slot per month (per center), and the median
number of patients per center on the waitlist since the FDA's approval
of idecabtagene vicleucel (ABECMA[supreg]) is 20 (range, 5 to 100).
Furthermore, the applicant noted patients remain on the waitlist for a
median of six months (range, 2 to 8 months) prior to leukapheresis,
which is the first step in the CAR T-cell manufacturing process, and
the centers participating in the study estimated that only 25 percent
of waitlisted patients eventually receive a slot for commercial CAR T-
cell therapy, approximately 25 percent die or enroll in hospice, and
the remaining 50 percent of patients are enrolled in clinical trials.
According to the applicant, certain patients do not have a realistic
chance of receiving a CAR T-cell product, and a percentage of these
patients may not have access to an appropriate clinical trial due to
eligibility criteria or distance from a large academic center with
available studies, whereas these beneficiaries are eligible for
TECVAYLITM. The applicant asserted for these patients
starting their fifth line of therapy who may be on waitlists or
otherwise unable to access CAR T-cell therapy, TECVAYLITM
provides a more readily available option that does not require the
complex T-cell collection, genetic engineering, and cell manufacturing,
or lymphodepleting chemotherapy prior to administration of therapy.
In response to CMS's concerns pertaining to the lack of comparative
safety data with CAR T-cell therapies, the applicant stated that there
is not direct comparison data available, but that TECVAYLITM
has a strong safety profile concerning cytokine release syndrome (CRS)
and immune effector cell-associated neurotoxicity syndrome (ICANS)
compared with the BCMA CAR T-cell products. The applicant stated in the
pivotal study of TECVAYLITM, CRS occurred in 72 percent of
patients, including 50 percent in Grade 1, 21 percent in Grade 2, and
0.6 percent in Grade 3.\140\ ICANS occurred in 6 percent of patients.
CRS occurred in 85 percent (108/127) of patients receiving
ABECMA[supreg] Grade 3 or higher CRS (Lee grading system 1) occurred in
9 percent (12/127) of patients, with Grade 5 CRS reported in one (0.8%)
patient. The applicant added that CAR T-cell-associated neurotoxicity
occurred in 28 percent (36/127) of patients receiving ABECMA[supreg],
including Grade 3 in 4 percent (5/127) of patients.\141\
CARVYKTI[supreg] was associated with CRS in 95 percent of patients,
including 5 percent Grade 3-5 CRS and 1 percent Grade 5 CRS. ICANS
occurred in 23 percent of patients, including Grade \3/4\ ICANS in 3
percent of all patients and Grade 5 ICANS in 2 percent of
patients.\142\ The applicant noted Hemophagocytic Lymphohistiocytosis
(HLH)/Macrophage Activation Syndrome (MAS) occurred in the pivotal
studies of both ABECMA[supreg] and CARVYKTI[supreg] but was not
observed in the pivotal study of TECVAYLITM. Concerning non-
CAR T-cell therapies, the applicant stated fewer than 1 percent of
TECVAYLITM patients discontinued therapy due to adverse
events,\143\ while this was 27 percent of selinexor patients.\144\ The
applicant claimed TECVAYLITM is an important treatment
alternative to CAR T-cell therapies, with a median DOR of 21.6 months
(ABECMA[supreg] is 11.0 months, and CARVYKTI[supreg] is 21.8 months).
Additionally, the applicant stated the incidence and severity of both
CRS and ICANS are less for TECVAYLITM compared to the BCMA
CAR T-cell products, and severe and potentially fatal HLH/MAS was not
observed in the pivotal study of TECVAYLITM.
---------------------------------------------------------------------------
\140\ Moreau P, Garfall AL, van de Donk NWCJ, et al. Teclistamab
in relapsed or refractory multiple myeloma. N Engl J Med.
2022;387(6):495-505.
\141\ https://www.fda.gov/media/147055/download [Package Insert;
ABECMA[supreg]].
\142\ https://reference.medscape.com/drug/carvykti-ciltacabtagene-autoleucel-4000224.
\143\ Moreau P, Garfall AL, van de Donk NWCJ, et al. Teclistamab
in relapsed or refractory multiple myeloma. N Engl J Med.
2022;387(6):495-505.
\144\ Chari A, Vogl DT, Gavriatopoulou M, Nooka AK, Yee AJ et
al. (2019a). Oral Selinexor-Dexamethasone for Triple-Class
Refractory Multiple Myeloma. N Engl J Med 381 727-738.
---------------------------------------------------------------------------
Response: We thank the applicant and commenters for their
statements regarding the substantial clinical improvement criterion.
Based on the additional information received and the information
submitted in the application, we agree with the applicant that
TECVAYLITM represents a substantial clinical improvement
over existing technologies because TECVAYLITM offers a
treatment option for a patient population unresponsive to, or
ineligible for, currently available treatments. We agreed with the
commenters that TECVAYLITM offers a treatment option for
patients ineligible for CAR T-cell therapy or for who CAR T-cell
therapy is not an available therapy and who are ineligible for
XPOVIO[supreg].
After consideration of the public comments we received, and the
information included in the applicant's new technology add-on payment
application, we have determined that TECVAYLITM meets the
criteria for approval for new technology add-on payment. Therefore, we
are approving new technology add-on payments for this technology for FY
2024. Cases involving the use of TECVAYLITM that are
eligible for new technology add-on payments will be identified by ICD-
10-PCS code XW01348.
In its application, the applicant estimated that the cost of
TECVAYLI is $13,754.67 per patient, as discussed previously. Under
Sec. 412.88(a)(2), we limit new technology add-on payments to the
lesser of 65 percent of the average cost of the technology, or 65
percent of the costs in excess of the MS-DRG payment for the case. As a
result, the maximum new technology add-on payment for a case involving
the use of TECVAYLITM is $8,940.54 for FY 2024.
j. TERLIVAZ[supreg] (Terlipressin)
Mallinckrodt Hospital Products, Inc. submitted an application for
new technology add-on payments for TERLIVAZ[supreg] for FY 2024. Per
the applicant, TERLIVAZ[supreg] is a pharmacologic therapy administered
via IV bolus for the treatment of hepatorenal syndrome (HRS) with rapid
reduction in kidney function. The applicant stated that
TERLIVAZ[supreg] is a V1-receptor synthetic vasopressin analogue that
acts as a pro-drug of lysine-vasopressin and has pharmacologic activity
on its own. According to the applicant, TERLIVAZ[supreg] is the first
and only FDA-approved treatment indicated to improve kidney function in
adults with hepatorenal syndrome with rapid reduction in kidney
function. We note that Mallinckrodt Hospital Products, Inc. submitted
an application for new technology add-on payments for TERLIVAZ[supreg]
for FY 2022 under the name Mallinckrodt Pharmaceuticals, 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). We note that the applicant also submitted an
application for new technology add-on payments for FY 2023 under the
name Mallinckrodt Pharmaceuticals, as summarized in the FY 2023 IPPS/
LTCH PPS proposed rule (87 FR 28287 through 28296), that it withdrew
prior to the issuance of the FY 2023 IPPS/LTCH PPS final rule (87 FR
48920).
[[Page 58892]]
Please refer to the online application posting for
TERLIVAZ[supreg], available at https://mearis.cms.gov/public/publications/ntap/NTP221014UR3R2, for additional detail describing the
technology and the disease treated by the technology.
With respect to the newness criterion, according to the applicant,
TERLIVAZ[supreg]'s NDA was approved by FDA on September 14, 2022, for
the improvement of kidney function in adults with hepatorenal syndrome
with rapid reduction in kidney function. According to the applicant,
TERLIVAZ[supreg] became commercially available on October 14, 2022. Per
the applicant, there was a delay in market availability because
TERLIVAZ[supreg] received FDA approval three months earlier than
expected, and the company needed additional time to conduct market
commercialization, including labeling and packaging. Per the applicant,
TERLIVAZ[supreg] is administered as an IV bolus injection. The
applicant stated that for the first 3 days, the recommended dosage is
0.85 mg (1 vial) TERLIVAZ[supreg] every 6 hours by slow IV bolus
injection. The applicant stated that on day 4, the serum creatinine
level is assessed against the baseline level obtained prior to
initiating the treatment. The applicant noted that if the serum
creatinine has decreased by 30 percent or more from the baseline, then
0.85 mg TERLIVAZ[supreg] can continue to be administered every 6 hours.
The applicant stated that if the serum creatinine has decreased by less
than 30 percent from the baseline, then TERLIVAZ[supreg] may be
increased to 1.7 mg (2 vials) 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.
The applicant also stated that if, on day 4, serum creatine is at or
above the baseline serum creatinine level, then TERLIVAZ[supreg] should
be discontinued. According to the applicant, the mean treatment
duration with TERLIVAZ[supreg] in the CONFIRM trial was 6.2 days, using
27 vials.
The applicant stated that, effective October 1, 2021, 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), or XW04367 (Introduction of terlipressin into
central vein, percutaneous approach, new technology group 7). The
applicant stated that diagnosis code K76.7 (Hepatorenal syndrome) may
be used to currently identify the indication for TERLIVAZ[supreg] under
the ICD-10-CM coding system.
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 substantial similarity criteria, the applicant
asserted that TERLIVAZ[supreg] is not substantially similar to other
currently available technologies because it offers a novel mechanism of
action that allows for selective vasoconstrictive effects on the
splanchnic vasculature via activation of V1 vasopressin receptors. The
applicant also stated that TERLIVAZ[supreg] is the first and only FDA-
approved pharmacologic therapy to satisfactorily treat patients with
HRS and offers efficacy among patients who fail previous treatment.
Therefore, the applicant asserted that the technology meets the newness
criterion. The following table summarizes the applicant's assertions
regarding the substantial similarity criteria. Please see the online
application posting for TERLIVAZ[supreg] for the applicant's complete
statements in support of its assertion that TERLIVAZ[supreg] is not
substantially similar to other currently available technologies.
[[Page 58893]]
[GRAPHIC] [TIFF OMITTED] TR28AU23.192
Similar to our discussion in the FY 2022 IPPS/LTCH PPS proposed
rule (86 FR 25340), and the FY 2023 IPPS/LTCH PPS proposed rule (87 FR
28290), in the FY 2024 IPPS/LTCH PPS proposed rule (88 FR 26892) we
noted that while TERLIVAZ[supreg] may address an unmet need because it
is the first treatment indicated specifically for the treatment of HRS,
the applicant's assertion that TERLIVAZ[supreg] does not involve the
treatment of the same/similar type of disease and the same/similar
patient population when compared to an existing technology, on the
basis that there is a subset of patients for whom current treatments
are ineffective and for whom TERLIVAZ[supreg] will offer a new
treatment option, did not necessarily speak to the treatment of a new
patient population for HRS.
We invited public comments on whether TERLIVAZ[supreg] is
substantially similar to existing technologies and whether
TERLIVAZ[supreg] meets the newness criterion.
Comment: Several commenters provided support for TERLIVAZ[supreg]'s
eligibility for new technology add-on payments, indicating that there
are currently no FDA-approved medications indicated specifically for
the treatment of HRS-1.
Response: We thank the commenters for their input and have taken it
into consideration, as discussed later in this section.
Comment: The applicant submitted a comment regarding the newness
criterion. With regard to whether TERLIVAZ[supreg] involves treatment
of the same/similar type of disease and the same/similar type of
patient population when compared to an existing technology, the
applicant stated that TERLIVAZ[supreg] offers an effective treatment
for patients with HRS with rapid reduction in kidney function who are
unresponsive to existing off-label therapies. The applicant noted that
a large proportion of patients in the CONFIRM trial had failed prior
therapy for HRS, and had received combination midrodrine and octreotide
before enrollment. The applicant further stated that in this subgroup
of patients, treatment with TERLIVAZ[supreg] was associated with a
greater rate of verified HRS reversal compared to placebo,
[[Page 58894]]
leading to improved renal function in a population who did not respond
to existing standard of care. The applicant also stated that
TERLIVAZ[supreg] is listed as the preferred therapy for HRS by several
U.S. and international guidelines, and these clinical recommendations
provide greater support for the use of TERLIVAZ[supreg] compared to
existing off-label therapies, suggesting that TERLIVAZ[supreg] may
offer a treatment option for patients who would not respond to other
available treatments.145 146 147 148
---------------------------------------------------------------------------
\145\ Biggins SW, 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.
\146\ European Association for the Study of the Liver. EASL
Clinical Practice Guidelines for the management of patients with
decompensated cirrhosis. J Hepatol. 2018;69(2):406-460.
\147\ Bajaj JS, O'Leary JG, Lai LC, et al. Acute-on-chronic
liver failure clinical guidelines. Am J Gastroenterol.
2022;117(2):225-252.
\148\ Flamm SL, Wong F, Ahn J, Kamath PS. AGA clinical practice
update on the evaluation and management of acute kidney injury in
patients with cirrhosis: expert review. Clin Gastroenterol Hepatol.
2022;20(12):2707-2716.
---------------------------------------------------------------------------
Response: We thank the applicant for its comment. Based on our
review of comments, we agree with the applicant and commenters that
TERLIVAZ[supreg] has a unique mechanism of action for selective
vasoconstrictive effects on the splanchnic vasculature via activation
of V1 vasopressin receptors as the first and only FDA-approved
treatment for HRS. Therefore, we believe that TERLIVAZ[supreg] is not
substantially similar to existing treatment options and meets the
newness criterion. We consider the beginning of the newness period to
commence on the date TERLIVAZ[supreg] became commercially available:
October 14, 2022.
With respect to the cost criterion, the applicant provided multiple
analyses to demonstrate that it meets the cost criterion. To identify
potential cases representing patients who may be eligible for
TERLIVAZ[supreg], the applicant searched the FY 2021 MedPAR file for
cases reporting ICD-10-CM code K76.7 (Hepatorenal syndrome). The
applicant used the inclusion/exclusion criteria described in the
following table. Each analysis differed with respect to the position of
the ICD-10-CM code on the claim (that is, whether the ICD-10-CM code
was the primary and/or admitting diagnosis code, or was in any position
on the claim). Each analysis also differed with respect to requirements
for the presence or absence of ICU-related charges (identified with the
ICU indicator in the MedPAR with each analysis either including claims
with ICU charges or claims without ICU charges), or whether ICU usage
was not a consideration (the analysis included both claims with and
without ICU charges). The applicant then presented six defined cohort
analyses, and used the factors in the following table to define the
cohorts. Please see Table 10.24.A.--TERLIVAZ[supreg] Codes (Analyses 1-
6)--FY 2024 associated with the proposed rule for the complete list of
MS-DRGs that the applicant included in its cost analysis for each
cohort. The applicant followed the order of operations described in the
following table.
For the first cohort analysis, the applicant identified 471 claims
mapping to nine MS-DRGs. The applicant calculated a final inflated
average case-weighted standardized charge per case of $279,135, which
exceeded the average case-weighted threshold amount of $77,358.
For the second cohort analysis, the applicant identified 7,273
claims mapping to 183 MS-DRGs. The applicant then calculated a final
inflated average case-weighted standardized charge per case of
$319,685, which exceeded the average case-weighted threshold amount of
$90,714.
For the third cohort analysis, the applicant identified 480 claims
mapping to five MS-DRGs. The applicant then calculated a final inflated
average case-weighted standardized charge per case of $189,783, which
exceeded the average case-weighted threshold amount of $66,195.
For the fourth cohort analysis, the applicant identified 6,497
claims mapping to 173 MS-DRGs. The applicant then calculated a final
inflated average case-weighted standardized charge per case of
$211,960, which exceeded the average case-weighted threshold amount of
$76,483.
For the fifth cohort analysis, the applicant identified 918 claims
mapping to nine MS-DRGs. The applicant then calculated a final inflated
average case-weighted standardized charge per case of $233,361, which
exceeded the average case-weighted threshold amount of $69,919.
For the sixth cohort analysis, the applicant identified 12,801
claims mapping to 217 MS-DRGs. The applicant then calculated a final
inflated average case-weighted standardized charge per case of
$265,448, which exceeded the average case-weighted threshold amount of
$81,949.
Because the final inflated average case-weighted standardized
charge per case exceeded the average case-weighted threshold amount for
all scenarios, the applicant asserted that TERLIVAZ[supreg] meets the
cost criterion.
BILLING CODE 4120-01-P
[[Page 58895]]
[GRAPHIC] [TIFF OMITTED] TR28AU23.193
We are invited public comments on whether TERLIVAZ[supreg] meets
the cost criterion.
We did not receive any comments on whether TERLIVAZ[supreg] meets
cost criterion. Based on the information submitted by the applicant as
part of its FY 2024 new technology add-on payment application for
TERLIVAZ[supreg], as previously summarized, the final inflated average
case-weighted standardized charge per case exceeded the average case-
weighted threshold amount. Therefore, 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 among HRS
patients who failed previous therapy with available off-label
treatments, TERLIVAZ[supreg] has been shown
[[Page 58896]]
to significantly improve renal function. Additionally, the applicant
stated that TERLIVAZ[supreg] remains the preferred treatment for HRS-
acute kidney injury (AKI) according to several guidelines and guidance
based on its significant efficacy, as shown by randomized clinical
trials. The applicant asserted that for these reasons TERLIVAZ[supreg]
offers a treatment option for HRS patients unresponsive to currently
available treatments (for example, norepinephrine, midodrine, and
octreotide), and it significantly improves clinical outcomes among HRS
patients as compared to placebo as well as currently available
treatments (for example, norepinephrine, midodrine and octreotide). The
applicant provided 14 studies to support these claims. The following
table summarizes the applicant's assertions regarding the substantial
clinical improvement criterion. Please see the online posting for
TERLIVAZ[supreg] for the applicant's complete statements regarding the
substantial clinical improvement criterion and the supporting evidence
provided.
[GRAPHIC] [TIFF OMITTED] TR28AU23.194
[[Page 58897]]
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[[Page 58901]]
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[[Page 58902]]
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[[Page 58903]]
[GRAPHIC] [TIFF OMITTED] TR28AU23.201
[[Page 58904]]
[GRAPHIC] [TIFF OMITTED] TR28AU23.202
BILLING CODE 4120-01-C
In the FY 2024 IPPS/LTCH PPS proposed rule (88 FR 26903 through
26904), after review of the information provided by the applicant, we
stated that we had the following concerns regarding whether
TERLIVAZ[supreg] meets the substantial clinical improvement criterion.
With respect to the applicant's assertion that TERLIVAZ[supreg] offers
a treatment option for a patient population unresponsive to currently
available treatments because among patients in the CONFIRM trial,
patients that had failed prior therapy with available options achieved
a statistically significant improvement in renal function with
TERLIVAZ[supreg], we noted that the applicant provided evidence from
data on file for the clinical study report of the CONFIRM trial. We
noted that this data on file appears to be a post-hoc analysis of the
trial. As this was a post-hoc analysis, we stated we were cautious
about drawing conclusions from this analysis alone without additional
outcome data.
We also noted that the applicant asserts that the primary endpoint
of the CONFIRM trial, verified HRS reversal, is a clinically
significant and appropriate measure of improvement in renal function.
However, as we noted in the FY 2022 IPPS/LTCH PPS proposed rule (86 FR
25344) and FY 2023 IPPS/LTCH proposed rule (87 FR 28295), in the
CONFIRM trial, while the proportion of patients with verified HRS
reversal without HRS recurrence by Day 30 was numerically greater in
the TERLIVAZ[supreg] group than placebo, the difference between groups
was not statistically significant (26% vs 17%, p=0.08).\149\ We also
noted that the potential for HRS recurrence among patients treated with
TERLIVAZ[supreg] after 30 days is unclear. We questioned whether a
statistically significant difference in verified HRS reversal in the
TERLIVAZ[supreg] group at 14 days was sufficient to provide evidence of
the durability of improvement in renal function.
---------------------------------------------------------------------------
\149\ 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.
---------------------------------------------------------------------------
With respect to the applicant's assertion that TERLIVAZ[supreg]
significantly improves clinical outcomes, we noted that the applicant
provided evidence from data on file for the clinical study report of
the CONFIRM trial that appear to consist of post-hoc analyses of
patient subgroups, for example, improvement in renal function for
patients with alcoholic hepatitis at baseline, and reduction in RRT
requirements in patients who received a liver transplant. Similar to
our earlier concern, we questioned if we were able to draw conclusions
from these post-hoc analyses alone without additional outcome data.
We also noted that the poster presentation for Mujtaba et al. is a
post-hoc analysis of a subpopulation of patients aged >=65 years from
the CONFIRM trial, which was not powered to assess differences in
clinical outcomes between the TERLIVAZ[supreg] and placebo groups in
this subpopulation. As such, we noted that differences between the
TERLIVAZ[supreg] and placebo groups in verified HRS reversal, HRS
reversal, durability of HRS reversal, verified HRS reversal without HRS
recurrence by Day 30, and length of study site hospital stay in days
were not statistically significant. We also noted that the difference
in RRT requirements through 90 days in the CONFIRM study among
surviving patients aged >=65 years was not statistically significant.
Although the results numerically favored the TERLIVAZ[supreg] group,
for those reasons, we questioned whether this analysis provided
sufficient evidence of improved clinical outcomes in the Medicare
population.
Finally, regarding the study conducted by Arora et al., we noted in
the FY 2022 IPPS/LTCH PPS (86 FR 25344) and FY 2023 IPPS/LTCH PPS (87
FR 28296) proposed rules that this study 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.\150\
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\150\ 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.
---------------------------------------------------------------------------
We invited public comments on whether TERLIVAZ[supreg] meets the
substantial clinical improvement criterion.
Comment: We received several comments in support of new technology
add-on payments for TERLIVAZ[supreg]. The commenters supported the
substantial clinical improvement assertations for TERLIVAZ[supreg], and
described high mortality and significant rates of HRS-1-related
readmissions in this patient
[[Page 58905]]
population. Commenters cited the results of randomized, placebo-
controlled trials where the use of TERLIVAZ[supreg] was associated with
a reduced rate of mortality and more rapid resolution of the disease
process as compared to the placebo. Furthermore, commenters indicated
that the CONFIRM trial demonstrated the substantial clinical
improvement of TERLIVAZ[supreg] as compared with placebo on multiple
outcomes, including: verified HRS reversal, verified HRS reversal in
patients with prior midodrine and octreotide use, durability of HRS
reversal, HRS reversal in the systemic inflammatory response syndrome
subgroup, decreased incidence of RRT through Day 14, and decreased
incidence of RRT after liver transplant. Several commenters noted that
the HRS-1 patient population has substantial need for an effective
treatment for this disease, and that outcomes have not improved for
these patients since 2002.\151\ Additionally, several commenters
indicated the clinical guidelines recommend using vasoconstrictors in
combination with albumin as the first-line treatment to counteract
splanchnic arterial vasodilation and that TERLIVAZ[supreg] is
considered the first line treatment of choice in treating HRS-1
patients in European and Asian countries.152 153 A commenter
further stated that the CONFIRM study demonstrated that
TERLIVAZ[supreg] has an acceptable safety profile for this high-
morbidity patient population.
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\151\ Thomson MJ, Taylor A, Sharma P, et al. Limited Progress in
Hepatorenal Syndrome (HRS) Reversal and Survival 2002-2018: A
Systematic Review and Meta-Analysis. Dig Dis Sci. 2019;30. doi:
10.1007/s10620-019-05858-2.
\152\ Low G, Alexander GJM, Lomas DJ. Hepatorenal Syndrome:
Aetiology, Diagnosis, and Treatment. Gastroenterology Research and
Practice. 2015;2015:207012.
\153\ 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.
---------------------------------------------------------------------------
Response: We thank the commenters for their input and have taken it
into consideration in our determination regarding substantial clinical
improvement, discussed later in this section.
Comment: The applicant submitted public comments regarding the
substantial clinical improvement criterion, in response to CMS's
concerns raised in the proposed rule. With respect to CMS's concern
that the applicant provide evidence that TERLIVAZ[supreg] offers a
treatment option for a patient population unresponsive to currently
available treatments from a post-hoc analysis of the trial from which
we were cautious about drawing conclusions without additional outcome
data, the applicant indicated that although these were findings from a
post hoc analysis, the data was derived from the largest multicenter,
double-blind, randomized, placebo-controlled clinical trial of
TERLIVAZ[supreg] to date. The applicant further stated the study of a
prospective, randomized, head-to-head trial by Cavallin et al. (2015),
in which patients with HRS receiving TERLIVAZ[supreg] were compared
against patients receiving combination midodrine and octreotide
demonstrated that TERLIVAZ[supreg]-treated patients attained complete
response (decrease in serum creatinine to <=1.5 mg/dL) at significantly
higher rates (55.5%) than midodrine and octreotide-treated patients
(4.8%; p < 0.001),\154\ providing greater confidence in the post hoc
results from the CONFIRM trial. The applicant also noted that guidance
and international guidelines stated that the efficacy of midodrine and
octreotide is lower than that of TERLIVAZ[supreg], and should only be
used if TERLIVAZ[supreg] is unavailable or contraindicated. The
applicant noted that these recommendations were further supported by
real-world efficacy data from the United Kingdom, demonstrating that
TERLIVAZ[supreg] addresses an unmet need and may offer a treatment
option for patients who do not respond to existing therapies.
---------------------------------------------------------------------------
\154\ 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(2):567-574.
---------------------------------------------------------------------------
In response to CMS's concern that in the CONFIRM trial, while the
proportion of patients with verified HRS reversal without HRS
recurrence by Day 30 was numerically greater in the TERLIVAZ[supreg]
group than placebo, the difference between groups was not statistically
significant, and that the potential for HRS recurrence after 30 days
was unclear, the applicant stated that verified HRS reversal was the
primary endpoint of the CONFIRM trial, and based on study timing, was
likely measured beyond Day 14 in most patients. The applicant stated
that furthermore, although verified HRS reversal without recurrence was
achieved in approximately 50 percent more patients treated with
TERLIVAZ[supreg] compared to placebo, this endpoint was reported
inconsistently, as recurrence was based on investigator judgment. The
applicant stated that the endpoint of durability of HRS reversal was a
more objective measure of sustained improvements in renal function than
verified HRS reversal without HRS recurrence, and reached statistical
significance in the CONFIRM trial. In addition, the applicant explained
that regarding the potential for HRS recurrence beyond 30 days, HRS
develops due to the hemodynamic alterations that occur from portal
hypertension and cirrhosis and that TERLIVAZ[supreg] is not intended to
resolve these complications. The applicant noted that patients whose
underlying advanced liver disease is not corrected via transplant may
develop HRS again if there is a new precipitating event, and that
ultimately, the rate of HRS recurrence beyond 30 days would not be a
reflection of TERLIVAZ efficacy, but an effect of patients' underlying
liver disease.
With respect to CMS's request for additional outcome data to
support post-hoc analyses of patient subgroups, the applicant stated
that although the data was derived from post hoc analyses, the CONFIRM
trial is the largest multicenter, double-blind, randomized, placebo-
controlled clinical trial of TERLIVAZ[supreg] to date, and that the
incidence of RRT through Day 90 was a prespecified endpoint for the
full trial population. The applicant further stated that overall, data
from the full intention-to-treat (ITT) population of the CONFIRM trial;
data from the pooled analysis of the CONFIRM, REVERSE, and OT-0401
trials; and pre-transplant and long-term data from the subgroup of
patients in the CONFIRM trial who received a liver transplant all
consistently support that treatment with TERLIVAZ[supreg] reduced the
incidence of RRT compared to placebo. Thus, TERLIVAZ[supreg] treatment
offers significant clinical efficacy by helping patients avoid
RRT,\155\ and has been associated with significant reductions in
intensive care unit (ICU) length of stay because it can be administered
on the general medicine floor. The applicant further stated that in the
subgroup analysis of patients with alcoholic hepatitis, post hoc data
from CONFIRM was consistent with published pooled data from all 3
trials, CONFIRM, REVERSE, and OT-0401, and showed that TERLIVAZ[supreg]
led to significant improvements in renal function compared to
placebo.\156\ The
[[Page 58906]]
applicant further stated that there was a significant improvement in
renal function in the pooled population subgroup, with 38.0 percent of
the TERLIVAZ[supreg] group vs 13.1 percent of the placebo group
achieving HRS reversal (p<0.001). Additionally, the applicant noted
that significantly more patients were alive without RRT and maintained
HRS reversal to Day 30 in the TERLIVAZ[supreg] group (33.9% vs 10.7%;
p<0.001), consistently demonstrating that TERLIVAZ[supreg] treatment
led to significant improvements in renal function among patients with
alcoholic hepatitis.
---------------------------------------------------------------------------
\155\ Weinberg EM, Wong F, Vargas HE, et al. Pretransplant
terlipressin treatment for hepatorenal syndrome decreases the need
for renal replacement therapy both pre- and posttransplant: a 12-
month follow-up analysis of the CONFIRM trial. Hepatology.
2022;76(S1):S145-S146.
\156\ Sigal SH, Sanyal AJ, Frederick RT, Weinberg EM, Pappas SC,
Jamil K. Terlipressin treatment is associated with reversal of
hepatorenal syndrome in patients with alcoholic hepatitis. Clin
Gastroenterol Hepatol. Published online February 26, 2023.
doi:10.1016/j.cgh.2023.02.015.
---------------------------------------------------------------------------
With respect to whether the analysis submitted by the applicant
provides sufficient evidence of improved clinical outcomes in the
Medicare population given that the CONFIRM trial was not powered to
assess differences in clinical outcomes in the subpopulation of
patients aged >=65 years, the applicant stated that HRS is a rare
disease, and that therefore, it is difficult to enroll an adequate
sample size to conduct large clinical trials that are powered to
achieve statistical significance among specific subgroups. The
applicant further stated that while the CONFIRM trial was not powered
to detect a difference between therapies in patients aged 65 years and
older, the mean age in the CONFIRM trial was 54 years, and
approximately 18 percent of patients in each treatment group were aged
65 years and older. The applicant further stated that although the
endpoints shown in the poster by Mujtaba et al.\157\ did not reach
statistical significance based on the small sample size, each endpoint
trended toward improvement in the TERLIVAZ[supreg] group compared to
placebo and that as a result treatment with TERLIVAZ[supreg] in
patients aged >=65 years has shown efficacy results consistent with
those of the larger CONFIRM population, and that available
pharmacokinetic data does not suggest an older population would have a
poorer response or tolerance to TERLIVAZ[supreg]. In a separate
comment, the applicant also shared a manuscript, with data previously
reported in the poster by Mujtaba et al.\158\ in abstract form, that
had been accepted for publication in Annals of Hepatology.\159\ The
applicant stated that the manuscript consisted of a pooled analysis of
the CONFIRM, REVERSE, and OT-0401 trials that revealed positive results
in patients aged 65 years or older with HRS, indicating that treatment
with TERLIVAZ[supreg] and albumin was associated with clinical
improvements for patients aged 65 years and older, and that no new
safety signals were revealed in this analysis.
---------------------------------------------------------------------------
\157\ Mujtaba M, Gamilla-Cruda AK, Merwat S, et al.
Terlipressin, in combination with albumin, is an effective therapy
for hepatorenal syndrome type 1 in patients aged >=65 years. Poster
presented at: National Kidney Foundation Spring Clinical Meeting;
April 6-10, 2022; Boston, MA.
\158\ Ibid.
\159\ Mujtaba, M.A., Gamilla-Crudo, A.K., Merwat, S.N., Hussain,
S.A., Kueht, M., Karim, A., Khattak, M.W., Rooney, P.J., & Jamil, K.
(2023). Terlipressin in combination with albumin as a therapy for
hepatorenal syndrome in patients aged 65 years or older. Annals of
hepatology, 28(5), 101126. Advance online publication. https://doi.org/10.1016/j.aohep.2023.101126.
---------------------------------------------------------------------------
With respect to CMS's concern that the study by Arora et al.
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, the applicant
responded that ACLF and HRS are often comorbid conditions and both were
seen in all patients included in the CONFIRM trial.\160\ The applicant
further specified that though it was not specifically required in the
inclusion criteria, every patient enrolled in the CONFIRM trial had at
least ACLF grade 1 at study entry. The applicant conclude that the
patient population studied in the Arora et al. was similar to that of
the CONFIRM trial and can be used to demonstrate that the improved
outcomes seen with TERLIVAZ[supreg] compared to norepinephrine is
expected in patients with HRS who meet ACLF criteria.
---------------------------------------------------------------------------
\160\ Wong F, Pappas SC, Reddy KR, et al. Terlipressin use and
respiratory failure in patients with hepatorenal syndrome type 1 and
severe acute-on-chronic liver failure. Aliment Pharmacol Ther.
2022;56(8):1284-1293.
23. Low G, Alexander GJM, Lomas.
---------------------------------------------------------------------------
Response: We thank the applicant for its comments and the
additional information provided regarding the substantial clinical
improvement criterion. Based on the comments and additional information
received, we agree that TERLIVAZ[supreg] represents a substantial
clinical improvement over existing technologies because it is the only
FDA-approved treatment for HRS patients, and significantly improves
clinical outcomes among HRS patients by improving renal function,
compared to placebo as well as currently available treatments, as
demonstrated by statistically significant differences in HRS reversal
rates, resulting in reduced RRT requirements and hospital length of
stay.
After consideration of the public comments we received and the
information included in the applicant's new technology add-on payment
application, we have determined that TERLIVAZ[supreg] meets the
criteria for approval for new technology add-on payment. Therefore, we
are approving new technology add-on payments for this technology for FY
2024. Cases involving the use of TERLIVAZ[supreg] that are eligible for
new technology add-on payments will be identified by ICD-10-PCS codes:
XW03367 (Introduction of terlipressin into peripheral vein,
percutaneous approach, new technology group 7) or XW04367 (Introduction
of terlipressin into central vein, percutaneous approach, new
technology group 7).
Per the applicant, the WAC of TERLIVAZ[supreg] is $950 per vial,
and the mean treatment duration with TERLIVAZ[supreg] in the CONFIRM
trial was 6.2 days, using 27 vials. In its application, the applicant
estimated that the average cost of therapy for TERLIVAZ[supreg] is
$25,650 per patient ($950 x 27 vials). Under Sec. 412.88(a)(2), we
limit new technology add-on payments to the lesser of 65 percent of the
average cost of the technology, or 65 percent of the costs in excess of
the MS-DRG payment for the case. As a result, the maximum new
technology add-on payment for a case involving the use of
TERLIVAZ[supreg] is $16,672.50 for FY 2024.
k. XENOVIEWTM (Xenon Xe 129 Hyperpolarized)
Polarean, Inc. and The Institute for Quality Resource Management
(collectively referred to as ``applicant'') submitted an application
for new technology add-on payments for XENOVIEWTM (xenon Xe
129 hyperpolarized) for FY 2024. Per the applicant,
XENOVIEWTM is prepared using an FDA approved
hyperpolarization process from a dose of Xenon \129\Xe Gas Blend. The
applicant stated that the imaging signal is specifically created to
address the unmet needs to quantitively diagnose early pulmonary oxygen
deficiency, at the level of the alveoli oxygen exchange, without
exposing the patient to ionizing radiation to inform management of
patients with diseases manifested by diminished lung function. The
applicant explained that after inhalation, HP \129\Xe freely diffuses
from the airspaces through alveolar-capillary barrier (comprised of
alveolar epithelial cells, interstitial tissues, and capillary
endothelial cells) and subsequently into the red blood cells (RBCs).
The applicant noted that HP \129\Xe exhibits distinct magnetic
resonance (MR) frequency shifts in the airspace, barrier, and RBCs,
allowing separate imaging of its distribution in all three
compartments, and that such imaging
[[Page 58907]]
has been used to spatially characterize disease burden across a range
of pulmonary disorders (for example, chronic obstructive pulmonary
disease (COPD) and asthma). We note that the applicant submitted an
application for new technology add-on payments for
XENOVIEWTM for FY 2023, as summarized in the FY 2023 IPPS/
LTCH PPS proposed rule (87 FR 28307 through 28317), that it withdrew
prior to the issuance of the FY 2023 IPPS/LTCH PPS final rule (87 FR
48920).
Please refer to the online application posting for
XENOVIEWTM available at https://mearis.cms.gov/public/publications/ntap/NTP221017PBF9L, for additional detail describing the
technology and the diseases diagnosed by the technology.
With respect to the newness criterion, according to the applicant,
XENOVIEWTM was granted NDA approval from FDA on December 23,
2022, for the use of XENOVIEWTM (xenon Xe 129
hyperpolarized) with magnetic resonance imaging (MRI) for evaluation of
lung ventilation in adults and pediatric patients aged 12 years and
older. According to the applicant, XENOVIEWTM was
commercially available immediately following the NDA approval. The
applicant stated that the dose for patients 12 years and older is 75 mL
to 100 mL dose equivalent (DE, where DE = [total volume Xe gas] x
[\129\Xe isotopic enrichment] x [polarized percent]) of HP \129\Xe by
oral inhalation of the entire contents of one XENOVIEWTM
Dose Delivery Bag. The applicant explained that each bag contains at
least 75 mL DE with a recommended target DE range of 75 mL to 100 mL in
a volume of 250 mL to 750 mL total xenon with additional nitrogen,
National Formulary (NF) (99.999% purity) added to reach a total volume
of 1,000 mL measured 5 minutes before inhalation.
The applicant stated that effective October 1, 2022, the following
ICD-10-PCS procedure code may be used to uniquely describe procedures
involving the use of XENOVIEWTM: BB34Z3Z (Magnetic resonance
imaging (MRI) of bilateral lungs using hyperpolarized xenon 129 (Xe-
129)).
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 substantial similarity criteria, the applicant
asserted that XENOVIEWTM is not substantially similar to
other currently available technologies because HP \129\Xe, a new
chemical entity, and new lung MRI signaling agent, is created on-site
following an FDA approved method, for oral inhalation. The applicant
explained that absent ionizing radiation, XENOVIEWTM
identifies lung abnormalities reporting ventilation defect percent
(VDP) diagnosing early deteriorating lung function to inform, guide and
monitor therapy. The applicant explained that XENOVIEWTM's
properties cause diffusion through the lung and distal alveoli, and
that novelty mechanistically lies in the gas preparation, where HP
creates a quantitative distinct volume DE for the patient's anatomy.
Therefore, the applicant asserted that the technology meets the newness
criterion. The following table summarizes the applicant's assertions
regarding the substantial similarity criteria. Please see the online
application posting for XENOVIEWTM for the applicant's
complete statements in support of its assertion that
XENOVIEWTM is not substantially similar to other currently
available technologies.
BILLING CODE 4120-01-P
[[Page 58908]]
[GRAPHIC] [TIFF OMITTED] TR28AU23.203
Similar to our discussion in the FY 2023 IPPS/LTCH PPS proposed
rule (87 FR 28308), we noted in the FY 2024 IPPS/LTCH PPS proposed rule
(88 FR 26917 through 26918) that although the applicant states that
XENOVIEWTM has not been assigned to an MS-DRG and cannot be
compared to an existing technology, we believed that based on its
indication, cases involving the use of XENOVIEWTM 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 invited public comments on whether XENOVIEWTM is
substantially similar to existing technologies and whether
XENOVIEWTM meets the newness criterion.
Comment: The applicant submitted a comment maintaining that
XENOVIEWTM meets the newness criterion. With respect to
mechanism of action, the applicant stated that XENOVIEWTM
creates a distinct image
[[Page 58909]]
requiring a special coil and multinuclear scanner for the MRI to
respond to the HP Xe 129, and therefore does not use the same or
similar mechanism of action as other imaging agents. Furthermore, the
applicant stated that XENOVIEWTM is FDA-approved as a new
chemical entity and that no conventional existing imaging or pulmonary
function testing can report region specific quantified VDP. The
applicant also explained that conventional MRI, CT, or VQ scintigraphy
would not be ordered to measure oxygen exchange of lung tissue,
therefore XENOVIEWTM MRI treats a population with
respiratory disease by reporting findings not otherwise obtainable.
With respect to whether cases involving the use of
XENOVIEWTM 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, the applicant stated that
XENOVIEWTM would not be assigned to the same MS-DRGs as
cases involving the use of other MRIs or advanced imaging because
medical necessity, images, spatial anatomy, and information obtained
from the XENOVIEWTM MRI are different from the information
from a conventional MRI, CT, and nuclear medicine lung imaging. The
applicant further stated a patient's principal diagnosis (specifically
asthma, COPD, interstitial lung disease, Bronchiolitis Obliterans,
cystic fibrosis, or complication post lung transplant), underlying
comorbidities, and surgical procedures drive the MS-DRG assignment at
the time of discharge, and creation of a new MS-DRG is not required.
The applicant stated that XENOVIEWTM would be assigned
within MS-DRGs 190-192, 196-198, 202-206 and 951 when ICD-10-PCS code
BB34Z3Z (Magnetic resonance imaging (MRI) of bilateral lungs using
hyperpolarized xenon 129 (Xe-129)) is used. The applicant explained
that within Major Diagnostic Category (MDC) 004--Diseases & Disorders
of the Respiratory System, 0.12 percent of cases included lung or
pulmonary ICD-10-PCS codes for CT, MRI, or nuclear imaging, and that
these imaging services are not ordered to report quantitative lung
ventilation, therefore the ICD-10-CM diagnosis code of patients who
benefit from XENOVIEWTM are different from those with
diagnosis codes where conventional CT, MRI, or nuclear imaging would be
ordered. The applicant explained that XENOVIEWTM is ordered
for patients with respiratory disease, using the VDP as new information
to guide treatment decisions and improve patient outcomes.
Response: We thank the applicant for the clarification regarding
MS-DRG assignment for XENOVIEWTM. Based on our review of
comments received and information submitted by the applicant as part of
its FY 2024 new technology add-on payment application for
XENOVIEWTM, we disagree with the applicant that
XENOVIEWTM would not be assigned to the same MS-DRGs as
cases involving the use of other MRIs or advanced imaging. We do not
believe that the low volume of CT, MRI, or nuclear imaging cases within
MDC 004 indicates that XENOVIEWTM would not be assigned to
the same MS-DRGs as these technologies. As the applicant noted, for
patients with lung disease who may be prescribed XENOVIEWTM,
the resulting MS-DRGs are determined by the patient's primary diagnosis
codes, not the XENOVIEWTM MRI ICD-10-PCS procedure code.
Therefore, we believe that cases involving the use of
XENOVIEWTM or other MRIs and imaging modalities for
pulmonary function and imaging of the lungs that have the same primary
diagnosis codes would be assigned to the same MS-DRGs.
However, we agree with the applicant that XENOVIEWTM
uses a new mechanism of action for the diagnosis of respiratory
conditions when compared to existing diagnostics because there are
currently no FDA-approved or cleared technologies that use imaging with
an inhaled hyperpolarized contrast agent that reports VDP
quantitatively to provide a detailed, quantifiable image of gas
distribution in regions of the lung. Therefore, we believe that
XENOVIEWTM is not substantially similar to existing
diagnostic options and meets the newness criterion. We consider the
newness period to begin on December 23, 2022, when
XENOVIEWTM was approved by FDA for the evaluation of lung
ventilation in adults and pediatric patients aged 12 years and older.
With respect to the cost criterion, the applicant searched the FY
2021 MedPAR file for potential cases representing patients who may be
eligible for XENOVIEWTM. The applicant limited its analysis
to eight MS-DRGs, listed in the following table, as it believes these
MS-DRGs represent patients most likely eligible for treatment with
XENOVIEWTM (that is, patients with lung and pulmonary
challenges, confirmed pulmonary disease, asthma, and COPD). Using the
inclusion/exclusion criteria described in the following table, the
applicant identified 87,801 claims mapping to these eight MS-DRGs. The
applicant followed the order of operations described in the following
table and calculated a final inflated average case-weighted
standardized charge per case of $55,652, which exceeded the average
case-weighted threshold amount of $46,624. Because the final inflated
average case-weighted standardized charge per case exceeded the average
case-weighted threshold amount, the applicant asserted that
XENOVIEWTM meets the cost criterion.
[[Page 58910]]
[GRAPHIC] [TIFF OMITTED] TR28AU23.204
In the FY 2024 IPPS/LTCH PPS proposed rule (88 FR 26918) we noted
that the applicant limited its analysis to eight MS-DRGs. We were
interested in information as to whether the technology would map to
other MS-DRGs, such as other MS-DRGs under Major Diagnostic Category
004--Diseases & Disorders of the Respiratory System, as the indication
for the technology regarding lung ventilation seems very broad. We
invited public comments on whether XENOVIEWTM meets the cost
criterion.
Comment: With respect to whether XENOVIEWTM would map to
other MS-DRGs under Major Diagnostic Category 004--Diseases & Disorders
of the Respiratory System, the applicant submitted a comment verifying
that Version 40.1 of the FY 2023 MS-DRG grouper comparing diagnosis
codes for the MS-DRGs within MDC 004 unique to the population that
would benefit from XENOVIEWTM for lung ventilation returned
the following: MS-DRGs 190-192, 196-198, 202-206 and 951. The applicant
stated that they added MS-DRGs 204-206 and emphasized that not all MS-
DRGs within MDC 004 related to diagnoses that would result in ordering
XENOVIEWTM for lung ventilation VDP measurement. For
example, the applicant stated that MS-DRGs 163-168 are specific to
thoracic surgical procedures and argued that XENOVIEWTM
would not map to the assignment of these MS-DRGs and would likely not
be used during that inpatient admission. Furthermore, the applicant
stated that MS-DRGs 174 and 176 are specific to pulmonary embolism, not
a diagnosis for XENOVIEWTM. The applicant also stated that
MS-DRGs 177-179, 186-188, 189, 193-195 and 199-201 represent specific
respiratory diseases with primary diagnosis codes not related to the
diagnosis codes for XENOVIEWTM. The applicant stated that
MS-DRGs 207-208 are specific to patients on a ventilator with diagnosis
codes not related to the primary diagnosis codes for
XENOVIEWTM. The applicant stated that lung imaging
procedures were identified with MS-DRG 177; however, such imaging was
ordered to monitor the accumulation of mucus in the lungs.
After adding MS-DRGs 204-206 to the cost criterion analysis, the
applicant calculated a final inflated average case-weighted
standardized charge per case of $58,328, which exceeded the average
case-weighted threshold amount of $47,107. The applicant asserted that
because the final inflated average case-weighted standardized charge
per case exceeded the average case-weighted threshold amount,
XENOVIEWTM meets the cost criterion.
Response: We thank the applicant for their revised cost analysis
with the addition of MS-DRGs 204-206. We agree the final inflated
average case-weighted standardized charge per case exceeded the average
case-weighted threshold amount, and therefore XENOVIEWTM
meets the cost criterion.
With regard to the substantial clinical improvement criterion, the
applicant asserted that XENOVIEWTM represents a substantial
clinical improvement over existing technologies because HP \129\Xe gas
for oral inhalation with MRI offers an effective option for patients
with pulmonary challenges to obtain quantitative information regarding
their lung ventilation as it relates to their progression of disease
without subjecting the patient to ionizing
[[Page 58911]]
radiation or the half-life of nuclear imaging agents. The applicant
further stated that HP \129\Xe MRI images are sharp and discrete,
providing visual evidence of oxygen impairment across the barrier
tissues leading to a quantifiable metric to follow patients' treatment.
The applicant asserted that XENOVIEWTM 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. The applicant provided 10 studies to
support these claims. The following table summarizes the applicant's
assertions regarding the substantial clinical improvement criterion.
Please see the online posting for XENOVIEWTM for additional
details on the applicant's statements regarding the substantial
clinical improvement criterion and the supporting evidence provided.
---------------------------------------------------------------------------
\161\ Hahn, AD, Carey KJ, Barton GP, Torres, LA, Kammerman J, et
al. Hyperpolarized 129Xe MR Spectroscopy in the Lung Shows 1-year
Reduced Function in Idiopathic Pulmonary Fibrosis. Radiology 2022;
000:1-9.
[GRAPHIC] [TIFF OMITTED] TR28AU23.205
[[Page 58912]]
[GRAPHIC] [TIFF OMITTED] TR28AU23.206
[[Page 58913]]
[GRAPHIC] [TIFF OMITTED] TR28AU23.207
---------------------------------------------------------------------------
\162\ Grist JT, Collier GJ, Walters H, Kim M, Chen M, et al.
Lung abnormalities depicted with hyperpolarized xenon MRI in
patients with long COVID. Radiology 2022;in press:1-26.
---------------------------------------------------------------------------
[[Page 58914]]
[GRAPHIC] [TIFF OMITTED] TR28AU23.208
[[Page 58915]]
[GRAPHIC] [TIFF OMITTED] TR28AU23.209
BILLING CODE 4120-01-C
In the FY 2024 IPPS/LTCH PPS proposed rule (88 FR 26923 through
26924), after reviewing the information the applicant provided, we
stated we had the following concerns regarding whether
XENOVIEWTM meets the substantial clinical improvement
criterion. We noted that, similar to our discussion in the FY 2023
IPPS/LTCH PPS proposed rule (87 FR 28312), with respect to the evidence
provided by the applicant to support its assertion that
XENOVIEWTM 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, 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 required under Sec.
412.87(b)(1)(ii)(B). Although the applicant provided studies
demonstrating that XENOVIEWTM can detect gas diffusion
abnormalities in patients that traditional imaging such as CT cannot,
or can detect these abnormalities earlier than currently available
methods, these studies did not appear to demonstrate that subsequently,
treatment planning or disease management was affected.
For example, we noted that studies were designed to assess the
ability of XENOVIEWTM to detect changes in lung function
before and after treatment in comparison to other technologies, rather
than a change in patient management. For example, in the Mummy et al.
(2021) study,\163\ HP \129\Xe MRI was used to observe treatment effects
in COPD patients before and after receiving biologic therapy. Even
though the study demonstrated that XENOVIEWTM may have more
sensitivity in providing measurements of lung functioning in
structurally normal areas of the lung, there were no additional follow-
ups on patients who appeared to be non-responsive to therapy based on
HP \129\Xe MRI imaging. Without this information, it was difficult to
determine whether using XENOVIEWTM to observe the effects of
treatment has an impact on clinical decision-making for patients with
COPD. Similarly, although the study abstract for McIntosh et al. (2020)
\164\ noted that clinically relevant VDP improvements were observed 14-
days post-benralizumab in patients with minimal response detected using
spirometry, it was not clear from the study abstract if the use of
XENOVIEWTM to observe the effects of treatment impacted the
clinical decision-making for these patients. In addition, we questioned
the clinical significance of the findings in the Hahn et al. (2022)
study \165\ to support the applicant's statement that in patients with
IPF, HP \129\Xe MRI can predict disease progression in patient
[[Page 58916]]
population where fibrosis is not detectable by traditional CT, as the
study authors suggested that findings need to be verified in a
longitudinal multicenter study with more rigorous testing of the
repeatability of the MRI-based measurements of gas exchange and
ventilation in a larger sample of participants with IPF.
---------------------------------------------------------------------------
\163\ Mummy DG, Coleman M, Wang Z, Bier EA, Lu J, Driehuys D,
Huang YC. J. Regional Gas Exchange Measured by 129Xe 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.
\164\ McIntosh M, Eddy RL, Knipping D, Barker AL, Lindenmaier
TJ, Yamashita C, et al. Response to benralizumab in severe asthma:
129Xe MRI, oscillometry and clinical measurements. Am J Respir Crit
Care Med 2020;201:A6244.
\165\ Hahn, AD, Carey KJ, Barton GP, Torres, LA, Kammerman J, et
al. Hyperpolarized 129Xe MR Spectroscopy in the Lung Shows 1-year
Reduced Function in Idiopathic Pulmonary Fibrosis. Radiology 2022;
000:1-9.
---------------------------------------------------------------------------
Furthermore, although the applicant stated that HP \129\Xe MRI
could be used to quantify abnormalities across three compartments of
alveolar gas-exchange (in the airspaces (ventilation), barrier tissue
of the lung parenchyma, and transfer to red blood cells (RBCs)), we
questioned whether the detection of such abnormalities allows for a
specific diagnosis of disease. For example, in the Grist et al. (2022)
study,\166\ a follow-up to the Grist et al. (2021) study,\167\ the
authors noted that the relationship of the HP \129\Xe MRI abnormalities
detected and the breathlessness experienced by the wider population of
post-COVID-19 condition participants was unclear. The authors stated
that caution is necessary in the use of HP \129\Xe MRI for the
detection of disease, as it was unknown whether participants with other
respiratory tract infections, such as flu, had abnormal HP \129\Xe MRI
gas transfer months after infection. The authors also stated that it
was not known whether the abnormalities detected were of clinical
importance. The authors of the Mummy et al. (2021) \168\ study also
indicated that HP \129\Xe MRI ventilation measurements in COPD had not
been well characterized, which limited the authors' ability to
determine a clinically meaningful change in ventilation metrics. In
addition, we noted that the Thomen et al. (2016) \169\ study provided
by the applicant consists of a pediatric population, and we questioned
whether such detection of ventilation abnormalities by
XENOVIEWTM would be generalizable to a Medicare population.
---------------------------------------------------------------------------
\166\ Grist JT, Collier GJ, Walters H, Kim M, Chen M, et al.
Lung abnormalities depicted with hyperpolarized xenon MRI in
patients with long COVID. Radiology 2022;in press:1-26.
\167\ Grist JT, Chen M, Collier GJ, Raman B, Abueid G, et al.
Hyperpolarized 129XE MRI abnormalities in dyspneic patients 3 months
after COVID-19 pneumonia: Preliminary results. Radiology
2021;301:E353-E360.
\168\ Mummy DG, Coleman M, Wang Z, Bier EA, Lu J, Driehuys D,
Huang YC. J. Regional Gas Exchange Measured by 129Xe 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.
\169\ 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
2016;16(2):275-282.
---------------------------------------------------------------------------
In summary, we questioned whether the evidence provided
demonstrates that earlier detection of alveolar gas-exchange defects
using XENOVIEWTM results in earlier diagnosis and subsequent
changes to clinical decision-making following an earlier diagnosis. As
such, we were interested in additional evidence to support the
applicant's assertion that use of XENOVIEWTM to make a
diagnosis affects the management of the patient.
We invited public comments on whether XENOVIEWTM meets
the substantial clinical improvement criterion.
Comment: We received several comments in support of new technology
add-on payments for XENOVIEWTM, including one from the
applicant, in response to CMS's concerns in the FY 2024 IPPS/LTCH PPS
proposed rule regarding whether XENOVIEWTM meets the
substantial clinical improvement criterion.
The applicant asserted that the technology informs on spatial lung
ventilation defects, leading to treatment decisions that positively
impact patient outcomes. The applicant stated that VDP is able to
provide quantitative information about a patient's specific region of
ventilation and oxygen defect across all functional regions of the
lung, unlike conventional chest CT, MRI, nuclear imaging, or pulmonary
function tests (PFTs), and therefore can be used to identify treatment
effects of drug therapy and guide physicians in making adjustments. The
applicant explained that, as a diagnostic test, XENOVEWTM
MRI would not be expected to directly change health outcomes; rather, a
diagnostic test affects health outcomes through changes in disease
management, and that the usefulness of a test result is constrained by
the available treatment options. The applicant also noted that
XENOVIEWTM is not effort dependent, unlike for patients who
have difficulty with spirometry or PFTs. The applicant further asserted
that XENOVIEWTM provides an objective quantified measure
specific to the individual patient, which removes health disparities
and improves equality in healthcare outcomes of chronic diseases where
marginalized populations have few options for unbiased lung ventilation
evaluation.
The applicant stated that outcomes of interest for the technology
as a diagnostic test include beneficial or adverse clinical effects,
such as changes in management due to test findings or preferably,
improved health outcomes for Medicare beneficiaries. The applicant
asserted that results from XENOVIEWTM MRI lead physicians to
prescribe different and better treatments, and that those patients
whose treatments are changed by test results remain on the regimen and
achieve better long-term lung disease control. The applicant asserted
that the evidence provided demonstrates the utility of the technology
to accurately identify those patients who will, if untreated with
improved treatment protocols, suffer the morbidity and mortality of
lung disease. The applicant explained that peer-reviewed publications
across patients with asthma, COPD, and asthma plus COPD with underlying
risk factors demonstrated a reliable measurement of VDP with
XENOVIEWTM proprietary software. The applicant stated that
XENOVIEWTM VDP is an unbiased, quantitative measure compared
to the patient's own lung, rather than a population-based standard as
in PFTs, and can detect subtle differences that cannot be captured by
spirometry for PFTs. The applicant explained that higher rates of COPD
diagnoses in non-Hispanic whites lends credibility to the inequity and
bias in understanding and managing this disease, and asserted that
XENOVIEWTM MRI can be used to reduce disparities in
healthcare and improve management of chronic disease.
The applicant asserted that XENOVIEWTM MRI could be used
to inform treatment outcomes to make changes as needed. The applicant
referenced the Hahn et al. (2022) study, and explained that the study
identified patients where VDP could explain the patient symptoms that
were unable to be diagnosed by conventional spirometry or lung CT
imaging.\170\ The applicant also referenced the study abstract for
McIntosh et al. (2020),\171\ stating that the results support practical
clinical use of VDP to inform treatment change, as it allowed for the
differentiation between non-responders from responders to benralizumab
therapy in patients with severe asthma. The applicant stated that the
study provided evidence that the technology effectively measures gas
exchange and functional ventilation in a population of asthma patients,
and
[[Page 58917]]
allows clinically meaningful longitudinal follow-up. The applicant also
referenced the Mummy et al. (2021) study, and stated it provided
further evidence of treatment effect as VDP significantly improved in
subjects with COPD before and after bronchodilator therapy. The
applicant also asserted that without VDP measurements, physicians
prescribe drugs without quantitative measures to document the treatment
effect, and referenced a study by Hall et al. (2021).\172\ The
applicant explained that the use of bronchial thermoplasty (BT) in
severe asthma has been limited by peri procedure adverse events,
therefore VDP offers physicians an option to guide treatment to the
specific region that will benefit. The applicant explained that the
Hall et al. (2021) \173\ study randomly assigned 30 patients to BT
treatment of the six most involved airways in the first session
(XENOVIEWTM MRI VDP guided group) or a standard three-
session BT (unguided group). The applicant stated that statistically
significant findings in XENOVIEWTM MRI guided BT patients
resulted in actionable changes in the patient's management, and that
VDP guided patients experienced a better outcome with fewer adverse
asthmatic events. The applicant stated although there were no
significant difference in quality of life after one guided BT compared
with three unguided BTs (guided = 0.91 [95% confidence interval, 0.28-
1.53]; unguided = 1.49 [95% confidence interval, 0.84-2.14]; P =
0.201); VDP guided patients, however, had a statistically significant
greater reduction in the percentage of poorly and nonventilated lung
from baseline when compared with unguided BT treatments (217.2%; p =
0.009). The applicant further noted that 33 percent of patients
experienced asthma exacerbations after one guided BT compared with 73
percent after three unguided BTs (p = 0.028).
---------------------------------------------------------------------------
\170\ Hahn, AD, Carey KJ, Barton GP, Torres, LA, Kammerman J, et
al. Hyperpolarized 129Xe MR Spectroscopy in the Lung Shows 1-year
Reduced Function in Idiopathic Pulmonary Fibrosis. Radiology 2022;
000:1-9.
\171\ McIntosh M, Eddy RL, Knipping D, Barker AL, Lindenmaier
TJ, Yamashita C, et al. Response to benralizumab in severe asthma:
129Xe MRI, oscillometry and clinical measurements. Am J Respir Crit
Care Med 2020;201:A6244.
\172\ Hall CS, Quirk JD, Goss CW, Lew D, Kozlowski J., et. al.
Single-Session Bronchial Thermoplasty Guided by 129Xe Magnetic
Resonance Imaging A Pilot Randomized Controlled Clinical Trial.
American Journal of Respiratory and Critical Care Medicine. 2020;
202(4): 529-534.
\173\ Ibid.
---------------------------------------------------------------------------
Additional commenters supported the use of XENOVIEWTM
MRI to aid in the characterization of the individual patient's disease
and impact clinical decision-making and patient management. One
commenter suggested XENOVIEWTM may help characterize an
individual's disease and inform treatment decisions in an inpatient
setting as it provides information about lung disease severity and
activity beyond what is available with conventional PFTs. The commenter
added that they foresaw Xenon MRI playing an important role in: (1)
patients with respiratory symptoms but normal spirometry or PFTs to
assess for lung disease; (2) patients undergoing bronchoscopic
treatment of lung disease to guide regional treatments; (3) patients
with lung disease who are not responding to treatment to quantify
response to treatment or determine if a different treatment was
required; and (4) patients with respiratory symptoms but a confusing
clinical picture. The commenter stated that hyperpolarized gas MRI is
more sensitive than the spirometry or pulmonary function testing in
detecting mild or early disease and changes with treatment; has no
ionizing radiation compared to CT; and can be used to identify regional
lung function defects not seen with other modalities. The commenter
stated they envisioned using XENOVIEWTM in longitudinal
assessment of a patient's response to therapy to stop or intensify
treatments, and/or serve as an adherence tool to show patients their
positive response to therapy and motivate continued compliance. The
commenter explained that quantitative measures of VDP and the apparent
diffusion coefficient-based emphysema index (ADC) can be safely
obtained with hyperpolarized Xe MRI. The commenter also explained that
hyperpolarized gas MRI is advantageous compared to spirometry because
each patient serves as their own normative value, and may be
particularly helpful in populations that struggle with spirometry
maneuvers.
Another commenter also asserted that XENOVIEWTM fills
the current clinical gaps for the diagnosis and management of pulmonary
diseases. The commenter stated that there are no clinical tests that
can assess regional lung function with high resolution as PFT measures
global lung function, while a CT scan provides structural details, but
not direct functional measurement, and has a radiation risk. The
commenter stated that ventilation/perfusion scans lack the resolution
for diagnosing lung disease, except pulmonary embolism. The commenter
stated that XENOVIEW is non-invasive, is sensitive to changes in
ventilation abnormalities, and provides novel information on VDP and
the apparent diffusion coefficient-based emphysema index (ADC), which
would allow clinicians to develop personalized care for patients to
increase patient's compliance with medications and decrease the need
for unnecessary testing. The commenter described four common pulmonary
conditions where XENOVIEWTM would be useful. The commenter
suggested XENOVIEW could provide an early triage point in the clinical
pathway for patients with unexplained dyspnea on exertion (DOE). The
commenter provided a clinical scenario of a patient with DOE, and
stated that if XENOVIEWTM had been available, they would
have ordered the technology, which would have likely revealed
ventilation defects that would have helped them diagnose small airway
disease asthma with more confidence and chose the appropriate
medications. The commenter stated that chronic cough with failed
treatments was another common pulmonary condition, which may be a
result of cough-variant asthma that is difficult to diagnose with
current clinical tests, and that if XENOVIEWTM were
available, it would assist with disease diagnosis and treatment. The
commenter further suggested the use of XENOVIEWTM in
patients with COPD to differentiate between two clinical phenotypes,
chronic bronchitis and emphysema. The commenter noted that patients
with ventilation patterns more consistent with chronic bronchitis
tended to respond better to LABA/LAMA, even if there was minimal
response in PFT,\174\ and that this information would help clinicians
change medications earlier in the ``non-responders''. Finally, the
commenter noted that patients with asthma may have a normal PFTs and
other test results, while remaining symptomatic. The commenter
referenced two studies using \129\Xe MRI that had shown the presence of
ventilation defects in stable asthma patients even if PFT was normal,
and ventilation defects improved after treatment.175 176 The
commenter explained that ventilation defects on XENOVIEWTM
could alert clinicians that the asthma may not have been well
controlled.
---------------------------------------------------------------------------
\174\ Mummy DG, Coleman EM, Wang Z, et al. Regional Gas Exchange
Measured by (129) Xe Magnetic Resonance Imaging Before and After
Combination Bronchodilators Treatment in Chronic Obstructive
Pulmonary Disease. Journal of magnetic resonance imaging: JMRI 2021;
54(3): 964-74.
\175\ Serajeddini H, Eddy RL, Licskai C, McCormack DG, Parraga
G. FEV1 and MRI ventilation defect reversibility in asthma and COPD.
The European respiratory journal 2020; 55(3).
\176\ Ebner L, He M, Virgincar RS, et al. Hyperpolarized
129Xenon 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. Investigative radiology 2017; 52(2): 120-
7.
---------------------------------------------------------------------------
An additional commenter affirmed that XENOVIEWTM, when
available in the clinical setting, would inform and/or change their
treatment decisions due
[[Page 58918]]
to knowledge of the underlying respiratory defect in a variety of
clinical settings, and could serve as an adherence tool to motivate
continued compliance. The commenter stated that children born
prematurely have complex respiratory phenotypes, and that
hyperpolarized Xe would allow simultaneous investigation of those
phenotypes, and allow for targeted therapeutics. The commenter also
stated that the technology could be used to detect, and therefore allow
for treatment of, early onset obliterative bronchiolitis. The commenter
noted that Xe MRI offered an alternative to assess lung function for
children who were unable to cooperate with PFTs. The commenter stated
that PFTs are insensitive to evaluate regional changes in lung
function, and that XENOVIEWTM MRI can be used to identify
regions of the lung with poor ventilation, changes in alveolar size,
and gas exchange abnormalities to inform treatment options. The
commenter stated that the technology would be able to image pulmonary
anatomy not imaged by CT, while avoiding ionizing radiation, which
would be particularly critical in children.
With respect to CMS's question as to whether the detection of
ventilation abnormalities by XENOVIEWTM in a study
consisting of a pediatric population would be generalizable to a
Medicare population, the applicant asserted that it would be because
each XENOVIEWTM VDP measure is unique to individual patients
across all ages, as it is compared to their own lung and not a
contrived calculation as with PFTs. The applicant explained that as
each XENOVIEWTM MRI is patient specific, the VDP
relationship with poor regions of lung ventilation would be correctly
identified in an adult when applying studies from patients under 18
years of age. The applicant stated that clinical trial evidence from
studies of patients with cystic fibrosis could be related to an adult
population. The applicant stated that approximately 14 percent of
patients with cystic fibrosis have Medicare, and that therefore, data
for this population is relevant to CMS beneficiaries.
In response to the same concern, a commenter stated they had
performed hyperpolarized gas MRI in patients ranging from infants to
those 80+ years, and asserted that results of research studies in lung
diseases in the pediatric population are applicable to these diseases
in the adult population since the underlying disease processes are the
same. Another commenter stated that their group had successfully and
safely implemented Xe MRI throughout childhood from birth through
adolescence to gather clinically applicable information, highlighting
the ability of hyperpolarized Xe technology to influence care across
the lifespan.
Response: We thank the applicant and other commenters for their
comments. Based on our review of comments received and additional
information submitted by the applicant as part of its FY 2024 new
technology add-on payment application for XENOVIEW\TM\, we continue to
have concerns as to whether XENOVIEW\TM\ meets the substantial clinical
improvement criterion to be approved for new technology add-on
payments. In particular, we remain concerned that although
XENOVIEWTM may be able to diagnose pulmonary conditions, it
remains unclear that use of the technology to make a diagnosis affected
the management of patients. Although commenters provided statements as
to how they believed XENOVIEWTM could be used in clinical
settings to impact patient management, we note that these testimonials
appear to consist of hypothetical use cases, and we are uncertain if
these testimonials would reflect the actual use of
XENOVIEWTM in the inpatient Medicare population.
In particular, we note that neither the applicant nor the other
commenters submitted evidence that demonstrated the use of
XENOVIEWTM MRI to actually affect the management of
patients, such as a change in diagnosis, a change in treatment
planning, or discontinuation of or intensification of treatment
regimens. For example, the study by Ebner et al. (2017) \177\ assessed
the correlation between VDP and PFTs in asthmatic patients versus
healthy controls, but did not describe changes in patient management
due to VDP findings. In addition, we note that the study by Serajeddini
et al. (2020) \178\ was a retrospective evaluation of spirometry and
hyperpolarized \3\He MRI measurements, and as such, does not appear to
speak to the use of XENOVIEWTM.
---------------------------------------------------------------------------
\177\ Ebner L, He M, Virgincar RS, et al. Hyperpolarized
129Xenon 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. Investigative radiology 2017; 52(2): 120-
7.
\178\ Serajeddini H, Eddy RL, Licskai C, McCormack DG, Parraga
G. FEV1 and MRI ventilation defect reversibility in asthma and COPD.
The European respiratory journal 2020; 55(3).
---------------------------------------------------------------------------
As described in the FY 2024 IPPS/LTCH PPS proposed rule (88 FR
26923 and 26924), we continue to have concerns about the Hahn et al.
(2022), McIntosh et al. (2020), and Mummy et al. (2021) studies
described in the applicant's comment, and to continue to believe that
these studies assess the ability of XENOVIEWTM to detect
changes in lung function before and after treatment in comparison to
other technologies, rather than a change in patient management. For the
same reason, we have concerns that the Thomen et al. (2016) study \179\
does not demonstrate a change in patient management, as the study
assessed the feasibility of \129\Xe MRI usage and if usage would
demonstrate ventilation defects in mild CF with greater sensitivity
than FEV1. Therefore, we note the technology was not used to
diagnose CF in the study, as patients were known to be either healthy
control volunteers or cystic fibrosis patients, nor was there a change
in diagnosis or treatment due to \129\Xe MRI usage. In addition, we
continue to have concerns with the preliminary results presented in the
Grist et al. (2021) study \180\ referenced by commenters, as it was
aimed to determine if hyperpolarized \129\Xe MRI imaging could identify
the possible cause of breathlessness in patients after hospital
discharge following COVID-19 infection, and did not assess for changes
in patient management due to those findings. Furthermore, although the
applicant shared a study \181\ of Xe-MRI VDP guided bronchial
thermoplasty (BT) treatment compared to standard of care, with
statistically significant findings reporting that Xe-MRI guided BT
patients resulted in actionable changes in the patient's management due
to VDP measure of lung ventilation, we note that the study provided,
associated with clinical trial number NCT01832363, utilized the
MagniXene[supreg] technology by Xemed LLC. We note that it is unclear
if the XENOVIEWTM technology from Polarean, Inc. is the same
as the MagniXene[supreg] technology from Xemed LLC, or what differences
may exist between the technologies. Therefore, we are unable to
conclude that use of the XENOVIEWTM technology affects the
management of the patient.
---------------------------------------------------------------------------
\179\ 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
2016;16(2):275-282.
\180\ Grist JT, Chen M, Collier GJ, Raman B, Abueid G, et al.
Hyperpolarized 129XE MRI abnormalities in dyspneic patients 3 months
after COVID-19 pneumonia: Preliminary results. Radiology
2021;301:E353-E360.
\181\ Hall CS, Quirk JD, Goss CW, Lew D, Kozlowski J., et. al.
Single-Session Bronchial Thermoplasty Guided by 129Xe Magnetic
Resonance Imaging A Pilot Randomized Controlled Clinical Trial.
American Journal of Respiratory and Critical Care Medicine. 2020;
202(4): 529-534.
---------------------------------------------------------------------------
[[Page 58919]]
After review of the information submitted by the applicant as part
of its FY 2024 new technology add-on payment application for
XENOVIEW\TM\ and consideration of the comments received, we are unable
to determine that XENOVIEW\TM\ meets the substantial clinical
improvement criterion for the reasons discussed in the FY 2024 IPPS/
LTCH PPS proposed rule and in this final rule, and therefore we are not
approving new technology add-on payments for XENOVIEW\TM\ for FY 2024.
7. FY 2024 Applications for New Technology Add-On Payments (Alternative
Pathways)
As discussed previously, beginning with applications for FY 2021, a
medical device designated under FDA's Breakthrough Devices Program that
has received marketing authorization as a Breakthrough Device, for the
indication covered by the Breakthrough Device designation, may qualify
for the new technology add-on payment under an alternative pathway.
Additionally, beginning with FY 2021, a medical product that is
designated by the FDA as a Qualified Infectious Disease Product (QIDP)
and has received marketing authorization for the indication covered by
the QIDP designation, and, beginning with FY 2022, a medical product
that is a new medical product approved under FDA's Limited Population
Pathway for Antibacterial and Antifungal Drugs (LPAD) and used for the
indication approved under the LPAD pathway, may also qualify for the
new technology add-on payment under an alternative pathway. Under an
alternative pathway, a technology will be considered 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-
to-3-year newness period to be considered ``new,'' and must also still
meet the cost criterion.
As discussed previously, in the FY 2023 IPPS/LTCH PPS final rule,
we finalized our proposal to publicly post online applications for new
technology add-on payment beginning with FY 2024 applications (87 FR
48986 through 48990). As noted in the FY 2023 IPPS/LTCH PPS final rule,
we stated in the proposed rule that we are continuing to summarize each
application in the proposed rule. However, we stated that while we are
continuing to provide discussion of the concerns or issues we
identified with respect to applications submitted under the alternative
pathway, we are providing 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
applicable new technology add-on payment criteria. We refer readers to
https://mearis.cms.gov/public/publications/ntap for the publicly posted
FY 2024 new technology add-on payment applications and supporting
information (with the exception of certain cost and volume information,
and information or materials identified by the applicant as
confidential or copyrighted). In addition, we noted that we made
available separate tables listing the ICD-10-CM codes, ICD-10-PCS
codes, and/or MS-DRGs related to the analyses of the cost criterion for
certain technologies for the FY 2024 new technology add-on payment
applications in Table 10 associated with the proposed rule, available
via the internet 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 2024 IPPS Proposed Rule Home
Page'' or ``Acute Inpatient--Files for Download''. Please see section
VI of the Addendum of the proposed rule for additional information
regarding tables associated with the proposed rule.
We received 27 applications for new technology add-on payments for
FY 2024 under the new technology add-on payment alternative pathway.
Seven applicants withdrew applications prior to the issuance of the
proposed rule. Subsequently, prior to the issuance of this final rule,
seven additional applicants withdrew their respective applications for
Selux NGP System, Total Ankle Talar Replacement, Transdermal GFR
Measurement System utilizing Lumitrace, Ceribell Delirium Monitor,
NUsurface, 4WEB Ankle Truss System, and the Nelli[supreg] Seizure
Monitoring System. One applicant, LimFlow (the applicant for the
LimFlow System), did not meet the July 1 deadline for FDA approval or
clearance of the technology and, therefore, the technology is not
eligible for consideration for new technology add-on payments for FY
2024. Of the remaining 12 applications, we are approving 11 and
conditionally approving 1 for new technology add-on payments for FY
2024. A discussion of these 12 applications is presented in this final
rule, including 9 technologies that have received a Breakthrough Device
designation from FDA and 3 that were designated as a QIDP by FDA.
In accordance with the regulations under Sec. 412.87(e)(2),
applicants for new technology add-on payments for FY 2024, 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 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 final rule for a complete discussion of
this policy (85 FR 58737 through 58742).
As we did in the FY 2023 IPPS/LTCH PPS proposed rule, for
applications under the alternative new technology add-on payment
pathway, in the FY 2024 IPPS/LTCH PPS proposed rule we proposed to
approve or disapprove each of these 12 applications for FY 2024 new
technology add-on payments. Therefore, in this section of the preamble
of this final rule, we provide background information on each of the
remaining 12 alternative pathway applications and our determinations as
to whether each technology is eligible for new technology add-on
payments for FY 2024 or not. Consistent with our standard approach, we
are not including in this final rule the description and discussion of
applications that were withdrawn or that are ineligible for
consideration for FY 2024 due to not meeting the July 1 deadline,
described previously, which were included in the FY 2024 IPPS/LTCH PPS
proposed rule. We are also not summarizing nor responding to public
comments received regarding these withdrawn or ineligible applications
in this final rule.
a. Alternative Pathway for Breakthrough Devices
(1) Aveir\TM\ AR Leadless Pacemaker
Abbott Cardiac Rhythm Management submitted an application for new
technology add-on payments for the
[[Page 58920]]
Aveir\TM\ AR Leadless Pacemaker for FY 2024. Per the applicant, the
Aveir\TM\ AR Leadless Pacemaker is a programmable system comprised of a
single leadless pacemaker implanted into the right atrium that provides
single-chamber pacing therapy without the need for traditional
``wired'' leads. According to the applicant, this technology contains
both the generator and electrodes within the device and is anticipated
to be indicated for one or more of the following permanent conditions:
syncope, presyncope, fatigue, disorientation due to arrhythmia/
bradycardia, or any combination of those symptoms. We note that the
applicant also submitted an application for new technology add-on
payments for FY 2024 for the AveirTM Leadless Pacemaker
(herein referred to as the AveirTM Dual-Chamber Leadless
Pacemaker), discussed separately in the following section.
Please refer to the online application posting for Aveir\TM\ AR
Leadless Pacemaker, available at https://mearis.cms.gov/public/publications/ntap/NTP221017AH7JC, for additional detail describing the
technology and the disease treated by the technology.
According to the applicant, Aveir\TM\ AR Leadless Pacemaker
received Breakthrough Device designation from FDA on March 27, 2020,
under the Breakthrough Device designation for the Leadless Dual Chamber
System for the following proposed indication: Pacemaker implantation is
indicated in one or more of the following permanent conditions:
syncope, presyncope, fatigue, disorientation due to arrhythmia/
bradycardia, or any combination of those symptoms. The proposed
indications for the use of the Leadless Dual Chamber System included
all four of the following: (1) Rate-Modulated Pacing is indicated for
patients with chronotropic incompetence, and for those who would
benefit from increased stimulation rates concurrent with physical
activity. Chronotropic incompetence has not been rigorously defined. A
conservative approach, supported by the literature, defines
chronotropic incompetence as the failure to achieve an intrinsic heart
rate of 70 percent of the age-predicted maximum heart rate or 120 bpm
during exercise testing, whichever is less, where the age-predicted
heart rate is calculated as 197 - (0.56 x age). (2) Dual-Chamber Pacing
is indicated for those patients exhibiting: sick sinus syndrome;
chronic, symptomatic second- and third-degree AV block; recurrent
Adams-Stokes syndrome; symptomatic bilateral bundle branch block when
tachyarrhythmia and other causes have been ruled out. (3) Atrial Pacing
is indicated for patients with sinus node dysfunction and normal AV and
intraventricular conduction systems. (4) Ventricular Pacing is
indicated for patients with significant bradycardia and normal sinus
rhythm with only rare episodes of AV block or sinus arrest; chronic
atrial fibrillation; severe physical disability.
According to the applicant, the relevant indications for single-
chamber atrial leadless pacing are the first and third indications,
Rate-Modulated Pacing and Atrial Pacing. The applicant further stated
that the Breakthrough Device designation applies to two clinical
scenarios: a de novo system where a patient receives the
AveirTM Dual-Chamber Leadless Pacemaker (that is, both the
AveirTM AR Leadless Pacemaker and the AveirTM VR
Leadless Pacemaker are implanted within the same procedure), or an
upgrade system where a patient already has a ventricular leadless
pacemaker and is upgraded to the AveirTM Dual-Chamber
Leadless Pacemaker by receiving the AveirTM AR Leadless
Pacemaker. The applicant stated that it received FDA premarket approval
for both the atrial leadless pacemaker (AveirTM AR Leadless
Pacemaker) and the dual chamber leadless pacemaker (AveirTM
Dual-Chamber Leadless Pacemaker) on June 29, 2023, for the same
indications. We stated in the FY 2024 IPPS/LTCH PPS proposed rule (88
FR 26927) that while the intended indications for the
AveirTM AR Leadless Pacemaker would appear to match sections
of the Breakthrough Device designation, the Breakthrough Device
designation provided by the applicant is for the Leadless Dual Chamber
System, rather than the AveirTM Dual-Chamber Leadless
Pacemaker. Therefore, although the AveirTM AR Leadless
Pacemaker may be one component of the system, it appeared that the
AveirTM AR Leadless Pacemaker on its own is not the subject
of the Breakthrough Device designation and would not be considered a
Breakthrough Device once FDA approved. As discussed, a device must be
designated under FDA's Breakthrough Devices Program to be eligible
under the alternative pathway. Accordingly, because the
AveirTM AR Leadless Pacemaker appeared to only be eligible
under the alternative pathway for procedures involving the full dual-
chamber system (that is, where patients are upgraded to the
AveirTM Dual-Chamber Leadless Pacemaker by receiving the
AveirTM AR Leadless Pacemaker), we stated in the proposed
rule that we believe any eligible use of the AveirTM AR
Leadless Pacemaker would be included under the new technology add-on
payment application for the AveirTM Dual-Chamber Leadless
Pacemaker. We invited public comment on the eligibility of the
AveirTM AR Leadless Pacemaker under the alternative pathway.
Comment: The applicant submitted a comment regarding the
eligibility of the AveirTM AR Leadless Pacemaker for new
technology add-on payments. The applicant asserted that FDA granted
Breakthrough Device designation to the modular Leadless Dual Chamber
System, which consists of the AveirTM VR (ventricular
leadless pacemaker) and the AveirTM AR (atrial leadless
pacemaker). The applicant stated it developed the modular Leadless Dual
Chamber System with bidirectional implant-to-implant (i2i)
communication to accommodate all pacing indications. According to the
applicant, the i2i technology provides beat-to-beat communication and
synchrony between two leadless pacemakers, a necessary foundation of
dual-chamber leadless pacing therapy. The applicant stated that this
system allows the two devices to communicate with each other--sensing
for delayed or missed heartbeat and then pacing the appropriate chamber
of the heart. According to the applicant, the AveirTM system
is modular, such that a single device can be implanted in a heart
chamber initially, and the second pacemaker added to the other heart
chamber in the future should the clinical need arise. The applicant
asserted that the AveirTM AR Leadless Pacemaker specifically
corresponds to the Atrial Pacing configuration listed by FDA in the
Breakthrough Device designation, which is distinct from Ventricular
Pacing and Dual-Chamber Pacing. The applicant asserted that it would be
incongruous for AveirTM AR Leadless Pacemaker not to be a
Breakthrough Device since it is the precise device that provides Atrial
Pacing. The applicant stated that new technology add-on payment
designation for the standalone AveirTM AR Leadless Pacemaker
would enable CMS to recognize that the costs to hospitals are different
when a single leadless pacemaker is implanted in the right atrium
compared with implantation of both a leadless ventricular pacemaker and
atrial leadless pacemaker in the same procedure. The applicant
commented that the AveirTM AR Leadless Pacemaker with i2i
technology also enables physicians to implant for single chamber pacing
indications and adapt treatment if symptoms progress
[[Page 58921]]
and the patient requires dual-chamber pacing.
Response: We appreciate the information submitted by the applicant
regarding the eligibility of the AveirTM AR Leadless
Pacemaker. However, we still note that Breakthrough Device designation
was granted for the combination product. We agree with the applicant
that the bidirectional i2i communication and synchrony between two
leadless pacemakers is distinct from what is offered on implantation of
the either the AveirTM AR or the AveirTM VR
leadless pacemakers individually. While we understand that implantation
of the AveirTM AR Leadless Pacemaker alone during a
procedure could be included under the Breakthrough Device designation,
it is our understanding that that would only be the case with a prior
implanted AveirTM VR Pacemaker to trigger the i2i
communication, and not with a future implant. Therefore, we believe
that eligible uses of the AveirTM AR Leadless Pacemaker
would be procedures that result in a dual-chamber leadless system
(whether as part of an initial dual-chamber insertion procedure or as
part of an upgrade procedure to a dual-chamber device, as described
previously). Since the AveirTM AR Leadless Pacemaker on its
own was not granted Breakthrough Device designation, it is therefore
not eligible for consideration under the alternative pathway for
Breakthrough Devices as a standalone device.
Comment: The applicant provided a list of clinical scenarios and
procedure codes for which it believed either the AveirTM AR
Leadless Pacemaker or the AveirTM Dual-Chamber Leadless
Pacemaker qualified for the Breakthrough Device designation. The
applicant asserted: (1) X2H63V9 and X2HK3V9 (Insertion of dual-chamber
intracardiac pacemaker into right atrium, percutaneous approach, new
technology group 9, Insertion of dual-chamber intracardiac pacemaker
into right ventricle, percutaneous approach, new technology group 9)
could be used for de novo insertion, or removal and replacement of the
dual chamber leadless system; (2) the procedure code X2H63V9 could be
used for upgrading to dual chamber leadless system (AveirTM
AR insertion when patient has existing AveirTM VR), or
removal and replacement of right atrial component of dual chamber
leadless system (AveirTM AR removal and replacement); and
(3) the procedure code X2H63V9 could be used for de novo insertion of
atrial only single chamber leadless pacemaker, or removal and
replacement of right atrial single chamber leadless pacemaker.
Another commenter requested that CMS clarify in the final rule the
clinical scenarios to which the new technology add-on payment would
apply if approved and provide guidance on appropriate coding to
facilitate claims processing to ensure the new technology add-on
payment is triggered only in cases that meet the alternative pathway
requirements.
Response: We thank the commenters for the comments. As discussed
previously, only use of the Aveir\TM\ AR Leadless Pacemaker as part of
an upgrade procedure to dual chamber pacemaker, or as part of a De Novo
insertion of a dual chamber pacemaker (discussed in further detail in
the following section for AveirTM Dual Chamber Leadless
Pacemaker), are relevant for the purposes of new technology add-on
payments. As noted later in this section, the Aveir\TM\ AR Leadless
Pacemaker was granted approval for the following procedure code
effective October 1, 2023: X2H63V9 (Insertion of dual-chamber
intracardiac pacemaker into right atrium, percutaneous approach, new
technology group 9), which describes upgrade procedures to dual-chamber
pacing by implanting a leadless pacemaker into the atrium only where
the patient already has a ventricular leadless pacemaker. We do not
believe it would be appropriate to utilize X2H63V9 for a procedure that
does not result in a dual-chamber pacemaker (such as implantation of an
atrial-only pacemaker). We further note that single-chamber pacing is
not intended to be captured by the new code, and additional codes are
utilized for removal/replacement procedures in addition to insertion
codes.
The applicant stated that the following ICD-10-PCS code may be used
to uniquely describe procedures involving the use of Aveir\TM\ AR
Leadless Pacemaker effective beginning FY 2017: 02H63NZ (Insertion of
intracardiac pacemaker into right atrium, percutaneous approach). The
applicant also submitted a request for approval for a unique ICD-10-PCS
code for the Aveir\TM\ AR Leadless Pacemaker beginning in FY 2024 and
was granted approval for the following procedure code effective October
1, 2023: X2H63V9 (Insertion of dual-chamber intracardiac pacemaker into
right atrium, percutaneous approach, new technology group 9). The
applicant stated that I49.9 (Cardiac arrythmia, unspecified) may be
used to currently identify the proposed indication for Aveir\TM\ AR
Leadless Pacemaker under the ICD-10-CM coding system.
With respect to the cost criterion, to identify potential cases
representing patients who may be eligible for the Aveir\TM\ AR Leadless
Pacemaker, the applicant searched the FY 2021 MedPAR file for cases
reporting ICD-10-PCS code 02H63NZ (Insertion of intracardiac pacemaker
into right atrium, percutaneous approach). Using the inclusion/
exclusion criteria described in the following table, the applicant
identified 1,186 claims mapping to 43 MS-DRGs. The applicant followed
the order of operations described in the following table and calculated
a final inflated average case-weighted standardized charge per case of
$207,890, which exceeded the average case-weighted threshold amount of
$158,574. Because the final inflated average case-weighted standardized
charge per case exceeded the average case-weighted threshold amount,
the applicant asserted that the Aveir\TM\ AR Leadless Pacemaker meets
the cost criterion.
[[Page 58922]]
[GRAPHIC] [TIFF OMITTED] TR28AU23.210
In the FY 2024 IPPS/LTCH PPS proposed rule (88 FR 26928), we stated
that we have the following concerns regarding the cost criterion. As
summarized in the following section, the applicant stated that the
AveirTM Dual-Chamber Leadless Pacemaker is identified using
both ICD-10-PCS code 02H63NZ (used for the cost analysis for the
Aveir\TM\ AR Leadless Pacemaker) and ICD-10-PCS code 02HK3NZ (Insertion
of Intracardiac Pacemaker into Right Ventricle, Percutaneous Approach).
We questioned whether, by not excluding cases reporting ICD-10-PCS code
02HK3NZ as part of the case selection for the cost analysis for the
Aveir\TM\ AR Leadless Pacemaker, cases involving use of the dual
chamber system could have been included as part of this analysis. Also,
while it was our understanding that procedure code 02H63NZ was approved
to describe procedures involving the use of intracardiac atrial
pacemakers effective beginning FY 2017, the applicant stated that there
are no technologies on the market eligible to be coded with procedure
code 02H63NZ as the AveirTM AR Leadless Pacemaker will be
the first atrial leadless pacemaker, if approved. Therefore, we were
unsure why the applicant searched for cases reporting procedure code
02H63NZ within the FY 2021 MedPAR file if there should not be any
technologies coded with procedure code 02H63NZ until FY 2022 (when the
applicant stated clinical trials for the AveirTM AR Leadless
Pacemaker began). We further questioned in the proposed rule which
technology the cases identified in the MedPAR data represent. We
questioned whether searching for cases utilizing standard pacemakers
instead of leadless pacemakers (with relevant adjustments to remove/add
charges as necessary) would better reflect the technology that the
applicant anticipates AveirTM AR Leadless Pacemaker will be
replacing.
Subject to the applicant adequately addressing these concerns, in
the FY 2024 IPPS/LTCH PPS proposed rule (88 FR 26928), we agreed that
the technology meets the cost criterion and proposed to approve the
Aveir\TM\ AR Leadless Pacemaker for new technology add-on payments for
FY 2024, subject to the technology receiving Breakthrough Device
designation and FDA marketing authorization as a Breakthrough Device
for the indication corresponding to the Breakthrough Device designation
by July 1, 2023.
The applicant had not provided an estimate for the cost of the
Aveir\TM\ AR Leadless Pacemaker at the time of the proposed rule. We
stated in the FY 2024 IPPS/LTCH PPS proposed rule (88 FR 26928) that we
expected the applicant to submit cost information prior to the final
rule, and that we would provide an update regarding the new technology
add-on payment amount for the technology, if approved, in the final
rule. We stated that any new technology add-on payment for the
Aveir\TM\ AR Leadless Pacemaker 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 percent of the average cost of the technology, or 65
percent of the costs in excess of the MS-DRG payment for the case.
We invited public comments on whether the Aveir\TM\ AR Leadless
Pacemaker meets the cost criterion and our proposal to approve new
technology add-on payments for the Aveir\TM\ AR Leadless Pacemaker for
FY 2024 subject to the technology receiving Breakthrough Device
designation and FDA marketing authorization as a Breakthrough Device
for the indication corresponding to the Breakthrough Device designation
by July 1, 2023.
Comment: We received a comment in support of our proposal to
approve new technology add-on payments for the AveirTM AR
Leadless Pacemaker. The commenter stated that the AveirTM AR
Leadless Pacemaker allows for mapping prior to fixation and reduces the
number of repositioning attempts. According to the commenter,
positioning capabilities may result in better long-term outcomes for
patients, and in addition to an increased battery life- twice the
battery life of other leadless pacemakers--it may lead to fewer
procedures and reduce patient risk.
Response: We thank the commenter for the comments.
Comment: The applicant submitted a comment regarding the cost
criterion and provided an alternate cost analysis in response to CMS's
concerns identified in the proposed rule regarding whether cases
utilizing standard pacemakers instead of leadless pacemakers would
better reflect the technology that the applicant anticipates
AveirTM AR Leadless Pacemaker will be replacing. In the
updated analysis, the applicant searched for cases using a combination
of ICD-10-PCS codes for implanting a standard dual-chamber pacemaker
plus the insertion of the additional lead in the right atrium (rather
than codes for leadless pacemakers) based on the assertion that this
would appropriately describe patients who already have a leadless right
ventricle pacemaker who are implanted with the AveirTM AR
Leadless Pacemaker. The applicant removed 100 percent of the charges
from revenue centers 0275, 0278, 0279, and 0624 from the 1,317
identified discharges to be as conservative as possible. Because the
final inflated average case-weighted standardized charge per case of
$252,073 for a device upgrade exceeded the average case-
[[Page 58923]]
weighted threshold amount of $122,326 in the updated cost analysis, the
applicant asserted that the AveirTM AR Leadless Pacemaker
met the cost criterion.
With respect to CMS's question why the applicant searched for cases
reporting procedure code 02H63NZ, the applicant stated that it included
these cases in the original analysis with the expectation that CMS
would seek that data because it is a code specific to a leadless
pacemaker, notwithstanding that its technology was not reported until
FY 2022. The applicant noted that it updated the analysis using
traditional transvenous pacemaker codes and omitted this code, based on
CMS's suggestion, and as described previously.
In addition, the applicant provided an additional cost analysis for
insertion of atrial only single chamber pacemaker in the right atrium
to complement the prior analysis and other clinical scenarios, as it
stated that Aveir ARTM Leadless Pacemaker with i2i
technology also enables physicians to implant for single chamber pacing
indications and adapt treatment if symptoms progress and the patient
requires dual-chamber pacing. In the new cost analysis, because the
final inflated average case-weighted standardized charge per case of
$276,818 for an atrial-only pacemaker exceeded the average case-
weighted threshold amount of $137,401, the applicant maintained that
the device meets the cost criterion.
Response: We thank the applicant for its comments and appreciate
the updated and additional cost analyses. We agree that the technology
meets the cost criterion based on the first updated analysis where the
applicant searched for cases utilizing standard pacemakers and
implanting an atrial lead during insertion of a dual-chamber system. As
previously stated, the Breakthrough Device designation was granted for
the dual-chamber product and not for the AveirTM AR Leadless
Pacemaker, and therefore eligible uses of the AveirTM AR
Leadless Pacemaker would be procedures that result in the insertion of
a dual-chamber system, and it is not eligible for consideration under
the alternative pathway for Breakthrough Devices as a standalone
device.
Based on the information provided in the application for new
technology add-on payments, and after consideration of the public
comments we received, we believe Aveir\TM\ AR Leadless Pacemaker meets
the cost criterion. The technology received FDA premarket approval on
June 29, 2023, as a Breakthrough Device when used as part of the Dual-
Chamber system, with an indication for one or more of the following
permanent conditions: syncope, presyncope, fatigue, disorientation due
to arrhythmia/bradycardia, or any combination of those symptoms.
Therefore, we are finalizing our proposal to approve new technology
add-on payments for Aveir\TM\ AR Leadless Pacemaker for FY 2024. We
note, as discussed previously, that only the use of the technology
resulting in the insertion of a dual-chamber system is relevant for the
purposes of new technology add-on payments. We consider the beginning
of the newness period to commence on June 29, 2023, the date on which
technology received FDA marketing authorizationfor the indication
covered by its Breakthrough Device designation.
Based on the information available at the time of this final rule,
the cost per case of Aveir\TM\ AR Leadless Pacemaker is $16,500,
including one Aveir\TM\ AR atrial leadless pacemaker, one delivery
catheter, and one introducer. Under Sec. 412.88(a)(2), we limit new
technology add-on payments to the lesser of 65 percent of the average
cost of the technology, or 65 percent of the costs in excess of the MS-
DRG payment for the case. As a result, we are finalizing that the
maximum new technology add-on payment for a case involving the use of
Aveir\TM\ AR Leadless Pacemaker is $10,725 for FY 2024 (that is, 65
percent of the average cost of the technology). Cases involving the use
of the Aveir\TM\ AR Leadless Pacemaker that are eligible for new
technology add-on payments will be identified by ICD-10-PCS procedure
code X2H63V9 (Insertion of dual-chamber intracardiac pacemaker into
right atrium, percutaneous approach, new technology group 9).
(2) AveirTM Leadless Pacemaker (Dual-Chamber)
Abbott Cardiac Rhythm Management submitted an application for new
technology add-on payments for the AveirTM Leadless
Pacemaker (herein referred to as the AveirTM Dual-Chamber
Leadless Pacemaker) for FY 2024. According to the applicant, the
AveirTM Dual-Chamber Leadless Pacemaker is a modular
programmable system comprised of two implanted leadless pacemakers that
provide dual-chamber pacing therapy: a ventricular leadless pacemaker
intended for direct implantation into the right ventricle, and an
atrial leadless pacemaker intended for direct implantation into the
right atrium. The applicant stated that the AveirTM Dual-
Chamber Leadless Pacemaker has built-in power supply and electrodes, is
designed to be retrievable by a dedicated retrieval catheter, and
enables two separate pacemakers to function as one dual-chamber pacing
system. The applicant stated that pacemaker implantation is generally
indicated in one or more of the following permanent conditions:
syncope, presyncope, fatigue, disorientation due to arrhythmia/
bradycardia, or any combination of those symptoms. As discussed
separately in the previous section, the applicant also submitted an
application for FY 2024 new technology add-on payments for the
AveirTM AR Leadless Pacemaker, which provides atrial pacing.
Please refer to the online application posting for the
AveirTM Dual-Chamber Leadless Pacemaker, available at
https://mearis.cms.gov/public/publications/ntap/NTP221017AJNQH, for
additional detail describing the technology and the disease treated by
the technology.
According to the applicant, the AveirTM Dual-Chamber
Leadless Pacemaker was granted Breakthrough Device designation from FDA
on March 27, 2020, under the Breakthrough Device designation for the
Leadless Dual Chamber System for the following proposed indication:
Pacemaker implantation is indicated in one or more of the following
permanent conditions: syncope, presyncope, fatigue, disorientation due
to arrhythmia/bradycardia, or any combination of those symptoms. The
proposed indications for use of the Leadless Dual Chamber System
include all four of the following: (1) Rate-Modulated Pacing is
indicated for patients with chronotropic incompetence, and for those
who would benefit from increased stimulation rates concurrent with
physical activity. Chronotropic incompetence has not been rigorously
defined. A conservative approach, supported by the literature, defines
chronotropic incompetence as the failure to achieve an intrinsic heart
rate of 70 percent of the age-predicted maximum heart rate or 120 bpm
during exercise testing, whichever is less, where the age-predicted
heart rate is calculated as 197-(0.56 x age); (2) Dual-Chamber Pacing
is indicated for those patients exhibiting: sick sinus syndrome;
chronic, symptomatic second- and third-degree AV block; recurrent
Adams-Stokes syndrome; symptomatic bilateral bundle branch block when
tachyarrhythmia and other causes have been ruled out; (3) Atrial Pacing
is indicated for patients with: sinus node dysfunction and normal AV
and intraventricular conduction systems; (4) Ventricular Pacing is
indicated for patients with: significant bradycardia and normal sinus
rhythm with only rare episodes of AV block or
[[Page 58924]]
sinus arrest; chronic atrial fibrillation; severe physical disability.
The applicant further stated that the Breakthrough Device
designation applies to two clinical scenarios: a de novo system where a
patient receives the AveirTM Dual-Chamber Leadless
Pacemaker, or an upgrade system where a patient already has a
ventricular leadless pacemaker and is upgraded to the
AveirTM Dual-Chamber Leadless Pacemaker by receiving the
AveirTM AR Leadless Pacemaker. The applicant stated that it
received FDA premarket approval for the AveirTM Dual-Chamber
Leadless Pacemaker on June 29, 2023, for the same indications.
According to the applicant, the following ICD-10-PCS procedure
codes can currently be used to distinctly identify the
AveirTM Dual-Chamber Leadless Pacemaker effective beginning
FY 2017: 02H63NZ (Insertion of intracardiac pacemaker into right
atrium, percutaneous approach) and 02HK3NZ (Insertion of intracardiac
pacemaker into right ventricle, percutaneous approach). The applicant
stated that there are other systems also in development that will use
this combination of ICD-10-PCS codes but that the AveirTM
Dual-Chamber Leadless Pacemaker will be the first dual chamber leadless
pacemaker system on the market. The applicant also submitted a request
for approval for a unique ICD-10-PCS code for the Aveir\TM\ Dual-
Chamber Leadless Pacemaker beginning in FY 2024 and was granted
approval for the following procedure code combination effective October
1, 2023: X2H63V9 (Insertion of dual-chamber intracardiac pacemaker into
right atrium, percutaneous approach, new technology group 9) and
X2HK3V9 (Insertion of dual-chamber intracardiac pacemaker into right
ventricle, percutaneous approach, new technology group). Both codes
would be reported for this procedure to identify the percutaneous
insertion of a dual-chamber leadless cardiac pacemaker system. The
applicant stated that diagnosis code I49.9 (Cardiac arrythmia,
unspecified) may be used to currently identify the proposed indication
for Aveir\TM\ Dual-Chamber Leadless Pacemaker under the ICD-10-CM
coding system.
With respect to the cost criterion, to identify potential cases
representing patients who may be eligible for the AveirTM
Dual-Chamber Leadless Pacemaker, the applicant searched the FY 2021
MedPAR file for cases reporting ICD-10-PCS code 02H63NZ (Insertion of
intracardiac pacemaker into right atrium, percutaneous approach) in
combination with ICD-10-PCS code 02HK3NZ (Insertion of intracardiac
pacemaker into right ventricle, percutaneous approach). Using the
inclusion/exclusion criteria described in the following table, the
applicant identified 991 claims mapping to 38 MS-DRGs. The applicant
followed the order of operations described in the following table and
calculated a final inflated average case-weighted standardized charge
per case of $206,636, which exceeded the average case-weighted
threshold amount of $159,357. Because the final inflated average case-
weighted standardized charge per case exceeded the average case-
weighted threshold amount, the applicant asserted that the
AveirTM Dual-Chamber Leadless Pacemaker meets the cost
criterion.
[GRAPHIC] [TIFF OMITTED] TR28AU23.211
In the FY 2024 IPPS/LTCH PPS proposed rule (88 FR 26930), we stated
that we have the following concern regarding the cost criterion. It was
our understanding that procedure codes 02H63NZ and 02HK3NZ were
approved for use in describing procedures involving intracardiac
pacemakers effective beginning FY 2017. The applicant stated that there
are no technologies on the market eligible to be coded with procedure
code 02H63NZ as the AveirTM AR Leadless Pacemaker will be
the first atrial leadless pacemaker, if approved, and there are no
dual-chamber leadless pacemakers currently available. Therefore, we
were unsure why the applicant searched for cases reporting procedure
code 02H63NZ within the FY 2021 MedPAR file if there should not be any
technologies coded with 02H63NZ until FY 2022 (when the applicant
stated clinical trials for the AveirTM AR and Dual-Chamber
Leadless Pacemaker began). We further questioned in the proposed rule
which technology the cases identified in the MedPAR data represent. We
questioned whether searching for cases utilizing standard
[[Page 58925]]
pacemakers instead of leadless pacemakers (with relevant adjustments to
remove/add charges as necessary) would better reflect the technology
that the applicant anticipates AveirTM Dual-Chamber Leadless
Pacemaker will be replacing.
Subject to the applicant adequately addressing this concern, in the
FY 2024 IPPS/LTCH PPS proposed rule (88 FR 26930), we agreed with the
applicant that the technology meets the cost criterion and therefore
proposed to approve the AveirTM Dual-Chamber Leadless
Pacemaker for new technology add-on payments for FY 2024, subject to
the technology receiving FDA marketing authorization as a Breakthrough
Device for the indication corresponding to the Breakthrough Device
designation by July 1, 2023.
The applicant had not provided an estimate for the cost of the
AveirTM Dual-Chamber Leadless Pacemaker at the time of the
proposed rule. We stated in the FY 2024 IPPS/LTCH PPS proposed rule (88
FR 26930) that we expected the applicant to submit cost information
prior to the final rule, and that we would provide an update regarding
the new technology add-on payment amount for the technology, if
approved, in the final rule. We stated that any new technology add-on
payment for the Aveir\TM\ Dual-Chamber Leadless Pacemaker 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 percent of the average
cost of the technology, or 65 percent of the costs in excess of the MS-
DRG payment for the case.
We invited public comments on whether the AveirTM Dual-
Chamber Leadless Pacemaker meets the cost criterion and our proposal to
approve new technology add-on payments for the AveirTM Dual-
Chamber Leadless Pacemaker for FY 2024 subject to the technology
receiving FDA marketing authorization as a Breakthrough Device for the
indication corresponding to the Breakthrough Device designation by July
1, 2023.
Comment: The applicant submitted an alternate cost analysis in
response to CMS's concerns identified in the proposed rule whether
cases utilizing standard dual-chamber pacemakers instead of leadless
pacemakers would be more representative of the discharges
AveirTM Dual-Chamber Leadless Pacemaker would be replacing.
The applicant asserted that the cases selected in the updated cost
analysis appropriately describe traditional transvenous dual-chamber de
novo implant procedures and provide a good comparator for procedures it
anticipates would be replaced with AveirTM Dual-Chamber
Leadless Pacemaker. The applicant removed 100 percent of the charges
from revenue centers 0275, 0278, 0279, and 0624 from the 47,425
identified discharges to be as conservative as possible. In the updated
cost analysis, because the final inflated average case-weighted
standardized charge per case of $201,227 still exceeded the average
case-weighted threshold amount of $115,421, the applicant asserted that
AveirTM Dual-Chamber Leadless Pacemaker meets the cost
criterion.
With respect to CMS's concern that whether cases coded with 02HK3NZ
should be included in the analysis, the applicant stated that its
original analysis included cases reporting 02H63NZ for purposes of
completeness and in expectation that CMS would seek data on codes
specific to a leadless pacemaker, notwithstanding that its specific
technology was not reported until FY 2022. According to the applicant,
the updated analysis used only the traditional transvenous pacemaker
codes listed previously based on the CMS's suggestion and omitted
02H63NZ.
Response: We thank the applicant for the comments and the alternate
cost analysis.
Based on the information provided in the application for new
technology add-on payments, and after consideration of the public
comments we received, we believe AveirTM Dual-Chamber
Leadless Pacemaker meets the cost criterion. The technology received
FDA premarket approval on June 29, 2023, as a Breakthrough Device, with
an indication for one or more of the following permanent conditions:
syncope, presyncope, fatigue, disorientation due to arrhythmia/
bradycardia, or any combination of those symptoms. Therefore, we are
finalizing our proposal to approve new technology add-on payments for
AveirTM Dual-Chamber Leadless Pacemaker for FY 2024. We
consider the beginning of the newness period to commence on June 29,
2023, the date on which technology received FDA marketing authorization
for the indication covered by its Breakthrough Device designation.
Based on the information available at the time of this final rule,
the cost per case of AveirTM Dual-Chamber Leadless Pacemaker
is $24,000, including two leadless pacemakers (Aveir\TM\ AR atrial
leadless pacemaker and Aveir\TM\ VR ventricular leadless pacemaker),
two delivery catheters (one for each leadless pacemaker), and one
introducer. Under Sec. 412.88(a)(2), we limit new technology add-on
payments to the lesser of 65 percent of the average cost of the
technology, or 65 percent of the costs in excess of the MS-DRG payment
for the case. As a result, we are finalizing that the maximum new
technology add-on payment for a case involving the use of
AveirTM Leadless Pacemaker is $15,600 for FY 2024 (that is,
65 percent of the average cost of the technology). Cases involving the
use of AveirTM Leadless Pacemaker that are eligible for new
technology add-on payments will be identified by ICD-10-PCS procedure
codes X2H63V9 (Insertion of dual-chamber intracardiac pacemaker into
right atrium, percutaneous approach, new technology group 9) in
combination with X2HK3V9 (Insertion of dual-chamber intracardiac
pacemaker into right ventricle, percutaneous approach, new technology
group). We note that both codes would be reported for this procedure to
identify the percutaneous insertion of a dual-chamber leadless cardiac
pacemaker system relevant for new technology add-on payments.
(3) Canary Tibial Extension (CTE) With Canary Health Implanted
Reporting Processor (CHIRP) System
Zimmer Biomet submitted an application for new technology add-on
payments for the Canary Tibial Extension (CTE) with Canary Health
Implanted Reporting Processor (CHIRP) System for FY 2024. Per the
applicant, the CTE with CHIRP System is a tibial extension implant
containing electronics and software, used with the Zimmer Persona
Personalized Knee System. According to the applicant, the CTE with
CHIRP System collects kinematic data pertaining to a patient's gait and
activity level following total knee arthroplasty (TKA) surgery using
internal motion sensors (3-D accelerometers and 3-D gyroscopes).
Please refer to the online application posting for the CTE with
CHIRP System, available at https://mearis.cms.gov/public/publications/ntap/NTP221014KYAL1, for additional detail describing the technology
and its intended use.
According to the applicant, the CTE with CHIRP System received
Breakthrough Device designation from FDA on October 24, 2019, for the
following proposed indication: for use with the Zimmer Persona
Personalized Knee System (K113369) for TKA. The CTE with CHIRP System
is intended to provide objective kinematic data from the implanted
medical device to assist the patient and clinician during a patient's
TKA post-surgical care. The kinematic data is intended as an adjunct to
standard of care and physiological parameter measurement tools applied
or
[[Page 58926]]
utilized by the physician during the course of patient monitoring and
treatment post-surgery. FDA granted De Novo classification to the CTE
with CHIRP System on August 27, 2021, for the following indication: to
provide objective kinematic data from the implanted medical device
during a patient's TKA post-surgical care. The kinematic data is an
adjunct to other physiological parameter measurement tools applied or
utilized by the physician during the course of patient monitoring and
treatment post-surgery. The device is indicated for use in patients
undergoing a cemented TKA procedure that are normally indicated for at
least a 58 mm sized tibial stem extension. The applicant stated that
the technology was not immediately available for sale due to production
delays related to COVID-19 and because of the need to negotiate data
agreements with customer hospitals, but it became commercially
available on October 4, 2021.
The applicant submitted a request for approval for a unique ICD-10-
PCS procedure code for the CTE with CHIRP System beginning in FY 2024
and was granted approval for the following procedure code(s) effective
October 1, 2023: XNHG0F9 (Insertion of tibial extension with motion
sensors into right tibia, open approach, new technology group 9), or
XNHH0F9 (Insertion of tibial extension with motion sensors into left
tibia, open approach, new technology group 9).
With respect to the cost criterion, the applicant provided the
following analysis to demonstrate that it meets the cost criterion. To
identify potential cases representing patients who may be eligible for
the CTE with CHIRP System, the applicant searched the FY 2021 MedPAR
file for cases reporting the ICD-10-PCS codes describing cemented
replacement of the knee joint with a synthetic device via an open
approach, as listed in the following table. Using the inclusion/
exclusion criteria described in the following table, the applicant
identified 74,654 claims mapping to 60 MS-DRGs. See Table 10.5.A.--CTE
with CHIRP System Codes--FY 2024 associated with the proposed rule for
the complete list of MS-DRGs provided by the applicant. The applicant
followed the order of operations described in the following table and
calculated a final inflated average case-weighted standardized charge
per case of $90,599, which exceeded the average case-weighted threshold
amount of $84,613. Because the final inflated average case-weighted
standardized charge per case exceeded the average case-weighted
threshold amount, the applicant asserted that the CTE with CHIRP System
meets the cost criterion.
[GRAPHIC] [TIFF OMITTED] TR28AU23.212
In the FY 2024 IPPS/LTCH PPS proposed rule (88 FR 26931), we agreed
with the applicant that the technology meets the cost criterion and
therefore proposed to approve the CTE with CHIRP System for new
technology add-on payments for FY 2024 for the indication to provide
objective kinematic data from the implanted medical device during a
patient's TKA post-surgical care. The kinematic data is an adjunct to
other physiological parameter measurement tools applied or utilized by
the physician during the course of patient monitoring and treatment
post-surgery. The device is indicated for use in patients undergoing a
cemented TKA procedure that are normally indicated for at least a 58 mm
sized tibial stem extension.
Based on preliminary information from the applicant at the time of
the proposed rule, the total cost of the CTE with CHIRP System to the
hospital was approximately $1,654 per knee. This included $1,309 for
the CTE and $345 for the Canary Medical Home Base Station. We noted
that per the applicant, the Home Base Station System is intended for
use in the patient's home environment and is used to query the CTE
while the patient is asleep. We further noted that the Home Base
Station provided to the patient to set up and connect to their home Wi-
Fi prior to surgery. We therefore stated that we believe the relevant
inpatient costs for the add-on payment would include only the cost of
the CTE.\182\ We noted that the cost information for this technology
would be updated in the final rule based on revised or additional
information CMS received prior to the final rule. Under Sec.
412.88(a)(2), we limit new technology add-on payments to the lesser of
65 percent of the average cost of the technology, or 65 percent of the
costs in excess of the MS-DRG payment for the case. As a result, we
proposed that the maximum new technology add-on payment for a case
involving the use of the CTE with CHIRP System would be $850.85 for one
knee (or $1,701.70 for two knees) for FY 2024 (that is, 65
[[Page 58927]]
percent of the average cost of the technology).
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\182\ https://canarymedical.com/clinicians/additional-information-for-clinicians/.
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We invited public comments on whether the CTE with CHIRP System
meets the cost criterion and our proposal to approve new technology
add-on payments for the CTE with CHIRP System for the indication to
provide objective kinematic data from the implanted medical device
during a patient's TKA post-surgical care.
Comment: The applicant submitted a comment regarding the cost of
the technology relevant for add-on payments. Per the applicant, while
they agreed that the home base station is used in the patient's home,
the CTE with CHIRP is a system requiring both the CTE and the home base
station components for the system to function. The applicant noted that
the home base station is necessary for the communication of data to an
external server, is paired to only one patient (that is, it is not
reusable), and though it is paid for by the facility, it becomes the
property of the patient. Thus, it is not a piece of equipment, an
instrument, apparatus, implement or item for which depreciation and
financing expenses are recovered by the hospital. The applicant
maintained that the home base station is different from the operating
room base station, which they agreed is not applicable to the new
technology add-on payment calculation and was not included in their
application because it is given to the hospital, and remains with the
hospital, to be used intraoperatively to activate the CHIRP System in
multiple patients. The applicant requested that CMS recognize that the
CTE with CHIRP is one system and include the $345 cost of the home base
station in the new technology add-on payment calculation to bring the
maximum new technology add-on payment to $1,075.10 per knee ($1,654 x
65%).
Response: We thank the applicant for its input. However, as stated
in the proposed rule, we are concerned that that the Home Base Station
is provided to the patient to set up and connect to their home Wi-Fi
prior to surgery. The Home Base Station is not an item administered to
the patient during the hospital that leaves the hospital with the
patient upon discharge. While the applicant states that the Home Base
Station is not a piece of equipment, an instrument, apparatus,
implement or item for which depreciation and financing expenses are
recovered by the hospital, we still are unclear if the Home Base
Station is billable in the inpatient setting. Therefore, for this final
rule we are excluding the Home Base Station from the add on payment and
the relevant inpatient costs for the add-on payment would include only
the cost of the CTE. We welcome additional information from the
applicant in the future on whether the Home Base Station should be
included in the add on payment.
Comment: Another commenter submitted a comment stating that the
kinematic data generated by the CTE with CHIRP System has not
demonstrated any clinical benefits or outcomes and is not intended to
be utilized for clinical decision-making, and raised questions
regarding how the technology would be used.
Response: We thank the commenter for its comment. We note, as
discussed previously, that a technology that applies under an
alternative pathway does 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. We refer the reader to the FY 2020 IPPS/LTCH
PPS final rule for a discussion of the development of these alternative
pathways (84 FR 42292 through 42297).
Based on the information provided in the application for new
technology add-on payments, and after consideration of the public
comment we received, we believe the CTE with CHIRP System meets the
cost criterion. The technology received De Novo classification on
August 27, 2021, as a Breakthrough Device for the following indication
which is covered by its Breakthrough Device designation: to provide
objective kinematic data from the implanted medical device during a
patient's total knee arthroplasty (TKA) post-surgical care. The device
is indicated for use in patients undergoing a cemented TKA procedure
that are normally indicated for at least a 58 mm sized tibial stem
extension. Therefore, we are finalizing our proposal to approve new
technology add-on payments for CTE with CHIRP for FY 2024. We consider
the beginning of the newness period to commence on October 4, 2021, the
date on which the technology became commercially available for the
indication covered by its Breakthrough Device designation.
Based on the information available at the time of this final rule,
as stated previously, the relevant inpatient costs for the add-on
payment would include only the cost of the CTE. The cost per case of
the CTE with CHIRP System is $1,309 per knee. Under Sec. 412.88(a)(2),
we limit new technology add-on payments to the lesser of 65 percent of
the average cost of the technology, or 65 percent of the costs in
excess of the MS-DRG payment for the case. As a result, we are
finalizing that the maximum new technology add-on payment for a case
involving the use of the CTE with CHIRP System is $850.85 for one knee
(or $1,701.70 for two knees) for FY 2024 (that is, 65 percent of the
average cost of the technology). Cases involving the use of the CTE
with CHIRP System that are eligible for new technology add-on payments
will be identified by ICD-10-PCS procedure codes XNHG0D9 (Insertion of
tibial extension with motion sensors into right tibia, open approach,
new technology group 9) or XNHH0D9 (Insertion of tibial extension with
motion sensors into left tibia, open approach, new technology group 9).
(4) Ceribell Status Epilepticus Monitor
Ceribell, Inc. submitted an application for new technology add-on
payments for the Ceribell Status Epilepticus Monitor for FY 2024.
According to the applicant, the Ceribell Status Epilepticus Monitor is
a medical device system comprised of proprietary software and two
cleared, proprietary products: a single-use signal acquisition headband
(the Ceribell EEG Headband) and a recorder (the Ceribell Pocket EEG).
Per the applicant, the software utilizes a machine learning model to
analyze EEG signals to detect features indicative of electrographic
status epilepticus (ESE) to provide more effective diagnosis of ESE.
Please refer to the online application posting for the Ceribell
Status Epilepticus Monitor, available at https://mearis.cms.gov/public/publications/ntap/NTP22101439A1J, for additional detail describing the
technology.
The applicant stated that the Ceribell Status Epilepticus Monitor
received Breakthrough Device designation from FDA on October 25, 2022,
for the following proposed indication: the Ceribell Status Epilepticus
Monitor software is intended for the diagnosis of ESE in adult patients
at risk for seizure. The Ceribell Status Epilepticus Monitor software
analyzes EEG waveforms and identifies patterns consistent with ESE as
defined in the American Clinical Neurophysiology Society's Guideline
14. The applicant stated that the technology received 510(k) clearance
from FDA on May 23, 2023, for the same indication. In the FY 2024 IPPS/
LTCH PPS proposed rule (88 FR 26933), we noted that the Ceribell EEG
Headband and Ceribell Pocket EEG were not included on the Breakthrough
Device designation, and it therefore appeared that only the software
would be designated as the Breakthrough Device once market authorized,
such that only the software would be eligible for new technology add-on
payments under the alternative pathway. We note that the
[[Page 58928]]
510k clearance for the technology provided by the applicant was also
for the software only.
The applicant submitted a request for approval for a unique ICD-10-
PCS procedure code for the Ceribell Status Epilepticus Monitor
beginning in FY 2024 and was granted approval for the following
procedure code effective October 1, 2023: XX20X89 (Monitoring of brain
electrical activity, computer-aided detection and notification, new
technology group 9).
With respect to the cost criterion, the applicant provided multiple
updated analyses to demonstrate that it meets the cost criterion. For
the first two analyses, to identify potential cases representing
patients who may be eligible for treatment involving the Ceribell
Status Epilepticus Monitor, the applicant searched the FY 2021 MedPAR
file for cases reporting charges in the revenue codes 020X (Intensive
Care Unit) and 021X (Coronary Care Unit) as this is where the
technology is expected to be utilized based on the expected FDA label
of the technology. The first analysis used 100 percent of all cases
reporting charges in the two revenue code categories because these
cases could be monitored for Status Epilepticus, and the second
analysis used 75 percent of all such cases. The applicant also provided
sensitivity analyses limited to cases reporting the diagnosis codes
that were believed to identify cases with the highest risk of Status
Epilepticus. The third analysis used 100 percent of these cases and the
fourth analysis used 75 percent of these cases. The applicant followed
the order of operations described in the following table.
Under the first analysis (100 percent of all cases within the
revenue code categories), the applicant identified 2,985,030 claims
mapping to 754 MS-DRGs (see Table 10.7.A.--Ceribell Status Epilepticus
Monitor Codes (Analyses 1-2)--FY 2024 associated with the proposed rule
for a complete list of MS-DRGs provided by the applicant) and
calculated a final inflated average case-weighted standardized charge
per case of $114,238, which exceeded the average case-weighted
threshold amount of $85,765.
Under the second analysis (75 percent of all cases within the
revenue code categories) the applicant identified 2,243,140 claims
mapping to 92 MS-DRGs (see Table 10.7.B.--Ceribell Status Epilepticus
Monitor Codes (Analyses 1-2)--FY 2024 associated with the proposed rule
for a complete list of MS-DRGs provided by the applicant) and
calculated a final inflated average case-weighted standardized charge
per case of $110,949, which exceeded the average case-weighted
threshold amount of $85,280.
Under the third analysis, in addition to searching for cases
reporting charges in the two revenue code categories listed previously,
the applicant limited the cases by selecting claims reporting diagnosis
codes that it believed reflected the cases for patients age 65 or older
with the highest risk of Status Epilepticus (see Table 10.7.B.--
Ceribell Status Epilepticus Monitor Codes (Analyses 3-4)--FY 2024
associated with the proposed rule for a complete list of the diagnosis
codes provided by the applicant). According to the applicant, the
diagnosis codes identified fall into four categories: Neurological
Disorders, Infection/Toxicity, Respiratory Failure and Cardiac Arrest.
The applicant identified 981,013 claims mapping to 672 MS-DRGs (see
Table 10.7.B.--Ceribell Status Epilepticus Monitor Codes (Analyses 3-
4)--FY 2024 associated with the proposed rule for a complete list of
MS-DRGs provided by the applicant) and calculated a final inflated
average case-weighted standardized charge per case of $127,942, which
exceeded the average case-weighted threshold amount of $89,219.
Under the fourth analysis, using 75 percent of all cases reporting
the diagnosis codes used in scenario 3, the applicant identified
734,908 claims mapping to 59 MS-DRGs (see Table 10.7.B.--Ceribell
Status Epilepticus Monitor Codes (Analyses 3-4)--FY 2024 associated
with the proposed rule for a complete list of MS-DRGs provided by the
applicant), and calculated a final inflated average case-weighted
standardized charge per case of $123,446, which exceeded the average
case-weighted threshold amount of $88,063.
Because the final inflated average case-weighted standardized
charge per case exceeded the average case-weighted threshold amount in
all scenarios, the applicant asserted that the Ceribell Status
Epilepticus Monitor meets the cost criterion.
[[Page 58929]]
[GRAPHIC] [TIFF OMITTED] TR28AU23.213
In the FY 2024 IPPS/LTCH PPS proposed rule (88 FR 26934), we agreed
that the technology meets the cost criterion and therefore proposed to
approve the Ceribell Status Epilepticus Monitor for new technology add-
on payments for FY 2024 subject to the technology receiving FDA
marketing authorization as a Breakthrough Device for the indication
corresponding to the Breakthrough Device designation by July 1, 2023.
Based on preliminary information from the applicant at the time of
the proposed rule, the applicant anticipated the total cost of the
Ceribell Status Epilepticus Monitor to the hospital to be $2,600 per
patient (comprised of $1,800 for the software and $800 for the required
headband). We stated in the proposed rule, however, that as discussed
previously, it seemed that only the software would be eligible for the
new technology add-on payment under the alternative pathway as it was
the subject of the Breakthrough Device designation. We further noted,
as discussed with regard to the Ceribell Delirium Monitor, that the
Ceribell EEG headband appeared to have been 510(k)-cleared by FDA since
August 2017 \183\ and was therefore no longer new. Therefore, it
appeared any add-on payment for the Ceribell Status Epilepticus Monitor
would include only the cost of the software ($1,800). We welcomed
comment on including only the cost of the software in determining the
add-on payment amount for the Ceribell Status Epilepticus Monitor. We
noted that the cost information for this technology may be updated in
the final rule based on revised or additional information CMS received
prior to the final rule. Under Sec. 412.88(a)(2), we limit new
technology add-on payments to the lesser of 65 percent of the average
cost of the technology, or 65 percent of the costs in excess of the MS-
DRG payment for the case. As a result, we proposed that the maximum new
technology add-on payment for a case involving the use of the Ceribell
Status Epilepticus Monitor would be $1,170 ($1,800 x 0.65) for FY 2024
(that is, 65 percent of the average cost of the technology for the
software).
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\183\ https://www.accessdata.fda.gov/cdrh_docs/pdf17/K171459.pdf.
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We invited public comments on whether the Ceribell Status
Epilepticus Monitor meets the cost criterion and our proposal to
approve new technology add-on payments for the Ceribell Status
Epilepticus Monitor for FY 2024 for the diagnosis of ESE in adult
patients at risk for status epilepticus.
Comment: The applicant submitted a comment and a revised cost
analysis. In its comment, the applicant noted that they have updated
their pricing structure to commercialize the Status Epilepticus Monitor
software through a subscription-based pricing model. Under this model,
a hospital will pay a fixed monthly subscription for use of the
software that allows the hospital to utilize the technology without
limitations on volume. Per the applicant, their rationale for charging
hospitals a monthly subscription fee is based on prior experience using
a similar charge structure for launching their current EEG technology
in 2020. The applicant noted that because they anticipated a lot of
overlap in the use of their current EEG technology and the anticipated
use of the Status Epilepticus Monitor, they plan to also commercialize
the Status Epilepticus Monitor using a subscription-based pricing
model. According to the applicant, to arrive at the updated per-patient
cost, they estimated the number of patients expected to be evaluated
using the Status Epilepticus Monitor software and divided that number
by
[[Page 58930]]
the projected monthly subscription cost. According to the applicant, it
arrived at an estimated annual utilization of the Status Epilepticus
Monitor per hospital based on the median annual utilization of their
customers' existing EEG system over the three-year timeframe of 2020,
2021, and 2022. This resulted in a per case charge of $1,406 (instead
of $1,800 in the proposed rule); the cost of the headband was unchanged
at $800. Thus, the updated per patient cost is $2,206, per the
applicant.
Using the new per patient cost, the applicant updated its cost
analysis. According to the applicant, the updated analysis was
consistent with what they had provided in the past, with the cost per
patient as the only change. In their revised first analysis, in which
the applicant used 100 percent of all cases within the revenue code
categories, the final inflated average case-weighted standardized
charge per case was $113,082, which exceeded the average case-weighted
threshold amount of $85,765. In the revised second analysis, the
applicant used 75 percent of all cases within the revenue code
categories, the final inflated average case-weighted standardized
charge per case was $109,784, which exceeded the average case-weighted
threshold amount of $85,280. In the revised third analyses, in which
the applicant provided sensitivity analyses limited to 100 percent of
all the cases with the highest risk of Status Epilepticus, the inflated
average case-weighted standardized charge per case was $125,611, which
exceeded the average case-weighted threshold amount of $88,778. In
their revised fourth analysis, in which the applicant provided
sensitivity analyses limited to 75 percent of all the cases with the
highest risk of Status Epilepticus, the final inflated average case-
weighted standardized charge per case was $121,188, which exceeded the
average case-weighted threshold amount of $87,583. Per the applicant,
all the revised cost analyses have demonstrated that the technology
still meets cost criterion.
Response: We thank the applicant for the updated information. We
agree that the technology continues to meet the cost criterion using
the revised pricing structure based on a subscription-based pricing
model. We also thank the commenter for providing an explanation how it
computed the per discharge amount based on a subscription-based pricing
model.
Comment: Several commenters submitted public comments providing
general support for Ceribell Status Epilepticus Monitor. A commenter
noted that diagnosing status epilepticus is often challenging, as
community hospitals often lack EEG technicians or specialized
providers. A commenter stated that this technology will be helpful to
patients in both the emergency department and the inpatient setting,
especially in the intensive care unit, where patients likely have
altered awareness and need to have status epilepticus diagnosed or
excluded timely. Several of the commenters disagreed with our proposal
to cover only the Ceribell Status Epilepticus Monitor software and not
the Ceribell headband. They stated that the technology is only
operational as a complete system, and that the Ceribell Status
Epilepticus Monitor software requires the use of the Ceribell headband.
They therefore argued in favor of including the Ceribell headband in
any new technology add-on payment for the Ceribell Status Epilepticus
Monitor.
Response: We thank the commenters for their comments. We note that,
under the eligibility criteria for approval under the alternative
pathway for certain transformative new devices, only the use of the
Ceribell Status Epilepticus Monitor software is relevant for purposes
of the new technology add-on payment application for FY 2024. Since
only the software was designated as a Breakthrough Device by FDA, the
Ceribell EEG Headband is not eligible to be included in the Ceribell
Status Epilepticus Monitor add-on payment amount.
Based on the information provided in the application for new
technology add-on payments, and after consideration of the public
comments we received, we believe the Ceribell Status Epilepticus
Monitor meets the cost criterion. The Ceribell Status Epilepticus
Monitor System received 510(k) clearance from FDA on May 23, 2023, for
the diagnosis of Electrographic Status Epilepticus in adult patients at
risk for seizure, which is covered by its Breakthrough Device
designation. We consider the beginning of the newness period to
commence on May 23, 2023, the date on which Ceribell Status Epilepticus
Monitor was 510(K)-cleared by FDA for the indication covered in its
Breakthrough Device designation.
As noted earlier, the applicant updated their pricing structure to
commercialize the Status Epilepticus Monitor software through a
subscription-based pricing model. Based on the information available at
the time of this final rule, the cost per case of the Ceribell Status
Epilepticus Monitor (using a per discharge amount based on a
subscription-based pricing model) is $1,406, based on the cost per
patient of the software only. Under Sec. 412.88(a)(2), we limit new
technology add-on payments to the lesser of 65 percent of the average
cost of the new technology, or 65 percent of the costs in excess of the
MS-DRG payment for the case. As a result, we are finalizing that the
maximum new technology add-on payment for a case involving the use of
the Ceribell Status Epilepticus Monitor is $913.90 for FY 2024 (that
is, 65 percent of the average cost of the technology). Cases involving
the use of the Ceribell Status Epilepticus Monitor that are eligible
for new technology add-on payments will be identified by ICD-10-PCS
procedure code XX20X89 (Monitoring of brain electrical activity,
computer-aided detection and notification, new technology group 9).
(5) DETOUR System
Endologix, Inc., submitted an application for new technology add-on
payments for the DETOUR System for FY 2024. According to the applicant,
the DETOUR System is a fully percutaneous approach to femoral-popliteal
bypass. Per the applicant, under fluoroscopic guidance, a proprietary
TORUS Stent Graft System is deployed from the popliteal artery into the
femoral vein, and from the femoral vein into the superficial femoral
artery (SFA) in a continuous, overlapping fashion through two
independent anastomoses. The applicant stated that the intended result
is a large lumen endograft bypass, that delivers unobstructed,
pulsatile flow from the SFA ostium to the popliteal artery.
Please refer to the online application posting for the DETOUR
System, available at https://mearis.cms.gov/public/publications/ntap/NTP2210149Y5M6, for additional detail describing the technology and the
disease treated by the technology.
According to the applicant, the DETOUR System received Breakthrough
Device designation from FDA on September 2, 2020, for percutaneous
revascularization of symptomatic femoropopliteal lesions 200mm to 460mm
with a chronic total occlusion 100mm to 425mm, and/or moderate-to-
severe calcification, and/or in-stent-restenosis in patients with
severe peripheral arterial disease. The applicant received FDA
premarket approval on June 7, 2023, for the same indication. According
to the applicant, the device became available on the market immediately
upon FDA approval.
The applicant submitted a request for approval for a unique ICD-10-
PCS procedure code for DETOUR System beginning in FY 2024 and was
granted
[[Page 58931]]
approval for the following procedure codes effective October 1, 2023:
X2KH3D9 (Bypass right femoral artery using conduit through femoral vein
to superficial femoral artery, percutaneous approach, new technology
group 9), X2KH3E9 (Bypass right femoral artery using conduit through
femoral vein to popliteal artery, percutaneous approach, new technology
group 9), X2KJ3D9 (Bypass left femoral artery using conduit through
femoral vein to superficial femoral artery, percutaneous approach, new
technology group 9), or X2KJ3E9 (Bypass left femoral artery using
conduit through femoral vein to popliteal artery, percutaneous
approach, new technology group 9). Per the applicant, diagnosis codes
170.92 (Chronic total occlusion of artery of the extremities), 170.2XX
(Atherosclerosis of native arteries of the extremities), and 173.9
(Peripheral vascular disease, unspecified) may be used to currently
identify the indication for the DETOUR System under the ICD-10-CM
system.
With respect to the cost criterion, the applicant provided two
analyses to demonstrate that it meets the cost criterion. For both
analyses, the applicant searched the FY 2021 MedPAR file for potential
cases representing patients who may be eligible for the DETOUR System
femoral-popliteal bypass procedures using either a synthetic substitute
or an autologous venous tissue graft.
Under the first analysis, the applicant searched the FY 2021 MedPAR
file for cases reporting one of the ICD-10-PCS codes listed in the
following table and included 100 percent of the cases identified. Using
the inclusion/exclusion criteria described in the following table, the
applicant identified 3,110 cases mapping to 63 MS-DRGs. Please see
Table 10.25.A.--The DETOUR System Codes--FY 2024 associated with the
proposed rule for the complete list of MS-DRGs that the applicant
indicated were included in its cost analysis. The applicant followed
the order of operations described in the following table and calculated
a final inflated average case-weighted standardized charge per case of
$146,323, which exceeded the average case-weighted threshold amount of
$106,123.
Under the second analysis, the applicant searched the FY 2021
MedPAR file for cases reporting one of the ICD-10-PCS codes listed in
the table that follows and included 67.3 percent of the cases
identified. Using the inclusion/exclusion criteria described in the
following table, the applicant limited the search to the top three MS-
DRGs as listed in the table and identified 2,094 cases. The applicant
followed the order of operations described in the following table and
calculated a final inflated average case-weighted standardized charge
per case of $111,332, which exceeded the average case-weighted
threshold amount of $96,526. Because the final inflated average case-
weighted standardized charge per case exceeded the average case-
weighted threshold amount in both analyses, the applicant asserted that
the DETOUR System meets the cost criterion.
[GRAPHIC] [TIFF OMITTED] TR28AU23.214
In the FY 2024 IPPS/LTCH PPS proposed rule (88 FR 26950), we agreed
with the applicant that the DETOUR System meets the cost criterion and
proposed to approve the DETOUR System for new technology add-on
payments for FY 2024, subject to the technology receiving FDA marketing
authorization as a Breakthrough Device for the indication corresponding
to the Breakthrough Device designation by July 1, 2023.
We stated in the FY 2024 IPPS/LTCH PPS proposed rule (88 FR 26950)
that we expected the applicant to submit cost information prior to the
final rule, and we would 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 DETOUR 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 percent of
[[Page 58932]]
the average cost of the technology, or 65 percent of the costs in
excess of the MS-DRG payment for the case.
We invited public comments on whether the DETOUR System meets the
cost criterion and our proposal to approve new technology add-on
payments for the DETOUR System for FY 2024 subject to the technology
receiving FDA marketing authorization as a Breakthrough Device for the
indication corresponding to the Breakthrough Device designation by July
1, 2023.
Comment: We received a comment from the applicant in support of
CMS's proposal to approve the technology for new technology add-on
payments. The applicant stated that the DETOUR System provides a
transformative approach for the treatment of individuals with complex
peripheral artery disease (PAD) through a novel, minimally invasive
procedure referred to as percutaneous transmural arterial bypass
(PTAB).
Response: We thank the commenter for its support.
Based on the information provided in the application for new
technology add-on payments, we believe the DETOUR System meets the cost
criterion. The technology received FDA marketing authorization on June
7, 2023, as a Breakthrough Device with an indication for percutaneous
revascularization of symptomatic femoropopliteal lesions 200mm to 460mm
with a chronic total occlusion 100mm to 425mm, and/or moderate-to-
severe calcification, and/or in-stent-restenosis in patients with
severe peripheral arterial disease, which is covered by its
Breakthrough Device designation. Therefore, we are finalizing our
proposal to approve new technology add-on payments for the DETOUR
System for FY 2024. We consider the beginning of the newness period to
commence on June 7, 2023, the date on which the technology became
commercially available for the indication covered by its Breakthrough
Device designation.
Based on the information available at the time of this final rule,
the cost per case of the DETOUR System is $25,000 for the single-use
system comprised of the TORUS Stent Graft(s) and the ENDOCROSS device.
Under Sec. 412.88(a)(2), we limit new technology add-on payments to
the lesser of 65 percent of the average cost of the technology, or 65
percent of the costs in excess of the MS-DRG payment for the case. As a
result, we are finalizing that the maximum new technology add-on
payment for a case involving the use of the DETOUR System is 65 percent
of $16,250 for FY 2024 (that is, 65 percent of the average cost of the
technology). Cases involving the use of the DETOUR System that are
eligible for new technology add-on payments will be identified by one
of the following ICD-10-PCS procedure codes: X2KH3D9 (Bypass right
femoral artery using conduit through femoral vein to superficial
femoral artery, percutaneous approach, new technology group 9), X2KH3E9
(Bypass right femoral artery using conduit through femoral vein to
popliteal artery, percutaneous approach, new technology group 9),
X2KJ3D9 (Bypass left femoral artery using conduit through femoral vein
to superficial femoral artery, percutaneous approach, new technology
group 9), or X2KJ3E9 (Bypass left femoral artery using conduit through
femoral vein to popliteal artery, percutaneous approach, new technology
group 9).
(6) EchoGo Heart Failure 1.0
Ultromics Limited submitted an application for EchoGo Heart Failure
1.0 for FY 2024. According to the applicant, EchoGo Heart Failure 1.0
is an automated machine learning-based decision support system,
indicated as a diagnostic aid for patients undergoing routine
functional cardiovascular assessment using echocardiography. Per the
applicant, when utilized by an interpreting physician, this device
provides information that may be useful in detecting heart failure with
preserved ejection fraction (HFpEF).
Please refer to the online application posting for EchoGo Heart
Failure 1.0, available at https://mearis.cms.gov/public/publications/ntap/NTP2210172L1HN, for additional detail describing the technology
and the medical condition the technology is intended for.
According to the applicant, EchoGo Heart Failure 1.0 received
Breakthrough Device designation from FDA on February 24, 2022, as an
automated machine learning-based decision support system, indicated as
a diagnostic aid for patients undergoing routine functional
cardiovascular assessment using echocardiography. When utilized by an
interpreting clinician, this device provides information that may be
useful in detecting heart failure with preserved ejection fraction
(HFpEF). EchoGo Heart Failure 1.0 is indicated in adult populations
over 25 years of age. Patient management decisions should not be made
solely on the results of the EchoGo Heart Failure 1.0 analysis. EchoGo
Heart Failure 1.0 takes as input an apical 4-chamber view of the heart
that has been captured and assessed to have an ejection fraction >=50
percent. The applicant received FDA 510(k) clearance on November 23,
2022, for the same indication.
The applicant submitted a request for approval for a unique ICD-10-
PCS procedure code for EchoGo Heart Failure 1.0 beginning in FY 2024
and was granted approval for the following procedure code effective
October 1, 2023: XXE2X19 (Measurement of cardiac output, computer-aided
assessment, new technology group 9). The applicant provided a list of
diagnosis codes that may be used to currently identify the indication
for EchoGo Heart Failure 1.0 under the ICD-10-CM coding system. Please
refer to the online application posting for the complete list of ICD-
10-CM codes provided by the applicant.
With respect to the cost criterion, the applicant provided multiple
analyses to demonstrate that it meets the cost criterion. For each
analysis, the applicant searched the FY 2021 MedPAR file using a
combination of MS-DRGs and ICD-10-CM codes to identify potential cases
representing patients who may be eligible for EchoGo Heart Failure 1.0.
The applicant explained that it ran eight additional simulations as a
sensitivity analysis, in which the applicant used combinations of MS-
DRGs and/or ICD-10-CM codes to identify potential cases. Each analysis
followed the order of operations described in the following table.
For the first analysis, the applicant searched for specific ICD-10-
CM codes in the primary diagnosis position mapped to specific MS-DRGs
representing patients likely to undergo routine functional
cardiovascular assessment using echocardiography and likely to use
EchoGo Heart Failure 1.0 to detect HFpEF. Please see Table 10.12.A.--
EchoGo Heart Failure 1.0 Codes (Analyses 1-5)--FY 2024 associated with
the proposed rule for the complete list of ICD-10-CM codes and MS-DRGs
that the applicant indicated were included in its cost analysis 1.
Using the inclusion/exclusion criteria described in the following
table, the applicant identified 407,813 claims mapping to 17 MS-DRGs.
The applicant calculated a final inflated average case-weighted
standardized charge per case of $66,144, which exceeded the average
case-weighted threshold amount of $52,548.
For the second analysis, the applicant searched for cases that had
a primary diagnosis from the applicant's ICD-10-CM list, in any MS-DRG.
Please see Table 10.12.A.--EchoGo Heart Failure 1.0 Codes (Analyses 1-
5)--FY 2024 associated with the proposed rule for the complete lists of
ICD-10-CM codes
[[Page 58933]]
and MS-DRGs that the applicant indicated were included in its cost
analysis 2. The applicant used the inclusion/exclusion criteria
described in the following table. Under this analysis, the applicant
identified 496,879 claims mapping to 92 MS-DRGs. The applicant
calculated a final inflated average case-weighted standardized charge
per case of $88,203, which exceeded the average case-weighted threshold
amount of $66,971.
For the third analysis, the applicant used all cases (without the
use of any ICD-10-CM or ICD-10-PCS codes) in any of the MS-DRGs
included on the applicant's list of specific MS-DRGs representing
patients likely to undergo routine functional cardiovascular assessment
using echocardiography and likely to use the EchoGo Heart Failure 1.0
to detect HFpEF. Please see Table 10.12.A.--EchoGo Heart Failure 1.0
Codes (Analyses 1-5)--FY 2024 associated with the proposed rule for the
complete list of MS-DRGs that the applicant indicated were included in
its cost analysis 3. The applicant used the inclusion/exclusion
criteria described in the following table. Under this analysis, the
applicant identified 572,720 claims mapping to 20 MS-DRGs. The
applicant calculated a final inflated average case-weighted
standardized charge per case of $69,126, which exceeded the average
case-weighted threshold amount of $54,038.
For the fourth analysis, the applicant searched for any Medicare
fee-for-service (FFS) case with an admitting diagnosis from the
applicant's ICD-10-CM codes list, in any MS-DRG. Please see Table
10.12.A.--EchoGo Heart Failure 1.0 Codes (Analyses 1-5)--FY 2024
associated with the proposed rule for the complete lists of ICD-10-CM
codes and MS-DRGs that the applicant indicated were included in its
cost analysis 4. The applicant used the inclusion/exclusion criteria
described in the following table. Under this analysis, the applicant
identified 267,378 claims mapping to 493 MS-DRGs. The applicant
calculated a final inflated average case-weighted standardized charge
per case of $97,027, which exceeded the average case-weighted threshold
amount of $72,813.
For the fifth analysis, the applicant searched for any case with a
primary or secondary diagnosis from the applicant's ICD-10-CM codes
list, in any MS-DRG. Please see Table 10.12.A.--EchoGo Heart Failure
1.0 Codes (Analyses 1-5)--FY 2024 associated with the proposed rule for
the complete list of ICD-10-CM codes and MS-DRGs that the applicant
indicated were included in its cost analysis 5. The applicant used the
inclusion/exclusion criteria described in the following table. Under
this analysis, the applicant identified 2,277,736 claims mapping to 746
MS-DRGs, with none exceeding more than 15 percent of the total
identified cases. The applicant calculated a final inflated average
case-weighted standardized charge per case of $107,796, which exceeded
the average case-weighted threshold amount of $76,632.
According to the applicant, the ICD-10-CM codes for systolic HF
were included in the initial cost criterion analysis as the provider
may not know if the patient has either systolic or diastolic HF unless
the provider has ordered an echo and subsequently EchoGo Heart Failure
1.0. Symptoms are often identical, and systolic HF is defined by low
ejection fraction which the applicant stated is an incredibly variable
measurement. In addition, in acute decompensated HF, these patients can
present as HFpEF and transition to systolic HF or vice versa within a
single inpatient stay. As such, the applicant asserted that ordering
EchoGo Heart Failure 1.0 would be appropriate. To understand the impact
of removing the cases where the only inclusion criteria met was one of
the ICD-10-CM codes for systolic HF, the applicant conducted additional
analyses six through nine, removing ICD-10-CM codes for systolic heart
failure: I50.20 (Unspecified systolic (congestive) heart failure),
I50.21 (Acute systolic (congestive) heart failure), I50.22 (Chronic
systolic (congestive) heart failure), and I50.23 (Acute on chronic
systolic (congestive) heart failure). Please see Table 10.12.B.--EchoGo
Heart Failure 1.0 Codes (Analyses 6-9)--FY 2024 associated with the
proposed rule for the complete list of ICD-10-CM codes and MS-DRGs that
the applicant indicated were included in its cost analyses 6-9.
Inclusion/exclusion criteria for analyses six through nine are detailed
in the table that follows.
The sixth analysis mirrored the first analysis, except that cases
with ICD-10-CM systolic heart failure codes were excluded. Under this
analysis, the applicant identified 398,398 claims mapping to 17 MS-
DRGs. The applicant calculated a final inflated average case-weighted
standardized charge per case of $66,245, which exceeded the average
case-weighted threshold amount of $52,651.
The seventh analysis mirrored the second analysis, except that
cases with systolic heart failure ICD-10-CM codes were excluded. Under
this analysis, the applicant identified 485,027 claims mapping to 92
MS-DRGs. The applicant calculated a final inflated average case-
weighted standardized charge per case of $88,149, which exceeded the
average case-weighted threshold amount of $66,991.
The eighth analysis mirrored the fourth analysis, except that cases
with ICD-10-CM systolic heart failure codes were excluded. Under this
analysis, the applicant identified 244,399 claims mapping to 491 MS-
DRGs. The applicant calculated a final inflated average case-weighted
standardized charge per case of $97,453, which exceeded the average
case-weighted threshold amount of $72,735.
The ninth analysis mirrored the fifth analysis, except that cases
with ICD-10-CM systolic heart failure codes were excluded. Under this
analysis, the applicant identified 2,214,393 claims mapping to 746 MS-
DRGs. The applicant calculated a final inflated average case-weighted
standardized charge per case of $107,201, which exceeded the average
case-weighted threshold amount of $76,389.
Because the final inflated average case-weighted standardized
charge per case exceeded the average case-weighted threshold amount in
all scenarios, the applicant asserted that the EchoGo Heart Failure 1.0
meets the cost criterion.
BILLING CODE 4120-01-P
[[Page 58934]]
[GRAPHIC] [TIFF OMITTED] TR28AU23.215
[[Page 58935]]
[GRAPHIC] [TIFF OMITTED] TR28AU23.216
In the FY 2024 IPPS/LTCH PPS proposed rule (88 FR 26937), we agreed
with the applicant that EchoGo Heart Failure 1.0 meets the cost
criterion and therefore proposed to approve EchoGo Heart Failure 1.0
for new technology add-on payments for FY 2024.
Based on preliminary information from the applicant at the time of
the proposed rule, the applicant's anticipated cost per patient for
EchoGo Heart Failure 1.0 was $1,575. According to the applicant, the
EchoGo Heart Failure 1.0 is charged on a per patient basis with no
monthly subscription to the hospital. We noted that the cost
information for this technology may be updated in the final rule based
on revised or additional information CMS received prior to the final
rule. Under Sec. 412.88(a)(2), we limit new technology add-on payments
to the lesser of 65 percent of the average cost of the technology, or
65 percent of the costs in excess of the MS-DRG payment for the case.
As a result, we proposed that the maximum new technology add-on payment
for a case involving the use of EchoGo Heart Failure 1.0 would be
$1,023.75 for FY 2024 (that is, 65 percent of the average cost of the
technology).
We invited public comments on whether EchoGo Heart Failure 1.0
meets the cost criterion and our proposal to approve new technology
add-on payments for EchoGo Heart Failure 1.0 for FY 2024 for the
indication as an automated machine learning-based decision support
system, indicated as a diagnostic aid for patients undergoing routine
functional cardiovascular assessment using echocardiography that
corresponds to the Breakthrough Device designation.
Comment: The applicant submitted a public comment expressing
support for the approval of EchoGo Heart Failure 1.0 for the new
technology add-on payment for FY 2024. The applicant also supported
CMS's proposed maximum new technology add-on payment amount.
Response: We thank the applicant for its comments.
Based on the information provided in the application for new
technology add-on payments, and after consideration of the public
comments we received, we believe EchoGo Heart Failure 1.0 meets the
cost criterion. The technology was granted FDA marketing authorization
on November 23, 2022, as a Breakthrough Device, with an indication for
use as an automated machine learning-based decision support system,
indicated as a diagnostic aid for patients undergoing routine
functional cardiovascular assessment using echocardiography. When
utilized by an interpreting clinician, this device provides information
that may be useful in detecting heart failure with preserved ejection
fraction (HFpEF). EchoGo Heart Failure 1.0 is indicated in adult
populations over 25 years of age. Patient management decisions should
not be made solely on the results of the EchoGo Heart Failure 1.0
analysis. EchoGo Heart Failure 1.0 takes as input an apical 4-chamber
view of the heart that has been captured and assessed to have an
ejection fraction >=50 percent. This indication is covered by its
Breakthrough Device Designation. Therefore, we are finalizing our
proposal to approve new technology add-on payments for EchoGo Heart
Failure 1.0 for FY 2024. We consider the beginning of the newness
period to commence on November 23, 2022, the date on which technology
received its FDA 510(k) clearance for the indication covered by its
Breakthrough Device designation.
Based on the information available at the time of this final rule,
the cost per case of EchoGo Heart Failure 1.0 is $1,575. Under Sec.
412.88(a)(2), we limit new technology add-on payments to the lesser of
65 percent of the average cost of the technology, or 65 percent of the
costs in excess of the MS-DRG payment for the case. As a result, we are
finalizing that the maximum new technology add-on payment for a case
involving the use of EchoGo Heart Failure 1.0 is $1,023.75 for FY 2024
(that is, 65 percent of the average cost of the technology). Cases
involving the use of EchoGo Heart Failure 1.0 that are eligible for new
technology add-on payments will be identified by ICD-10-PCS procedure
code XXE2X19 (Measurement of cardiac output, computer-aided assessment,
new technology group 9).
(7) Phagenyx[supreg] System
Phagenesis Ltd. submitted an application for new technology add-on
payments for the Phagenyx[supreg] System for FY 2024. The
Phagenyx[supreg] System treats neurogenic dysphagia using electrical
pulses to stimulate sensory nerves in the oropharynx. We note that
Phagenesis Ltd. submitted an application for new technology add-on
payments for the Phagenyx[supreg] System for FY 2022 and 2023, as
summarized in the FY 2022 and 2023 IPPS/LTCH PPS proposed rules (86 FR
25382 through 25384 and 87 FR 28342 through 28344), but the technology
did not meet the deadline of July 1, 2021/2022 for FDA approval or
clearance of the technology and, therefore, was not eligible for
consideration for new technology add-on payments for the FY 2022 or
2023 IPPS/LTCH PPS final rules (86 FR 45126 through 45127 and 87 FR
48780).
Please refer to the online application posting for the
Phagenyx[supreg] System, available at https://mearis.cms.gov/public/publications/ntap/NTP221013D2MDC, for additional detail describing the
technology and the disorder treated by the technology.
According to the applicant, the Phagenyx[supreg] System received
Breakthrough Device designation from FDA on January 29, 2021, for the
treatment of non-progressive neurogenic dysphagia in adult patients.
Non-progressive neurogenic dysphagia is defined as all neurogenic
dysphagia excluding that arising solely as a result of a progressive
neurodegenerative disease or condition. The Phagenyx[supreg] System was
granted De Novo Classification from FDA on September 16, 2022, as a
neurostimulation device delivering electrical stimulation to the
oropharynx, to be used in addition to standard dysphagia care, as an
aid to improve swallowing in patients with severe dysphagia post
stroke. In the FY 2024 IPPS/LTCH PPS proposed rule (88 FR 26943) we
noted that since the indication for which the applicant received 510(k)
clearance is included within the scope of the Breakthrough Device
designation, and FDA considers this marketing authorization to be the
Breakthrough Device,\184\ it appears that the 510(k) indication is
appropriate for consideration for new technology add-on payment under
the alternative pathway criteria.
---------------------------------------------------------------------------
\184\ List of Breakthrough Devices with Marketing Authorization:
https://www.fda.gov/medical-devices/how-study-and-market-your-device/breakthrough-devices-program.
---------------------------------------------------------------------------
According to the applicant, Phagenesis Ltd is based in Manchester,
[[Page 58936]]
United Kingdom and currently setting up business operations
infrastructure to commercially market and sell Phagenyx. This includes
but is not limited to establishing an importing agent, third party
warehousing and logistics, tax IDs in all states, a corporate office,
and hiring staff. The applicant stated that for these reasons, April 1,
2023, was the expected commercial availability date for the
Phagenyx[supreg] System.
The applicant stated that, effective October 1, 2021, the ICD-10-
PCS code XWHD7Q7 (Insertion of neurostimulator lead into mouth and
pharynx, via natural or artificial opening, new technology group 7) may
be used to uniquely describe procedures involving the use of the
Phagenyx[supreg] System. The applicant provided a list of diagnosis
codes that may be used to currently identify the indication for the
Phagenyx[supreg] System under the ICD-10-CM coding system. Please refer
to the online application posting for the complete list of ICD-10-CM
codes provided by the applicant.
With respect to the cost criterion, the applicant searched the FY
2021 MedPAR file for potential cases representing patients who may be
eligible for the Phagenyx[supreg] System to demonstrate that it meets
the cost criterion. The applicant searched for cases reporting a
combination of the ICD-10-CM codes that may be used to currently
identify the indication for the Phagenyx[supreg] System under the ICD-
10-CM coding systems. Please see the following table for the complete
list of ICD-10-CM codes provided by the applicant. Using the inclusion/
exclusion criteria described in the following table, the applicant
identified 79,056 claims mapping to 551 MS-DRGs (see Table 10.16.A.--
Phagenyx[supreg] System Codes--FY 2024 associated with the proposed
rule for a list of MS-DRGs that the applicant indicated were included
in its cost analysis). The applicant followed the order of operations
described in the following table and calculated a final inflated
average case-weighted standardized charge per case of $130,440, which
exceeded the average case-weighted threshold amount of $82,183. Because
the final inflated average case-weighted standardized charge per case
exceeded the average case-weighted threshold amount, the applicant
asserted that the Phagenyx[supreg] System meets the cost criterion.
[GRAPHIC] [TIFF OMITTED] TR28AU23.217
[[Page 58937]]
In the FY 2024 IPPS/LTCH PPS proposed rule (88 FR 26944), we agreed
with the applicant that the Phagenyx[supreg] System meets the cost
criterion and therefore proposed to approve the Phagenyx[supreg] System
for new technology add-on payments for FY 2024.
Based on preliminary information from the applicant at the time of
the proposed rule, the applicant anticipated the cost to the hospital
for the Phagenyx[supreg] System to be $5,000, which is the price of the
single use, per patient catheter. We noted that the cost information
for this technology may be updated in the final rule based on revised
or additional information CMS receives prior to the final rule. Under
Sec. 412.88(a)(2), we limit new technology add-on payments to the
lesser of 65 percent of the average cost of the technology, or 65
percent of the costs in excess of the MS-DRG payment for the case. As a
result, we proposed that the maximum new technology add-on payment for
a case involving the use of the Phagenyx[supreg] System would be $3,250
for FY 2024 (that is, 65 percent of the average cost of the
technology).
We invited public comments on whether the Phagenyx[supreg] System
meets the cost criterion and our proposal to approve new technology
add-on payments for the Phagenyx[supreg] System for FY 2024 as a
neurostimulation device delivering electrical stimulation to the
oropharynx, to be used in addition to standard dysphagia care, as an
aid to improve swallowing in patients with severe dysphagia post
stroke, which corresponds to the Breakthrough Device designation.
Comment: The applicant submitted a public comment expressing
support for the approval of the Phagenyx[supreg] System for the new
technology add-on payment for FY 2024. The applicant reiterated that
the Phagenyx[supreg] System meets the cost criterion and confirmed the
proposed cost of the Phagenyx[supreg] System. The applicant also
restated that the ICD-10-PCS code XWHD7Q7 (Insertion of neurostimulator
lead into mouth and pharynx, via natural or artificial opening, new
technology group 7) must be used to appropriately describe the
procedure. The applicant provided an update on the availability of the
device, stating the actual commercial availability of the device was
established when FDA cleared the product from U.S. customs on April 12,
2023.
Response: Based on the information provided in the application for
new technology add-on payments, and after consideration of the public
comments we received, we believe the Phagenyx[supreg] System meets the
cost criterion. The technology was granted FDA marketing authorization
on September 16, 2022, as a Breakthrough Device with an indication as a
neurostimulation device delivering electrical stimulation to the
oropharynx, to be used in addition to standard dysphagia care, as an
aid to improve swallowing in patients with severe dysphagia post
stroke, which corresponds to the Breakthrough Device designation.
Therefore, we are finalizing our proposal to approve new technology
add-on payments for the Phagenyx[supreg] System for FY 2024. We
consider the beginning of the newness period to commence on April 12,
2023, the date that the technology became commercially available for
the indication covered by its Breakthrough Device designation.
Based on the information available at the time of this final rule,
the cost per case of the Phagenyx[supreg] System is $5,000. Under Sec.
412.88(a)(2), we limit new technology add-on payments to the lesser of
65 percent of the average cost of the technology, or 65 percent of the
costs in excess of the MS-DRG payment for the case. As a result, we are
finalizing that the maximum new technology add-on payment for a case
involving the use of the Phagenyx[supreg] System is $3,250 for FY 2024
(that is, 65 percent of the average cost of the technology). Cases
involving the use of the Phagenyx[supreg] System that are eligible for
new technology add-on payments will be identified by ICD-10-PCS
procedure code XWHD7Q7 (Insertion of neurostimulator lead into mouth
and pharynx, via natural or artificial opening, new technology group
7).
(8) SAINT Neuromodulation System
Magnus Medical, Inc. submitted an application for new technology
add-on payments for the SAINT Neuromodulation System for FY 2024. The
SAINT Neuromodulation System is a non-invasive repetitive transcranial
magnetic stimulation (rTMS) system that identifies an individualized
target and delivers navigationally directed repetitive magnetic pulses
to that individualized target located within the left dorsolateral
prefrontal cortex (L-DLPFC) to treat Major Depressive Disorder (MDD) in
adult patients who have failed to achieve satisfactory improvement from
prior antidepressant medication in the current episode. The SAINT
Neuromodulation System consists of hardware devices (for example,
stimulator with treatment coil and neuro-navigation) designed to
deliver SAINT Therapy to a targeted area within the L-DLPFC, as well as
cloud software that identifies the personalized target. We note that
Magnus Medical, Inc. submitted an application for new technology add-on
payments for the SAINT Neuromodulation System for FY 2023 under the
name Magnus Neuromodulation System with SAINT Technology, as summarized
in the FY 2023 IPPS/LTCH PPS proposed rule (87 FR 28339 through 28341),
that it withdrew prior to the issuance of the FY 2023 IPPS/LTCH PPS
final rule (87 FR 48960).
Please refer to the online application posting for the SAINT
Neuromodulation System, available at https://mearis.cms.gov/public/publications/ntap/NTP2210157HBCW, for additional detail describing the
technology and the disorder treated by the technology.
According to the applicant, the SAINT Neuromodulation System
received Breakthrough Device designation from FDA on July 2, 2021, for
the treatment of MDD in adult patients who have failed to receive
satisfactory improvement from prior antidepressant medication in the
current episode. According to the applicant, the Magnus Neuromodulation
System (SAINT Neuromodulation System) received 510(k) clearance from
FDA on September 1, 2022, for the same indication. In the FY 2024 IPPS/
LTCH PPS proposed rule (88 FR 26945), the applicant noted that the
technology is not anticipated to become available for sale until March
29, 2024, as several components of the SAINT Neuromodulation System are
currently being integrated into a single unit to simplify and improve
ease of use, and the applicant is bringing up scalable manufacturing of
production systems to optimize commercial adoption of the technology.
We noted that the applicant has submitted the application for new
technology add-on payments for FY 2024 with a Breakthrough Device
designation that corresponds to the SAINT Neuromodulation System, as it
was assessed by FDA. Changes to the system to integrate components may
require a reassessment by FDA to determine if the integrated, single
unit system still meets the current Breakthrough Device designation, or
if a new application for Breakthrough Device designation and additional
510(k) clearance is required. We noted that a device must be designated
under FDA's Breakthrough Devices Program to be eligible under the
alternative pathway, and that we would be interested in additional
information regarding the Breakthrough Device status of the integrated,
single unit system as it becomes available.
The applicant stated that ICD-10-PCS code X0Z0X18 (Computer-
assisted
[[Page 58938]]
transcranial magnetic stimulation of prefrontal cortex, new technology
group 8) may be used to uniquely describe procedures involving the use
of the SAINT Neuromodulation System, effective October 1, 2022. The
applicant stated that ICD-10-CM codes F32.2 (Major depressive disorder,
single episode, severe without psychotic features) and F33.2 (Major
depressive disorder, recurrent severe without psychotic features) may
be used to currently identify the indication for the SAINT
Neuromodulation System under the ICD-10-CM coding system.
With respect to the cost criterion, the applicant provided the
following analysis to demonstrate that it meets the cost criterion. To
identify potential cases representing patients who may be eligible for
the SAINT Neuromodulation System, the applicant searched the FY 2021
MedPAR file for cases reporting one of the following ICD-10-CM codes:
F32.2 (Major depressive disorder, single episode, severe without
psychotic features) and F33.2 (Major depressive disorder, recurrent
severe without psychotic features). Only MS-DRG 885 (Psychoses) had
significant volume; all other MS-DRGs accounted for 1 percent or less
of cases by volume. Using the inclusion/exclusion criteria described in
the following table, the applicant identified 19,181 claims mapping to
MS-DRG 885 (Psychoses). The applicant followed the order of operations
described in the following table and calculated a final inflated
average case-weighted standardized charge per case of $94,697, which
exceeded the average case-weighted threshold amount of $39,071. Because
the final inflated average case-weighted standardized charge per case
exceeded the average case-weighted threshold amount, the applicant
asserted that the SAINT Neuromodulation System meets the cost
criterion.
[GRAPHIC] [TIFF OMITTED] TR28AU23.218
In the FY 2024 IPPS/LTCH PPS proposed rule (88 FR 26946), we agreed
with the applicant that SAINT Neuromodulation System meets the cost
criterion and therefore proposed to approve SAINT Neuromodulation
System for new technology add-on payments for FY 2024 for the treatment
of MDD in adult patients who have failed to receive satisfactory
improvement from prior antidepressant medication in the current
episode.
Based on preliminary information from the applicant at the time of
the proposed rule, the applicant anticipated the total cost of the
SAINT Neuromodulation System to the hospital to be $19,500.00 per
patient, including personalized target identification using the SAINT
software, neuro-navigation, and treatment for 50 sessions over 5 days.
We noted that the cost information for this technology may be updated
in the final rule based on revised or additional information CMS
receives prior to the final rule. Under Sec. 412.88(a)(2), we limit
new technology add-on payments to the lesser of 65 percent of the
average cost of the technology, or 65 percent of the costs in excess of
the MS-DRG payment for the case. As a result, we proposed that the
maximum new technology add-on payment for a case involving the use of
the SAINT Neuromodulation System would be $12,675.00 for FY 2024 (that
is, 65 percent of the average cost of the technology).
We invited public comments on whether the SAINT Neuromodulation
System meets the cost criterion and our proposal to approve new
technology add-on payments for the SAINT Neuromodulation System for FY
2024 for the treatment of MDD in adult patients who have failed to
receive satisfactory improvement from prior antidepressant medication
in the current episode, which corresponds to the Breakthrough Device
designation.
Comment: Several commenters expressed support for our proposal to
approve new technology add-on payments for the SAINT Neuromodulation
System. Many commenters shared anecdotal experiences with transcranial
magnetic stimulation (TMS) and advocated for implementing the SAINT
Neuromodulation System in the inpatient setting. Some commenters
emphasized the importance of the inpatient schedule of treatment. Many
commenters stated that this technology will not be available to
Medicare patients without a new technology add-on payment. There were a
multitude of comments directly from people who participated in trials
of the SAINT
[[Page 58939]]
Neuromodulation System who were supportive of CMS's proposal to approve
new technology add-on payments and attributed significant and
remarkable relief from depression resulting from use of the SAINT
Neuromodulation System.
Response: We thank the commenters for their support and feedback.
Comment: Several commenters asserted that the SAINT Neuromodulation
System meets the cost criterion and supported the applicant's use of
MS-DRG 885 (Psychoses), and ICD-10-CM codes F32.2 (Major depressive
disorder, single episode, severe without psychotic features) and F33.2
(Major depressive disorder, recurrent severe without psychotic
features) in their analyses.
Response: We thank the commenters for their input.
Comment: A couple of commenters urged CMS to consider a higher
reimbursement rate than what was proposed, stating that neuro-navigated
TMS costs significantly more in the outpatient setting, than that of
the SAINT Neuromodulation System's $19,500 inpatient technology cost.
Commenters suggested that patients could resort to hospitalization to
save on procedure costs, as a result. The commenters advocated for an
increased rate of payment.
Response: It is unclear what the commenters are referring to by
advocating for an increased rate of payment. The cost of the technology
of $19,500 is based on information directly from the manufacturer.
While the commenter may have concerns with regard to reimbursement in
the outpatient setting, we believe the information for the cost per
case of the SAINT Neuromodulation System in this final rule for the
inpatient setting is accurate for the purposes of new technology add-on
payments. We also rely on clinicians to determine whether to treat a
patient in the inpatient or outpatient setting.
Comment: The applicant submitted a public comment in support of our
proposal to approve new technology add-on payments for FY 2024 for the
SAINT Neuromodulation System. The applicant reiterated that the SAINT
Neuromodulation System meets the cost criterion, and reaffirmed the
selection of codes and the MS-DRG used in the cost analysis, as
discussed in the proposed rule. The applicant confirmed the proposed
cost of the SAINT Neuromodulation System to the hospital of $19,500.00
per patient, including personalized target identification using the
SAINT software, neuro-navigation, and treatment for 50 sessions over 5
days. The applicant also stated that they will commercially launch the
SAINT Neuromodulation System, which is the subject of the Breakthrough
Device designation (BDD) and is currently cleared by the FDA (510k
number K220177, obtained September 1, 2022), on April 15, 2024. The
applicant explained that the interval between the 510(k) clearance and
the April 2024 launch date represents the time necessary to manufacture
an adequate supply of SAINT Neuromodulation Systems and prepare for
commercial launch. The applicant also stated that the company is also
continuing to develop future versions of the technology but intends
that any future modifications to the hardware system will be
substantially equivalent to the hardware components in the current
system, and that no changes to the BDD SAINT treatment are
contemplated.
Response: We thank the applicant for this information and support
to approve new technology add-on payments for the SAINT Neuromodulation
System. As we have discussed in prior rulemaking (86 FR 45132; 77 FR
53348), generally, our policy is to begin the newness period on the
date of FDA approval or clearance or, if later, the date of
availability of the product on the U.S. market. The applicant states
that the SAINT Neuromodulation System will be commercially available on
April 15, 2024, but it is unclear whether the technology would be
available for sale, prior to that date. At this time, we cannot
determine a definitive, future newness date based on a documented delay
in the technology's availability on the U.S. market. Absent additional
information, we therefore consider the newness date for this technology
to be September 1, 2022. We welcome updates from the applicant once the
technology becomes commercially available for future rulemaking.
Comment: A comment was submitted on behalf of the applicant, Magnus
Medical, stating that if the manufacturer makes changes to the SAINT
Hardware System to integrate certain components but retains the same
indication for use and intended patient population, the new version
will continue to be recognized under the SAINT Neuromodulation System's
existing Breakthrough Device designation (BDD). The commenter further
requested general confirmation that new technology add-on payment
eligibility for devices qualified under the alternative pathway for
transformative new devices will continue to apply to a future iteration
of the device as long as: (1) FDA determines the device versions to be
substantially equivalent via the 510(k) review and clearance process;
and (2) the new version continues to meet the requirements of the new
technology add-on payment program (for example, the indication for the
new 510(k) is the indication covered by the Breakthrough Device
designation).
Response: We thank the commenter for its comment. As discussed
previously, eligible devices under the alternative pathway for
Breakthrough Devices are devices that are designated and market
authorized by FDA as a Breakthrough Device for the indication covered
by the Breakthrough Device designation. We understand that Magnus has
outreached FDA on whether a subsequent cleared version of a device
would still be considered a Breakthrough Device. We appreciate updates
as they become available.
Based on the information provided in the application for new
technology add-on payments, and after consideration of the public
comments we received, we believe the SAINT Neuromodulation System meets
the cost criterion. The technology was granted FDA marketing
authorization on September 1, 2022, as a Breakthrough Device for the
treatment of MDD in adult patients who have failed to receive
satisfactory improvement from prior antidepressant medication in the
current episode. Therefore, we are finalizing our proposal to approve
new technology add-on payments for the SAINT Neuromodulation System for
FY 2024. Absent additional information from the applicant, we consider
the beginning of the newness period to commence on September 1, 2022,
the date of FDA marketing authorization for the indication covered by
its Breakthrough Device designation.
Based on the information available at the time of this final rule,
the cost per case of the SAINT Neuromodulation System is $19,500.00.
Under Sec. 412.88(a)(2), we limit new technology add-on payments to
the lesser of 65 percent of the average cost of the technology, or 65
percent of the costs in excess of the MS-DRG payment for the case. As a
result, we are finalizing that the maximum new technology add-on
payment for a case involving the use of the SAINT Neuromodulation
System is $12,675.00 for FY 2024 (that is, 65 percent of the average
cost of the technology). Cases involving the use of the SAINT
Neuromodulation System that are eligible for new technology add-on
payments will be identified by ICD-10-PCS procedure code X0Z0X18
(Computer-assisted transcranial magnetic stimulation of prefrontal
cortex, new technology group 8).
[[Page 58940]]
(9) TOPS\TM\ System
Premia Spine, Inc. submitted an application for new technology add-
on payments for the TOPS\TM\ System for FY 2024. According to the
applicant, the TOPSTM System is a motion preserving device
inserted and affixed during spinal surgery after open posterior
decompression to preserve normal spinal motion and provide
stabilization of the lumbar intervertebral segment. 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. We note that Premia Spine,
Inc. submitted an application for new technology add-on payments for
the TOPS\TM\ System for FY 2023, as summarized in the FY 2023 IPPS/LTCH
PPS proposed rule (87 FR 28346), that it withdrew prior to the issuance
of the FY 2023 IPPS/LTCH PPS final rule (87 FR 48960).
Please refer to the online application posting for the TOPS\TM\
System, available at https://mearis.cms.gov/public/publications/ntap/NTP2210146W0H2, for additional detail describing the technology and the
disease treated by the technology.
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 stated that it was seeking
premarket approval from FDA for the following indication: for patients
between the ages 35 and 80 years suffering from degenerative
spondylolisthesis up to Grade I with moderate to severe lumbar spinal
stenosis and either the thickening of the ligamentum flavum or scarring
facet joint capsule at one level from L2 to L5. We noted in the FY 2024
IPPS/LTCH PPS proposed rule (88 FR 26950) that the proposed premarket
approval indication did not include limitation to neurogenic
claudication as noted in the Breakthrough Device designation. We noted
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 2024. The applicant subsequently
received premarket approval from FDA on June 15, 2023, for patients
between 35 and 80 years of age with symptomatic degenerative
spondylolisthesis up to Grade I, with moderate to severe lumbar spinal
stenosis and either the thickening of the ligamentum flavum and/or
scarring of the facet joint capsule at one level from L3 to L5.
The applicant stated that effective October 1, 2021, the following
ICD-10-PCS procedure code may be used to uniquely describe procedures
involving the use of TOPSTM System: XRHB018 (Insertion of
posterior spinal motion preservation device into lumbar vertebral
joint, open approach, new technology group 8). The applicant stated
that ICD-10-CM codes M43.16 (Spondylolisthesis, lumbar region), M48.061
(Spinal stenosis, lumbar region, without neurogenic claudication) and
M48.062 (Spinal stenosis, lumbar region, with neurogenic claudication)
may be used to currently identify the indication for the
TOPSTM System under the ICD-10-CM coding system. We noted
that ICD-10-CM code M48.061 was not relevant for identification of the
indication under Breakthrough Device designation.
With respect to the cost criterion, the applicant provided the
following analysis to demonstrate that it meets the cost criterion. To
identify potential cases representing patients who may be eligible for
the TOPSTM System, the applicant searched the FY 2021 MedPAR
file for cases reporting one of the ICD-10-PCS codes listed in table
10.2.A.--TOPSTM System Codes--FY 2024 associated with the
proposed rule. Using the inclusion/exclusion criteria described in the
following table, the applicant identified 669 claims mapping to MS-DRG
518. The applicant followed the order of operations described in the
following table and calculated a final inflated average case-weighted
standardized charge per case of $175,574, which exceeded the average
case-weighted threshold amount of $123,029. Because the final inflated
average case-weighted standardized charge per case exceeded the average
case-weighted threshold amount, the applicant asserted that the
TOPSTM System meets the cost criterion.
[[Page 58941]]
[GRAPHIC] [TIFF OMITTED] TR28AU23.219
In the FY 2024 IPPS/LTCH PPS proposed rule (88 FR 26951), we agreed
with the applicant that the TOPSTM System meets the cost
criterion and therefore proposed to approve the TOPSTM
System for new technology add-on payments for FY 2024, subject to the
technology receiving FDA marketing authorization as a Breakthrough
Device for the indication corresponding to the Breakthrough Device
designation by July 1, 2023.
Based on preliminary information from the applicant at the time of
the proposed rule, the applicant anticipated the total cost of the
TOPSTM System to the hospital to be $17,500 for a single
level construct. Per the applicant, as the TOPSTM System is
anticipated to only be implanted at one level, the per-patient
anticipated cost to the hospital is $17,500. We noted that the cost
information for this technology may be updated in the final rule based
on revised or additional information CMS receives prior to the final
rule. Under Sec. 412.88(a)(2), we limit new technology add-on payments
to the lesser of 65 percent of the average cost of the technology, or
65 percent of the costs in excess of the MS-DRG payment for the case.
As a result, we that the maximum new technology add-on payment for a
case involving the use of the TOPSTM System would be $11,375
for FY 2024 (that is, 65 percent of the average cost of the
technology).
We invited public comments on whether the TOPSTM System
meets the cost criterion and our proposal to approve new technology
add-on payments for the TOPSTM System for FY 2024 subject to
the technology receiving FDA marketing authorization as a Breakthrough
Device for the indication corresponding to the Breakthrough Device
designation by July 1, 2023.
We did not receive any comments any public comments related to the
TOPSTM System. Based on the information provided in the
application for new technology add-on payments, we believe the
TOPSTM System meets the cost criterion. The technology
received FDA premarket approval on June 15, 2023 as a Breakthrough
Device, with an indication for patients between 35 and 80 years of age
with symptomatic degenerative spondylolisthesis up to Grade I, with
moderate to severe lumbar spinal stenosis and either the thickening of
the ligamentum flavum and/or scarring of the facet joint capsule at one
level from L3 to L5, which is covered by its Breakthrough Device
designation. Therefore, we are finalizing our proposal to approve new
technology add-on payments for the TOPS\TM\ System for FY 2024. We
consider the beginning of the newness period to commence on June 15,
2023, the date on which technology received FDA marketing authorization
for the indication covered by its Breakthrough Device designation. We
note that, under the eligibility criteria for approval under the
alternative pathway for certain transformative new devices, only the
use of TOPSTM for patients suffering from neurogenic
claudication resulting from degenerative spondylolisthesis, and the FDA
Breakthrough Device designation it received for that use, are relevant
for purposes of the new technology add-on payment application for FY
2024. Since the Breakthrough Device designation is limited to patients
with neurogenic claudication specifically, as opposed to the PMA
indication for patients with symptomatic disease, only use of the
technology for patients with neurogenic claudication is relevant for
new technology add-on payment purposes.
Based on the information available at the time of this final rule,
the cost per case of the TOPSTM System is $17,500 for a
single level construct. Per the applicant, as the TOPSTM
System is anticipated to only be implanted at one level, the per-
patient anticipated cost to the hospital is $17,500. As a result, we
are finalizing that the maximum new technology add-on payment for a
case involving the use of the TOPSTM System is $11,375 for
FY 2024 (that is, 65 percent of the average cost of the technology).
Cases involving the use of the TOPSTM System that are
eligible for new technology add-on payments will be identified by ICD-
10-PCS code XRHB018 (Insertion of posterior spinal motion preservation
device into lumbar
[[Page 58942]]
vertebral joint, open approach, new technology group 8) in combination
with ICD-10-CM code M48.062 (Spinal stenosis, lumbar region, with
neurogenic claudication).
b. Alternative Pathways for Qualified Infectious Disease Products
(QIDPs)
(1) taurolidine/heparin
CorMedix Inc. submitted an application for new technology add-on
payments for taurolidine/heparin for FY 2024. Per the applicant,
taurolidine/heparin 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 (CRBSI)
from in-dwelling catheters in patients undergoing hemodialysis (HD)
through a central venous catheter (CVC). We note that CorMedix Inc.
submitted an application for new technology add-on payments for
taurolidine/heparin for FY 2023 under the name DefenCathTM
and received conditional approval for new technology add-on payments
for FY 2023, subject to DefenCathTM receiving FDA marketing
authorization before July 1, 2023 (87 FR 48978 through 48982). In the
proposed rule, we explained that if DefenCathTM receives FDA
marketing authorization before July 1, 2023, the new technology add-on
payment for cases involving the use of this technology would be made
effective for discharges beginning in the first quarter after FDA
marketing authorization is granted. We stated that if the FDA marketing
authorization is received on or after July 1, 2023, no new technology
add-on payments would be made for cases involving the use of
DefenCathTM for FY 2023. We noted that the applicant stated
that it submitted this second new technology add-on payment application
for FY 2024 in the event it does not obtain FDA approval prior to July
1, 2023. We further noted that in the event DefenCathTM does
receive FDA marketing authorization before July 1, 2023, evaluation of
this FY 2024 application would no longer be necessary, and we would
propose to instead continue the new technology add-on payment for
DefenCathTM for FY 2024. We note that DefencathTM
did not receive FDA marketing authorization by July 1, 2023, and
therefore no add-on payments will be made for this technology for FY
2023, and we are instead making a determination regarding this
application for FY 2024.
Please refer to the online application posting for taurolidine/
heparin, available at https://mearis.cms.gov/public/publications/ntap/NTP221014UJ89G, for additional detail describing the technology and the
disease treated by the technology.
According to the applicant, taurolidine/heparin received QIDP
designation from FDA in 2015 for the prevention of CRBSI in patients
with end-stage renal disease (ESRD) receiving HD through a CVC and has
been granted FDA Fast Track status. The applicant indicated that it was
pursuing an NDA under FDA's LPAD for the same indication. The applicant
noted that FDA issued a Complete Response Letter, and the NDA is
pending resubmission.
The applicant stated that effective October 1, 2022, the following
ICD-10-PCS code may be used to uniquely describe procedures involving
the use of taurolidine/heparin: XY0YX28 (Extracorporeal introduction of
taurolidine anti-infective and heparin anticoagulant, new technology
group 8).
With respect to the cost criterion, the applicant provided two
analyses to demonstrate that it meets the cost criterion. For each
analysis, the applicant searched the FY 2021 MedPAR file using a
different combination of codes to identify potential cases representing
patients who may be eligible for taurolidine/heparin.
Per the applicant, taurolidine/heparin 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.
Analysis A searched for claims with presence of a diagnosis code for
ESRD, chronic kidney disease (CKD), AKI, or ATN in combination with
diagnosis and procedure codes for HD. Analysis B searched for claims
with presence of a diagnosis code for ESRD, CKD, AKI, or ATN with codes
for both HD (diagnosis and procedure codes) and CVC (procedure codes).
The applicant explained that Analysis A overstates the population of
patients eligible for taurolidine/heparin because it includes any
patient receiving HD, regardless of whether a central venous catheter
is used. The applicant further explained that Analysis B undercounts
the potential cases because CVC codes are not always available on
inpatient claims. Please see Table 10.10.A Taurolidine/Heparin Codes--
FY 2024 associated with the proposed rule for a complete list of ICD-
10-CM and ICD-10-PCS codes provided by the applicant.
Under Analysis A, using the inclusion/exclusion criteria described
in the following table, the applicant identified 412,436 claims mapping
to 494 MS-DRGs. Please see Table 10.10.A.--Taurolidine/Heparin Codes--
FY 2024 associated with the proposed rule for a complete list of MS-
DRGs provided by the applicant. The applicant followed the order of
operations described in the following table and calculated a final
inflated average case-weighted standardized charge per case of
$230,720, which exceeded the average case-weighted threshold amount of
$141,035.
Under Analysis B, using the inclusion/exclusion criteria described
in the following table, the applicant identified 66,861 claims mapping
to 410 MS-DRGs. Please see Table 10.10.A.--Taurolidine/Heparin Codes--
FY 2024 associated with the proposed rule for a complete list of MS-
DRGs provided by the applicant. The applicant followed the order of
operations described in the following table and calculated a final
inflated average case-weighted standardized charge per case of
$313,587, which exceeded the average case-weighted threshold amount of
$201,755.
Because the final inflated average case-weighted standardized
charge per case exceeded the average case-weighted threshold amount in
all scenarios, the applicant asserted that taurolidine/heparin meets
the cost criterion.
[[Page 58943]]
[GRAPHIC] [TIFF OMITTED] TR28AU23.220
In the FY 2024 IPPS/LTCH PPS proposed rule (88 FR 26957), we agreed
with the applicant that taurolidine/heparin meets the cost criterion
based on the analysis presented. We also welcomed additional
information on using additional codes and/or criteria to better target
cases of taurolidine/heparin for the cost criterion.
We stated that therefore, if taurolidine/heparin does not receive
FDA approval by July 1, 2023, to receive new technology add-on payments
beginning with FY 2023, per Sec. 412.87(e)(3), we proposed to
conditionally approve taurolidine/heparin for new technology add-on
payments for FY 2024, subject to the technology receiving FDA marketing
authorization by July 1, 2024. If taurolidine/heparin receives FDA
marketing authorization before July 1, 2024, 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, 2024, no new technology add-on payments
will be made for cases involving the use of taurolidine/heparin for FY
2024. If taurolidine/heparin receives FDA marketing authorization prior
to July 1, 2023, we proposed to continue making new technology add-on
payments for taurolidine/heparin in FY 2024.
Based on preliminary information from the applicant at the time of
the proposed rule, the applicant stated the Wholesale Acquisition Cost
of taurolidine/heparin is $1,170 per three milliliter vial taurolidine/
heparin. The applicant noted that two vials of taurolidine/heparin (one
vial for each lumen) will be used for each HD session and that while HD
typically occurs three times/week for patients in the outpatient
setting, inpatients may receive HD daily or every other day, depending
on the severity of their disease. According to the applicant, on
average, patients would receive 9.75 HD treatments per inpatient stay
based upon the average length of stay of 13.3 days, which would require
19.5 vials of taurolidine/heparin. Thus, the applicant anticipated the
cost of taurolidine/heparin to the hospital per patient to be $22,815.
We stated in the FY 2024 IPPS/LTCH PPS proposed rule (88 FR 26957) that
we were interested in additional information as to how the length of
stay for patients on HD and the estimation of daily or every other day
dialysis were determined for purposes of estimating the anticipated
average cost. We also noted that the cost information for this
technology may be updated in the final rule based on revised or
additional information CMS receives prior to the final rule. Under
Sec. 412.88(a)(2), we limit new technology add-on payments for QIDPs
to the lesser of 75 percent of the average cost of the technology, or
75 percent of the costs in excess of the MS-DRG payment for the case.
As a result, we proposed that the maximum new technology add-on payment
for a case involving the use of taurolidine/heparin would be $17,111.25
for FY 2024 (that is, 75 percent of the average cost of the
technology).
We invited public comments on whether taurolidine/heparin meets the
cost criterion and our proposal to approve new technology add-on
payments for taurolidine/heparin for FY 2024 for the prevention of
CRBSI in patients with ESRD receiving HD through a CVC.
Comment: A commenter submitted a comment in support of the
implementation of add-on payments for taurolidine/heparin for the
treatment of CRBSI from in-dwelling catheters in ESRD patients
undergoing HD through a CVC as well CMS's proposal for conditional
approval.
Response: We thank the commenter for its support.
[[Page 58944]]
Based on the information provided in the application for new
technology add-on payments, and after consideration of the public
comment we received, we believe taurolidine/heparin meets the cost
criterion. Therefore, we are granting conditional approval for
taurolidine/heparin for new technology add-on payments for FY 2024,
subject to the technology receiving FDA marketing authorization by July
1, 2024 (that is, by July 1 of the fiscal year for which the applicant
applied for new technology add-on payments (2024)). In the proposed
rule we stated that as an application submitted under the alternative
pathway for certain antimicrobial products at Sec. 412.87(d),
taurolidine/heparin 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, 2024) (88 FR 26956
to 26957). If taurolidine/heparin receives FDA marketing authorization
before July 1, 2024, 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, 2024, no new technology add-on payments will be made
for cases involving the use of taurolidine/heparin for FY 2024.
Based on the information available at the time of this final rule,
the cost per case of taurolidine/heparin is $22,815. Under Sec.
412.88(a)(2), we limit new technology add-on payments to the lesser of
75 percent of the average cost of the technology, or 75 percent of the
costs in excess of the MS-DRG payment for the case. As a result, we are
finalizing that the maximum new technology add-on payment for a case
involving the use of taurolidine/heparin is $17,111.25 for FY 2024
(that is, 75 percent of the average cost of the technology). Cases
involving the use of taurolidine/heparin that are eligible for new
technology add-on payments will be identified by ICD-10-PCS procedure
code XY0YX28 (Extracorporeal introduction of taurolidine anti-infective
and heparin anticoagulant, new technology group 8).
(2) REZZAYOTM (Rezafungin for Injection)
Cidara Therapeutics submitted an application for new technology
add-on payments for REZZAYOTM (rezafungin for injection) for
FY 2024. According to the applicant, REZZAYOTM is an
echinocandin antifungal drug for the treatment of candidemia and
invasive candidiasis in patients 18 years of age or older.
Please refer to the online application posting for
REZZAYOTM, available at https://mearis.cms.gov/public/publications/ntap/NTP221017057WN, for additional detail describing the
technology and the disease treated by the technology.
According to the applicant, REZZAYOTM received QIDP
designation from FDA on June 27, 2017, for treatment of candidemia and/
or invasive candidiasis. The applicant stated that the NDA for
REZZAYOTM was approved on March 22, 2023, for use in
patients 18 years of age or older who have limited or no alternative
options for the treatment of candidemia and invasive candidiasis.
Approval of this indication is based on limited clinical safety and
efficacy data for REZZAYOTM. The applicant stated that
REZZAYOTM would not be commercially available until July
2023, but we note that a rationale for the delay in market availability
was not provided. Due to the timing of receipt of FDA approval, we
stated in the FY 2024 IPPS/LTCH PPS proposed rule (88 FR 26958) that we
were interested in additional information on whether the technology is
considered a QIDP under this NDA.
The applicant submitted a request for approval for a unique ICD-10-
PCS procedure code for REZZAYOTM beginning in FY 2024 and
was granted approval for the following procedure codes effective
October 1, 2023: XW033R9 (Introduction of rezafungin into peripheral
vein, percutaneous approach, new technology group 9) and XW043R9
(Introduction of rezafungin into central vein, percutaneous approach,
new technology group 9).
With respect to the cost criterion, to identify potential cases
representing patients who may be eligible for REZZAYOTM, the
applicant searched the FY 2021 MedPAR file for cases reporting one of
the ICD-10-CM diagnosis codes for candidemia or invasive candidiasis
(in any position) listed in the table in this section. Using the
inclusion/exclusion criteria described in the following table, the
applicant identified 50,939 claims mapping to 540 MS-DRGs. The
applicant followed the order of operations described in the following
table and calculated a final inflated average case-weighted
standardized charge per case of $177,099.74, which exceeded the average
case-weighted threshold amount of $97,375.67. Because the final
inflated average case-weighted standardized charge per case exceeded
the average case-weighted threshold amount, the applicant asserted that
REZZAYOTM meets the cost criterion.
[[Page 58945]]
[GRAPHIC] [TIFF OMITTED] TR28AU23.221
In the FY 2024 IPPS/LTCH PPS proposed rule (88 FR 26958), we agreed
with the applicant that REZZAYOTM meets the cost criterion
and therefore proposed to approve REZZAYOTM for new
technology add-on payments for FY 2024 for use in patients 18 years of
age or older who have limited or no alternative options for the
treatment of candidemia and invasive candidiasis.
The applicant had not provided an estimate for the cost of
REZZAYOTM at the time of the proposed rule. According to the
applicant, REZZAYOTM is to be administered once weekly by
intravenous infusion, with an initial loading dose of 400 mg and
followed by a 200 mg dose once weekly thereafter. According to the
applicant, in the pivotal trial, on average patients received 14 days
of IV treatment and that data also showed that patients stay in the
hospital after being diagnosed with invasive candidiasis for 14 days.
Therefore, the applicant estimated the average dose of medication
during an inpatient stay to be 600 mg, given the initial 400 mg dose
plus one 200 mg maintenance dose prior to discharge from the hospital.
We stated that we expected the applicant to submit cost information
prior to the final rule, and we would 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
REZZAYOTM 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 percent of the average cost of the technology, or 75
percent of the costs in excess of the MS-DRG payment for the case.
We invited public comments on whether REZZAYOTM meets
the cost criterion and our proposal to approve new technology add-on
payments for REZZAYOTM for FY 2024 for use in patients 18
years of age or older who have limited or no alternative options for
the treatment of candidemia and invasive candidiasis.
Comment: The applicant submitted a public comment urging CMS to
finalize its proposal to approve REZZAYOTM for new
technology add-on payments and reiterating that REZZAYOTM
meets the criteria for approval. The applicant also stated that the
wholesale acquisition cost of REZZAYOTM will be $1,950 per
200 mg vial. Per the applicant, as discussed in the proposed rule, the
estimated average dose during an inpatient stay is 600mg and therefore
the average cost of the technology would be $5,850 per inpatient stay.
The applicant recommended a maximum add-on payment of $4,387.50 or 75
percent of the average cost of REZZAYOTM of $5,850.
Response: We thank the applicant for its support and the additional
information.
Based on the information provided in the application for new
technology add-on payments, and after consideration of the public
comment we received, we believe REZZAYOTM meets the cost
criterion. The technology was granted FDA marketing authorization on
March 22, 2023, with an indication for use in patients 18 years of age
or older who have limited or no alternative options for the treatment
of candidemia and invasive candidiasis, which is covered by its QIDP
designation. Therefore, we are finalizing our proposal to approve new
technology add-on payments for REZZAYOTM for FY 2024. The
applicant has stated that the technology is not yet available for sale
but has not provided information regarding a documented delay in market
availability. Absent additional information, we therefore consider the
newness period to commence on the date of marketing authorization,
March 22, 2023.
Based on the information available at the time of this final rule,
the cost per case of REZZAYOTM is $5,850. Under Sec.
412.88(a)(2), we limit new technology add-on payments to the lesser of
75 percent of the average cost of the technology, or 75 percent of the
costs in excess of the MS-DRG payment for the case. As a result, we are
finalizing that
[[Page 58946]]
the maximum new technology add-on payment for a case involving the use
of REZZAYOTM is $4,387.50 for FY 2024 (that is, 75 percent
of the average cost of the technology). Cases involving the use of
REZZAYOTM that are eligible for new technology add-on
payments will be identified by ICD-10-PCS procedure codes: XW033R9
(Introduction of rezafungin into peripheral vein, percutaneous
approach, new technology group 9) or XW043R9 (Introduction of
rezafungin into central vein, percutaneous approach, new technology
group 9).
(3) XACDURO[supreg] (Sulbactam/Durlobactam)
Entasis Therapeutics, Inc. submitted an application for new
technology add-on payments for XACDURO[supreg] (sulbactam/durlobactam,
referred to as ``SUL-DUR'' in the proposed rule) for FY 2024. According
to the applicant, XACDURO[supreg] is a penicillin derivative and
classified as a [beta]-lactamase inhibitor but also has intrinsic
antibacterial activity against Acinetobacter baumannii and other
members of the Acinetobacter baumannii-calcoaceticus complex (ABC).
According to the applicant, sulbactam, in combination with durlobactam,
will be used for the treatment of hospital-acquired and ventilator-
associated bacterial pneumonia (HABP/VABP) and bloodstream infections
(BSI) due to Acinetobacter baumannii.
Please refer to the online application posting for XACDURO[supreg],
available at https://mearis.cms.gov/public/publications/ntap/NTP221017F5WKE, for additional detail describing the technology and the
disease treated by the technology.
According to the applicant, XACDURO[supreg] received QIDP
designation for the treatment of HABP/VABP and bloodstream infections
due to Acinetobacter baumannii. The applicant stated that it was
seeking approval of a broader NDA from FDA for the treatment of adults
with infections due to Acinetobacter baumannii-calcoaceticus complex
organisms, including multidrug-resistant and carbapenem-resistant
strains. According to the applicant, patients are expected to receive 1
to 1.5 grams sulbactam and 1 to 1.5 grams durlobactam every 6 hours for
an average of 10 days. In the FY 2024 IPPS/LTCH PPS proposed rule (88
FR 26959), we noted that, under the eligibility criteria for approval
under the alternative pathway for certain antimicrobial products, only
the use of XACDURO[supreg] for the treatment of HABP/VABP and
bloodstream infections due to Acinetobacter baumannii, and the FDA QIDP
designation it received for that use, were relevant for purposes of the
new technology add-on payment application for FY 2024. We also noted
that, as an application submitted under the alternative pathway for
certain antimicrobial products at Sec. 412.87(d), XACDURO[supreg] was
eligible for conditional approval for new technology add-on payments if
it did 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, 2024). The applicant stated that XACDURO[supreg] received
FDA approval on May 23, 2023, with an indication for use in patients 18
years of age and older for the treatment of HABP/VABP, caused by
susceptible isolates of Acinetobacter baumanni-calcoaceticus complex.
Since the indication for which the technology received FDA approval is
included within the scope of the QIDP designation, it appears that the
proposed FDA indication is appropriate for new technology add-on
payment under the alternative pathway criteria.
The applicant submitted a request for approval for a unique ICD-10-
PCS procedure code for XACDURO[supreg] beginning in FY 2024 and was
granted approval for the following procedure codes effective October 1,
2023: XW033K9 (Introduction of sulbactam-durlobactam into peripheral
vein, percutaneous approach, new technology group 9) and XW043K9
(Introduction of sulbactam-durlobactam into central vein, percutaneous
approach, new technology group 9). The applicant provided a list of
diagnosis codes that may be used to currently identify the indication
for XACDURO[supreg] under the ICD-10-CM coding system. Please refer to
the online application posting for the complete list of ICD-10-CM codes
provided by the applicant. We noted that the applicant included ICD-10-
CM codes that correspond to the broader anticipated NDA indication. As
previously noted, only use of the technology for the indications
corresponding to the QIDP designation would be relevant for new
technology add-on payment purposes. We believed the relevant ICD-10-CM
codes to identify the QIDP-designated indications were: Y95 and J15.6
(describing HABP due to Acinetobacter baumannii); or J95.851 and B96.89
(describing VABP due to Acinetobacter baumannii); or A41.59 (Other
Gram-negative sepsis) for bloodstream infection due to Acinetobacter
baumannii. We note that since the approved NDA indication is limited to
HABP and VABP due to Acinetobacter baumannii and does not include
bloodstream infections, we believe ICD-10-CM code A41.59 is no longer
is relevant to describe the indication relevant for new technology add-
on payment purposes.
With respect to the cost criterion, the applicant provided two
analyses to demonstrate that it meets the cost criterion. For each
analysis, the application searched the FY 2021 MedPAR file using a
different combination of codes to identify potential cases representing
patients who may be eligible for XACDURO[supreg]. The applicant
explained that it used different codes to demonstrate different cohorts
that may be eligible for the technology. Each analysis followed the
order of operations described in the following table.
According to the applicant, XACDURO[supreg] was anticipated to be
indicated in adults for the treatment of infections due to ABC complex
including multi-drug resistant and carbapenem-resistant strains upon
FDA approval. Therefore, in the first analysis, the applicant
identified ICD-10-CM codes that reflect the anticipated FDA indication.
According to the QIDP designation, XACDURO[supreg] was designated for
the treatment of HABP/VABP and bloodstream infections due to
Acinetobacter baumannii. Therefore, in the second analysis, the
applicant identified ICD-10-CM codes that reflect the QIDP-designated
indications. Please see Table 10.23.A.--XACDURO[supreg] Codes--FY 2024
associated with the proposed rule for the complete list of codes
provided by the applicant.
For Analysis 1, using the inclusion/exclusion criteria described in
the following table, the applicant identified 440,756 cases mapping to
452 MS-DRGs. The applicant followed the order of operations described
in the following table and calculated a final inflated average case-
weighted standardized charge per case of $182,553, which exceeded the
average case-weighted threshold amount of $76,364.
For Analysis 2, using the inclusion/exclusion criteria described in
the following table, the applicant identified 214,694 claims mapping to
330 MS-DRGs. The applicant followed the order of operations described
in the following table and calculated a final inflated average case-
weighted standardized charge per case of $202,171, which exceeded the
average case-weighted threshold amount of $85,665.
Because the final inflated average case-weighted standardized
charge per
[[Page 58947]]
case exceeded the average case-weighted threshold amount in both
analyses, the applicant asserted that XACDURO[supreg] meets the cost
criterion.
[GRAPHIC] [TIFF OMITTED] TR28AU23.222
In the FY 2024 IPPS/LTCH PPS proposed rule (88 FR 26960), we agreed
with the applicant that XACDURO[supreg] meets the cost criterion and
therefore proposed to approve XACDURO[supreg] for new technology add-on
payments for FY 2024 for the treatment of HABP/VABP and bloodstream
infections due to Acinetobacter baumannii, subject to the technology
receiving FDA marketing authorization for the indication corresponding
to the QIDP designation by July 1, 2023. We stated that as an
application submitted under the alternative pathway for certain
antimicrobial products at Sec. 412.87(d), XACDURO[supreg] was eligible
for conditional approval for new technology add-on payments if it did
not receive FDA marketing authorization by the July 1 deadline
specified in Sec. 412.87(e)(2), provided that the technology received
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, 2024). If XACDURO[supreg] received FDA marketing
authorization before July 1, 2024, 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 was received
on or after July 1, 2024, no new technology add-on payments would be
made for cases involving the use of XACDURO[supreg] for FY 2024.
Based on preliminary information from the applicant at the time of
the proposed rule, the applicant stated that the anticipated cost of
XACDURO[supreg] was $15,000 per stay based upon the expectation that
patients would receive 1 to 1.5 grams sulbactam and 1 to 1.5 grams
durlobactam every 6 hours for an average of 10 days. The applicant did
not provide the cost per vial and did not supply supporting information
with regard to the average of 10 days. Therefore, we stated in the FY
2024 IPPS/LTCH PPS proposed rule (88 FR 26960) that we were interested
in information regarding the cost per vial and the average of 10 days
to support the anticipated average cost of $15,000 provided by the
applicant. We noted that the cost information for this technology may
be updated in the final rule based on revised or additional information
CMS received prior to the final rule. Under Sec. 412.88(a)(2), we
limit new technology add-on payments for QIDPs to the lesser of 75
percent of the average cost of the technology, or 75 percent of the
costs in excess of the MS-DRG payment for the case. As a result, we
proposed that the maximum new technology add-on payment for a case
involving the use of XACDURO[supreg] when used for the treatment of
HABP/VABP and bloodstream infections due to Acinetobacter baumannii
would be $11,250 for FY 2024 (that is, 75 percent of the average cost
of the technology).
We invited public comments on whether XACDURO[supreg] meets the
cost criterion and our proposal to approve new technology add-on
payments for XACDURO[supreg] for FY 2024 for the treatment of HABP/VABP
and bloodstream infections due to Acinetobacter baumannii subject to
the technology receiving marketing authorization consistent with its
QIDP designation by July 1, 2023.
Comment: The applicant submitted a public comment in support of its
application and responding to questions raised by CMS in the proposed
rule
[[Page 58948]]
regarding the cost information. In its comment letter, the applicant
stated that XACDURO[supreg] for injection is supplied as a kit
containing 3 single-dose vials. Per the applicant, one vial contains
sulbactam 1g and 2 vials each contains durlobactam 0.5g. The applicant
stated that the expected dosing schedule for XACDURO varies, but most
patients will receive one infusion every 6 hours, for a total of 4 kits
per 24-hour period. The applicant provided the following table showing
the dosage of XACDURO[supreg] based on renal function.
[GRAPHIC] [TIFF OMITTED] TR28AU23.223
BILLING CODE 4120-01-C
The applicant stated that the recommended duration of treatment is
7 to 14 days and should be guided by the severity and site of infection
and the patient's clinical and bacteriological progress.
Per the applicant, the claims data analysis would not allow for
identifying XACDURO[supreg] dosing based on creatinine clearance
utilizing ICD-10-CM, HCPCS Level I (CPT) and HCPCS Level II codes.
Therefore, the applicant was unable to determine any XACDURO[supreg]
dosing adjustments of different time intervals based on the coding in
claims data.
In response to CMS questions regarding cost and duration of
treatment, the applicant submitted a change to the proposed average of
days of treatment from 10 days to 9.6 days. The applicant calculated a
weighted average duration of treatment (in days) across the treatment
arms in the trial. In Part A of the study, there were 91 patients with
an average of 9.3 days of treatment duration. In part B, there were 28
patients with an average treatment duration of 10.6 days. The weighted
average days of treatment across both groups is 9.6 days. Based on an
average estimated length of stay of 9.6 days, the applicant submitted a
change to the expected cost for treatment per stay to be $18,240.
Based on the revised expected cost of treatment per stay, the
applicant provided an updated analysis for the second analysis which
matches the final approved indication and cost. The revised final
inflated average case-weighted standardized charge per case was
$219,780, which exceeded the average case-weighted threshold amount of
$85,665. The applicant asserted that XACDURO[supreg] still met the cost
criterion threshold.
Response: We thank the applicant for it comments and the additional
information.
Based on the information provided in the application for new
technology add-on payments, and after consideration of the public
comment we received, we believe XACDURO[supreg] meets the cost
criterion. The technology was granted FDA marketing authorization on
May 23, 2023, for the treatment of hospital-acquired bacterial
pneumonia (HABP) and ventilator-associated bacterial pneumonia (VABP)
caused by susceptible strains of bacteria called Acinetobacter
baumannii-calcoaceticus complex, for patients 18 years of age and
older, which is covered by its QIDP designation. Therefore, we are
finalizing our proposal to approve new technology add-on payments for
XACDURO[supreg] for FY 2024. We consider the beginning of the newness
period to commence on May 23, 2023, the date on which the technology
received FDA market authorization for the indication covered by its
QIDP designation.
Based on the information available at the time of this final rule,
the average cost per case of XACDURO[supreg] is $18,240. Under Sec.
412.88(a)(2), we limit new technology add-on payments to the lesser of
75 percent of the average cost of the technology, or 75 percent of the
costs in excess of the MS-DRG payment for the case. As a result, we are
finalizing that the maximum new technology add-on payment for a case
involving the use of XACDURO[supreg] is $13,680 for FY 2024 (that is,
75 percent of the average cost of the technology). Cases involving the
use of XACDURO[supreg] that are eligible for new technology add-on
payments will be identified by ICD-10-PCS procedure codes XW033K9
(Introduction of sulbactam-durlobactam into peripheral vein,
percutaneous approach, new technology group 9) or XW043K9 (Introduction
of sulbactam-durlobactam into central vein, percutaneous approach, new
technology group 9) in combination with one of the following ICD-10-CM
codes: Y95 and J15.6 (describing HABP due to Acinetobacter baumannii);
or J95.851 and B96.89 (describing VABP due to Acinetobacter baumannii)
8. Other Comments
We received several public comments requesting changes to the new
technology add-on payment policies, such as increasing the add-on
payment amount to 85 percent or more, creating new alternative pathway
categories for different FDA designations or types of treatments, and
expanding the conditional approval process to additional types of
technologies or designations, that were outside the scope of the
proposals included in the FY 2024 IPPS/LTCH PPS proposed rule and we
are therefore not addressing them in this final rule. We appreciate
these comments and may consider them for possible proposals in future
rulemaking.
9. Modification of New Technology Add-On Payment Application
Eligibility Requirements Related to FDA Application Status and Moving
the Deadline for FDA Marketing Authorization from July 1 to May 1 for
Technologies that Are Not Already FDA Market Authorized
As noted in section II.E.1.f. of this final rule, applicants for
new technology add-on payments for new medical
[[Page 58949]]
services or technologies must submit to CMS 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). In addition, as reflected in the application,
applicants must submit information about the technology's FDA marketing
authorization status and the status of any relevant designations
required for new technology add-on payment eligibility.
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 any supplemental information obtained from the applicant,
information provided at the Town Hall meeting, and comments received in
response to the Town Hall meeting. As part of the new technology add-on
payment application process, CMS summarizes in the IPPS/LTCH PPS
proposed rule the information submitted as part of each new technology
add-on payment application. This generally includes summarizing and/or
providing the public with information on the applicant's explanation of
what the technology does, background on the disease process, status of
FDA approval or 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. As discussed in prior rulemaking,
our goal is to ensure that the public has sufficient information to
facilitate public comment on whether the medical service or technology
meets the new technology add-on payment criteria.
In the FY 2023 IPPS/LTCH PPS final rule, to increase transparency,
enable increased stakeholder engagement, and improve and streamline our
new technology add-on payment review process, we finalized a policy
that, beginning with FY 2024, new technology add-on payment
applications and certain related materials would be publicly posted
online (87 FR 48986 through 48990). We noted that we believed making
this information publicly available may help to further engage the
public and foster greater input and insights through public comments on
the new medical services and technologies presented annually for
consideration for new technology add-on payments. Consistent with this
finalized policy, the FY 2024 applications for new technology add-on
payments are available at https://mearis.cms.gov/public/publications/ntap.
Building on our efforts to further increase transparency,
facilitate public input, and improve the review process, we are
finalizing as proposed modifications to both the new technology add-on
payment application eligibility requirements and the date by which
applicants must receive FDA marketing authorization in order to be
eligible for consideration. Specifically, we are finalizing our
proposed policies to modify the new technology add-on payment
application eligibility requirements for technologies that are not
already FDA market authorized to require such applicants to have a
complete and active FDA marketing authorization request at the time of
new technology add-on payment application submission, and to move the
FDA marketing authorization deadline from July 1 to May 1, beginning
with applications for FY 2025. As we discuss in further detail later in
this section, we believe these changes will significantly improve our
ability to evaluate whether a technology is eligible for new technology
add-on payment.
We accept new technology add-on payment applications annually, each
fall. As previously discussed, CMS considers whether the technology
meets the criteria for the new technology add-on payment and announces
the results as part of the annual IPPS rulemaking. To provide maximum
flexibility for applicants for new technology add-on payments, we have
not historically specified how complete an application must be at the
time of its submission. This has resulted in a significant number of
applicants submitting new technology add-on payment applications that
lack critical information that is needed to evaluate whether the
technology meets the eligibility criteria at Sec. 412.87(b), (c), or
(d), particularly with regard to having information available for the
proposed rule and during the comment period. Specifically, many
applicants submit new technology add-on payment applications prior to
submitting a request to FDA for the necessary marketing authorization,
and applicants have stated that information missing from their
applications, which is needed to evaluate the technology for the add-on
payment, will not become available until after submission to FDA. With
regard to the alternative pathways, such applications may also be
missing information that would help inform understanding of the details
and interrelationship between the intended indication and FDA
Breakthrough Device or QIDP designation, which is the basis for a
product's eligibility for the alternative pathway.
Ultimately, it is difficult for CMS to review and for interested
parties to comment on a product that has not yet been submitted to FDA,
as multiple sections of the new technology add-on payment applications
lack preliminary information that is more likely to be available after
an FDA submission. Public input is an important part of our assessment
of whether a technology meets the new technology add-on payment
criteria, particularly as technology becomes more complex and
specialized.
Thus, we believe that requiring applicants to have already
submitted a marketing authorization request to FDA at the time of
submission of the new technology add-on payment application will
further increase transparency and improve the 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. By requiring applicants to submit their
FDA marketing authorization requests prior to submitting an application
for new technology add-on payments, the public and the agency will be
able to more knowledgeably analyze the new technology add-on payment
applications and supporting data and evidence to inform an assessment
of the technology's eligibility for the add-on payment.
Therefore, we proposed that beginning with the new technology add-
on payment applications for FY 2025, to be eligible for consideration
for the new technology add-on payment, an applicant must have already
submitted an FDA marketing authorization request before submitting an
application for new technology add-on payments. We proposed that, for
the purposes of this policy, submission of a request for marketing
authorization by FDA would mean that the applicant has submitted a
complete application to FDA, and that the application has an active
status with FDA (such as not in a Hold status or having received a
Complete Response Letter). An applicant must provide documentation of
the marketing authorization request at the time of submission of its
new technology add-
[[Page 58950]]
on payment application to CMS. We stated our belief that requiring an
FDA acceptance or filing letter will provide the clearest and most
effective means of documenting that the applicant has submitted a
complete request to FDA and therefore proposed to require this approach
to documentation. We proposed that the applicant would also indicate on
the new technology add-on payment application whether the FDA request
has an active status with FDA. We noted that applicants for
technologies that have already received FDA marketing authorization for
the indication for which they are applying for new technology add-on
payments would not be required to submit an FDA acceptance or filing
letter and would continue to be eligible for consideration for new
technology add-on payments. We proposed to amend 42 CFR 412.87 to
reflect this proposal by redesignating current paragraph (e) as
paragraph (f) and adding a new provision at 42 CFR 412.87(e) to state
that CMS will only consider, for add-on payments for a particular
fiscal year, an application for which the medical service or technology
is either FDA market authorized for the indication that is the subject
of the new technology add-on payment application or for which the
medical service or technology is the subject of a complete and active
FDA marketing authorization request and documentation of FDA acceptance
or filing is provided to CMS at the time of new technology add-on
payment application submission.
In the FY 2009 IPPS/LTCH PPS final rule (73 FR 48562 through
48563), we finalized our proposal to set July 1 of each year as the
deadline by which IPPS new technology add-on payment applications must
receive FDA marketing authorization. We noted that while we prefer that
technologies have FDA approval or clearance at the time of application,
this may not always be feasible. At that time, we believed that the
July 1 deadline would provide an appropriate balance between the
necessity for adequate time to fully evaluate the applications, the
requirement to publish the IPPS final rule by August 1 of each year,
and addressing commenters' concerns that potential new technology
applicants have some flexibility with respect to when their technology
receives FDA approval or clearance.
However, with the increased complexity and volume of applications
for new technology add-on payments since finalization of this policy in
the FY 2009 IPPS/LTCH PPS final rule, we believe the July 1 deadline
may no longer provide sufficient time to fully evaluate the new
technology applications in advance of the issuance of the final rule,
including information that does not become available until FDA approval
or clearance. The technologies that are the subject of new technology
add-on payment applications are increasingly complex, such as fourth-
and fifth-line therapies and devices utilizing artificial intelligence
algorithms. The volume of new technology add-on payment applications
has also risen substantially. In the first 20 years of the new
technology add-on payment program, CMS received on average 2-10
applications per year. Applications have risen by 200 percent from FY
2020 to FY 2024 alone.
The increased volume and complexity of applications makes it more
challenging to mitigate information gaps in advance of the final rule,
particularly with regard to analysis and validation of information
necessary to make determinations regarding whether technologies meet
the add-on payment criteria. For traditional pathway applications, this
may involve submission of new clinical studies and/or a different final
indication, which can change the relevant comparators for
consideration. For alternative pathway applications, CMS must assess
the relevant designations in connection with the applicable indications
and how the necessary marketing authorization relates to the designated
technology, which often necessitates coordination with FDA and other
components of HHS. As new technology continues to be developed, we
expect both the complexity and the number of applications to increase,
further increasing the need for additional time to fully evaluate the
applications in advance of the final rule. We also believe that
providing the opportunity for interested parties to review the FDA
approved indications and the clinical data that often only becomes
available after receiving, and may only be available in, FDA marketing
authorization will strengthen the quality of the public comments and
allow for more informed decision-making in the final rule.
Accordingly, to allow adequate time to fully evaluate the new
technology add-on payment criteria for FDA-authorized technologies in
advance of the final rule, and to further facilitate and inform public
comment, we proposed requiring applicants to receive FDA approval or
clearance by May 1 in order to be eligible for consideration for the
new technology add-on payment for the upcoming fiscal year. We said we
believed that this May 1 deadline would strike a balance between
providing adequate time to fully evaluate the applications while also
continuing to preserve flexibility for manufacturers. We proposed to
amend proposed redesignated Sec. 412.87(f)(2) to reflect this proposed
change by revising the date by which new medical services or
technologies must receive FDA marketing authorization from July 1 to
May 1 and making other conforming changes to the regulatory text.
Consistent with our current approach, we will not include in the
final rule the description and discussion of new technology add-on
payment applications which were included in the proposed rule that were
withdrawn or that were ineligible for consideration for the upcoming
fiscal year due to not meeting the proposed May 1 deadline. We will
also neither summarize nor respond to public comments received
regarding these withdrawn or ineligible applications in the final rule.
We noted that we were not proposing to change the July 1 deadline
for technologies for which an application is submitted under the
alternative pathway for certain antimicrobial products because they
would continue to be eligible for conditional approval under Sec.
412.87(e)(3) (to be redesignated as Sec. 412.87(f)(3)), as finalized
in the FY 2021 IPPS/LTCH PPS final rule (85 FR 58740). However, we
proposed to amend the redesignated Sec. 412.87(f)(3) to revise the
current cross-reference to Sec. 412.87(e)(2) in light of the
previously discussed amendments being proposed.
We sought public comment on our proposal to modify the new
technology add-on payment application eligibility requirements for
technologies that are not already FDA market authorized to require such
applicants to have a complete and active FDA marketing authorization
request at the time of new technology add-on payment application
submission, to provide documentation of FDA acceptance or filing to CMS
at the time of application submission, and to move the FDA marketing
authorization deadline from July 1 to May 1, beginning with
applications for FY 2025.
Comment: We received several public comments regarding the stated
policy goals behind our proposal of promoting transparency,
facilitating public input, and improving the review process. As part of
improving the new technology add-on payment review process, we stated
that as new technologies continue to be developed, we expect both the
complexity and the number of applications to increase, further
increasing the need for additional information earlier in the new
technology add-on payment review
[[Page 58951]]
process in order to fully evaluate the applications. As discussed
further in this section, many commenters stated that they understood
our policy goals but provided alternatives as to how to achieve those
goals or asked for a delay in implementation. We discuss the specific
comments concerning alternatives to our proposal and asking for a delay
in implementation later in this section.
Other commenters stated that it is unclear how the proposal would
improve transparency, facilitate public input, and improve the review
process, or disagreed that it would do so. One commenter specifically
stated that it did not understand how our proposal would further
facilitate and inform public comment, as the proposed rule is released
in April and the information from the full FDA approval would not be
available in the proposed rule at that time. A number of commenters
asserted that the intent of these policies is to reduce the number of
applications or decrease CMS's workload, and some of these commenters
expressed the view that the proposal is unlikely to address the
increasing volume and complexity of applications or reduce CMS's review
time. Commenters also stated that they did not believe the volume of
applications would decline because they believe that applicants will
likely continue to pursue a new technology add-on payment application
as a ``just in case'' strategy, or to solicit information on what
concerns CMS may have with a future application, even if they are
unlikely to receive FDA approval until well after the proposed May 1
deadline. One commenter noted that even those with Priority Review
status \185\ may not receive FDA approval until after May 1, and that
technologies subject to the standard review timeline may not receive
approval until late fall.
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\185\ A priority review designation means FDA's goal is to take
action on the marketing application within 6 months of receipt
(compared with 10 months under standard review). https://www.fda.gov/regulatory-information/search-fda-guidance-documents/expedited-programs-serious-conditions-drugs-and-biologics.
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A few of the commenters noted that applicants who do not receive
new technology add-on payment approval due to missing the marketing
authorization deadline would likely apply again during the following
application cycle and CMS would have to repeat this process the
following year, resulting in a greater burden on both manufacturers and
CMS. A few of these commenters also disagreed that our proposal would
improve transparency nor materially impact the volume or complexity of
applications, specifically for technologies with Breakthrough Device
designations for which the new technology add-on payment applications
only contain limited information as compared to traditional pathway
applications that contain newness and SCI information.
One commenter stated that complete new technology add-on payment
applications should provide CMS with sufficient information to assess
the medical technology in question regardless of whether the FDA
application has been formally submitted, and another commenter stated
that CMS currently has the discretion not to approve applications that
are missing data, regardless of the status of the FDA marketing
authorization application.
Response: We thank commenters for their comments. While a number of
commenters noted their belief that the intent of these policies is to
reduce the number of applications or decrease CMS's workload, the
intent of our proposal is instead to address the ever-increasing
complexity and number of applications lacking critical information that
is needed to evaluate whether the technology meets the eligibility
criteria at Sec. 412.87(b), (c), or (d), by enhancing transparency and
improving the evaluation process, as described in the proposed rule.
Specifically, applications for technologies that have not yet received
FDA marketing authorization often have incomplete information about the
indication, lack cost information, and provide limited clinical
information and supporting data (where applicable), all of which are
necessary for a thorough analysis of new technology add-on payment
criteria. Thus, the application summaries and lists of relevant CMS
concerns in the proposed rule may be limited and the public may not
have all of the necessary information on the new technology being
considered for new technology add-on payment. Public commenters in
previous final rules have noted that they cannot meaningfully comment
on a product that has not yet been FDA approved because multiple
sections of the new technology add-on payment applications are informed
by the marketing authorization approval process. Public input on the
new technology add-on payments is highly valued and an important
consideration in our assessment of whether a new technology add-on
payment application meets the eligibility criteria. This is especially
important given that new technologies are becoming more complex and
specialized and the volume of applications for new technology add-on
payments is increasing.
Therefore, we believe more comprehensive applications at the time
of submission will allow CMS to better identify critical questions in
the proposed rule and will enable more comprehensive evaluation by
commenters during the public comment process. In summary, the goal of
the proposal is to increase the quality of the information contained in
the application to allow the public and the agency to more
knowledgeably review and analyze the applications, supporting data, and
evidence to inform an assessment of a technology's eligibility for the
new technology add-on payment.
Although a commenter stated that complete new technology add-on
payment applications should provide CMS with sufficient information to
assess the medical technology in question regardless of whether an
application has been formally submitted to FDA, as noted previously,
applications for technologies that have not yet received FDA marketing
authorization often have incomplete information about the indication,
lack cost information, and provide limited clinical information and
supporting data (where applicable). In addition, in regard to the
commenter that stated CMS has the discretion not to approve
applications that are missing data, this does not address our intent to
increase the quality of the information contained in the application,
as previously described.
CMS recognizes that some applicants who submit new technology add-
on payment applications prior to submitting applications for FDA
marketing authorization may be doing so strategically to identify
information regarding concerns CMS may have with new technology that is
the subject of the new technology add-on payment application as early
as possible, as described by a commenter. While we acknowledge that it
could be advantageous for an applicant to learn of CMS's concerns
regarding eligibility of its product for new technology add-on
payments, we do not believe it is an appropriate use of resources to
evaluate applications for technologies that will not be eligible in
time for that particular rulemaking cycle. In addition, over the last 4
years, 50 to 75 percent of applications (depending on the fiscal year)
did not meet the July 1 deadline for obtaining FDA marketing
authorization. We believe that this proposal will serve to mitigate
these practices to some extent, though this is
[[Page 58952]]
not the goal behind the proposal, as described previously.
Regarding the comments that stated that applicants who miss the
marketing authorization deadline would likely apply again during the
following application cycle, resulting in a greater burden on both
manufacturers and CMS, we note that this would not be a change from our
current policy. As noted previously, even with a July 1 deadline, 50-75
percent of applications do not meet the deadline and many reapply the
following year. As described later in this section, we believe
requiring technologies to have submitted FDA marketing authorization
requests prior to submitting applications for new technology add-on
payments would mitigate this issue, as we believe applications for
which a ``complete and active'' FDA application has been accepted or
filed have a greater chance of meeting the deadline for FDA marketing
authorization for new technology add-on payment eligibility purposes.
Additionally, with regard to commenters' assertion that our
proposal would not improve transparency and materially impact the
volume or complexity of Breakthrough Device applications, we believe
that requiring a FDA marketing authorization request to have been
submitted and in an active status at the time of application for
technologies with Breakthrough Device designations will lead to
applicants submitting information in their new technology add-on
payments applications that address the criteria needed to determine
eligibility, such as the marketing authorization indication and other
information that would help inform understanding of the details and
interrelationship between the intended indication and FDA Breakthrough
Device designation, which is the basis for a product's eligibility for
the alternative pathway, and whether the device that is the subject of
the application is the same device designated as a Breakthrough Device.
We note, as we have gained more experience with applications for
technologies with Breakthrough Device designations, these applications
are increasingly complex and involve many considerations and nuances
across multiple aspects of the application, not just the cost
criterion. This requirement will enhance the quality of information CMS
receives at the time of application for all application pathways,
making more information available to the public and providing CMS with
more robust information to evaluate the application.
Although a commenter mentioned that the proposed rule is released
in April and therefore, information from the full FDA approval would
not be available in the proposed rule, we note that a May 1 deadline
allows for information necessary to determine whether a technology
meets the requirements for new technology add-on payment eligibility,
such as the full FDA marketing authorization indication and information
for which release is dependent on that approval, to be publicly
available during the comment period in time for consideration by the
public and the agency, since this deadline would generally occur
approximately 30 days before the public comment period closes. A
technology's FDA marketing authorization may differ from the proposed
indication, which may require additional consideration when
contemplating new technology add-on payment eligibility; for example,
with respect to how the final marketing authorization indication
compares to an alternative pathway designation, or what would be the
appropriate comparators for newness and substantial clinical
improvement for traditional pathway applications. Access to this
information will enhance the quality of the review process and improve
transparency for the public prior to the final rule.
Comment: One commenter was fully supportive of our proposal and
agreed that increasing transparency is critical for the new technology
add-on payment process. The commenter stated applications that lack
information at the time of submission make it difficult for CMS and the
public to assess whether the technology meets the new technology add-on
payment criteria. The commenter believed that the vast majority of
applicants, if not virtually all, who apply for new technology add-on
payments before they are ready to submit an application for marketing
authorization to FDA, do not end up receiving FDA approval in time for
the new technology add-on payment determination, which leads to a
tremendous use of resources to review technologies and put them through
the proposed rule and comment period, just to have the applications be
withdrawn from new technology add-on payment consideration at the last
minute. The commenter further asserted that due to the increased volume
and complexity of applications over the years, these issues may have
been compounded. The commenter noted that spreading limited resources
over a large number of applications with an extremely short deadline to
review the applications could result in a less than thorough review
process.
Response: We thank the commenter who was supportive of the proposal
and agree that the policy will increase our stated goals of
transparency, facilitating public input, and improving the review
process.
Comment: Many commenters who opposed our proposal stated that one
or both aspects of the proposal would create a barrier to beneficiary
and provider access to innovative technologies. A few commenters
recommended that CMS analyze the proposal's impact on beneficiary
access. Some of the commenters explained that the proposal would impact
the timeliness of reimbursement for the new technology. One commenter
stated that new technology add-on payments are often not in place until
more than a year after a product receives marketing authorization from
FDA and that the proposal would further delay that payment. Another
commenter encouraged CMS to maintain the existing timelines as reducing
the duration of the new technology add-on payment could reduce patient
access to therapies like CAR T-cell therapy. One commenter raised
concerns about the proposal having a negative effect on applicants that
rely on new technology add-on payments to sustain a viable market entry
point.
Several commenters noted that the proposal would worsen the lag
time between FDA marketing authorization and new technology add-on
payments and create disruptions, and thus delay beneficiary access to
new technologies, which would be the opposite of the intent of the new
technology add-on payment process. A few commenters stated that this
proposal would negatively affect therapies intended to treat serious
conditions and address unmet needs, and one commenter raised several
concerns about timing for new technology add-on payment approvals for,
and patient access to, certain types of newly approved FDA therapies,
such as cell and gene therapies and therapies treating orphan
conditions and rare diseases. One commenter stated that there is risk
that the policies would have a disproportionately negative effect on
drugs that utilize the FDA ``rolling review'' process,\186\ delaying
patient access to these drugs.
---------------------------------------------------------------------------
\186\ Rolling Review means that a drug company can submit
completed sections of its Biologic License Application (BLA) or New
Drug Application (NDA) for review by FDA, rather than waiting until
every section of the NDA is completed before the entire application
can be reviewed. BLA or NDA review usually does not begin until the
drug company has submitted the entire application to the FDA https://www.fda.gov/patients/fast-track-breakthrough-therapy-accelerated-approval-priority-review/fast-track.
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[[Page 58953]]
Response: We thank the commenters for sharing their concerns. CMS
shares the goal of ensuring Medicare beneficiaries and their providers
have access to new technologies. However, as described in the FY 2005
final rule (69 FR 49003 and 49009), patient access to these
technologies should not be adversely affected if a technology does not
qualify to receive new technology add-on payments, as CMS continues to
pay for new technologies through the regular payment mechanism
established by the MS-DRG methodology. We further note that whether a
technology receives new technology add-on payments or not does not
affect coverage of the technology or the ability for hospitals to
provide a technology to patients where appropriate.
Comment: Many commenters raised concerns that our proposals to
require a complete and active FDA marketing authorization request at
the time of submission of the new technology add-on payment application
and to move the FDA approval deadline from July 1 to May 1 for
technologies to receive FDA marketing authorization would adversely
impact their ability to enjoy maximum flexibility with respect to when
to apply to FDA and when they apply for new technology add-on payment.
One commenter stated that the proposal could discourage applicants
from applying for a new technology add-on payment. Another commenter
noted a manufacturer could be working closely and actively with FDA
through the FDA's voluntary pre-submission process, which is intended
to improve the quality of subsequent submissions, shorten total review
times, and facilitate the development process for new devices. The
commenter explained that the proposal would discourage industry
collaboration with FDA in its voluntary pre-submission process since
the policy could potentially delay eligibility for a new technology
add-on payment by a full year. A commenter stated that CMS should
consider a flexible approach for submitting additional documentation on
a rolling basis that corresponds with the type of technology's FDA
review process to account for the variation in FDA review processes
across new technologies and avoid creating new burdens on FDA.
One commenter noted that manufacturers' timelines are driven
primarily by trial enrollment so they may not be able to submit a BLA
prior to the new technology add-on payment application submission or
get approved by the May 1 deadline. A few commenters asserted that the
proposal would jeopardize the ability of manufacturers to submit
applications within the window of time necessary to be eligible to
receive new technology add-on payments, leading to fewer products being
eligible for approval each year.
A few commenters noted how the proposal does not reflect the
variations in FDA processes and timelines for different types of new
technologies, whereas the new technology add-on payment designation is
the same and only occurs once a year. Additionally, commenters noted
that the FDA provides estimates of timeline, but it does not provide
applicants with definitive timelines of when the product will be
approved or provide feedback on what is needed. A few commenters raised
concerns about how the FDA submission process can be impacted by
several factors, including timing of interactions with the FDA and
manufacturing readiness. One commenter noted that there are examples of
technologies receiving FDA clearance after submitting their new
technology add-on payment application and meeting the new-technology
add-on payment criteria, and that as long as new technology add-on
payments can only be awarded annually, applicants should be able to
apply for new technology add-on payments as long as there is potential
for FDA clearance prior to the July 1 deadline.
Response: We understand the commenters' concerns with regard to the
impact of having maximum flexibility with respect to when they apply
for FDA marketing authorization and when they apply for new technology
add-on payments. We believe the new technology add-on payment
application timeline with the same deadline for submission of a request
for FDA marketing authorization is appropriate regardless of how long
it takes for a technology to receive FDA approval. To date, we have not
specified how complete an application for new technology add-on
payments must be at the time of its submission, and used a late
deadline of July 1 for the requirement for FDA approval, in order to
maximize flexibility for applicants. But as noted earlier, currently,
many applicants submit new technology add-on payment applications prior
to submitting a request to FDA for marketing authorization, and
applicants have stated that information missing from their
applications, which is needed to evaluate the eligibility of the
technology for the add-on payment, will not become available until
after submission to FDA. Our policy will further increase transparency
and improve the evaluation process, including enabling CMS to identify
critical questions regarding the technology's eligibility for add-on
payments in the proposed rule. It will also reduce the number of
applications that CMS receives that contain limited information.
We further note that even under the current policy with the
flexibilities mentioned by the commenters, most applicants do not
receive FDA marketing authorization by the July 1 deadline. As noted
previously, over the last 4 years, more than 50 percent of applications
each year did not receive FDA marketing authorization by the July 1
deadline and were therefore ineligible for new technology add-on
payments for the fiscal year for which they applied. As the commenters
noted, there are many factors (including timing of interactions with
FDA and manufacturing readiness) that can impact a technology's
approval or clearance by FDA, despite expected FDA timelines based on
review time or submission planning. This is true regardless of whether
the deadline for FDA approval is May 1 or July 1.
We note that this policy does not eliminate flexibilities built
into the new technology add-on payment process, as FDA marketing
authorization is not required at the time of application, and
applicants can continue to provide information as it becomes available
according to our standard processes (such as the December supplemental
deadline and the public comment period). We believe in providing
maximum flexibility to applicants where feasible, but due to the
increasing complexity and volume of applications lacking critical
information that is needed to evaluate whether the technology meets the
eligibility criteria at Sec. 412.87(b), (c), or (d), as we have noted
previously, we will require information related to FDA submission at
the time of application beginning with applications for FY 2025.
We do not anticipate that the policy of requiring an applicant to
have already submitted its marketing authorization application to FDA
will discourage applicants from applying for new technology add-on
payments, since they would be able to reasonably provide sufficient
information at the time of application in order for CMS to identify
critical questions regarding the technology's eligibility for add-on
payments and to allow the public to assess the relevant new technology
evaluation criteria in the proposed rule. In addition, the extent to
which an applicant decides to collaborate with FDA is independent from
the application process for new technology
[[Page 58954]]
add-on payment, and the applicants retain the autonomy to decide if,
when, and how to collaborate with the FDA. Applicants are not precluded
from continuing to work with FDA as appropriate, and can continue to
submit applications to FDA based on their individual readiness and
internal timelines.
Comment: Many commenters expressed specific concerns regarding
moving the FDA approval deadline to May 1 and how it would impact how
long technologies may be eligible for a new technology add-on payment.
Several of the commenters asserted that this policy change would
prevent a 3-year new technology add-on payment duration for almost all
applicants, as only those technologies that receive FDA marketing
authorization in April would get 3 years of new technology add-on
payments, shortening the window from 3 months under the current policy
to just 1 month (April 1 until July 1, vs April 1 until May 1).\187\
One commenter stated that few new technology add-on payment
applications have had a full three-year duration of add-on payments
under existing policy, potentially limiting Medicare beneficiary
access, and this new policy would exacerbate the issue. Further,
another commenter provided an example of the potential impact of this
policy by referring to Table II.P.-01 in the proposed rule that details
the technologies that are scheduled to continue new technology add-on
payments in FY 2024. The commenter noted that of the 11 technologies
listed, seven (64%) received FDA approval/clearance between May 5 and
June 30, and stated that if this policy had been in place at the time
these new technology add-on payment applications were evaluated, each
of these would not have been granted new technology add-on payments the
following October, representing a delay of 12 months.
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\187\ 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 add-on payment for an additional 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).
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Some commenters recommended that if CMS finalizes the aspect of its
proposal to move the FDA approval date to May 1, it also adjust its
regulations to provide that all devices that receive approval for a new
technology add-on payment be granted 3 fiscal years of reimbursement
from the time of approval for the new technology add-on payment,
independent of the timing of the FDA approval. A few commenters noted
that the shortened period resulting from decreasing the window for 3
years of payment for new technology add-on payments to 1 month (April 1
until May 1) would mean CMS would have less claims data available to
determine the MS-DRG payment rate.
Several commenters believed our proposal would worsen lag times
between FDA approval and the new technology add-on payment designation,
resulting in an FDA-approved product being on the market for up to 17-
18 months without being approved to receive new technology add-on
payments and reducing the potential length of new technology add-on
payment eligibility from a possible 3-year period to a 2-year period.
Some commenters performed analyses to demonstrate the potential
impact of the proposed May 1 deadline policy: one commenter noted that
if the policy were currently in effect then new technology add-on
payments would have been delayed for 4 out of the 25 technologies that
received approval between 2019 and 2023; another noted that if this
policy had already been implemented, then 9 out of the current 19
traditional applications would be disqualified for consideration for
the FY 2024 rule; and another commenter noted that almost all renewals
proposed for FY 2024 would have had new technology add-on payments
delayed by a year as their newness periods begin in May/June. One
commenter noted that 20 percent of FY 2022 approved technologies and 30
percent of FY 2023 approved technologies had FDA approval dates between
May 2 and July 1, and that based on this data, the commenter estimated
the proposed May 1 deadline would delay access by a full year for
between one-in-three and one-in-five therapies. Another commenter cited
a study finding that, historically, over 25 percent of new technology
add-on payment denials were due to applicants being unable to meet the
existing July 1 deadline, stating that the May 1 deadline would result
in even more products experiencing delays in new technology add-on
payments.
Response: We thank the commenters for their feedback. We note that
it appears that commenters' analyses may have conflated FDA approval
dates with newness period start dates. For example, with respect to the
commenter that referred to Table II.P.-01 in the proposed rule, we note
that this table does not provide FDA approval/clearance dates, but
rather the newness period start dates, for these technologies.
Furthermore, the commenters' analyses of technologies in previous
fiscal years that received approvals for new technology add-on payments
with newness period start dates between May 2 and July 1 do not
necessarily indicate that these technologies would have received a
denial for new technology add-on payments for those respective fiscal
years. In certain circumstances, the newness start date may occur after
the FDA marketing authorization date. Applicants may have also applied
for new technology add-on payments after receiving FDA marketing
authorization. It is also possible that some of these manufacturers may
have delayed their submission of their FDA marketing authorization
application in an attempt to align that approval as much as possible
with the existing new technology add-on payment timelines, rather than
applying at a sooner time that could have resulted in an FDA marketing
authorization date prior to May 1. With regard to the commenter that
stated that 9 out of the current 19 traditional applications would be
disqualified for consideration for the FY 2024 rule if CMS had already
implemented an FDA marketing authorization deadline of May 1st, we note
that of those 9 applications, 7 withdrew or were ineligible for new
technology add-on payments.
We also note that even under the current policy with the
flexibilities mentioned by the commenters, not all applicants receive
the full three years of new technology add on payments. As the
commenters noted, there are many factors (including timing of
interactions with the FDA and manufacturing readiness) that can delay a
technology's approval by the FDA that would disrupt a technologies
ability to receive the full three years of payment.
We note that our data analysis of applications over the last 3
years demonstrates that nearly all applicants who submit new technology
add-on payment applications prior to FDA submission in fact do not
receive FDA approval by the July 1 deadline. Between FY 2021 and FY
2023, only 3.7 percent of applicants that applied for a new technology
add-on payment prior to having submitted its marketing authorization
application to FDA received FDA marketing authorization prior to the
July 1 deadline. We believe this may result in part from strategically
planning the timing of application submission to FDA, as noted by
commenters. However, while we expect that applicants are applying for
new technology add-on payments with the expectation that they will
receive FDA marketing authorization by the deadline, we agree that this
choice to
[[Page 58955]]
``time'' an application submission to FDA by applicants may not change
with implementation of this policy. As stated previously, the goals of
this policy are to increase transparency, facilitate public input, and
improve the review process, and we believe that by receiving relevant
information earlier (both in terms of the time of application and in
terms of final FDA marketing authorization prior to the close of the
comment period), these goals will be fostered and advanced. We further
note that between FY 2021 and FY 2023, only 4 applications out of 107
received FDA marketing authorization between May 1 and July 1 and were
approved for new technology add-on payments. Based on this analysis,
however, we note that it appears that changing the FDA approval date
from July 1 to May 1 would still have affected only a small percentage
of new technology add-on payment applications.
We further note that section 1886(d)(5)(K)(ii) of the Act
establishes a period of not less than two years and not more than three
years for the collection of data with respect to the costs of new
services or technologies; a full 3 years is not required. As previously
stated, consistent with the statute and our implementing regulations, a
technology is no longer considered ``new'' once it is more than 2 to 3
years old, irrespective of how frequently the medical service or
technology has been used in the Medicare population (70 FR 47349). As
such, once a technology has been available on the U.S. market for more
than 2 to 3 years, we consider the costs to be included in the MS-DRG
relative weights regardless of whether the technology's use in the
Medicare population has been frequent or infrequent. Therefore, we do
not believe that 2 years' worth of data would be insufficient to inform
rate-setting for the inpatient setting.
However, we have noted commenters' concerns regarding the
possibility that moving the FDA approval deadline from July 1 to May 1
may limit the ability of new technology add-on payment recipients to
receive three years of add-on payments, due to the shortened time
period between April 1 and May 1. We note that we anticipate
considering for future rulemaking changes to how we assess new
technology add-on payment eligibility in the third year of newness,
such as consideration of adjusting the April 1 cut-off to allow for a
longer window of eligibility.
Comment: One commenter supported this aspect of the proposal,
agreeing that moving the deadline to May 1 would allow interested
parties to review the FDA-approved indications and clinical data that
often becomes available only after receiving FDA marketing
authorization, and would strengthen the quality of the public comments,
allowing for a more informed decision-making process in the final rule.
Response: We thank the commenter and agree that the policy will
increase our stated goals of transparency, facilitating public input,
and improving the review process.
Comment: Commenters asked for clarifications or raised concerns
with the terminology used in the proposal regarding the requirement for
a complete and active FDA marketing authorization request at the time
of new technology add-on payment application submission and providing
documentation of FDA acceptance or filing to CMS at the time of
application submission.
Some commenters requested that CMS clarify what constitutes a
``complete and active FDA marketing authorization request.'' Some of
these commenters stated it was unclear what the terms ``complete and
active FDA marketing authorization'' means, as they are not defined in
statute, regulation, or guidance, or adequately defined in the proposed
rule. A few commenters noted that these terms do not correlate with the
terms used by the FDA and that there is currently no certification
provided by the FDA indicating such a status. Some commenters suggested
this would create further confusion between FDA, CMS, and interested
parties.
A few commenters noted the FDA application status at the time of
the new technology add-on payment application submission is not always
an accurate representation of the maturity of the FDA application. A
few commenters stated that the FDA application process is dynamic and
could switch from ``active'' to ``on hold'' at any time for various
reasons including temporary pauses for minor questions or the request
of supplemental materials, and noted that a temporary hold may be
lifted with submission of supplemental materials.
Some commenters raised concerns about what documentation is
sufficient to demonstrate that a product was submitted to FDA for
approval or review at the time of submission of the new technology add-
on payment application and requested additional clarification from CMS.
One commenter recommended that CMS accept a copy of the first page of
the marketing authorization request cover letter submitted to the FDA
as sufficient documentation. Another commenter raised concerns that
this would increase the burden on the FDA to provide applicants with
proof of a ``complete and active'' application status.
One commenter requested clarification about whether a ``Refuse to
File'' letter from the FDA would prevent an applicant from applying for
new technology add-on payments, recommending that a ``Refuse to File''
letter should not preclude an applicant from applying for new
technology add-on payments because the applicant could correct the
filing error and re-submit their NDA or BLA and still meet the current
July 1 FDA marketing authorization deadline.
Response: We thank the commenters for the feedback and sharing
their concerns. We note that we collaborated with the FDA in developing
the terminology used in this proposal, and the intent behind using the
terms we did was to ensure that the requirement could apply to and be
inclusive of the different types of FDA applications for different
types of drugs and devices. Many of the commenters only referenced
terms used for either drugs or for devices, and because a variety of
types of technologies, with different FDA marketing authorization
application requirements, can be eligible for new technology add-on
payment, we are not using terms defined in statute or existing
regulations or terms defined by FDA.
We consider, for the purposes of new technology add-on payment
applications, an FDA marketing authorization application to be
``complete'' when the full application has been submitted to FDA.
Specifically, for relevant FDA application types, a full application
includes all modules or all information following a rolling review or
Real-Time Oncology Review (RTOR).\188\ We will only accept new
technology add-on payment applications once FDA has received all of the
information to determine whether it will accept (such as in the case of
a 510k application or De Novo Classification request) or file (such as
in the case of a PMA, NDA, or BLA) the application, as demonstrated by
the acceptance/filing letter that is already provided by FDA to
indicate that FDA has determined that the application is sufficiently
complete to allow for substantive review by FDA. Additionally, for the
purposes of new technology add-on payment applications, we consider an
FDA marketing authorization application to be in an ``active'' status
when the application has been determined by
[[Page 58956]]
FDA to be sufficiently complete to permit substantive review by FDA,
and when it is still under review at the time of new technology add-on
payment application submission (that is, it is not in an inactive
status such as withdrawn, the subject of a Complete Response Letter or
final decision from FDA to refuse to approve the application, or on
hold). We have received a number of applications over the years for
technologies that have received a Complete Response Letter (CRL) or not
approvable status from FDA, or are in a hold status with up to 360 days
allowed for submission of additional information. Applications that are
submitted to CMS without a new submission to FDA or additional
information submitted to FDA addressing the relevant issues leading to
the inactive review status would still be missing significant relevant
information to inform assessment of the add-on payment criteria. For
these reasons, applications submitted for new technology add-on
payments must be in an active status with FDA at the time of new
technology add-on payment application submission, and must provide that
information as part of their new technology add-on payment application.
We believe that those technologies for which a ``complete and active''
FDA application has been accepted or filed also have a greater chance
of meeting the deadline for FDA marketing authorization for new
technology add-on payment eligibility purposes. We do not believe this
process will increase the burden on FDA; we are requiring that
applicants provide us with the initial acceptance or filing letter that
is already provided by FDA after its initial administrative review
(which can vary based on the FDA application type) which demonstrates
FDA has begun substantive review of the application in full, as
described further in this section. Aside from that, we do not require
specific documentation from FDA to demonstrate continued ``active
status'' after initial FDA acceptance or filing, as we believe
applicants are aware of any changes to their FDA application status and
would be able to provide this information to CMS in their new
technology add-on payment application. We acknowledge that the FDA
application process is dynamic and could switch from ``active'' to ``on
hold'' at any time for various reasons, and do not intend for our
requirement to exclude applicants that have submitted to FDA; the
intention is that applicants apply for new technology add-on payments
if they can indicate that the FDA application has an ``active status''
at the time of new technology add-on payment application submission. As
described previously, the intent of this requirement is to ensure that
applicants are far enough along in the FDA review process that
applicants would be able to reasonably provide sufficient information
at the time of application for CMS to identify critical questions
regarding the technology's eligibility for add-on payments and to allow
the public to assess the relevant new technology evaluation criteria in
the proposed rule.
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\188\ https://www.fda.gov/about-fda/oncology-center-excellence/real-time-oncology-review.
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Regarding the documentation that would suffice for the purposes of
this policy, as described previously, we are requiring the
documentation provided to applicants by FDA after FDA concludes that
the application is sufficiently complete to permit a substantive
review. We note that when FDA instead provides applicants with a
``Refuse to File'' (RTF) (or ``Refusal to Accept'' (RTA)) letter, this
specifically indicates that FDA has determined the application is not
complete and therefore those applicants that have received an RTF or
RTA letter will not be eligible to apply for new technology add-on
payment until the application is resubmitted to FDA and an acceptance/
filing letter is received.
Comment: A few commenters requested exceptions for QIDPs and LPADs
to one or both aspects of the proposal. The commenters stated that
since applications for these technologies only require the cost
criterion, they should be exempt from the proposal, as the proposal
could delay access to QIDPs and LAPDs.
Response: We thank commenters for their feedback. We note that we
did not propose to change the July 1 deadline for technologies for
which an application is submitted under the alternative pathway for
certain antimicrobial products because they would continue to be
eligible for conditional approval under Sec. [thinsp]412.87(e)(3) (as
finalized in the FY 2021 IPPS/LTCH PPS final rule (85 FR 58740)).
However, we do not believe it is appropriate to exempt any technology
from the requirement to request FDA marketing authorization prior to
applying for new technology add-on payments. As discussed previously,
this proposal is intended to increase transparency for the proposed
rule, and as such, receiving the most information possible at the time
of application would result in robust analysis and discussion for the
proposed rule to maximize public input. Furthermore, as discussed
previously, with regard to the alternative pathways, such applications
may also be missing information that would help inform understanding of
the details and interrelationship between the intended indication and
FDA QIDP (or Breakthrough Device) designation, which is the basis for a
product's eligibility for the relevant alternative pathway.
Comment: Several commenters requested that if CMS finalizes its
proposal, it should delay implementing until after FY 2025. The
commenters recommended that CMS provide more notice to manufacturers
and delay implementation of the proposed new policies until FY 2026 or
later to provide more time for manufacturers to adjust their
development processes. Some commenters raised concerns that planning
for the FY 2025 cycle is already underway and if these policy changes
are implemented in this final rule, they would no longer be able to
apply for a new technology add-on payment in the next cycle as they
anticipated, which raises the risk that Medicare beneficiaries would
not have reliable access to these new technologies for more than a year
after FDA approval. One commenter also noted that it takes about 6-10
months from the initial FDA application request to receive an approval
decision, and that by the time the final rule releases in August, if
the policy is finalized, it may be too late for manufacturers to apply
and receive FDA approval before the May 1 deadline. Other commenters
specifically noted that this could require Breakthrough Devices/510k
applications to submit applications to FDA earlier, such as 4-6 months
sooner (since their FDA timeline is shorter), which would mean a year
delay in add-on payments if the deadline is missed, since they can
currently apply to FDA as late as April and still anticipate approval
by July 1.
Response: We thank the commenters for their recommendations
regarding delay of implementation of the proposal. It seems that
commenters are suggesting that manufacturers may strategically time the
submission of an application to the FDA in an attempt to align an
expected decision by the FDA with the timelines for new technology add-
on payment eligibility. We encourage manufacturers to pursue the
appropriate regulatory processes to bring new products to market as
soon as practical. While FDA reviews often have standard estimated
timeframes from application to approval, we understand that there can
be many variables in the review, including FDA seeking new or
additional information, that may result in a longer or shorter
timeframe to approval than estimated. We further note that CMS
continues to pay for new
[[Page 58957]]
technologies through the regular payment mechanism established by the
MS-DRG methodology, with or without new technology add-on payments, and
whether a technology receives new technology add-on payments or not
does not affect coverage of the technology or ability for hospitals to
provide a technology to patients where appropriate.
As discussed previously and in the FY 2024 IPPS/LTCH PPS proposed
rule, we believe these policies will help facilitate a more transparent
process that will improve public engagement and help improve and
streamline our review processes. Many of these products are novel and
complex, and CMS has a responsibility to appropriately and thoroughly
review applications for eligibility for new technology add-on payments
against our established eligibility criteria. Therefore, we do not
intend to delay implementation of the proposed new policies because we
believe that such a delay would not lead to improved transparency and
more robust applications or otherwise align with the issues this policy
would address.
Comment: Many commenters stated that the proposal was unlikely to
achieve CMS's stated goals or to decrease workload, and would instead
negatively impact beneficiary access or manufacturer flexibility. The
commenters therefore recommended alternatives that they believed would
maximize flexibility and improve access in line with the intent of new
technology add-on payments, as described further in this section.
Commenters recommended that rather than finalizing the proposal,
CMS consider increasing the frequency of new technology add-on payment
application reviews. Specifically, some commenters requested that CMS
conduct quarterly or biannual reviews that align with existing CMS
processes for the hospital outpatient transitional pass-through
payments and ICD-10 coding cycles. One commenter supported the proposal
to require applicants to submit their FDA marketing authorization
requests prior to submitting a new technology add-on payment
application only if the new technology add-on payment eligibility
determinations are conducted biannually.
For instance, a few commenters suggested the effective dates of a
semiannual new technology add-on payment application process to begin
making new technology add-on payments could fall on April 1 and October
1. Some of the commenters suggested a biannual cycle as follows: For an
October 1 add-on payment start date, new technology add-on payment
applications could have a deadline of April 1, with a public meeting in
early/mid-May, with new technology add-on payment proposals issued in
early/mid-June allowing for a 30-day comment period leading to final
new technology add-on payment decisions in late August with an
effective date of October 1; the second cycle would follow a similar
timeline with a new technology add-on payment application deadline of
October 1 and April 1 add-on payment start date. This commenter stated
that this proposed timeline would be consistent with the statute and
would allow for more new technology add-on payment determinations,
which would, in theory, enhance the quantity and quality of claims data
used for ratesetting. Other commenters also noted that biannual new
technology add-on payment reviews could also theoretically result in
more claims data to analyze in the next fiscal year.
Another commenter asserted that section 1886(d)(5)(K)(vii) of the
Act does not prevent the agency from approving new technology add-on
payment applications more than once a year, but mandates only that the
Secretary provide the addition of new diagnosis and procedure codes on
April 1, while giving the Secretary discretion to adjust the payment.
One commenter proposed that the 60-day comment period could be avoided
by CMS going through rulemaking to establish the substantive legal
standards used to determine whether a product qualifies for new
technology add-on payment, as well as the process, including the
opportunity for public comment, for applying those standards. The
commenter noted precedent for similar approaches under the Medicare
program, including the Clinical Laboratory Fee Schedule rate setting
process and the process for approving applications for transitional
pass-through payment under the Outpatient Prospective Payment System.
Another commenter stated that the statute \189\ does not preclude CMS
from considering applications prior to the required public meeting, and
accordingly supported a quarterly review process.
---------------------------------------------------------------------------
\189\ See SSA sec. 1886(d)(5)(K)(viii)(III).
---------------------------------------------------------------------------
A few commenters suggested that more frequent reviews could help
address patient access challenges, reduce the volume of applications
per application cycle, provide CMS with additional time to fully review
and analyze applications and reduce the administrative burden on the
agency, and ensure timely reimbursement for new technologies. Other
commenters recommended that CMS consider expanding alternative pathways
and conditional approvals to more types of technologies, for example,
products designated as Breakthrough Therapies and Regenerative Medicine
Advanced Therapies (RMAT) by the FDA, innovative therapies, cell and
gene therapies, in-vitro diagnostics, etc., to reduce workload and
accelerate review timelines. Some commenters recommended that CMS
expand the new technology add-on payment conditional approval pathway
to include all technologies approved or cleared by the FDA through the
Breakthrough Device Program to reduce workload and improve access.
One commenter stated that CMS should consider more frequent
application cycles or other mechanisms that allow for faster NTAP
eligibility, and indicated that certain technologies, such as
antimicrobial products, have unique characteristics or policy needs
recognized by CMS that warrant bespoke new technology add-on payment
policies. The commenter stated that CMS should consider adopting a
similar mechanism in other contexts to allow a new technology add-on
payment to be implemented on a rolling or quarterly basis, especially
in situations where there is a heightened policy need to facilitate new
technology add-on payment availability.
A number of commenters suggested that CMS not finalize these
policies and instead gather additional input from interested parties to
assist with finding alternative policies, such as convening various
interested parties to discuss potential alternatives or issuing a
separate request for information (RFI) related to the new technology
add-on payment applications process. One commenter stated that a 200
percent increase in new technology add-on payment applications would
require additional resources but recommended that CMS work with
interested parties to explore other options before finalizing any
policy and ensure that any future changes to the new technology add-on
payment process maintain transparency into the agency's decisions and
provide applicants and the public the opportunity to provide comments.
A few commenters recommended that instead of requiring proof of
active FDA review by the application deadline, CMS should require that
proof by the December supplemental information deadline. They stated
that this could account for the lag between FDA submission and the
acknowledgment letter CMS is proposing to require, and
[[Page 58958]]
this modification to the proposed policy would enable CMS to achieve
the stated intent of striking a balance between being able to fully
evaluate applications and preserving flexibility for manufacturers.
Response: We thank the commenters for their suggestions and
recommendations. We believe at the heart of these comments is a shared
interest among commenters and CMS in the goal of the new technology
add-on payment program, which is to facilitate access to innovative new
technologies for Medicare beneficiaries. We understand that the goals
of other new technology payment pathways, such as transitional pass-
through payments under the OPPS, may be similar.
However, there are a number of complexities, both legal and
operational, that CMS would need to consider before proposing and
finalizing an increase in the frequency of new technology add-on
payment application review cycles, and not all of these complexities
are the same in other new technology payment programs, such as
transitional pass-through payment under the Outpatient Prospective
Payment System. For example, the assessment of whether new technology
add-on payment applicants meet the newness criterion intersects with
other requirements associated with MS-DRG development and assessment,
which is tied to fiscal year rulemaking and ratesetting. We note that
we did not propose increasing the frequency of the new technology add-
on payment application review cycle, and as such, we believe it is most
appropriate to consider the feasibility of taking such steps in future
years, so that we could solicit public comment through a full notice-
and-comment rulemaking cycle.
Regarding the comments that recommended CMS should require proof of
active FDA review by the December supplemental information deadline
instead of the new technology add-on payment application deadline, as
stated previously, we believe the new technology add-on payment
application timeline with a simultaneous deadline for submission of a
request for FDA marketing authorization is appropriate because when
applicants submit new technology add-on payment applications prior to
submitting a request to FDA for marketing authorization, missing
information from their applications, which is needed to evaluate the
eligibility of the technology for the add-on payment, will not become
available until after submission to FDA.
With regard to expanding conditional approvals to other types of
technologies, we note that we only recently established the pathway of
conditional approvals. To date, no application that has gone through
the conditional approval pathway has received FDA approval after being
granted conditional new technology add-on payment approval and we
therefore do not yet have sufficient experience with the conditional
approval process. We do not currently have any reasonable expectation
that expansion of eligibility for conditional approvals would advance
our policy goals of promoting transparency, facilitating public input,
and improving the review/evaluation process, or lead to additional
technologies being granted conditional approval based on other new
technology add-on payment criteria that we are required to assess. In
addition, we have stated in prior rulemaking that we do not believe it
is appropriate for CMS to determine whether a medical service or
technology represents a substantial clinical improvement over existing
technologies before FDA makes a determination as to whether the medical
service or technology is safe and effective, and therefore we are
unable to extend conditional approval to traditional applications (86
FR 45049).
With regard to expanding alternative pathways, we will continue to
consider these issues for future rulemaking, including suggestions
previously made by commenters to develop other ways pursuant to which a
technology could qualify for new technology add-on payments, such as
technologies that are designated for an FDA expedited program for drugs
or devices (85 FR 58432).
We appreciate all the comments and various suggested alternatives
to our proposal, as well as the recognition of our efforts toward
greater transparency, public input, and streamlining of the new
technology add-on application process. We acknowledge the concerns
raised by commenters regarding flexibility and clarification of our
policy. While commenters were concerned about our proposal, they did
not address our concerns with regard to transparency. However, after
having reviewed and carefully considered the comments and suggestions
we received, we have determined that the additional information that
will be made available by requiring a complete and active FDA marketing
application prior to submission of a new technology add-on payment
application, and the increased time for final review of such
application made available by changing the FDA authorization deadline
from July 1 to May 1, supports our decision to finalize these policy
changes in this final rule. We have also further clarified the
requirements for documentation and the meaning of ``complete and
active'' under this policy, as described previously.
Therefore, for the reasons discussed previously and in the FY 2024
IPPS/LTCH proposed rule, we are finalizing our proposal to require
applications to have a complete and active FDA marketing authorization
request at the time of the new technology add-on payment application
submission, and to move up the FDA marketing authorization deadline
from July 1 to May 1, beginning with applications for FY 2025. As
stated previously, we have noted commenters' concern regarding the
potential impact of the shortened time period between April 1 and May
1, and we anticipate considering potential changes to the April 1 cut-
off for future rulemaking. As previously noted, we are not making
changes to the July 1 deadline for applications submitted under the
alternative pathway for certain antimicrobial products because they
would continue to be eligible for conditional approval under Sec.
412.87(e)(3) (redesignated as Sec. 412.87(f)(3)) in this final rule),
as finalized in the FY 2021 IPPS/LTCH PPS final rule (85 FR 58740). We
are also finalizing our proposal to redesignate Sec.
[thinsp]412.87(e)(3) as Sec. [thinsp]412.87(f)(3), and to amend the
redesignated Sec. [thinsp]412.87(f)(3) to revise the current cross-
reference to Sec. [thinsp]412.87(e)(2), in light of the previously
discussed proposed amendments.
III. Changes to the Hospital Wage Index for Acute Care Hospitals
A. Background
1. Legislative Authority
Section 1886(d)(3)(E) of the Act requires that, as part of the
methodology for determining prospective payments to hospitals, the
Secretary adjust the standardized amounts for area differences in
hospital wage levels by a factor (established by the Secretary)
reflecting the relative hospital wage level in the geographic area of
the hospital compared to the national average hospital wage level. We
currently define hospital labor market areas based on the delineations
of statistical areas established by the Office of Management and Budget
(OMB). A discussion of the FY 2024 hospital wage index based on the
statistical areas appears under section III.A.2. of the preamble of
this final rule.
Section 1886(d)(3)(E) of the Act requires the Secretary to update
the wage index annually and to base the update on a survey of wages and
wage-
[[Page 58959]]
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 expires on September 30, 2025.
Section 1886(d)(3)(E) of the Act also requires that any updates or
adjustments to the wage index be made in a manner that ensures that
aggregate payments to hospitals are not affected by the change in the
wage index. The adjustment for FY 2024 is discussed in section II.B. of
the Addendum to this final rule.
As discussed in section III.I. of the preamble of this final rule,
we also take into account the geographic reclassification of hospitals
in accordance with sections 1886(d)(8)(B) and 1886(d)(10) of the Act
when calculating IPPS payment amounts. Under section 1886(d)(8)(D) of
the Act, the Secretary is required to adjust the standardized amounts
so as to ensure that aggregate payments under the IPPS after
implementation of the provisions of sections 1886(d)(8)(B),
1886(d)(8)(C), and 1886(d)(10) of the Act are equal to the aggregate
prospective payments that would have been made absent these provisions.
The budget neutrality adjustment for FY 2024 is discussed in section
II.A.4.b. of the Addendum to this final rule.
Section 1886(d)(3)(E) of the Act also provides for the collection
of data every 3 years on the occupational mix of employees for short-
term, acute care hospitals participating in the Medicare program, in
order to construct an occupational mix adjustment to the wage index.
(The OMB control number for approved collection of this information is
0938-0907, which expires on January 31, 2026.) A discussion of the
occupational mix adjustment that we are applying to the FY 2024 wage
index appears under sections III.E. and F. of the preamble of this
final rule.
2. Core-Based Statistical Areas (CBSAs) for the FY 2024 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 OMB Bulletin No. 17-01 (August 15, 2017). On September 14,
2018, OMB issued OMB Bulletin No. 18-04 which superseded OMB Bulletin
No. 18-03 (April 10, 2018). 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, OMB Bulletin No. 18-04 (September 14,
2018) 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
[[Page 58960]]
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 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 2024, we will 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.
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. Per the schedule published
in a July 16, 2021 OMB Notice of Decision, we expect revised
delineations based on the 2020 decennial census data to be available in
July 2023 (86 FR 37775). We intend to address these revisions in future
rulemaking.
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.
For FY 2024, we are continuing to use only the FIPS county codes
for purposes of crosswalking counties to CBSAs. For FY 2024, Tables 2
and 3 associated with this final rule and the County to CBSA Crosswalk
File and Urban CBSAs and Constituent Counties for Acute Care Hospitals
File posted on the CMS website reflect the latest FIPS code updates.
B. Worksheet S-3 Wage Data for the FY 2024 Wage Index
The FY 2024 wage index values are based on the data collected from
the Medicare cost reports submitted by hospitals for cost reporting
periods beginning in FY 2020 (the FY 2023 wage indexes were based on
data from cost reporting periods beginning during FY 2019).
1. Included Categories of Costs
The FY 2024 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 2023, the wage
index for FY 2024 also excludes the direct and overhead salaries and
hours for services not subject to IPPS payment, such as skilled nursing
facility (SNF) services, home health services, costs related to GME
(teaching physicians and residents) and certified registered nurse
anesthetists (CRNAs), and other subprovider components that are not
paid under the IPPS. The FY 2024 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. We did not
receive any comments on the discussion in this section.
[[Page 58961]]
C. Verification of Worksheet S-3 Wage Data
The wage data for the FY 2024 wage index were obtained from
Worksheet S-3, Parts II, III and IV of the Medicare cost report, CMS
Form 2552-10 (OMB Control Number 0938-0050 with an expiration date
September 30, 2025) for cost reporting periods beginning on or after
October 1, 2019, and before October 1, 2020. For wage index purposes,
we refer to cost reports beginning on or after October 1, 2019, and
before October 1, 2020, as the ``FY 2020 cost report,'' the ``FY 2020
wage data,'' or the ``FY 2020 data.'' Instructions for completing the
wage index sections of Worksheet S-3 are included in the Provider
Reimbursement Manual (PRM), Part 2 (Pub. 15-2), Chapter 40, sections
4005.2 through 4005.4. The data file used to construct the FY 2024 wage
index includes FY 2020 data submitted to us as of June 2023. 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 ratesettings, 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
4-year lag (for example, for the FY 2022 wage index we used cost report
data from FY 2018). We stated in the FY 2023 IPPS/LTCH PPS final rule
(87 FR 48994) that we will be looking at the differential effects of
the COVID-19 PHE on the audited wage data in future fiscal years. We
also stated we plan to review the audited wage data, and the impacts of
the COVID-19 PHE on such data and evaluate these data for future
rulemaking. For the FY 2024 wage index, the best available data
typically would be from the FY 2020 wage data.
In the proposed rule we stated that based on pre reclassified wage
data, the changes in the wage data from FY 2019 to FY 2020 show the
following compared to the annual changes for the most recent 3 year
periods (that is, FY 2016 to FY 2017, FY 2017 to FY 2018 and FY 2018 to
FY 2019):
Approximately 85 percent of hospitals have an increase in
their average hourly wage (AHW) from FY 2019 to FY 2020 compared to a
range of 76-77 percent of hospitals for the most recent 3 year periods.
Approximately 81 percent of all CBSA AHWs increased from
FY 2019 to FY 2020 compared to a range of 73-75 percent of all CBSAs
for the most recent 3 year periods.
Approximately 36 percent of all urban areas have an
increase in their area wage index from FY 2019 to FY 2020 compared to a
range of 41-43 percent of all urban areas for the most recent 3 year
periods.
Approximately 2.8 percent of all rural areas have an
increase in their area wage index from FY 2019 to FY 2020 compared to a
range of 4-6 percent of all rural areas for the most recent 3 year
periods.
The unadjusted national average hourly wage increased by a
range of 2.4-2.8 percent per year from FY 2016 to FY 2019. For FY 2020,
the unadjusted national average hourly increased by 5.3 percent from FY
2019.
Even if the comparison with the historical trends had indicated
greater differences at a national level in this context, we stated it
is not apparent whether any changes due to the COVID-19 PHE
differentially impacted the wages paid by individual hospitals.
Furthermore, even if hypothetically changes due to the COVID-19 PHE did
differentially impact the wages paid by individual hospitals over time,
we further stated that it is not clear how those changes could be
isolated from changes due to other reasons and what an appropriate
potential methodology might be to adjust the data.
Lastly, we also noted that we did not identify any significant
issues with the FY 2020 wage data itself in terms of our audits of this
data. As usual, the data was audited by the MACs, and there were no
significant issues reported across the data for all hospitals.
Taking all of these factors into account, we stated that we believe
the FY 2020 wage data is the best available wage data to use for FY
2024. Therefore, we proposed to use the FY 2020 wage data for FY 2024.
We also noted that AHW data by provider and CBSA, including the
data upon which the comparisons as previously described are based, is
available in our Public Use Files released with each proposed and final
rule each fiscal year. The Public Use Files for the respective FY Wage
Index Home Page can be found on the Wage Index Files web page at
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Wage-Index-Files.
Comment: One commenter stated that CMS should not be utilizing any
data from FY 2020 due to the impacts of COVID-19.
Another commenter stated that based on the agency's description in
the proposed rule, the specifics of the analysis above are unclear, as
the agency does not reference specific tables or files for the public
to review to confirm the agency's conclusion. The commenter further
stated that while CMS states that the data does not show a significant
discrepancy from prior years' data, when compared to trends from the
previous three fiscal years, the FY 2020 data does not follow the same
trends. Also, the commenter noted that the extent of the wage increases
is important to consider, not just the percentage of hospitals that saw
an hourly wage increase. The commenter stated that without knowing what
other sources of data are available for future wage index calculations
or evaluating a comparison of other data sources to identify any
potential discrepancies, the commenter is concerned that the impact of
the COVID-19 PHE may not be easily parsed out of future years' data.
The commenter also commented that while CMS states that it does not
believe the PHE alone is responsible for these changes, and that it is
difficult to parse out what impact the PHE had versus other factors
that may be driving up wages, the commenter is concerned that the
agency does not provide alternate methods for calculating the wage
index to try to account for the impact of COVID-19. Although the impact
of the PHE may not have been apparent on wage data until partially
through FY 2020, the commenter believes that CMS should consider
approaches to best account for the wage spikes and changes that are a
result of the pandemic. The commenter cited data from Vizient's May
2023 Workforce Intelligence Report \190\ that contract labor rates are
expected to stay 15% above pre-pandemic levels due to inflation and
other external economic factors. The commenter also noted that numerous
nursing workforce trends changed once the pandemic began in 2020,
including those related to nursing overtime hours as a percentage of
hours work, burnout, and turnover and asserted that these trends are
not sustainable. The commenter also stated that if hospitals were to
adopt and use strategies to address staffing challenges (e.g., ensure
nurses are practicing at the top of their license, plan ahead for
seasonable contract labor use, using technology as an enabler but not a
standalone solution) they would impact the wage index and such trends
are not considered by CMS. The commenter encouraged CMS to share
additional information regarding its analysis and other information the
agency needs so stakeholders can better understand the
[[Page 58962]]
agency's position and respond accordingly. The commenter further
encouraged CMS to begin exploring alternate data sources and analyses
to better understand how to account for the impact of the pandemic in
the wage index given enduring employment trends that were triggered by
the pandemic. The commenter concluded that CMS should work with
stakeholders on further developing or refining such an approach to
promote stability and accuracy.
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\190\ https://vizientinc-delivery.sitecorecontenthub.cloud/api/public/content/c372877070484a40be8cde3b480606f9.
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Response: We are unsure what the commenter means when it states
that the agency does not reference specific tables or files for the
public to review to confirm the agency's conclusion. As stated above,
AHW data by provider and CBSA, including the data upon which the
comparisons, as previously described are based, is available in our
Public Use Files released with each proposed and final rule each fiscal
year. The Public Use Files for the respective FY Wage Index Home Page
can be found on the Wage Index Files web page at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Wage-Index-Files. Therefore, any comparisons that CMS made within the current year
data and prior year data can easily be replicated by the public by
utilizing standard, commonly known statistical methods.
Also, the commenter states that the FY 2020 data does not follow
the same trends as prior years. However, as stated earlier, for the
reasons described above (it is not apparent whether any changes due to
the COVID-19 PHE differentially impacted the wages paid by individual
hospitals; even if hypothetically changes due to the COVID-19 PHE did
differentially impact the wages paid by individual hospitals over time,
we further stated that it is not clear how those changes could be
isolated from changes due to other reasons and what an appropriate
potential methodology might be to adjust the data; we did not identify
any significant issues with the FY 2020 wage data itself in terms of
our audits of this data), we continue to believe the FY 2020 wage data
is the best available wage data to use for FY 2024.
With regard to the use of alternative data, as stated above, we did
not identify any significant issues with the FY 2020 wage data itself
in terms of our audits of this data. As usual, the data was audited by
the MACs, and there were no significant issues reported across the data
for all hospitals. Also, as stated above, it is not apparent whether
any changes due to the COVID-19 PHE differentially impacted the wages
paid by individual hospitals. Furthermore, the commenters did not
present any data from the actual wage data demonstrating the need to
use alternative data. The commenter cited outside data sources with no
actual data from our public use files. Additionally, the commenter is
asking CMS to project potential changes hospitals may make to address
potential staffing shortages without any supporting data. Also, if
hospital workforce trends changed uniformly once the pandemic began in
2020 or if hospitals adopted strategies to address staffing shotages
uniformly, then this would be reflected uniformly across the salaries
and hours for all hospitals and areas (which is used to calculate an
area's AHW) which would lead to a commensurate change to the national
AHW and not the wage index itself. Therefore, we continue to believe
the FY 2020 wage data is the best available wage data to use for FY
2024.
Comment: One commenter stated that as a result of high COVID-19
patient volume for more than two years and subsequent healthcare staff
departures during the pandemic, hospitals are in the midst of a
national staffing shortage. The commenter continued that inflation is
simultaneously driving up healthcare costs during this workforce
shortage. The commenter believes CMS should offer short-term assistance
to the hospital community, considering inflationary updates to the wage
index as necessary to preserve current service levels, which is a
particular risk point for underserved populations. The commenter
recommended a more time-sensitive and layered approach to wage index
updates to account for excess labor costs driven by increased contract
labor and reimbursement rates to preserve critical national hospital
system infrastructure. The commenter stated that CMS could accomplish
this by leveraging current Medicare surveys and reporting to develop a
wage adjustment until the labor market stabilizes. The commenter
concluded that this approach would account for regional disparities and
impact, use known and accepted survey data, create a standardized and
auditable system, and support hospitals without disrupting the baseline
Medicare wage index.
Response: The commenter mentions that CMS could leverage current
Medicare surveys and reporting to develop a wage adjustment until the
labor market stabilizes. It is not clear what the commenter is
requesting. As stated above, the latest audited wage data is from FY
2020. We do not possesss audited wage data from a more recent period.
We also are unsure what type of adjustment the commenter is requesting
and how this adjustment would account for regional adjustments. Without
additional information we are unable to respond directly to the
comment. Also, as previously noted, 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. If the commenter is requesting a uniform
adjustment to the salaries and hours then uniformly adjusting the
salaries and hours for all areas (which is used to calculate an areas
AHW) would lead to a commensurate change to the national AHW and not
the wage index itself. This is because the wage index is required to be
a relative measure.
Comment: One commenter urged CMS to reconsider using FY 2020 cost
report data to calculate the wage index. The commenter explained that
CMS has stated that FY 2020 cost reports contained data that was
significantly impacted by the COVID-19 PHE, which will
disproportionately impact reimbursements for Massachusetts hospitals
and cause these hospitals to be underpaid because of the ``Nantucket
effect.'' That is, the commenter noted that, in general, Massachusetts
hospitals saw heightened levels of COVID-19 patients in FY 2020, while
one hospital located on the island of Nantucket saw almost no COVID-19
patients because the island was able to isolate from the rest of the
state. As a result of this effect, the commenter contended that the
Nantucket hospital's FY 2020 cost report is not reflective of the COVID
burden experienced by other hospitals in the state. The commenter
recommended that CMS use the FY 2022 cost reports, which better
reflects its labor market.
Response: We believe the commeneter is referring to provider number
220110, Nantucket Cottage Hospital, as this is the only hospital from
Nantucket included in the wage data. Within the wage data each fiscal
year, there are hospitals that have different hiring practices and
experiences. For example, some hospitals may be smaller than others and
not provide the same complex services as another hospital in the area.
Or one hospital may have more contracted workers compared to another
hospital in the same area that has no contracted workers. Perhaps one
hospital is focused on cancer patients compared to another hospital
that tries
[[Page 58963]]
to provide all types of servies. But these are not reasons that would
make a hospitals data aberrant. This simply means that hospitals
provide different care, have different hiring practices or have
different case mixes and are different than eachother; but it does not
make the wage data aberrant or not reflective of the area. Similarly, a
hospital that may have had a different experience with COVID does not
mean the wage data of that hospital is aberrant or not reflective of
the area. Also, we are unsure what issue the commenter is referring to
with regard to including this hospital in its area as Nantucket Cottage
Hospital is the only hospital located in rural Massachusetts. Finally,
the data for the FY 2024 wage index uses FY 2020 cost report data which
was audited by the MACs, and there were no significant issues reported
across the data for all hospitals. Additionally, CMS used the most
recent audited surveys and data to develop the FY 2024 wage index.
Audited cost report data from FY 2022 will be used for FY 2026 and is
not available at the time of this final rule. Therefore, we do not have
any audited data from the FY 2022 cost reports available for use at the
time of this final rule. We continue to believe the FY 2020 wage data
is the best available wage data to use for FY 2024.
For the FY 2025 wage index, as in the past two fiscal years, we
plan to review the audited wage data, and the impacts of the COVID-19
PHE on such data and evaluate these data for future rulemaking.
Section 1886(d)(3)(E) of the Act requires the Secretary to adjust
the proportion of hospitals' costs attributable to wages and wage-
related costs for area differences reflecting the relative hospital
wage level in the geographic area of the hospital compared to the
national average hospital wage level. In response to public comments,
as previously stated in past final rules (the FY 2016 IPPS/LTCH PPS
final rule (80 FR 49490 through 49491), the FY 2022 IPPS/LTCH PPS final
rule (86 FR 45168 through 45169), and the FY 2023 IPPS/LTCH PPS final
rule (87 FR 48996 through 48997)), we believe that, under this section
of the Act, we have discretion to exclude aberrant hospital data from
the wage index public use files (PUFs) to help ensure that the costs
attributable to wages and wage-related costs in fact reflect the
relative hospital wage level in the hospitals' geographic area. We
refer the reader to our previous responses to comments at the Federal
Register pages cited earlier with regard to the exclusion of hospitals'
wage data from the wage index.
Comment: Commenters opposed the exclusion of audited hospitals'
wage data which they contended was arbitrarily excluded from the
proposed rule wage data. These commenters stated that excluding
accurate and verified data is inconsistent with the extensive process
established by CMS to ensure the accuracy and reliability of hospital
wage index data. Commenters also stated the following concerns about
the lawfulness of excluding wage data for these hospitals:
Nothing in the applicable statute, section 1886(d)(3)(E),
permits CMS to exclude general acute care hospitals from the wage index
data simply because those hospitals' wages are higher than the wages of
other hospitals in their area. Rather, as indicated by CMS in past
rulemakings, the wages of all short-term acute care hospitals must be
included unless such data are incomplete or inaccurate.
Even if CMS had the authority to exclude certain hospitals
despite the fact that their data were accurate and verifiable (which is
the case with these hospitals), the exclusion of these hospitals would
be arbitrary and capricious, as CMS has promulgated no standards to
govern the exercise of its discretion. CMS has established an extensive
process to ensure the accuracy and reliability of hospital wage data,
which the excluded hospitals have been subjected to. Yet, where the
agency does not like the result, it has decided to deviate from this
process by arbitrarily excluding hospitals with accurate data.
CMS' exclusion of these hospitals is procedurally
improper, as CMS has failed to promulgate a rule in accordance with the
Administrative Procedures Act (APA) and section 2886 of the Social
Security Act that would define what constitutes aberrant data or
authorize excluding hospitals with verifiable data from the Medicare
wage index.
CMS has failed to consider the relevant factors and has
relied on factors that are not relevant under the applicable statute.
As a result, its action is arbitrary and capricious. The commenter
explained that because CMS has not conducted notice-and-comment
rulemaking to establish standards for excluding hospitals from the wage
index, it is unknown what factors CMS considered. Further, since CMS
has not proposed any ascertainable standards, the public has no
meaningful opportunity to comment on the factors that should be
considered.
The proposed exclusions for FFY 2024 will cause
significant harm to not only IPPS hospitals, but also inpatient
psychiatric hospitals, SNFs, inpatient rehabilitation hospitals (IRFs),
and many others. The consequence of these exclusions negatively
impacting more than the IPPS hospitals appear to be unintended by CMS,
as it failed to even consider them in its regulatory fiscal impact
analysis in the proposed rule, which it is legally required to do.
Thus, the exclusions are legally impermissible.
Response: As discussed above, we responded to similar comments in
the FY 2016 IPPS/LTCH PPS final rule (80 FR 49490 through 49491) and
the FY 2022 IPPS/LTCH PPS final rule (86 FR 45168 through 45169). We
provide summary responses below based on our responses to similiar
comments from previous rulemaking. However, we refer commenters to the
Federal Register pages cited earlier for our complete response to
similar comments with regard to the exclusion of hospitals' wage data
from the wage index.
Section 1886(d)(3)(E) of the Act requires the Secretary to adjust
the proportion of hospitals' costs attributable to wages and wage-
related costs for area differences reflecting the relative hospital
wage level in the geographic area of the hospital compared to the
national average hospital wage level. As previously stated in those
final rules, we believe that, under this section of the Act, we have
discretion to exclude aberrant hospital data from the wage index PUFs
to help ensure that the costs attributable to wages and wage-related
costs in fact reflect the relative hospital wage level in the
hospitals' geographic area.
Also, as discussed in response to comments in prior rules (80 FR
49490 and 86 FR 45168), as a standard part of the refinement of the
annual wage index, CMS evaluates the wage data for both accuracy and
reasonableness to ensure that the wage index is a relative measure of
the labor value provided to a typical hospital in a particular labor
market area. We have also previously stated that a hospital is included
in the wage index if its data are reasonable, regardless of whether the
hospital is open or whether it has terminated after the relevant past
period, because the wage index is constructed to represent the relative
average hourly wage for each labor market area in that past period.
Thus, reasonableness and relativity to each area's average hourly wages
have been longstanding tenets of the wage index development process
that CMS has articulated in rulemaking.
We acknowledge the commenters' suggestions for increased
transparency and disclosure of criteria for hospitals' exclusion. We
believe performing analysis of hospitals' wage data quality
[[Page 58964]]
and conducting edits for reasonableness are inherent parts of
conducting a survey of the wages and wage-related costs of subsection
(d) hospitals. We note that it has never been CMS' policy to disclose
audit protocol, because CMS is concerned that allowing hospitals to
become familiar with our audit parameters--which are based on standard
mathematical processes--would create opportunities for hospitals to
take action to manipulate their data in order to game audit thresholds.
However, in the future, we will continue to consider a limited proposal
regarding criteria for excluding a hospital's data from the wage index
due to its overall average hourly wage being either too high or too
low, as well as utilizing additional methods of communicating with
stakeholders regarding the adequacy of their wage data.
As discussed in response to comments in prior rules (80 FR 49491
and 86 FR 45169), just as CMS has excluded certain hospitals from the
wage index with extraordinarily high average hourly wages relative to
their labor market areas, CMS also has excluded hospitals with
extraordinarily low average hourly wages relative to their labor market
areas. Therefore, we disagree with commenters' assertions that we have
been ``arbitrary and capricious'' in excluding hospitals from the wage
index.
We also reiterate the following example of a hospital in California
removed from the FY 2024 wage index. The hospital is located in CBSA
23420 (Fresno, California) and had a very high average hourly wage and
was removed from the wage data even though the hospital's wage data was
properly documented. However, the hospital does not merely have the
highest average hourly wage in the CBSA; its average hourly wage is
extremely and unusually high, significantly higher than the next
highest average hourly wage in that CBSA and in the surrounding areas.
While we believe this is a result of the unique salary structure and
business model of the hospital's owner, not from a lack of reliability
in its wage data, we believe the data is nonetheless aberrant and we
therefore have authority to remove it. We do not believe that the
average hourly wage of this particular hospital accurately reflects the
economic conditions in its labor market area during the FY 2018 cost
reporting period. Therefore, its inclusion in the wage index would not
ensure that the FY 2024 wage index represents the labor market area's
current wages as compared to the national average of wages. Rather, its
inclusion would distort the average hourly wage of its labor market
area. Accordingly, we have exercised our discretion to remove this
hospital's wage data from the FY 2024 wage index.
With regard to the impact on facilities paid under other PPSs, we
refer commenters to the rulemaking of those PPSs for comments on the
wage index.
We requested that our MACs revise or verify data elements that
result in specific edit failures. For the proposed FY 2024 wage index,
we identified and excluded 88 providers with aberrant data that should
not be included in the wage index. However, we stated that if data
elements for some of these providers are corrected, we intended to
include data from those providers in the final FY 2024 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 20, 2023. For the final FY 2024 wage index, we restored the
data of 27 hospitals to the wage index, because their data was either
verified or improved. Thus, 61 hospitals with aberrant data remain
excluded from the FY 2024 wage index (88-27 = 61).
In constructing the proposed FY 2024 wage index, we included the
wage data for facilities that were IPPS hospitals in FY 2020, inclusive
of those facilities that have since terminated their participation in
the program as hospitals, as long as those data did not fail any of our
edits for reasonableness. We stated in the proposed rule (88 FR 26965
through 26967) that we believe that including the wage data for these
hospitals is, in general, appropriate to reflect the economic
conditions in the various labor market areas during the relevant past
period and to ensure that the current wage index represents the labor
market area's current wages as compared to the national average of
wages. However, we excluded the wage data for CAHs as discussed in the
FY 2004 IPPS final rule (68 FR 45397 through 45398); that is, any
hospital that is designated as a CAH by 7 days prior to the publication
of the preliminary wage index public use file (PUF) is excluded from
the calculation of the wage index. For the proposed FY 2024 wage index,
we removed 1 hospital that converted to CAH status on or after January
22, 2022, the cut-off date for CAH exclusion from the FY 2023 wage
index, and through and including January 23, 2023, the cut-off date for
CAH exclusion from the FY 2024 wage index. Since the proposed rule, we
learned of 1 more hospital that converted to CAH status on or after
January 22, 2022, and through and including January 23, 2023, the cut-
off date for CAH exclusion from the FY 2024 wage index, for a total of
2 hospital that were removed from the FY 2024 wage index due to
conversion to CAH status. In summary, we calculated the FY 2024 wage
index using the Worksheet S-3, Parts II and III wage data of 3,129
hospitals.
For the FY 2024 wage index, we allotted the wages and hours data
for a multicampus hospital among the different labor market areas where
its campuses are located using campus full-time equivalent (FTE)
percentages as originally finalized in the FY 2012 IPPS/LTCH PPS final
rule (76 FR 51591). Table 2, which contains the FY 2024 wage index
associated with this final rule (available via the internet on the CMS
website), includes separate wage data for the campuses of 28
multicampus hospitals. The following chart lists the multicampus
hospitals by core service area (CSA) certification number (CCN) and the
FTE percentages on which the wages and hours of each campus were
allotted to their respective labor market areas:
BILLING CODE 4120-01-P
[[Page 58965]]
[GRAPHIC] [TIFF OMITTED] TR28AU23.224
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 FY 2024 Unadjusted Wage Index
As stated in the proposed rule (88 FR 26967 through 26970), the
method used to compute the FY 2024 wage index without an occupational
mix adjustment follows the same methodology that we used to compute the
wage indexes without an occupational mix adjustment in the FY 2021
IPPS/LTCH PPS final rule (see 85 FR 58758 through 58761, September 18,
2020), and we did not propose any changes to this methodology. We have
restated our methodology in this section of this rule.
Step 1.--We gathered data from each of the non-Federal, short-term,
acute care hospitals for which data were reported on the Worksheet S-3,
Parts II and III of the Medicare cost report for the hospital's cost
reporting period relevant to the wage index (in this case, for FY 2024,
these were data from cost reports for cost reporting periods beginning
on or after October 1, 2019, and before October 1, 2020). In addition,
we included data from some hospitals
[[Page 58966]]
that had cost reporting periods beginning before October 2019 and
reported a cost reporting period covering all of FY 2020. 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 2020 data. We note that, if a hospital had more than one
cost reporting period beginning during FY 2020 (for example, a hospital
had two short cost reporting periods beginning on or after October 1,
2019, and before October 1, 2020), we include wage data from only one
of the cost reporting periods, the longer, in the wage index
calculation. If there was more than one cost reporting period and the
periods were equal in length, we included the wage data from the later
period in the wage index calculation.
Step 2.--Salaries.--The method used to compute a hospital's average
hourly wage excludes certain costs that are not paid under the IPPS. We
note that, beginning with FY 2008 (72 FR 47315), we included what were
then Lines 22.01, 26.01, and 27.01 of Worksheet S-3, Part II of CMS
Form 2552-96 for overhead services in the wage index. Currently, these
lines are lines 28, 33, and 35 on CMS Form 2552-10. However, we note
that the wages and hours on these lines are not incorporated into Line
101, Column 1 of Worksheet A, which, through the electronic cost
reporting software, flows directly to Line 1 of Worksheet S-3, Part II.
Therefore, the first step in the wage index calculation is to compute a
``revised'' Line 1, by adding to the Line 1 on Worksheet S-3, Part II
(for wages and hours respectively) the amounts on Lines 28, 33, and
35.) In calculating a hospital's Net Salaries (we note that we
previously used the term ``average'' salaries in the FY 2012 IPPS/LTCH
PPS final rule (76 FR 51592), but we now use the term ``net'' salaries)
plus wage-related costs, we first compute the following: Subtract from
Line 1 (total salaries) the GME and CRNA costs reported on CMS Form
2552-10, Lines 2, 4.01, 7, and 7.01, the Part B salaries reported on
Lines 3, 5 and 6, home office salaries reported on Line 8, and exclude
salaries reported on Lines 9 and 10 (that is, direct salaries
attributable to SNF services, home health services, and other
subprovider components not subject to the IPPS). We also subtract from
Line 1 the salaries for which no hours were reported. Therefore, the
formula for Net Salaries (from Worksheet S-3, Part II) is the
following:
((Line 1 + Line 28 + Line 33 + Line 35)--(Line 2 + Line 3 + Line 4.01 +
Line 5 + Line 6 + Line 7 + Line 7.01 + Line 8 + Line 9 + Line 10)).
To determine Total Salaries plus Wage-Related Costs, we add to the
Net Salaries the costs of contract labor for direct patient care,
certain top management, pharmacy, laboratory, and nonteaching physician
Part A services (Lines 11, 12 and 13), home office salaries and wage-
related costs reported by the hospital on Lines 14.01, 14.02, and 15,
and nonexcluded area wage-related costs (Lines 17, 22, 25.50, 25.51,
and 25.52). We note that contract labor and home office salaries for
which no corresponding hours are reported are not included. In
addition, wage-related costs for nonteaching physician Part A employees
(Line 22) are excluded if no corresponding salaries are reported for
those employees on Line 4. The formula for Total Salaries plus Wage-
Related Costs (from Worksheet S-3, Part II) is the following:
((Line 1 + Line 28 + Line 33 + Line 35)-(Line 2 + Line 3 + Line 4.01 +
Line 5 + Line 6 + Line 7 + Line 7.01 + Line 8 + Line 9 + Line 10)) +
(Line 11 + Line 12 + Line 13 + Line 14.01 + 14.02 + Line 15) + (Line 17
+ Line 22 + 25.50 + 25.51 + 25.52).
Step 3.--Hours.--With the exception of wage-related costs, for
which there are no associated hours, we compute total hours using the
same methods as described for salaries in Step 2. The formula for Total
Hours (from Worksheet S-3, Part II) is the following:
((Line 1 + Line 28 + Line 33 + Line 35)-(Line 2 + Line 3 + Line 4.01 +
Line 5 + Line 6 + Line 7 + Line 7.01 + Line 8 + Line 9 + Line 10)) +
(Line 11 + Line 12 + Line 13 + Line 14.01 + 14.02 + Line 15).
Step 4.--For each hospital reporting both total overhead salaries
and total overhead hours greater than zero, we then allocate overhead
costs to areas of the hospital excluded from the wage index
calculation. First, we determine the ``excluded rate'', which is the
ratio of excluded area hours to Revised Total Hours (from Worksheet S-
3, Part II) with the following formula:
(Line 9 + Line 10)/(Line 1 + Line 28 + Line 33 + Line 35)-(Lines 2, 3,
4.01, 5, 6, 7, 7.01, and 8 and Lines 26 through 43).
We then compute the amounts of overhead salaries and hours to be
allocated to the excluded areas by multiplying the previously discussed
ratio by the total overhead salaries and hours reported on Lines 26
through 43 of Worksheet S-3, Part II. Next, we compute the amounts of
overhead wage-related costs to be allocated to the excluded areas using
three steps:
We determine the ``overhead rate'' (from Worksheet S-3,
Part II), which is the ratio of overhead hours (Lines 26 through 43
minus the sum of Lines 28, 33, and 35) to revised hours excluding the
sum of lines 28, 33, and 35 (Line 1 minus the sum of Lines 2, 3, 4.01,
5, 6, 7, 7.01, 8, 9, 10, 28, 33, and 35). We note that, for the FY 2008
and subsequent wage index calculations, we have been excluding the
overhead contract labor (Lines 28, 33, and 35) from the determination
of the ratio of overhead hours to revised hours because hospitals
typically do not provide fringe benefits (wage-related costs) to
contract personnel. Therefore, it is not necessary for the wage index
calculation to exclude overhead wage-related costs for contract
personnel. Further, if a hospital does contribute to wage-related costs
for contracted personnel, the instructions for Lines 28, 33, and 35
require that associated wage-related costs be combined with wages on
the respective contract labor lines. The formula for the Overhead Rate
(from Worksheet S-3, Part II) is the following:
(Lines 26 through 43--Lines 28, 33 and 35)/((((Line 1 + Lines 28, 33,
35)--(Lines 2, 3, 4.01, 5, 6, 7, 7.01, 8, and 26 through 43))-(Lines 9
and 10)) + (Lines 26 through 43-Lines 28, 33, and 35)).
We compute overhead wage-related costs by multiplying the
overhead hours ratio by wage-related costs reported on Part II, Lines
17, 22, 25.50, 25.51, and 25.52.
We multiply the computed overhead wage-related costs by
the previously described excluded area hours ratio.
Finally, we subtract the computed overhead salaries, wage-related
costs, and hours associated with excluded areas from the total salaries
(plus wage-related costs) and hours derived in Steps 2 and 3.
Step 5.--For each hospital, we adjust the total salaries plus wage-
related costs to a common period to determine total adjusted salaries
plus wage-related costs. To make the wage adjustment, we estimate the
percentage change in the employment cost index (ECI) for compensation
for each 30-day increment from October 14, 2019, through April 15,
2021, for private industry hospital workers from the Bureau of Labor
Statistics' (BLS') National Compensation Survey. We use the ECI because
it reflects the price
[[Page 58967]]
increase associated with total compensation (salaries plus fringes)
rather than just the increase in salaries. In addition, the ECI
includes managers as well as other hospital workers. This methodology
to compute the monthly update factors uses actual quarterly ECI data
and assures that the update factors match the actual quarterly and
annual percent changes. We also note that, since April 2006 with the
publication of March 2006 data, the BLS' ECI uses a different
classification system, the North American Industrial Classification
System (NAICS), instead of the Standard Industrial Codes (SICs), which
no longer exist. We have consistently used the ECI as the data source
for our wages and salaries and other price proxies in the IPPS market
basket, and we did not propose to make any changes to the usage of the
ECI for FY 2024. The factors used to adjust the hospital's data are
based on the midpoint of the cost reporting period, as indicated in
this rule.
Step 6.--Each hospital is assigned to its appropriate urban or
rural labor market area before any reclassifications under section
1886(d)(8)(B), 1886(d)(8)(E), or 1886(d)(10) of the Act. Within each
urban or rural labor market area, we add the total adjusted salaries
plus wage-related costs obtained in Step 5 for all hospitals in that
area to determine the total adjusted salaries plus wage-related costs
for the labor market area.
Step 7.--We divide the total adjusted salaries plus wage-related
costs obtained under Step 6 by the sum of the corresponding total hours
(from Step 4) for all hospitals in each labor market area to determine
an average hourly wage for the area.
Step 8.--We add the total adjusted salaries plus wage-related costs
obtained in Step 5 for all hospitals in the nation and then divide the
sum by the national sum of total hours from Step 4 to arrive at a
national average hourly wage.
Step 9.--For each urban or rural labor market area, we calculate
the hospital wage index value, unadjusted for occupational mix, by
dividing the area average hourly wage obtained in Step 7 by the
national average hourly wage computed in Step 8.
Step 10.--For each urban labor market area for which we do not have
any hospital wage data (either because there are no IPPS hospitals in
that labor market area, or there are IPPS hospitals in that area but
their data are either too new to be reflected in the current year's
wage index calculation, or their data are aberrant and are deleted from
the wage index), we finalized in the FY 2020 IPPS/LTCH PPS final rule
(84 FR 42305) that, for FY 2020 and subsequent years' wage index
calculations, such CBSA's wage index would be equal to total urban
salaries plus wage-related costs (from Step 5) in the State, divided by
the total urban hours (from Step 4) in the State, divided by the
national average hourly wage from Step 8 (see 84 FR 42305 and 42306,
August 16, 2019). We stated that we believe that, in the absence of
wage data for an urban labor market area, it is reasonable to use a
statewide urban average, which is based on actual, acceptable wage data
of hospitals in that State, rather than impute some other type of value
using a different methodology. For calculation of the FY 2024 wage
index, we note there is one urban CBSAs 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 appendix A of this final rule
for the policy regarding rural areas that do not have IPPS hospitals.
Step 11.--Section 4410 of Public Law 105-33 provides that, for
discharges on or after October 1, 1997, the area wage index applicable
to any hospital that is located in an urban area of a State may not be
less than the area wage index applicable to hospitals located in rural
areas in that State. The areas affected by this provision are
identified in Table 2 listed in section VI. of the Addendum to the
final rule and available via the internet on the CMS website.
The 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, 2019, through April 15,
2021, for private industry hospital workers from the BLS' National
Compensation Survey. We have consistently used the ECI as the data
source for our wages and salaries and other price proxies in the IPPS
market basket, and we did not propose any changes to the usage of the
ECI for FY 2024. The factors used to adjust the hospital's data are
based on the midpoint of the cost reporting period, as indicated in the
following table.
[[Page 58968]]
[GRAPHIC] [TIFF OMITTED] TR28AU23.225
For example, the midpoint of a cost reporting period beginning
January 1, 2020, and ending December 31, 2020, is June 30, 2020. An
adjustment factor of 1.01923 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 2024, there is no Puerto Rico-
specific overall average hourly wage or wage index.
Based on the previously discussed methodology, we stated in the
proposed rule (88 FR 26970) that the proposed FY 2024 unadjusted
national average hourly wage was $50.33.
We did not receive any comments regarding the discussion of our
method for computing the FY 2024 unadjusted wage index. Based on the
previously described methodology, the final FY 2024 unadjusted national
average hourly wage is the following:
[GRAPHIC] [TIFF OMITTED] TR28AU23.226
E. Occupational Mix Adjustment to the FY 2024 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.
[[Page 58969]]
1. Use of 2019 Medicare Wage Index Occupational Mix Survey for the FY
2024 Wage Index
Section 304(c) of the Consolidated Appropriations Act, 2001 (Pub.
L. 106- 554) amended section 1886(d)(3)(E) of the Act to require CMS to
collect data every 3 years on the occupational mix of employees for
each short-term, acute care hospital participating in the Medicare
program. As discussed in the FY 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 2024 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 January 31, 2026) to their MACs by September
3, 2021. 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 2024
In the FY 2024 IPPS/LTCH PPS proposed rule (88 FR 26971), for FY
2024, we proposed to calculate the occupational mix adjustment factor
using the same methodology that we have used since the FY 2012 wage
index (76 FR 51582 through 51586) and to apply the occupational mix
adjustment to 100 percent of the FY 2024 wage index. In the FY 2020
IPPS/LTCH PPS final rule (84 FR 42308), we modified our methodology
with regard to how dollar amounts, hours, and other numerical values in
the unadjusted and adjusted wage index calculation are rounded, in
order to ensure consistency in the calculation. According to the policy
finalized in the FY 2020 IPPS/LTCH PPS final rule (84 FR 42308 and
42309), for data that we consider to be ``raw data,'' such as the cost
report data on Worksheets S-3, Parts II and III, and the occupational
mix survey data, we continue to use these data ``as is'', and not round
any of the individual line items or fields. However, for any dollar
amounts within the wage index calculations, including any type of
summed wage amount, average hourly wages, and the national average
hourly wage (both the unadjusted and adjusted for occupational mix), we
round such dollar amounts to 2 decimals. We round any hour amounts
within the wage index calculations to the nearest whole number. We
round any numbers not expressed as dollars or hours in the wage index
calculations, which could include ratios, percentages, or inflation
factors, to 5 decimals. However, we continue rounding the actual
unadjusted and adjusted wage indexes to 4 decimals, as we have done
historically.
Similar to the method we use for the calculation of the wage index
without occupational mix, salaries and hours for a multicampus hospital
are allotted among the different labor market areas where its campuses
are located. Table 2 associated with this final rule (which is
available via the internet on the CMS website), which contains the
final FY 2024 occupational mix adjusted wage index, includes separate
wage data for the campuses of multicampus hospitals. We refer readers
to section III.C. of the preamble of this final rule for a chart
listing the multicampus hospitals and the FTE percentages used to allot
their occupational mix data.
Because the statute requires that the Secretary measure the
earnings and paid hours of employment by occupational category not less
than once every 3 years, all hospitals that are subject to payments
under the IPPS, or any hospital that would be subject to the IPPS if
not granted a waiver, must complete the occupational mix survey, unless
the hospital has no associated cost report wage data that are included
in the FY 2024 wage index. For the proposed FY 2024 wage index, we used
the Worksheet S-3, Parts II and III wage data of 3,103 hospitals, and
we used the occupational mix surveys of 3,007 hospitals for which we
also had Worksheet S-3 wage data, which represented a ``response'' rate
of 97 percent (3,007/3,103). For the proposed FY 2024 wage index, we
applied proxy data for noncompliant hospitals, new hospitals, or
hospitals that submitted erroneous or aberrant data in the same manner
that we applied proxy data for such hospitals in the FY 2012 wage index
occupational mix adjustment (76 FR 51586). As a result of applying this
methodology, the proposed FY 2024 occupational mix adjusted national
average hourly wage was $50.27.
For the final FY 2024 wage index, we are using the Worksheet S3,
Parts II and III wage data of 3,129 hospitals, and we are using the
occupational mix surveys of 3,031 hospitals for which we also have
Worksheet S-3 wage data, which is a ``response'' rate of 97 percent
(3,031/3,129). For the final FY 2024 wage index, we are applying proxy
data for noncompliant hospitals, new hospitals, or hospitals that
submitted erroneous or aberrant data in the same manner that we applied
proxy data for such hospitals in the FY 2012 wage index occupational
mix adjustment (76 FR 51586). As a result of applying this methodology,
the final FY 2024 occupational mix adjusted national average hourly
wage is the following:
[GRAPHIC] [TIFF OMITTED] TR28AU23.227
3. Deadline for Submitting the 2022 Medicare Wage Index Occupational
Mix Survey for Use Beginning With the FY 2025 Wage Index
A new measurement of occupational mix is required for FY 2025. The
FY 2025 occupational mix adjustment will be based on a new calendar
year (CY) 2022 survey. The CY 2022 survey (Form CMS-10079, OMB Number
0938-0907, expiration date January 31, 2026) received OMB approval on
January 3, 2023. The final CY 2022 Occupational Mix Survey Hospital
Reporting Form is available on the CMS website at: https://www.cms.gov/medicare/medicare-fee-service-payment/acuteinpatientpps/wage-index-files/2022-occupational-mix-survey-hospital. Hospitals were required to
submit their completed 2022 surveys to their MACs (not directly to CMS)
by June 30, 2023. The preliminary, unaudited CY 2022 survey data was
posted on the CMS website in mid-July 2023. As with the Worksheet S-3,
Parts II and III cost report wage data, as part of the FY 2025 desk
review process, the MACs will revise or verify data elements in
hospitals' occupational mix surveys that result in certain edit
failures.
Comment: We received comments with regard to the CY 2022
Occupational Mix Survey data. One commenter had concerns that the data
may be skewed due to the PHE. Another commenter stated that CMS must
ensure it is including all of the available data, including the data
that were submitted
[[Page 58970]]
to the agency, when it constructs an occupational mix adjustment to the
wage index. In addition, the commenter stated CMS must ensure that such
data is corrected after the initial submission deadline.
Response: CMS has yet to audit and review the CY 2022 Occupational
Mix Survey data. We plan to assess the CY 2022 Occupational Mix Survey
data in the FY 2025 IPPS proposed rule. Additionally, per the FY 2025
wage index development timetable on the web at https://www.cms.gov/files/document/fy2025-hospital-wage-index-development-timetable.pdf,
providers have until September 1, 2023, to request revisions to their
Worksheet S-3 wage data and CY 2022 occupational mix data as included
in the wage and occupational mix preliminary public use files. We refer
the reader to the FY 2025 wage index development timetable for complete
details.
F. Analysis and Implementation of the Occupational Mix Adjustment and
the FY 2024 Occupational Mix Adjusted Wage Index
As discussed in section III.E. of the preamble of this final rule,
for FY 2024, we are applying the occupational mix adjustment to 100
percent of the FY 2024 wage index. We calculated the occupational mix
adjustment using data from the 2019 occupational mix survey data, using
the methodology described in the FY 2012 IPPS/LTCH PPS final rule (76
FR 51582 through 51586).
The FY 2024 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] TR28AU23.228
The national average hourly wage for the entire nurse category is
computed in Step 5 of the occupational mix calculation. Hospitals with
a nurse category average hourly wage (as calculated in Step 4) of
greater than the national nurse category average hourly wage receive an
occupational mix adjustment factor (as calculated in Step 6) of less
than 1.0. Hospitals with a nurse category average hourly wage (as
calculated in Step 4) of less than the national nurse category average
hourly wage receive an occupational mix adjustment factor (as
calculated in Step 6) of greater than 1.0.
Based on the 2019 occupational mix survey data, we determined (in
Step 7 of the occupational mix calculation) the following:
[GRAPHIC] [TIFF OMITTED] TR28AU23.229
We compared the FY 2024 occupational mix adjusted wage indexes for
each CBSA to the unadjusted wage indexes for each CBSA. Applying the
occupational mix adjustment to the wage data resulted in the following:
[GRAPHIC] [TIFF OMITTED] TR28AU23.230
[[Page 58971]]
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 Permanent Cap on Wage Index Decreases
1. Application of the Rural Floor
Section 4410(a) of the Balanced Budget Act of 1997 (Pub. L. 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 the Patient Protection
and Affordable Care Act (Pub. L. 111-148) also requires that a national
budget neutrality adjustment be applied in implementing the rural
floor.
Based on the FY 2024 wage index associated with this final rule
(which is available via the internet on the CMS website) and based on
the calculation of the rural floor including the wage data of hospitals
that have reclassified as rural under Sec. 412.103 (as discussed in
section III.K. of the preamble of this final rule), we estimate that
646 hospitals will receive the rural floor in FY 2024. The budget
neutrality impact of the proposed application of the rural floor is
discussed in section II.A.4.e. of the Addendum of this final rule.
a. Treatment of Hospitals Reclassified as Rural Under Sec. 412.103 for
the Rural Wage Index and Rural Floor Calculation
Section 1886(d)(8)(E)(i) of the Act, implemented at 42 CFR 412.103,
requires 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.
In recent years, CMS's wage index and floor policies involving the
treatment of Sec. 412.103 hospitals have been the subject of frequent
litigation. Courts have repeatedly held unlawful CMS wage index and
floor policies that do not treat Sec. 412.103 hospitals the same as
geographically rural hospitals based on section 1886(d)(8)(E)(i) of the
Act, which requires that ``the Secretary shall treat the [Sec.
412.103] hospital as being located in the rural area.''
For example, on July 23, 2015, the U.S. Court of Appeals for the
Third Circuit issued a decision in Geisinger Community Medical Center
v. Secretary, United States Department of Health and Human Services,
794 F.3d 383 (3d Cir. 2015). Geisinger challenged as unlawful a CMS
regulation prohibiting hospitals with an active Sec. 412.103 rural
reclassification from applying for an additional reclassification for
wage index purposes through the MGCRB. A divided panel of the Court of
Appeals for the Third Circuit held that section 1886(d)(8)(E)(i) of the
Act required the Secretary to treat Sec. 412.103 hospitals the same as
geographically rural hospitals for the purposes of MGCRB
reclassification. Because geographically rural hospitals were eligible
for MGCRB reclassification, the court held CMS's regulation prohibiting
Sec. 412.103 hospitals from seeking MGCRB reclassification was
unlawful.
On February 4, 2016, the U.S. Court of Appeals for the Second
Circuit issued its decision in Lawrence + Memorial Hospital v. Burwell,
812 F.3d 257 (2d Cir. 2016), agreeing with the Third Circuit's
conclusion in Geisinger. The Second Circuit disagreed with CMS's
argument that the impact of these decisions--allowing Sec. 412.103
hospitals to be urban for wage index purposes and rural for others--was
``anomalous'': ``[T]his is simply a function of the many different
roles that hospitals play and the many different contexts in which they
operate . . . Section 401 simply increases the number of situations in
which hospitals can be treated as rural for some purposes and urban for
others, but there is nothing `absurd' about such a measured approach.''
Id. At 267.
As a consequence of the Geisinger and Lawrence + Memorial
decisions, CMS published an interim final rule with comment period
(IFC) on April 21, 2016 (81 FR 23428 through 23438), revising the
regulations to allow hospitals to hold simultaneous Sec. 412.103 and
MGCRB reclassifications, consistent with the courts' decisions. But
commenters have since argued that CMS continued to treat Sec. 412.103
hospitals differently from geographically rural hospitals in two
respects. First, CMS only allowed MGCRB reclassifications for Sec.
412.103 hospitals when the hospital's wages are at least 106 percent of
the urban area in which it was geographically located, rather than the
rural area to which it was reclassified under Sec. 412.103 (see 81 FR
56925). Additionally, CMS would not include data from Sec. 412.103
hospitals that are reclassified to an urban area by the MGCRB for wage
index purposes when calculating the rural wage index for that state (81
FR 23434).
The first policy was held unlawful on May 14, 2020, when the United
States District Court for the District of Columbia issued a decision in
Bates County Memorial Hospital v. Azar, 464 F. Supp. 3d 43 (DDC 2020)
(Bates). There, Bates County Memorial Hospital and five other
geographically urban hospitals were reclassified to rural under Sec.
412.103. They also applied for reclassification under the MGCRB but
were denied because their wages were not at least 106 percent of the
geographic urban area in which the hospitals were located. Each of the
hospitals' average hourly wages were at least 106 percent of the 3-year
average hourly wage of all other hospitals in the rural area of the
state in which the hospitals were located. The Court agreed with the
Plaintiffs that section 1886(d)(8)(E)(i) of Act requires that CMS
consider the rural area to be the area in which a Sec. 412.103
hospital is located for the wage comparisons required for MGCRB
reclassifications.
CMS did not appeal this decision, and in the May 10, 2021 Federal
Register (86 FR 24735), concurrent with the FY 2022 IPPS/LTCH PPS
proposed rule, we published an interim final rule with comment period
that amended our regulations to allow hospitals with a rural
reclassification under the Act to reclassify through the MGCRB using
the rural reclassified area as the geographic area in which the
hospital is located. We stated that these changes implemented the Bates
Court's interpretation of the requirement at section 1886(d)(8)(E)(i)
of the Act that ``the Secretary shall treat the hospital as being
located in the rural area,'' for all purposes of MGCRB
reclassification, including the average hourly wage comparisons
required by Sec. 412.230(a)(5)(i) and (d)(1)(iii)(C).
The second policy was recently challenged in Deaconess Hospital
Inc. v. Becerra, No. 1:22-cv-03136 (D.D.C. Oct. 14, 2022) and Robert
Packer v. Becerra, No. 1:22-cv-03196 (D.D.C. Oct. 19, 2022).
Specifically, plaintiffs in Deaconess and Robert Packer contend that
CMS must include Sec. 412.103 hospitals reclassified to another wage
area under the MGCRB in the rural wage index and rural wage floor under
the ``hold harmless'' provision in section 1886(d)(8)(C)(ii) of Act.
That provision provides that if an MGCRB decision ``reduces the wage
index for that rural area (as applied under this subsection), the
Secretary shall calculate and apply such wage index under this
subsection as if the hospitals so treated had not been excluded from
calculation of the wage index for that rural area.''
The treatment of Sec. 412.103 hospitals was again the subject of
litigation in a recent case contesting our FY 2020 rural floor policy,
under which we calculated the rural floor and the related budget
neutrality adjustment without including
[[Page 58972]]
data from hospitals that reclassified from urban to rural (84 FR 42332
through 42336). On April 8, 2022, the district court in Citrus HMA,
LLC, d/b/a Seven Rivers Regional Medical Center v. Becerra, No. 1:20-
cv-00707 (D.D.C.) (Citrus) found that the Secretary did not have
authority under section 4410(a) of the Balanced Budget Act of 1997 to
establish a rural floor different from the rural wage index for a
state.
Following our review of the Citrus decision (which we did not
appeal) and the comments we received on the FY 2023 IPPS/LTCH PPS
proposed rule, in the FY 2023 IPPS/LTCH PPS final rule (87 FR 49002
through 49004), we finalized a policy that calculates the rural floor
as it was calculated before FY 2020. We stated that we understand that
our policy of setting a rural floor lower than the rural wage index for
a state was inconsistent with the district court's decision in Citrus.
For FY 2023 and subsequent years, our policy is to include the wage
data of hospitals that have reclassified from urban to rural under
section 1886(d)(8)(E) of the Act (as implemented in the regulations at
Sec. 412.103) and have no MGCRB reclassification in the calculation of
the rural floor, and to include the wage data of such hospitals in the
calculation of ``the wage index for rural areas in the State in which
the county is located'' as referred to in section 1886(d)(8)(C)(iii) of
the Act.\191\ We stated that we will apply the same policy as prior to
the FY 2020 final rule for calculating the rural floor, in which the
rural wage index sets the rural floor.
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\191\ We note in the FY 2023 IPPS/LTCH PPS final rule (87 FR
49004), we stated that for FY 2023 and subsequent years, we are
finalizing a policy to include the wage data of hospitals that have
reclassified from urban to rural under section 1886(d)(8)(E) of the
Act (as implemented in the regulations at Sec. 412.103) and have no
additional form of reclassification (MGCRB or Lugar) in the
calculation of the rural floor, and to include the wage data of such
hospitals in the calculation of ``the wage index for rural areas in
the State in which the county is located'' as referred to in section
1886(d)(8)(C)(iii) of the Act. ``Lugar'' hospitals are
geographically rural and will be included in the rural wage index
calculation, unless excluded per the hold harmless provision at
section 1886(d)(8)(C)(ii). The parenthetical reference to ``Lugar''
hospitals in the rule was included in error, and was not implemented
in our rate setting methodology in FY 2023.
---------------------------------------------------------------------------
In addition to the litigation, as previously described, CMS has
received numerous public comments in recent years urging CMS to treat
Sec. 412.103 hospitals the same as geographically rural hospitals for
the rural wage index and rural floor calculations. For example, we
received many comments in response to our FY 2020 policy of excluding
the wage data of Sec. 412.103 hospitals from the calculation of the
rural floor stating that excluding reclassified hospitals from the
rural floor is inconsistent with the statutory language of section
1886(d)(8)(E) of the Act and section 4410(a) of the Balanced Budget Act
of 1997. As summarized in greater detail in the FY 2020 IPPS/LTCH PPS
final rule (84 FR 42334), commenters stated that the statute does not
draw any distinction between the ``rural areas'' used to calculate the
rural floor under section 4410(a) of the Balanced Budget Act of 1997
and the ``rural areas'' that reclassified hospitals are to be treated
as located in under section 1886(d)(8)(E) of the Act, and that under
the Geisinger and Lawrence & Memorial Hospital cases, a Sec. 412.103
hospital should be treated as a rural hospital for wage
reclassification.
Also, in the FY 2022 IPPS/LTCH PPS final rule (86 FR 45181), a
commenter disagreed with CMS's treatment of hospitals with dual Sec.
412.103 and MGCRB reclassifications. The commenter stated that CMS's
policy of considering the hospital's geographic CBSA and the urban CBSA
to which the hospital is reclassified under the MGCRB for the wage
index calculation violates the statutory requirement to treat Sec.
412.103 hospitals the same as geographically rural hospitals. The
commenter specifically requested that CMS include the wages of Sec.
412.103 hospitals that also have an active MGCRB reclassification in
calculating the rural wage of the state if not doing so would reduce
the wage index for that area, in the same manner that geographically
rural hospitals with a MGCRB reclassification are treated according to
section 1886(d)(8)(C)(ii) of Act.
Again, in response to the FY 2023 IPPS/LTCH PPS proposed rule,
commenters urged CMS to discontinue the policy of excluding the wage
data of Sec. 412.103 hospitals from the rural floor calculation (87 FR
49002). Spurred by the aforementioned district court's decision in
Citrus, commenters urged CMS to acquiesce, stating their belief that
the court's analysis was thorough and emphasizing that continuing the
rural floor policy would only increase the agency's exposure to future
lawsuits. Commenters asserted that the plain language of the statute
does not provide for a free-floating rural floor that is not linked to
the rural wage index.
As previously enumerated, CMS has made policy changes as a result
of the courts' decisions and related public comments. Because these
policy changes were implemented piecemeal in reaction to litigation,
and many through IFCs rather than the usual proposed rule process, CMS
has not had the opportunity to systematically revisit this regulatory
framework.
In the proposed rule, CMS took the opportunity to revisit the case
law, prior public comments, and the relevant statutory language. After
doing so, we stated that we now agree--for the reasons expressed by the
U.S. Courts of Appeals for the Second and Third Circuits, as well as
the U.S. District Court for the District of Columbia--that the best
reading of section 1886(d)(8)(E)'s text that CMS ``shall treat the
[Sec. 412.103] hospital as being located in the rural area'' is that
it instructs CMS to treat Sec. 412.103 hospitals the same as
geographically rural hospitals for the wage index calculation. We
stated that while CMS has previously treated section 1886(d)(8)(E)
reclassifications as one among many reclassifications provided for
under section 1886(d) of the Act and so limited its scope in several
ways, we now read it to provide that a Sec. 412.103 reclassification
functions the same as if the reclassifying hospital had physically
relocated into a geographically rural area. We explained in the
proposed rule that we are influenced by the fact that courts have
largely adopted this interpretation of section 1886(d)(8)(E) of the
Act, and that it requires considerable resources to unwind a wage index
policy after adverse judicial decisions--often requiring an IFC outside
the usual IPPS rulemaking schedule. We further note that such
unwindings may have budget neutrality implications. Cf. Amgen, Inc. v.
Smith, 357 F.3d 103, 112 (D.C. Cir. 2004) (collecting cases ``not[ing]
the havoc that piecemeal review of OPPS payments could bring about'' in
light of statutory budget neutrality requirements).
We acknowledged that this interpretation of section 1886(d)(8)(E)
of the Act can lead to significant financial consequences. Many
hospitals eligible for Sec. 412.103 reclassifications have paired that
reclassification with a MGCRB wage index reclassification to escalate
their wage index beyond what would be otherwise available to them under
the law. Section 1886(d)(3)(E)(i) of the Act states that any
adjustments or updates made under subparagraph (E) for a fiscal year
shall be made in a manner that assures that the aggregate payments
under section 1886(d) of the Act in the fiscal year are not greater or
less than those that would have been made without such adjustment, and
therefore any increases to these hospitals' wage index inevitably
decrease the payments Medicare makes to other hospitals. But, as the
Second Circuit explained (Lawrence + Memorial
[[Page 58973]]
Hospital, 812 F.3d at 267), these payment consequences are ``a function
of the many different roles that hospitals play and the many different
contexts in which they operate.'' We solicited comments on our proposed
interpretation of sections 1886(d)(8)(E) and 1886(d)(3)(E)(i) of the
Act.
As additionally previously discussed, pending litigation and public
comments in the FY 2022 IPPS/LTCH PPS final rule (86 FR 45181 and
45182) have raised concerns that there is an additional wage index
policy under which CMS does not treat Sec. 412.103 hospitals the same
as geographically rural hospitals: its policy of CMS excluding data
from Sec. 412.103 hospitals that are reclassified to an urban area by
the MGCRB for wage index purposes when calculating the rural wage index
for that state. We proposed to change that policy, consistent with our
new proposed interpretation of section 1886(d)(8)(E) of the Act, as
described in this section of this rule. Under the policy changes
adopted in the FY 2023 IPPS/LTCH PPS final rule under which the rural
floor is the same as the rural wage index (87 FR 49002 through 49004),
we believe that this change to the wage index policy will also resolve
the concerns about the rural floor raised in comments discussed
previously. As far as we are aware, these are the only policies that
our reinterpretation of section 1886(d)(8)(E) of the Act requires us to
change, but we solicited comments on whether there are any remaining
policies that CMS should reexamine in light of our proposed
reinterpretation of section 1886(d)(8)(E) of the Act.
b. Current Calculation of the Rural Wage Index and Application of
Various Hold Harmless Policies
Sections 1886(d)(8)(C)(ii) and (iii) of the Act are ``hold
harmless'' provisions that may affect the wage index calculation when
hospitals reclassify out of a state's rural area into another area.
Section 1886(d)(8)(C)(ii) of the Act provides that if the application
of section 1886(d)(8)(B) of the Act (``Lugar'' status) or a decision of
the MGCRB or the Secretary under section 1886(d)(10) of the Act, by
treating hospitals located in a rural county or counties as not being
located in the rural area in a state, reduces the wage index for that
rural area, the Secretary shall calculate and apply such wage index as
if the hospitals so treated had not been excluded from calculation of
the wage index for that rural area. Section 1886(d)(8)(C)(iii) of the
Act provides that the application of section 1886(d)(8)(B) of the Act
(``Lugar'' status) or a decision of the MGCRB or the Secretary under
section 1886(d)(10) of the Act may not result in the reduction of any
county's wage index to a level below the wage index for rural areas in
the state in which the county is located.
In the FY 2006 IPPS final rule (70 FR 47378 and 47379), we adopted
a regulatory hold harmless policy for situations where hospitals
reclassify into a state's rural area under section 1886(d)(8)(E) of the
Act. We stated that the wage data of an urban hospital reclassifying
into the rural area are included in the rural area's wage index, if
including the urban hospital's data increases the wage index of the
rural area. Otherwise, the wage data are excluded. It has been CMS's
policy since then to include hospitals with state-to-state MGCRB
reclassifications to a nearby state's rural area along with hospitals
reclassified under section 1886(d)(8)(E) of the Act in this regulatory
hold harmless policy.
In the FY 2010 IPPS/LTCH PPS final rule (74 FR 43837 and 43838), as
part of a summary of reclassification policies we had adopted, we
stated that in cases where hospitals have reclassified to rural areas,
such as urban hospitals reclassifying to rural areas under 42 CFR
412.103, the hospital's wage data are: (a) included in the rural wage
index calculation, unless doing so would reduce the rural wage index;
and (b) included in the urban area where the hospital is physically
located. We further stated that the effect of this policy, in
combination with the statutory requirement at section 1886(d)(8)(C)(ii)
of the Act, is that rural areas may receive a wage index based upon the
highest of: (1) wage data from hospitals geographically located in the
rural area (calculation 1 in the table in this section of this rule);
(2) wage data from hospitals geographically located in the rural area,
but excluding all data associated with hospitals reclassifying out of
the rural area under section 1886(d)(8)(B) or section 1886(d)(10) of
the Act (calculation 2 in the table in this section of this rule); or
(3) wage data associated with hospitals geographically located in the
area plus all hospitals reclassified into the rural area (calculation 3
in the table in this section of this rule).
In the April 21, 2016 IFC (81 FR 23428 through 23438), referenced
earlier in section III.G.1.a. of the preamble of this final rule, as a
result of the Geisinger decision, we adopted a policy allowing
hospitals to hold simultaneous Sec. 412.103 and MGCRB
reclassifications. In our wage index development process, we refer to
these hospitals as having ``dual reclass'' status. We further stated in
the IFC that we will exclude hospitals with Sec. 412.103
reclassifications from the calculation of the reclassified rural wage
index if they also have an active MGCRB reclassification to another
area (81 FR 23434).
We also clarified in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR
25070) that if a hospital qualified for ``Lugar'' status and obtained
Sec. 412.103 rural status, we would apply the urban ``Lugar'' status
for wage index purposes only. These geographically rural hospitals
would be included in the rural wage index calculation in accordance
with the previously described hold harmless policy.
The following chart summarizes the current calculation of the rural
wage index algebraically and in accordance with the statutes and
policies previously described:
[GRAPHIC] [TIFF OMITTED] TR28AU23.231
[[Page 58974]]
[GRAPHIC] [TIFF OMITTED] TR28AU23.232
c. Modification to the Rural Wage Index Calculation Methodology
In the FY 2022 IPPS/LTCH PPS final rule (86 FR 45181 and 45182), we
responded to a comment disagreeing with our treatment of ``dual
reclass'' hospitals when calculating the rural floor. The commenter
stated that CMS's policy of considering the hospital's geographic CBSA
and the urban CBSA to which the hospital is reclassified under the
MGCRB for the wage index calculation violates the statutory requirement
to treat Sec. 412.103 hospitals the same as hospitals geographically
located in the rural area of the state. The commenter requested that
CMS include the wages of Sec. 412.103 hospitals that also have an
active MGCRB reclassification in calculating the rural wage of the
state if not doing so would reduce the wage index for that area, in the
same manner that geographically rural hospitals with a MGCRB
reclassification are treated according to section 1886(d)(8)(C)(ii) of
the Act.
We responded that we did not propose the policy the commenter
suggested, and noted that it would constitute a significant change with
numerous and potentially negative effects on the IPPS wage index. We
stated that we did not believe it would be appropriate to adopt such a
policy without describing it in a proposed rule and obtaining public
comments. Therefore, we did not adopt the policy the commenter
suggested, but we stated that we would consider further addressing the
issue in future rulemaking. We also received and responded to a similar
comment in the FY 2023 IPPS/LTCH PPS final rule (87 FR 49003). After
further consideration of these comments and our proposed
reinterpretation of section 1886(d)(8)(E) of the Act discussed earlier
in this section, we proposed changing the rural wage index calculation
methodology consistent with that proposed reinterpretation. We
acknowledged the ongoing risk of the pending lawsuits cited previously,
and recognized the challenge should we need to implement any future
remedy in a budget neutral manner.
Beginning with FY 2024, we proposed to include hospitals with Sec.
412.103 reclassification along with geographically rural hospitals in
all rural wage index calculations, and to exclude ``dual reclass''
hospitals (hospitals with simultaneous Sec. 412.103 and MGCRB
reclassifications) implicated by the hold harmless provision at section
1886(d)(8)(C)(ii) of the Act. The following chart summarizes the
current (as described in the table earlier in this section) and
proposed rural wage index calculation algebraically:
[GRAPHIC] [TIFF OMITTED] TR28AU23.233
[GRAPHIC] [TIFF OMITTED] TR28AU23.234
As shown in the current calculation policy, as previously
described, Sec. 412.103 hospitals enter the rural wage index
calculation in calculation 3, which reflects the regulatory hold
harmless policy described in the FY 2006 IPPS final rule (70 FR 47378
and 47379) and previously referenced, preventing reclassification into
a state's rural area from reducing the rural wage index. That is, we
determine the effects for outbound reclassification (from the rural
area to another area) and inbound reclassification (from another area
into the rural area) separately when determining the highest rural wage
index value. Under our proposal, as shown in the proposed calculation
policy, as previously described, Sec. 412.103 hospitals will no longer
be treated as an inbound reclassification (calculation 3 of the current
policy), but will instead be included in all calculations in which
geographically rural hospitals are included (calculations 1-3 of the
proposed policy). ``Dual reclass'' hospitals will be excluded
(calculation 2 of the proposed policy) in accordance with the hold
harmless provision at section 1886(d)(8)(C)(ii) of the Act, along with
other geographically rural hospitals with MGCRB or ``Lugar''
reclassification status.
As discussed earlier in section III.G.1.a. of the preamble of this
final rule, in the FY 2023 IPPS/LTCH PPS final rule (87 FR 49004), we
stated that we will apply the same policy as prior to the FY 2020 IPPS/
LTCH PPS final rule for calculating the rural floor, in which the rural
wage index sets the
[[Page 58975]]
rural floor. For FY 2023 and subsequent years, our current policy is to
include the wage data of Sec. 412.103 hospitals that have no MGCRB
reclassification in the calculation of the rural floor, and to include
the wage data of such hospitals in the calculation of ``the wage index
for rural areas in the State in which the county is located'' as
referred to in section 1886(d)(8)(C)(iii) of the Act. Consistent with
the previously discussed proposal, beginning with FY 2024 we proposed
to include the data of all Sec. 412.103 hospitals (including those
that have an MGCRB reclassification) in the calculation of the rural
floor and the calculation of ``the wage index for rural areas in the
State in which the county is located'' as referred to in section
1886(d)(8)(C)(iii) of the Act.
We acknowledged that these proposals will have significant effects
on wage index values. As discussed in prior rulemaking (72 FR 47371
through 47373, 84 FR 42332, 85 FR 58788) and in this rule, CMS has
expressed concern with hospitals' use of Sec. 412.103 reclassification
to increase the rural wage index and rural floor. However, as already
mentioned, ``this is simply a function of the many different roles that
hospitals play and the many different contexts in which they operate,''
Lawrence + Mem'l Hosp., 812 F.3d at 267, and follows from our proposed
interpretation of section 1886(d)(8)(E) of the Act--which encompasses
the calculation of the State's rural wage index. We discuss the overall
impact of these proposed changes on the rural wage index calculation
methodology in detail in section II.A.4. of appendix A of this final
rule.
As discussed in the previous section, in the FY 2006 IPPS final
rule (70 FR 47378 and 47379), we adopted a regulatory hold harmless
policy for situations where hospitals reclassify into a state's rural
area. Hospitals reclassified under Sec. 412.103 will no longer be
affected by this policy, as we proposed to include them in the rural
wage index calculation in the same manner as geographically rural
hospitals. Therefore, only the effects of hospitals with state-to-state
MGCRB reclassifications to a nearby state's rural area will be
addressed by this policy. It has been CMS's longstanding policy that
hospitals with state-to-state MGCRB reclassifications to a nearby
state's rural area receive a ``combined'' wage index (calculation 3 of
the current rural wage index calculation, as previously detailed in the
chart) that includes the wage data for geographically rural hospitals
and all hospitals reclassified into that rural area. Given our
longstanding goal to mitigate potential negative impacts on rural
hospitals, we proposed to continue the part of our hold harmless policy
that excludes the data of hospitals reclassifying into a state's rural
area if doing so would reduce that state's rural wage index. We
proposed that these reclassified hospitals be assigned the ``combined''
wage index (calculation 3 of the proposed rural wage index calculation
as previously detailed in the chart) that includes the wage data for
geographically rural hospitals and all hospitals reclassified into that
rural area (subject to any additional wage index adjustment policies
for which those reclassified hospitals may be eligible).
Finally, we proposed to continue the policy to apply the deemed
urban wage index value for Sec. 412.103 hospitals that also qualify as
``Lugar'' under section 1886(d)(8)(B) of the Act. Prior to Geisinger,
since section 1886(d)(8)(E) of the Act requires CMS to treat a
reclassified hospital as being located in the rural area of the state,
and section 1886(d)(8)(B) of the Act requires CMS to treat a rural
hospital as being located in an urban area, our policy was that
obtaining Sec. 412.103 status would effectively waive a hospital's
deemed urban ``Lugar'' status. We discussed in the FY 2017 IPPS/LTCH
PPS proposed rule (81 FR 25070) that if a hospital qualified for
``Lugar'' status and obtained Sec. 412.103 rural status, our policy is
to apply the urban ``Lugar'' status for wage index purposes only.
Comment: Commenters strongly supported CMS's proposal to revise the
rural wage index and rural floor calculation. Specifically, commenters
supported CMS's proposed treatment of a Sec. 412.103 hospital in the
calculation of the rural wage index of its state even when the hospital
has an MGCRB reclassification to another area. Commenters stated that
the inclusion of Sec. 412.103 hospitals in this manner represents a
straightforward interpretation of the regulations and faithfully
executes Congressional intent by treating Sec. 412.103 hospitals ``as
being located in the rural area'' as required by section 1886(d)(8)(E)
of the Act. Commenters also supported CMS's proposed treatment of Sec.
412.103 hospitals for the calculation at section 1886(d)(8)(C)(ii) of
the Act, stating that they believe that treating Sec. 412.103
hospitals the same as geographically rural hospitals is the only lawful
interpretation of the Act. A commenter stated that the proposed changes
in response to the court cases illustrate the complexity,
inconsistency, and even irrationality of the wage index system.
Commenters also encouraged CMS to continue the policy of setting a
state's rural floor equal to its rural wage index as part of coherent
and consistent treatment of Sec. 412.103 hospitals.
Numerous commenters stressed the positive payment impact of these
proposals on many hospitals. Similarly, a commenter noted that the
proposed change to the calculation of the rural wage index and rural
floor would help further reduce the disparity between high and low wage
index hospitals due to its larger impact on hospitals with wage index
values at or below the 25th percentile. This commenter provided its own
wage index analysis in support of this finding.
Multiple commenters expressed concern regarding the increased rural
floor budget neutrality factor due to the proposed changes. While some
commenters acknowledged CMS's statutory budget neutrality requirement,
another commenter requested that CMS not apply the rural floor budget
neutrality factor to urban hospitals paid at the rural floor and to
rural hospitals, stating that it was Congress's intent that these
providers be excluded from this factor. Another commenter requested CMS
provide a more complete summary of the specific impact of the proposed
changes to the rural wage index calculation.
Response: We appreciate the commenters' support for our proposal.
We reviewed the analysis a commenter provided that suggests the
proposed change to the rural wage index calculation methodology would
reduce the total level of adjustments made under the low wage policy,
by raising the wage index of hospitals with wage index values currently
at or below the 25th percentile As proposed, nearly half of all IPPS
hospitals will be assigned their State's rural wage index,\192\ either
directly or through the application of the previously discussed
``floor'' policies. We expect that this number will increase in future
years as hospitals adjust to the policy and as the relative value of
States' rural wage index values increase due to the strategic inclusion
of hospitals that obtain Sec. 412.103 reclassification. An outcome of
this trend would be that the majority of hospitals (if not all) will be
assigned identical wage index values as all other hospitals within
their states. This would greatly reduce wage index variations within a
State but might dramatically increase wage index differentials between
States.
---------------------------------------------------------------------------
\192\ Some of these hospitals will receive an additional wage
index adjustment due their county's out-migration adjustment, or via
the 5 percent cap on wage index reductions.
---------------------------------------------------------------------------
We understand the other commenters' concern regarding the effect
that the
[[Page 58976]]
proposed modification of the rural wage index calculation has on the
rural floor budget neutrality factor. This policy will result in the
rural wage index being greater than the wage index of most or all urban
areas in that State. This will result in substantially more hospitals
receiving the rural floor (and the section 1886(d)(8)(C)(iii)
reclassification hold-harmless floor), and a consequently greater
budget neutrality impact. We acknowledge tension between hospitals
receiving identical wage index values and the broader structure of a
national wage index to reflect relative differences in regional labor
market costs. However, we believe this result would be unavoidable
given the requirement of section 1886(d)(8)(E) of the Act to treat
Sec. 412.103 hospitals `as being located in the rural area' of the
state.
With regard to the commenter's assertion that urban hospitals paid
at the rural floor and rural hospitals should be excluded from the
application of the rural floor budget neutrality factor, we believe we
have applied the rural floor budget neutrality adjustment correctly.
Section 3141 of the Patient Protection and Affordable Care Act (Pub. L.
111-148) requires that a national budget neutrality adjustment be
applied in implementing the rural floor. There is a statutory
requirement for budget neutrality, and the statute does not express
intent to exempt certain hospitals as the commenter claims. Consistent
with our longstanding methodology for implementing rural floor budget
neutrality, we believe it is appropriate to continue to apply a budget
neutrality adjustment to all hospitals' wage indexes so that the rural
floor is implemented in a budget neutral manner.
With regard to the commenter requesting a summary of the specific
impact of the changes to the rural wage index calculation, we refer the
commenter to section II.A.4.e. of the Addendum of this final rule for a
complete discussion of the budget neutrality impact of the application
of the rural floor.
Comment: Several commenters expressed concern with the timing of
our proposed policy as it relates to Medicare Advantage (MA)
reimbursement funding for MA plans. Commenters cited locations that
would have significant, sudden increases in hospital payment rates due
to the proposed change in the calculation of the rural wage index
values and cited potential severe financial hardships (including
increased insurance rates) if such plans are not granted adequate time
to transition and adjust to the implications of the policy change.
Another commenter stated that while budget neutrality may mitigate
the impact of CMS's rural wage index adjustments overall, it does not
prevent significant regional impacts. The commenter stated that MA
organizations have limited mechanisms to account for any increased
costs given that they must pay the FFS rate for non-contracted
providers. The negative impacts would be greater on small, regional
plans that do not provide services across a broad enough area to
mitigate the effects. Commenters requested CMS delay changes to the
rural wage index or implement a companion policy to counterbalance the
effects of the policy.
Response: After reviewing the concerns submitted by commenters
regarding the potential impact this policy would have on MA plan
payments, we are not convinced that the impact of this specific policy
is exceptionally unique (in either form or magnitude) from other policy
proposals made in past cycles. That is, we note that any change in
policy that has the effect of increasing the wage index of an area will
always result in an increase in MA payment rates to non-contracted
hospital providers in that area. It would be out of the scope of this
rulemaking to implement any change in MA payment policy (for example,
raising benchmark rates) and outside of our authority to change the
statutory bidding deadline for MA organizations (the first Monday in
June of the year preceding the payment and coverage year), and given
the broad general support we received from other commenters, we find
the benefits of the proposed policy outweigh the possible repercussions
highlighted by the commenter. Further, MA rates (that is, the bidding
benchmarks) are set, in part, using projections of national FFS per
capita costs for the payment year combined with a localized cost index,
or the average geographic adjustment (AGA). The AGA is based on the
most recent five-years of historical FFS experience. The IPPS claims
supporting the AGAs are repriced using the most recent available wage
index, which is FY 2023 for the 2024 MA rates. (These projections are
subject to specific statutory exclusions of certain costs that are
explained in the annual Rate Announcement.)
In response to the specific request to delay IPPS payment changes
because of non-contract MA claims, for the reason cited in the proposed
rule (83 FR 26976 through 26977), we believe that any delay to the
proposed changes to the rural wage index calculation would be
detrimental to hospitals and would result in additional litigation.
Consistent with sections 1852(a)(2), 1852(k)(1), and 1866(a)(1)(O) of
the Act, non-contract providers must accept as payment in full payment
amounts applicable in Original Medicare. We will take these comments
regarding MA payment implications into consideration for future
rulemaking.
Comment: A commenter requested that CMS provide clarification on
how its proposed interpretation of Sec. 412.103 impacts the distance
and proximity requirements for MGCRB reclassification. The commenter
specifically asked if a Sec. 412.103 redesignated hospital can seek
MGCRB reclassification to any CBSA within 35 miles of any point of the
State's rural area or to any CBSA adjacent to the rural area.
Response: We believe the commenter is misunderstanding the current
MGCRB reclassification rules. Hospitals with a Sec. 412.103
reclassification will continue to use the 35-mile rural proximity
criterion at Sec. 412.230(b)(1). All reclassification proximity
criteria that use mileage begin the measurement at the hospital's
geographic address and end at the nearest point in the requested CBSA
area.
After consideration of public comments received, we are adopting
the proposed changes to the rural wage index calculations as described
in the proposed rule. Specifically, we are adopting without change our
proposed interpretation of section 1886(d)(8)(E) of the Act.
Accordingly, we are finalizing our proposal to include hospitals with
Sec. 412.103 reclassification along with geographically rural
hospitals in all rural wage index calculations, and to exclude ``dual
reclass'' hospitals (hospitals with simultaneous Sec. 412.103 and
MGCRB reclassifications) implicated by the hold harmless provision at
section 1886(d)(8)(C)(ii) of the Act. We are also finalizing the
proposed policy that hospitals with state-to-state MGCRB
reclassifications to a nearby state's rural area receive a ``combined''
wage index (calculation 3 of the rural wage index calculation as
previously detailed in the chart) that includes the wage data for
geographically rural hospitals and all hospitals reclassified into that
rural area (subject to any additional wage index adjustment policies
for which those reclassified hospitals may be eligible). Finally, we
are finalizing our policy to continue to apply the deemed urban wage
index value for Sec. 412.103 hospitals that also qualify as ``Lugar''
under section 1886(d)(8)(B) of the Act, for wage index purposes only.
We note in this final rule that an additional corollary of the
changes
[[Page 58977]]
being finalized regarding our treatment of hospitals reclassified under
Sec. 412.103 is that a hospital with a Sec. 412.103 reclassification
should be considered as being located in its State's rural area for the
purposes of applying the hold harmless provision under section
1886(d)(8)(C)(iii) of the Act. This would prevent the rare situation
where Sec. 412.103 hospitals with the state-to-state rural MGCRB
reclassification would be assigned a lower wage index than
geographically rural hospitals with the same state-to-state rural MGCRB
reclassification.
We note that this policy implication would not alter any wage index
values for any hospital or CBSA for this FY 2024 rule, but will have
some minor underlying budget neutrality implications, as several
additional hospitals will be assigned their State's rural wage index
prior to the application of the ``rural floor'' provision (insofar as
CMS applies a budget neutrality adjustment in implementing 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 stated 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.
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 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. 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. Section 1886(d)(3)(E)(iv)(IV) of the Act
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.
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. We refer readers to the FY 2022 IPPS/LTCH PPS final rule (86 FR
45176 through 45178) for further discussion of the original imputed
floor calculation methodology implemented in FY 2005 and the
alternative methodology implemented in FY 2013.
Based on data available for this final rule, States that will be
all-urban States as defined in section 1886(d)(3)(E)(iv)(IV) of the
Act, and thus hospitals in such States that will be eligible to receive
an increase in their wage index due to application of the imputed floor
for FY 2024, are identified in Table 3 associated with this final rule.
States with a value in the column titled ``State Imputed Floor'' are
eligible for the imputed floor.
The regulations at Sec. 412.64(e)(1) and (4) and (h)(4) and (5)
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 continue to be applied for FY 2024 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 2024
Section 10324 of Public Law 111-148 requires that hospitals in
frontier States cannot be assigned a wage index of less than 1.0000.
(We refer readers to the regulations at 42 CFR 412.64(m) and to a
discussion of the implementation of this provision in the FY 2011 IPPS/
LTCH PPS final rule (75 FR 50160 through 50161).) In the FY 2024 IPPS/
LTCH PPS proposed rule, we did not propose any changes to the frontier
floor policy for FY 2024. In the proposed rule we stated 43 hospitals
would receive the frontier floor value of 1.0000 for their FY 2024
proposed wage index. These hospitals are located in Montana, North
Dakota, South Dakota, and Wyoming.
We did not receive any public comments on the application of the
State frontier floor for FY 2024. In this final rule, 42 hospitals will
receive the frontier floor value of 1.0000 for their FY 2024 wage
index. These hospitals are located in Montana, North Dakota, South
Dakota, and Wyoming. We note that while Nevada meets the criteria of a
frontier State, all hospitals within the State currently receive a wage
index value greater than 1.0000. The areas affected by the rural and
frontier floor policies for the final FY 2024 wage index are identified
in Table 2 associated with this final rule, which is available via the
internet on the CMS website.
4. Continuation of the Low Wage Index Hospital Policy and Budget
Neutrality Adjustment
In the FY 2020 IPPS/LTCH PPS final rule (84 FR 42325 through
42339), we finalized a policy to address the artificial magnification
of wage index disparities, based in part on comments we received in
response to our request for information included in our FY 2019 IPPS/
LTCH PPS proposed rule (83 FR 20372 through 20377). In the FY 2020
IPPS/LTCH final rule, based on those public comments and the growing
disparities between wage index values for high- and low-wage-index
hospitals, we explained that those growing disparities are likely
caused by the use of historical wage data to prospectively set
hospitals' wage indexes. That lag creates barriers to hospitals with
low wage index values from being able to increase employee
compensation, because those hospitals will not receive corresponding
increases in their Medicare payment for several years (84 FR 42327).
Accordingly, we finalized a policy that provided certain low wage index
hospitals with an opportunity to
[[Page 58978]]
increase employee compensation without the usual lag in those increases
being reflected in the calculation of the wage index.\193\ We
accomplished this by temporarily 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. As explained in the FY 2020 IPPS/LTCH proposed rule
(84 FR 19396) and final rule (84 FR 42329), we indicated that the
Secretary has authority to implement the lowest quartile wage index
proposal under both section 1886(d)(3)(E) of the Act and under his
exceptions and adjustments authority under section 1886(d)(5)(I) of the
Act.
---------------------------------------------------------------------------
\193\ In the FY 2020 IPPS/LTCH proposed rule, we agreed with
respondents to a request for information who indicated that some
current wage index policies create barriers to hospitals with low
wage index values from being able to increase employee compensation
due to the lag between when hospitals increase the compensation and
when those increases are reflected in the calculation of the wage
index. (We noted that this lag results from the fact that the wage
index calculations rely on historical data.) We also agreed that
addressing this systemic issue did not need to wait for
comprehensive wage index reform given the growing disparities
between low and high wage index hospitals, including rural hospitals
that may be in financial distress and facing potential closure (84
FR 19394 and 19395).
---------------------------------------------------------------------------
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 is 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). The
district court in Bridgeport found that the 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 for FY 2020 and remanded the
policy to the agency without vacatur. We have appealed the court's
decision.
At the time the policy was originally promulgated, we stated in the
FY 2020 IPPS/LTCH PPS final rule (84 FR 42326 through 42328) our
intention that it would be in effect for at least 4 fiscal years
beginning October 1, 2019. We stated we intended to revisit the issue
of the duration of this policy in future rulemaking as we gained
experience under the policy. At this time, we only have one year of
relevant data (from FY 2020) that we could use to evaluate any
potential impacts of this policy. As discussed in section III.B. of the
preamble of this final rule, consistent with the IPPS and LTCH PPS
ratesettings, 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 4-year lag (for example, for the
FY 2023 wage index we used cost report data from FY 2019). Given our
current lack of sufficient data with which to evaluate the low wage
index hospital policy, we believe it is necessary to wait until we have
useable data from additional fiscal years before making any decision to
modify or discontinue the policy. Therefore, for FY 2024, we proposed
to continue the low wage index hospital policy and the related budget
neutrality adjustment (discussed in this section of this rule).
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 2024 and for subsequent fiscal years during which the low
wage index hospital policy is in effect, we proposed to apply a budget
neutrality adjustment in the same manner as we applied it since FY 2020
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
final rule for further discussion of the budget neutrality adjustment
for FY 2024. For purposes of the low wage index hospital policy, based
on the data for this final rule, the table displays the 25th percentile
wage index value across all hospitals for FY 2024.
[GRAPHIC] [TIFF OMITTED] TR28AU23.235
Comment: Several commenters supported the low wage index hospital
policy. Numerous commenters indicated that they have used the increased
payments resulting from the low wage index hospital policy as CMS
intended, resulting in a positive impact on their workforce recruitment
and retention. Commenters commended the extension of the policy and
noted that there continues to be insufficient data to support modifying
or discontinuing the policy. Commenters explained that CMS should
continue to extend the policy until a full four-year period of wage
data is gathered in order to more fully evaluate the effectiveness of
the policy. Several commenters noted that the full 4 years of wage data
gathered should be post-COVID-19 wage data in part due to ongoing
workforce shortages and regional impacts as a result of the COVID-19
public health emergency (PHE). Specifically, one commenter explained
that CMS should not be utilizing any data from FY 2020 due to the
impacts of the PHE and other commenters urged CMS to continue the low
wage index policy at least through FY 2030 in order to collect wage
data outside of the PHE.
Some commenters asked that CMS provide clarification on its plans
for this low-wage hospital policy moving forward, urging CMS to specify
how many years of data it expects to need in order to evaluate whether
the policy has increased wages for low-wage hospitals. Commenters also
urged CMS to describe how it will account for the dramatic shifts in
wage costs during the COVID-19 PHE, while explaining that doing so will
help provide clarity and predictability to the field, especially during
the current financial climate in which hospitals are operating.
A commenter explained that regardless of whether the low-wage
hospital policy had its intended effect, CMS should now enter the
evaluation phase, ending the artificial increase in the low quartile
hospitals' wage indices after four years. According to the commenter,
if CMS disagrees that four
[[Page 58979]]
years of the policy is sufficient, it should better justify continuing
the policy and lay out its criteria for evaluating the policy's
potential success and at what point it should be terminated.
Response: We thank the many commenters expressing their support of
the low wage index hospital policy and the continued feedback regarding
achievement of the intended policy goal. We appreciate the commenters'
requests to consider the impacts of COVID-19, to extend this policy
beyond four years due to COVID-19, and to extend the policy until the
intended goals of the policy are reached. We appreciate commenters'
suggestions on how we might evaluate the effectiveness of the policy
and may consider those suggestions in future rulemaking.
Regarding the comments requesting clarity about how many years of
data are needed in order to evaluate whether the policy has increased
wages for low-wage hospitals, as noted in the proposed rule and earlier
in this section of the final rule, in the FY 2020 IPPS/LTCH PPS final
rule (84 FR 42326 through 42328) we stated our intention that this
policy will be effective for at least 4 years, until the policy's
effects could be reflected in the wage index data. As discussed in
section III.B. of the preamble of this final rule, consistent with the
IPPS and LTCH PPS ratesettings, 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 4-year lag (for
example, for the FY 2023 wage index we used cost report data from FY
2019). At this time, we only have one year of relevant data (from FY
2020) that we could use to evaluate any potential impacts of this
policy. Again, as described earlier in this section, when this policy
was finalized in the FY 2020 IPPS/LTCH PPS final rule, it was our
intention that it would be effective for at least 4 years, until the
policy's effects could be reflected in the wage index data. Given our
current lack of sufficient data with which to evaluate the low wage
index hospital policy, currently having access to only one year of
relevant data at this time due to the 4-year data lag also as described
earlier in this section, we believe it is necessary to wait until we
have useable data from additional fiscal years before making any
decision to modify or discontinue the policy.
Comment: Several commenters expressed their support for the
continued implementation of wage index payment increases for low-wage
hospitals but urged CMS to do so in a non-budget-neutral manner.
Commenters stated that implementing the policy with a budget neutrality
adjustment merely redistributes funds from one hospital to another,
arbitrarily causing some hospitals to experience a payment decrease and
others an increase. One commenter stated that those hospitals that fall
between approximately the 22nd and 25th percentile are receiving a
reduction to the wage adjusted standardized rate because the amount of
benefit received is less than the cost to fund the benefit. This
commenter suggested holding hospitals under the 25th percentile
harmless. Commenters also provided other suggestions for data and
alternative methodologies to include: reducing the wage index for
hospitals with values above the 75th percentile; working with Congress
on a more permanent fix to address the disparities in the wage index by
establishing a national floor for all hospitals; and seeking input from
the hospital community on best overall reform options that will better
avoid downstream consequences from wage index policy changes.
Response: We disagree with the commenters that the low wage index
hospital policy should be implemented in a non-budget neutral manner.
As we stated in response to similar comments in the FY 2020 IPPS/LTCH
PPS final rule (84 FR 42331 and 42332), the FY 2022 IPPS/LTCH PPS final
rule (86 FR 45180), and the FY 2023 IPPS/LTCH PPS final rule (87 FR
49007), under section 1886(d)(3)(E) of the Act, the wage index
adjustment is required to be implemented in a budget neutral manner.
However, even if the wage index were not required to be budget neutral
under section 1886(d)(3)(E) of the Act, we would consider it
inappropriate to use the wage index to increase or decrease overall
IPPS spending. As we stated in the FY 2020 IPPS/LTCH PPS final rule (84
FR 42331), the wage index is not a policy tool but rather a technical
adjustment designed to be a relative measure of the wages and wage-
related costs of subsection (d) hospitals. As a result, as we explained
in the FY 2020 IPPS/LTCH PPS final rule, if it were determined that
section 1886(d)(3)(E) of the Act does not require the wage index to be
budget neutral, we invoke our authority at section 1886(d)(5)(I) of the
Act in support of such a budget neutrality adjustment.
With regard to the commenter's concern that application of the low
wage index policy may result in a reduction to overall payment if the
amount of benefit received from the wage index boost is less than the
reduction to the standardized amount, we believe we have applied both
the quartile policy and the budget neutrality policy appropriately. As
we explained most recently in response to comments in the FY 2023 IPPS/
LTCH PPS final rule (87 FR 49007), the quartile adjustment is applied
to the wage index, which results in an increase to the wage index for
hospitals below the 25th percentile. The budget neutrality adjustment
is applied to the standardized amount in order to ensure that the low
wage index hospital policy is implemented in a budget neutral manner.
Thus, consistent with our current methodology for implementing wage
index budget neutrality under section 1886(d)(3)(E) of the Act and with
how we implemented budget neutrality for the low wage index hospital
policy in FY 2020, we believe it is appropriate to continue to apply a
budget neutrality adjustment to the national standardized amount for
all hospitals so that the low wage index hospital policy is implemented
in a budget neutral manner for FY 2024.
Regarding the comment about reducing the wage index for hospitals
with values above the 75th percentile, in the FY 2020 IPPS/LTCH final
rule (84 FR 42329), we discussed that we originally proposed to reduce
the wage index values for high wage index hospitals using a methodology
analogous to the methodology used to increase the wage index values for
low wage index hospitals described in section III.N.3.a. of the
preamble of the proposed rule; that is, we proposed to decrease the
wage index values for high wage index hospitals by a uniform factor of
the distance between the hospital's otherwise applicable wage index and
the 75th percentile wage index value for a fiscal year across all
hospitals. In response to comments we received (84 FR 42329 and 42330),
we acknowledged that some commenters presented reasonable policy
arguments that we should consider further regarding the relationship
between our proposed budget neutrality adjustment targeting high wage
hospitals and the design of the wage index to be a relative measure of
the wages and wage-related costs of subsection (d) hospitals in the
United States. Therefore, in the FY 2020 IPPS/LTCH final rule, we did
not finalize our proposal to target that budget neutrality adjustment
on high wage hospitals (84 FR 42331). Regarding the comment about the
establishment of a national floor for all hospitals, we noted in
response to a similar comment in the FY 2020 IPPS/LTCH PPS final rule
(84 FR 42338 through 42339), as we
[[Page 58980]]
do not have evidence a national rural labor market exists or would be
created if we were to adopt this alternative, this alternative would
not increase the accuracy of the wage index. Also, we believe we have
applied both the quartile policy and the budget neutrality policy
appropriately, as we explained in response to comments in the FYs 2021
and 2022 IPPS/LTCH PPS final rules and most recently FY 2023 IPPS/LTCH
PPS final rule (87 FR 49007). The quartile adjustment is applied to the
wage index, which resulted in an increase to the wage index for
hospitals below the 25th percentile. The budget neutrality adjustment
is applied to the standardized amount in order to ensure that the low
wage index hospital policy is implemented in a budget neutral manner.
Comment: Several commenters opposed the low wage index hospital
policy, stating that it is inappropriately redistributive, ineffective,
and outside the agency's statutory authority under section
1886(d)(3)(E) of the Act. Specifically, some commenters stated that
although the policy is intended to help rural hospitals, some rural
hospitals in certain states do not benefit from this policy.
Furthermore, a commenter stated that the policy undermines the intent
of the wage index by not recognizing real differences in labor costs.
Response: We believe we addressed the stated concerns in our
responses to comments when we first finalized the policy and the
related budget neutrality adjustment in the FY 2020 IPPS/LTCH PPS final
rule (84 FR 42325 through 42332). Concerning the policy's
redistributive effect, we refer readers to our response to the previous
comments about budget neutrality. With regard to the policy's
effectiveness, we continue to believe that the comments in support of
the policy, specifically comments from relatively low-wage hospitals
stating that the increased payments under the policy have allowed them
to raise compensation for their workers, indicate that many low wage
hospitals are benefiting from this policy. Furthermore, 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,
until the policy's effects could be reflected in the wage index data.
Regarding the policy's effect on rural hospitals, as we stated FY 2020
IPPS/LTCH PPS final rule (84 FR 42328), the wage index is a technical
payment adjustment. The intent of the low wage hospital policy is to
increase the accuracy of the wage index as a technical adjustment, and
not to use the wage index as a policy tool to address non-wage issues
related to rural hospitals, or the laudable goals of the overall
financial health of hospitals in low wage areas or broader wage index
reform. The low wage hospital policy aims to increase the accuracy of
the wage index as a relative measure because it allows low wage index
hospitals to increase their employee compensation in ways that we would
expect if there were no lag between the time a hospital increases
employee compensation and the time these increases are reflected in the
wage index, and allows those increases to be more timely reflected in
the wage index. While one effect of the policy may be to improve the
overall well-being of low wage hospitals, and we would welcome that
effect, that is not the primary rationale for our policy.
In response to comments stating the policy exceeds CMS's statutory
authority, we refer the commenters to our prior discussion of the
authority for the policy in the FY 2020 IPPS/LTCH PPS final rule (84 FR
42326 through 42332).
In response to the assertion that the low wage index hospital
policy does not recognize real differences in labor costs, we continue
to believe, for the reasons stated in the FY 2020 IPPS/LTCH PPS final
rule (84 FR 42327 and 42328), that by preserving the rank order in wage
index values, our policy continues to reflect meaningful distinctions
between the employee compensation costs faced by hospitals in different
geographic areas. Thus, under the low wage index hospital policy, we
believe the wage index for low wage index hospitals appropriately
reflects the relative hospital wage level in those areas compared to
the national average hospital wage level.
Comment: Many commenters noted that the low wage index hospital
policy is currently the subject of pending litigation in Bridgeport. A
few commenters urged CMS not to finalize the policy for FY 2024, or to
wait until a final court decision is reached. One such commenter
suggested CMS should eliminate the budget neutrality adjustments for
FYs 2020, 2021, 2022 and 2023 in light of Bridgeport. Many commenters
applauded CMS's decision to appeal the district court's decision in
Bridgeport. These commenters stated that the consequences of halting
the policy would be dire.
Response: We appreciate the commenters' input. As noted previously,
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). The district court in Bridgeport
found that the 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 for FY 2020 and remanded the policy to the agency
without vacatur. We have appealed the court's decision.
After consideration of the comments we received, and for the
reasons stated previously and in the proposed rule, we are finalizing
as proposed to continue the low wage index hospital policy and the
related budget neutrality adjustment for FY 2024.
5. Permanent Cap on Wage Index Decreases and Budget Neutrality
Adjustment
In the FY 2023 IPPS/LTCH PPS final rule (87 FR 49018 through
49021), we finalized a wage index cap policy and associated budget
neutrality adjustment for FY 2023 and subsequent fiscal years. Under
this policy, we 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. A hospital's wage index will not be
less than 95 percent of its final wage index for the prior FY. If a
hospital's prior FY wage index is calculated with the application of
the 5-percent cap, the following year's wage index will not be less
than 95 percent of the hospital's capped wage index in the prior FY.
Except for newly opened hospitals, we apply the cap for a FY using the
final wage index applicable to the hospital on the last day of the
prior FY. A newly opened hospital will be paid the wage index for the
area in which it is geographically located for its first full or
partial fiscal year, and it will not receive a cap for that first year,
because it will not have been assigned a wage index in the prior year.
The wage index cap policy is reflected at 42 CFR 412.64(h)(7). We apply
the cap in a budget neutral manner through a national adjustment to the
standardized amount each fiscal year. For more information about the
wage index cap policy and associated budget neutrality adjustment, we
refer readers to the discussion in the FY 2023 IPPS/LTCH PPS final rule
(87 FR 49018 through 49021).
Although we did not propose changes to the policy to apply a
permanent cap on wage index decreases, we received comments which are
summarized and responded to as follows.
Comment: Many commenters expressed their support for CMS's policy,
as finalized in the FY 2023 IPPS/
[[Page 58981]]
LTCH PPS final rule (87 FR 49018 through 49021), to limit any decrease
in a hospital's wage index value to be no greater than 5 percent as
compared to the hospital's wage index value for the prior fiscal year,
regardless of the circumstances causing the decline. According to
commenters, the policy helps maintain stability and predictability to
current and future payments under the IPPS by preventing abrupt
variation in year-to-year wage data for affected hospitals, much of
which may be beyond a hospital's control.
Response: We appreciate the support from commenters.
Comment: Several commenters that supported the policy to apply a
permanent cap on wage index decreases, explained that CMS is not bound
by statute to make the policy budget neutral and urged CMS to revisit
how the policy is funded in order to implement the policy in a non-
budget neutral manner. According to these commenters, the budget
neutral aspect of the policy causes unintended consequences as payment
rates are redistributed and undermines the intended benefit of the
policy. Commenters asked CMS to examine alternatives to fund this
policy so that the policy is funded using separate and additional
funds, rather than in a budget neutral way that reduces the wage
indexes of other hospitals. Furthermore, commenters explained that
implementing this policy in a non-budget neutral manner would both
stabilize provider reimbursement and avoid further unexpected
reductions for other providers. Finally, commenters encouraged CMS to
continue working with stakeholders and Congress to address the need for
more comprehensive reforms.
Response: We thank the commenters for their input regarding the
policy to apply a permanent cap on wage index decreases. As discussed
in our response to comments in the FY 2023 IPPS/LTCH PPS final rule (87
FR 49020), the budget neutrality adjustment associated with the
permanent cap on wage index increases policy is implemented through our
authority under sections 1886(d)(3)(E) and (d)(5)(I)(i) of the Act.
Section 1886(d)(3)(E) 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 applied in a
budget neutral manner. However, even if the wage index were not
required to be budget neutral under section 1886(d)(3)(E) of the Act,
we would not consider it an appropriate alternative to use the wage
index and the proposed permanent cap on wage index decreases to
increase or decrease overall IPPS spending. The wage index is not a
policy tool but rather a technical adjustment designed to be a relative
measure of the wages and wage-related costs of subsection (d) hospitals
in the United States. Furthermore, our past policies involving a 5
percent cap on wage index decreases implemented in a budget neutral
manner did not result in wage index volatility, and we expect the same
for the overall budget neutrality adjustments associated with the
permanent cap policy. For more information about the wage index cap
policy and associated budget neutrality adjustment finalized in FY 2023
for FY 2023 and subsequent years, we refer readers to the discussion in
the FY 2023 IPPS/LTCH PPS final rule (87 FR 49018 through 49021). For
FY 2024, we will apply the wage index cap and associated budget
neutrality adjustment in accordance with the policies adopted in the FY
2023 IPPS/LTCH PPS final rule. We note that the budget neutrality
adjustment will be updated, as appropriate, based on the final rule
data. We refer readers to the Addendum of this final rule for further
information regarding the budget neutrality calculations.
H. FY 2023 Wage Index Tables
In this FY 2024 IPPS/LTCH PPS final rule, we have included the
following wage index tables: Table 2 titled ``Case-Mix Index and Wage
Index Table by CCN''; Table 3 titled ``Wage Index Table by CBSA'';
Table 4A titled ``List of Counties Eligible for the Out-Migration
Adjustment under Section 1886(d)(13) of the Act''; and Table 4B titled
``Counties redesignated under section 1886(d)(8)(B) of the Act (Lugar
Counties).'' We refer readers to section VI. of the Addendum to this
final rule for a discussion of the wage index tables for FY 2024.
I. Revisions to the Wage Index Based on Hospital Redesignations and
Reclassifications
1. General Policies and Effects of Reclassification and Redesignation
Under section 1886(d)(10) of the Act, the Medicare Geographic
Classification Review Board (MGCRB) considers applications by hospitals
for geographic reclassification for purposes of payment under the IPPS.
Hospitals must apply to the MGCRB to reclassify not later than 13
months prior to the start of the fiscal year for which reclassification
is sought (usually by September 1). Generally, hospitals must be
proximate to the labor market area to which they are seeking
reclassification and must demonstrate characteristics similar to
hospitals located in that area. The MGCRB issues its decisions by the
end of February for reclassifications that become effective for the
following fiscal year (beginning October 1). The regulations applicable
to reclassifications by the MGCRB are located in 42 CFR 412.230 through
412.280. (We refer readers to a discussion in the FY 2002 IPPS final
rule (66 FR 39874 and 39875) regarding how the MGCRB defines mileage
for purposes of the proximity requirements.) The general policies for
reclassifications and redesignations and the policies for the effects
of hospitals' reclassifications and redesignations on the wage index
are discussed in the FY 2012 IPPS/LTCH PPS final rule for the FY 2012
final wage index (76 FR 51595 and 51596).
In addition, in the FY 2012 IPPS/LTCH PPS final rule, we discussed
the effects on the wage index of urban hospitals reclassifying to rural
areas under 42 CFR 412.103. 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, but we reverted back to the
pre-FY 2020 policy in the FY 2023 IPPS/LTCH PPS final rule (87 FR 49002
through 49004). 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.
[[Page 58982]]
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. Prior to FY 2024, we
excluded 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 FY 2024 and subsequent years, we refer
readers to section III.G.1 of the preamble of this final rule for
discussion of our proposal to include hospitals with a Sec. 412.103
redesignation that also have an active MGCRB reclassification to
another area in the calculation of the reclassified rural wage index.
On May 10, 2021, we published an interim final rule with comment
period (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 pre-reclassified 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 2024
a. FY 2024 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. There are 466 hospitals approved for wage index
reclassifications by the MGCRB starting in FY 2024. Because MGCRB wage
index reclassifications are effective for 3 years, for FY 2024,
hospitals reclassified beginning in FY 2022 or FY 2023 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 271 hospitals approved for wage index reclassifications in
FY 2022 that will continue for FY 2024, and 325 hospitals approved for
wage index reclassifications in FY 2023 that will continue for FY 2024.
Of all the hospitals approved for reclassification for FY 2022, FY
2023, and FY 2024, 1062 (approximately 30 percent) hospitals are in a
MGCRB reclassification status for FY 2024 (with 187 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's 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
through 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 2024, the CBSAs assigned in the FY 2021
IPPS/LTCH final rule continue to be in effect.
Applications for FY 2025 reclassifications are due to the MGCRB by
September 1, 2023. 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 2023 via the
internet on the CMS website at https://www.cms.gov/Regulations-andGuidance/Review-Boards/MGCRB/index.html. 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.
Comment: A commenter noted that the MGCRB issued determinations for
FY 2024 on January 31, 2023. The commenter stated that this was earlier
than in the past, when the MGCRB typically issued determinations mid-
February, to meet the statutory requirement for decisions to be issued
by the end of February. The commenter requested that CMS limit the
MGCRB from issuing decisions prior to the first week of February to
allow hospitals ample time to submit documentation of rural
reclassification, SCH and RRC status to the Board or to submit a
request to withdraw an application based on review of the January PUF.
The commenter stated that without a
[[Page 58983]]
more definitive timeline, hospitals face uncertainty if their
documentation will be accepted by the MGCRB and could be adversely
affected by an early decision being issued by the Board.
Response: We disagree with the commenter that hospitals are
disadvantaged by earlier issuance of MGCRB decisions. First, we believe
hospitals should submit applications complete with supporting
documentation at the time MGCRB applications are due. Hospitals taking
advantage of the MGCRB's practice of accepting supporting documentation
to supplement applications until the date of the MGCRB's review are
aware that the review is not held on the same date annually. In fact,
the MGCRB even issued determinations for FY 2024 on a later date in
January than it issued determinations for FY 2023 (January 31, 2023,
versus January 24, 2022). Furthermore, rural reclassification may be
obtained at any time, and hospitals seeking benefits of rural status
for MGCRB reclassification should plan accordingly. Finally, we note
that hospitals dissatisfied with the MGCRB's decision may request the
Administrator's review under Sec. 412.278. With regard to hospitals
requesting to withdraw a pending reclassification application following
review of the January PUF, hospitals may withdraw a reclassification
after the MGCRB has issued decisions, within 45 days of the date that
CMS's annual notice of proposed rulemaking is issued in the Federal
Register, per the regulations at Sec. 412.273. Therefore, we do not
believe hospitals are disadvantaged by the earlier timing of MGCRB
decisions, because they can submit supporting documentation timely,
obtain a rural reclassification in advance, request the Administrator's
review of an MGCRB decision, and withdraw an unwanted reclassification.
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 out-migration
adjustment. In addition, in that rule, we adopted a minor procedural
change that allows 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 will 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 out-migration adjustment within 45 days of the public
display date of the proposed rule at the Office of the Federal Register
in lieu of its Lugar wage index reclassification, and the county in
which the hospital is located would no longer qualify for an out-
migration adjustment when the final rule (or a subsequent correction
notice) wage index calculations are completed, the hospital's request
to accept the out-migration adjustment will be denied, and the hospital
will 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
will be recalculated to reflect this reclassification, and in some
instances, after taking into account this reclassification, the out-
migration adjustment for the county in question could be restored in
the final rule. However, as the hospital is assigned a Lugar
reclassification under section 1886(d)(8)(B) of the Act, it would be
ineligible to receive the county out-migration adjustment under section
1886(d)(13)(G) of the Act.
We received three timely requests in the [email protected]
mailbox from CCN 230005 (located in Lenawee County, PA), and CCNs
390183 and 390332 (located in Schuykill county, PA) to waive ``Lugar''
reclassification status to accept the county out-migration adjustment
(OMA). These requests are approved. All three hospitals have current
Sec. 412.103 rural reclassifications. Per the regulation at Sec.
412.103(g)(5), the rural reclassification status will be terminated,
effective October 1, 2023. The status of these requests will be listed
in Table 2 in the addendum of this final rule.
We received one request from CCN 150076 on June 13, 2023. The
deadline to file a request to waive ``Lugar'' reclassification status
to accept its county OMA was May 25, 2023; 45 days from the date of
public display (April 10, 2023) of the proposed rule at the Office of
the Federal Register. This request is therefore denied.
J. Out-Migration Adjustment Based on Commuting Patterns of Hospital
Employees
In accordance with section 1886(d)(13) of the Act, as added by
section 505 of Public Law 108-173, beginning with FY 2005, we
established a process to make adjustments to the hospital wage index
based on commuting patterns of hospital employees (the ``out-
migration'' adjustment or OMA). 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
[[Page 58984]]
Bureau used at that time and which contained questions on where
residents in each county worked (69 FR 49062). However, the 2010 Census
was ``short form'' only; information on where residents in each county
worked was not collected as part of the 2010 Census. The Census Bureau
worked with CMS to provide an alternative dataset based on the latest
available data on where residents in each county worked in 2010, for
use in developing a new out-migration adjustment based on new commuting
patterns developed from the 2010 Census data beginning with FY 2016.
To determine the out-migration adjustments and applicable counties
for FY 2016, we analyzed commuting data compiled by the Census Bureau
that were derived from a custom tabulation of the American Community
Survey (ACS), an official Census Bureau survey, utilizing 2008 through
2012 (5-year) Microdata. The data were compiled from responses to the
ACS questions regarding the county where workers reside and the county
to which workers commute. As we discussed in prior IPPS/LTCH PPS final
rules, most recently in the FY 2023 IPPS/LTCH PPS final rule (87 FR
49012), we have applied the same policies, procedures, and computations
since FY 2012. We proposed to use them again for FY 2024, 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 2024, 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 2024, we
did not propose any changes to the methodology or data source that we
used for FY 2016 (81 FR 25071). (We refer readers to a full discussion
of the out-migration adjustment, including rules on deeming hospitals
reclassified under section 1886(d)(8) or section 1886(d)(10) of the Act
to have waived the out-migration adjustment, in the FY 2012 IPPS/LTCH
PPS final rule (76 FR 51601 through 51602).)
Comment: A commenter stated that CMS should reconsider whether an
out-migration adjustment should be applied to hospitals with a Sec.
412.103 rural reclassification. The commenter stated that, in light of
the proposed modification to treat Sec. 412.103 hospitals the same as
geographically rural hospitals in the wage index calculation
methodology, a Sec. 412.103 hospital without an MGCRB or ``Lugar''
designation should be eligible to receive its county's calculated OMA.
Response: We disagree that a hospital with an active Sec. 412.103
rural reclassification is eligible to receive an OMA. Section
1886(d)(13)(G) of the Act states that a hospital that receives an OMA
is not eligible for reclassification under section 1886(d)(8) or
1886(d)(10) of the Act. Section 1886(d)(8) of the Act describes both
deemed urban status under section 1886(d)(8)(B) (``Lugar''
reclassification) and obtaining rural status under section
1886(d)(8)(E) of the Act (implemented by Sec. 412.103). By voluntarily
applying for a Sec. 412.103 rural reclassification, a hospital is
therefore waiving the application of the OMA, as described at section
1886(d)(13)(F) of the Act. Therefore, for the reasons set forth in this
final rule and in the FY 2024 IPPS/LTCH PPS proposed rule, for FY 2024,
we are finalizing our proposal, without modification, to continue using
the same policies, procedures, and computations that were used for the
FY 2012 out-migration adjustment and that were applicable for FYs 2016
through 2023.
Table 2 associated with this final rule (which is available via the
CMS website) includes the proposed out-migration adjustments for the FY
2024 wage index. In addition, Table 4A associated with this final rule,
``List of Counties Eligible for the Out-Migration Adjustment under
Section 1886(d)(13) of the Act'' (also available via the internet on
the CMS website), consists of the following: A list of counties that
are eligible for the out-migration adjustment for FY 2024 identified by
FIPS county code, the proposed FY 2024 out-migration adjustment, and
the number of years the adjustment will be in effect. We refer readers
to section V.I. of the Addendum of this final rule for instructions on
accessing IPPS tables that are posted on the CMS websites identified in
this final rule.
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 2023 IPPS/LTCH PPS
final rule (87 FR 49004) for a discussion of our current policy to
calculate the rural floor with the wage data of urban hospitals
reclassifying to rural areas under 42 CFR 412.103. We also refer
readers to section III.G.1. of the preamble of this final rule with
regard to our proposal to modify how we calculate the rural wage index
and its implications for the rural floor.
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. In the FY 2023 IPPS/LTCH PPS final rule (87 FR 49012
and 49013), we added 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. 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
[[Page 58985]]
these remote locations in Table 2 with a ``B'' in the 3rd position of
the CCN. These remote locations of hospitals with 42 CFR 412.103 rural
reclassification status in a different CBSA are identified in Table 2,
and hospitals should evaluate potential wage index outcomes for its
remote location(s) when withdrawing or terminating MGCRB
reclassification, or canceling Sec. 412.103 rural reclassification
status.
Finally, in section V.C.2. of the preamble of this final rule, we
are changing the effective date of rural reclassification for a
hospital qualifying for rural reclassification under Sec.
412.103(a)(3) by meeting the criteria for SCH status (other than being
located in a rural area), and also applying to obtain SCH status under
Sec. 412.92, where eligibility for SCH classification depends on a
hospital merger. Specifically, we are finalizing that in these
circumstances, and subject to the requirements set forth at new Sec.
412.92(b)(2)(vi), the effective date for rural reclassification will be
as of the effective date set forth in new Sec. 412.92(b)(2)(vi).
Also, in section V.C.2 of the preamble of this final rule, we are
making a conforming change to the regulations at Sec. 412.103(d) to
modify the effective date of rural reclassification for a hospital
qualifying for rural reclassification under Sec. 412.103(a)(3) by
meeting the criteria for SCH status (other than being located in a
rural area), and also applying to obtain SCH status under Sec. 412.92
where eligibility for SCH classification depends on a hospital merger.
We are amending Sec. 412.103(d)(1) and to add new paragraph Sec.
412.103(d)(3) to provide that, subject to the hospital meeting the
requirements set forth at new Sec. 412.92(b)(2)(vi), the effective
date for rural reclassification for such hospital will be as of the
effective date determined under Sec. 412.92(b)(2)(vi).
We refer the reader to section V.C.2. of the preamble of this final
rule for complete details on these policies.
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 2024 wage index
were made available on May 23, 2022, through the internet on the CMS
website at https://www.cms.gov/medicaremedicare-fee-service-paymentacuteinpatientppswage-index-files/fy-2024-wage-index-home-page.
On January 30, 2023, we posted a public use file (PUF) at https://www.cms.gov/medicaremedicare-fee-service-paymentacuteinpatientppswage-index-files/fy-2024-wage-index-home-page containing FY 2024 wage index
data available as of January 30, 2023. 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,
2019 through September 30, 2020; that is, FY 2020 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 30, 2023,
wage data PUF, and a tab containing the CY 2019 occupational mix data
of the hospitals deleted from the January 30, 2023, occupational mix
PUF. In a memorandum dated January 31, 2023, we instructed all MACs to
inform the IPPS hospitals that they service of the availability of the
January 30, 2023, wage index data PUFs, and the process and timeframe
for requesting revisions in accordance with the FY 2024 Hospital Wage
Index Development Time Table available at https://www.cms.gov/files/document/fy-2024-hospital-wage-index-development-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 3, 2022, 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 23, 2022, and the process and timeframe
for requesting revisions.
If a hospital wished to request a change to its data as shown in
the May 23, 2022, 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, 2022. Hospitals were notified of these deadlines
and of all other deadlines and requirements, including the requirement
to review and verify their data as posted in the preliminary wage index
data files on the internet, through the letters sent to them by their
MACs.
November 4, 2022, 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 2023. CMS published the wage
index PUFs that included hospitals' revised wage index data on January
30, 2023. Hospitals had until February 15, 2023, to submit requests to
the MACs to correct errors in the January 30, 2023, 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 30,
2023, 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, 2023, for the FY 2024 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 20, 2023. 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 3,
2023. Data that were incorrect in the preliminary or January 30, 2023,
wage index data PUFs, but for which no correction request was received
by the February 15, 2023 deadline, are not considered for correction at
this stage. In addition, April 3, 2023, was the deadline for hospitals
to dispute data corrections made by CMS of which the hospital was
notified after the January 30, 2023, PUF and at least 14 calendar days
prior to April 3, 2023 (that is, March 20, 2023), 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 3, 2023, for the
FY 2024 wage index). We refer readers to the FY 2024 Hospital Wage
Index Development Time Table for complete details.
Hospitals were given the opportunity to examine Table 2 associated
with the
[[Page 58986]]
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/medicaremedicare-fee-service-paymentacuteinpatientppswage-index-files/fy-2024-wage-index-home-page.
Table 2 associated with the proposed rule contained each hospital's
proposed adjusted average hourly wage used to construct the wage index
values for the past 3 years, including the proposed FY 2024 wage index
which was constructed from FY 2020 data. We noted in the proposed rule
that the proposed hospital average hourly wages shown in Table 2 only
reflected changes made to a hospital's data that were transmitted to
CMS by early February 2023.
We posted the final wage index data PUFs on April 28, 2023, on the
CMS website at https://www.cms.gov/medicaremedicare-fee-service-paymentacuteinpatientppswage-index-files/fy-2024-wage-index-home-page.
The April 2023 PUFs are made available solely for the limited purpose
of identifying any potential errors made by CMS or the MAC in the entry
of the final wage index data that resulted from the correction process
(the process for disputing revisions submitted to CMS by the MACs by
March 20, 2023, 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), as previously described.
After the release of the April 2023 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 20, 2023.
Requests for correction of errors that were not, but could
have been, identified during the hospital's review of the January 30,
2023, 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 2023 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 was required to send its
request to CMS and to the MAC so that it was received no later than May
26, 2023. May 26, 2023, was also the deadline for hospitals to dispute
data corrections made by CMS of which the hospital was notified on or
after 13 calendar days prior to April 1, 2023 (that is, March 19,
2023), and at least 14 calendar days prior to May 26, 2023 (that is,
May 12, 2023), that did not arise from a hospital's request for
revisions. (Data corrections made by CMS of which a hospital was
notified on or after 13 calendar days prior to May 26, 2023 (that is,
May 13, 2023), may be appealed to the Provider Reimbursement Review
Board (PRRB)). In accordance with the FY 2024 Hospital Wage Index
Development Time Table posted on the CMS website at https://www.cms.gov/files/document/fy-2024-hospital-wage-index-development-time-table.pdf, the May appeals were required to be sent via mail and
email to CMS and the MACs. We refer readers to the FY 2024 Hospital
Wage Index Development Time Table for complete details.
Verified corrections to the wage index data received timely (that
is, by May 26, 2023) by CMS and the MACs were incorporated into the
final FY 2024 wage index, which will be effective October 1, 2023.
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 2024 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 2023, 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 2024 wage index by August
2023, and the implementation of the FY 2024 wage index on October 1,
2023. 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 26,
2023, 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 26, 2023, for the FY 2024
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
[[Page 58987]]
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 26, 2023, deadline for the
FY 2024 wage index); and (3) CMS agreed before October 1 that the MAC
or CMS made an error in tabulating the hospital's wage index data and
the wage index should be corrected.
In those circumstances where a hospital requested a correction to
its wage index data before CMS calculated the final wage index (that
is, by the May 26, 2023, deadline for the FY 2024 wage index), and CMS
acknowledges that the error in the hospital's wage index data was
caused by CMS's 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 30 Public Use
File (PUF)
The process set forth with the wage index timetable discussed in
section III.L.1. of the preamble of this final rule allows hospitals to
request corrections to their wage index data within prescribed
timeframes. In addition to hospitals' opportunity to request
corrections of wage index data errors or MACs' mishandling of data, CMS
has the authority under section 1886(d)(3)(E) of the Act to make
corrections to hospital wage index and occupational mix data in order
to ensure the accuracy of the wage index. As we explained in the FY
2016 IPPS/LTCH PPS final rule (80 FR 49490 through 49491) and the FY
2017 IPPS/LTCH PPS final rule (81 FR 56914), section 1886(d)(3)(E) of
the Act requires the Secretary to adjust the proportion of hospitals'
costs attributable to wages and wage-related costs for area differences
reflecting the relative hospital wage level in the geographic areas of
the hospital compared to the national average hospital wage level. We
believe that, under section 1886(d)(3)(E) of the Act, we have
discretion to make corrections to hospitals' data to help ensure that
the costs attributable to wages and wage-related costs in fact
accurately reflect the relative hospital wage level in the hospitals'
geographic areas.
We have an established multistep, 15-month process for the review
and correction of the hospital wage data that is used to create the
IPPS wage index for the upcoming fiscal year. Since the origin of the
IPPS, the wage index has been subject to its own annual review process,
first by the MACs, and then by CMS. As a standard practice, after each
annual desk review, CMS reviews the results of the MACs' desk reviews
and focuses on items flagged during the desk review, requiring that, if
necessary, hospitals provide additional documentation, adjustments, or
corrections to the data. This ongoing communication with hospitals
about their wage data may result in the discovery by CMS of additional
items that were reported incorrectly or other data errors, even after
the posting of the January 30 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 30 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 30 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
[[Page 58988]]
described earlier and in the FY 2024 Hospital Wage Index Development
Time Table, as well as in the FY 2018 IPPS/LTCH PPS final rule (82 FR
38154 through 38156).
M. Labor-Related Share for the FY 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 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, 45529, and
45530). 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 the proposed rule,
for FY 2024, we did not propose to make any further changes to the
labor-related share. For FY 2024, we are finalizing the policy to
continue to use a labor-related share of 67.6 percent for discharges
occurring on or after October 1, 2023.
As discussed in section V.B. of the preamble of this final rule,
prior to January 1, 2016, Puerto Rico hospitals were paid based on 75
percent of the national standardized amount and 25 percent of the
Puerto Rico-specific standardized amount. As a result, we applied the
Puerto Rico-specific labor-related share percentage and nonlabor-
related share percentage to the Puerto Rico-specific standardized
amount. Section 601 of the Consolidated Appropriations Act, 2016 (Pub.
L. 114-113) amended section 1886(d)(9)(E) of the Act to specify that
the payment calculation with respect to operating costs of inpatient
hospital services of a subsection (d) Puerto Rico hospital for
inpatient hospital discharges on or after January 1, 2016, shall use
100 percent of the national standardized amount. Because Puerto Rico
hospitals are no longer paid with a Puerto Rico-specific standardized
amount as of January 1, 2016, under section 1886(d)(9)(E) of the Act as
amended by section 601 of the Consolidated Appropriations Act, 2016,
there is no longer a need for us to calculate a Puerto Rico-specific
labor-related share percentage and nonlabor-related share percentage
for application to the Puerto Rico-specific standardized amount.
Hospitals in Puerto Rico are now paid 100 percent of the national
standardized amount and, therefore, are subject to the national labor-
related share and nonlabor-related share percentages that are applied
to the national standardized amount. Accordingly, for FY 2024, we did
not propose 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 2024 IPPS/LTCH PPS final rule and available via the
internet on the CMS website, reflect the national labor-related share.
Table 1C, in section VI. of the Addendum to this FY 2024 IPPS/LTCH PPS
final rule and available via the internet on the CMS website, reflects
the national labor-related share for hospitals located in Puerto Rico.
For FY 2024, for all IPPS hospitals (including Puerto Rico hospitals)
whose wage indexes are less than or equal to 1.0000, we are applying
the wage index to a labor-related share of 62 percent of the national
standardized amount. For all IPPS hospitals (including Puerto Rico
hospitals) whose wage indexes are greater than 1.000, for FY 2024, we
are applying the wage index to a labor-related share of 67.6 percent of
the national standardized amount.
Comment: A commenter requested that CMS maintain the labor-related
share from FY 2023 for FY 2024.
Response: We did not propose to make any further changes to the
labor-related share for FY 2024. As discussed earlier, for FY 2024, we
are continuing to use a labor-related share of 67.6 percent for
discharges occurring on or after October 1, 2023.
IV. Payment Adjustment for Medicare Disproportionate Share Hospitals
(DSHs) for FY 2024 (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 method, is based on a complex statutory formula
under which the DSH payment
[[Page 58989]]
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.
[GRAPHIC] [TIFF OMITTED] TR28AU23.236
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
(Pub. L. 111-148), 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. 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 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 provided uncompensated care.
These additional 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.
In summary, since FY 2014, section 1886(r) of the Act has required
that hospitals that are eligible for DSH payments under section
1886(d)(5)(F) of the Act receive two separately calculated payments:
[GRAPHIC] [TIFF OMITTED] TR28AU23.237
Specifically, section 1886(r)(1) of the Act provides that the
Secretary shall pay to such subsection (d) 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.\194\ We refer to this payment as the ``empirically
justified Medicare DSH payment.''
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\194\ https://www.medpac.gov/wp-content/uploads/import_data/scrape_files/docs/default-source/reports/Mar07_EntireReport.pdf.
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In addition to this empirically justified Medicare DSH payment,
section 1886(r)(2) of the Act provides that, for FY 2014 and each
subsequent fiscal year, the Secretary shall pay to such subsection (d)
hospital an additional amount equal to the product of three factors.
The first factor is the difference between the aggregate amount of
payments that would be made to subsection (d) hospitals under section
1886(d)(5)(F) of the Act if subsection (r) did not apply and the
aggregate amount of payments that are made to subsection (d) hospitals
under section 1886(r)(1) of the Act for such fiscal year. Therefore,
this factor amounts to 75 percent of the payments that would otherwise
be made under section 1886(d)(5)(F) of the Act.
The second factor is, for FY 2018 and subsequent fiscal years,
equal to 1 minus the percent change in the percent of individuals who
are uninsured. For purposes of calculating this factor, the Secretary
determines the percent change in the percent of individuals who are
uninsured by comparing the percent of individuals who were uninsured in
2013 (as estimated by the Secretary
[[Page 58990]]
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).
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.'' In brief, the uncompensated care
payment for an individual hospital is determined as the product of the
following 3 factors:
[GRAPHIC] [TIFF OMITTED] TR28AU23.238
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 beginning
in 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
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
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. In addition, section 1886(r) of the Act states that
hospitals must receive empirically justified Medicare DSH payments in a
fiscal year to receive an additional Medicare uncompensated care
payment for that year. Specifically, section 1886(r)(2) of the Act
provides that, in addition to the empirically justified Medicare DSH
payment made to a subsection (d) hospital under section 1886(r)(1), the
Secretary will pay to ``such subsection (d) hospitals'' the
uncompensated care payment. Section 1886(r)(2)'s reference to ``such
subsection (d) hospitals'' refers to hospitals that receive empirically
justified Medicare DSH payments under Section 1886(r)(1). Therefore,
the uncompensated care payment provided for in Section 1886(r)(2) is
limited to those hospitals that receive empirically justified Medicare
DSH payments.
Accordingly, 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 explained 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).\195\ In the FY 2024 IPPS/LTCH PPS proposed rule (88 FR
26988), we stated that we would estimate DSH status for all hospitals
using the most recent available SSI ratios and information from the
most recent available Provider Specific File.\196\ We noted that FY
2020 SSI ratios available on the CMS website were the most recent
available SSI ratios at the time of developing the proposed rule.\197\
We stated that if more recent data on DSH eligibility become available
before the final rule, we would use such data in the final rule. The FY
2020 SSI ratios were the most recent data available at the time of
developing this FY 2024 IPPS/LTCH PPS final rule.
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\195\ For more information on interim uncompensated care
payments, we refer readers to the FY 2014 IPPS/LTCH PPS final rule
(78 FR 50624 through 50625).
\196\ The file contains information about the facts specific to
the provider that affect computations for the IPPS.
\197\ https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/dsh.
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Our final determination of a hospital's eligibility for
uncompensated care payments will be based on the hospital's actual DSH
status at cost report settlement for FY 2024.
In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50622) and in the
rulemaking for subsequent fiscal years, we specified our policies
regarding the eligibility of several specific classes of hospitals to
receive empirically justified Medicare DSH payments and uncompensated
care payments under section 1886(r) of the Act.
[[Page 58991]]
Eligible hospitals include the following:
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 section
1886(r) of the Act (78 FR 50623 and 79 FR 50006).
Sole community hospitals (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. If an SCH receives
interim empirically justified Medicare DSH payments in a fiscal year,
it also will receive interim uncompensated care payments for that
fiscal year on a per discharge basis, subject 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 updated hospital-specific
rate from certain specified base years (76 FR 51684) exceeds the
Federal rate. 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. 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.
Legislation has extended the MDH program into FY 2024. The MDH program
was initially extended through December 17, 2022, by section 102 of the
Continuing Appropriations and Ukraine Supplemental Appropriations Act,
2023 (Pub. L. 117-180), and through December 24, 2022, by section 102
of the Further Continuing Appropriations and Extensions Act, 2023 (Pub.
L. 117-229). Section 4102 of the Continuing Appropriations Act, 2023
(Pub. L. 117-328) amended sections 1886(d)(5)(G)(i) and
1886(d)(5)(G)(ii)(II) of the Act to provide for an extension of the MDH
program through October 1, 2024 (that is, for discharges occurring on
or before September 30, 2024). We refer readers to section V.F. of the
preamble of this final rule for further discussion of the MDH program.
We continue to make determinations 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, which
started 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. On October 13, 2022, CMS
announced that the BPCI Advanced Model would be extended for two years.
Accordingly, the Model's final performance year will end on December
31, 2025. For further information regarding the BPCI Advanced Model, we
refer readers to the CMS website at https://innovation.cms.gov/innovation-models/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.
Ineligible hospitals include the following:
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. Under this Model, which began on January 1, 2019, and concludes
on December 31, 2026, Maryland hospitals are not paid under the IPPS
and are ineligible to receive empirically justified Medicare DSH
payments and uncompensated care payments under section 1886(r) of the
Act.
SCHs that are paid under their hospital-specific
rate are not eligible for Medicare DSH and uncompensated care payments.
(See 78 FR 50623 and 50624.)
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. 111-
148). 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 second 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 will end on June 30, 2028. 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
excluded from receiving interim and final uncompensated care payments.
At the time of development of this final rule, we expect 26 hospitals
may participate in the demonstration program at the start of FY 2024.
We received a comment that was outside the scope of the proposed
rule. The comment related to the eligibility of SCHs paid under
hospital-specific rate and MDHs to receive DSH payments.
[[Page 58992]]
Because we consider this public comment to be outside the scope of the
proposed rule, we are not addressing the comment in this final rule.
C. Empirically Justified Medicare DSH Payments
As we 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 Medicare program to pay a designated percentage of these
payments and does not revise 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 had determined that it was
unnecessary to develop new operational mechanisms for making
empirically justified DSH payments under section 1886(r)(1). Therefore,
in the FY 2014 IPPS/LTCH PPS final rule (78 FR 50626), we implemented
section 1886(r)(1) of the Act by advising Medicare Administrative
Contractors (MACs) to simply adjust subsection (d) hospitals' interim
claim payments to an amount equal to 25 percent of what would have been
paid if section 1886(r) of the Act did not apply. 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, which are
available on the CMS website at https://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/2014-Transmittals-Items/R5P240.html.
D. Supplemental Payment for Indian Health Service (IHS) and Tribal
Hospitals and Puerto Rico Hospitals
In the FY 2023 IPPS/LTCH PPS final rule (87 FR 49047 through
49051), we established a new supplemental payment for IHS/Tribal
hospitals and hospitals located in Puerto Rico for FY 2023 and
subsequent fiscal years. This payment was established to help to
mitigate the impact of the decision to discontinue the use of low-
income insured days as proxy for uncompensated care costs for these
hospitals and to prevent undue long-term financial disruption for these
providers. The regulations located at 42 CFR 412.106(h) govern the
supplemental payment. In brief, the supplemental payment for a fiscal
year is 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)(1). The base year amount is
the hospital's FY 2022 uncompensated care payment adjusted by one plus
the percent change in the total uncompensated care amount between the
applicable fiscal year (that is, FY 2024 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 that
year. 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.
As discussed in the FY 2023 IPPS/LTCH PPS final rule (87 FR 49048
and 49049), the eligibility and payment processes for the supplemental
payment are consistent with the processes for determining eligibility
to receive interim and final uncompensated care payments adopted in FY
2014 IPPS/LTCH final rule. We note that the MAC will 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.
Comment: Two commenters expressed continued support for these
supplemental payments to lessen the impact of discontinuing the use of
low-income patient days to calculate uncompensated care payments for
IHS/Tribal hospitals and hospitals in Puerto Rico. Specifically, a
commenter noted that the permanent supplemental payments will mitigate
the undue long-term financial disruption that would have occurred due
to the discontinuance of the previous methodology for calculating
uncompensated care costs.
Many commenters reiterated their recommendations that were
submitted in response to the proposal to establish these supplemental
payments in last year's proposed rule. Specifically, these commenters
recommended that CMS calculate the supplemental payment for Puerto Rico
hospitals using a base year amount determined from Medicaid days and an
SSI days proxy of at least 40 percent of the hospital's Medicaid days,
instead of the proxy that applied from FY 2017 through FY 2022,
consisting of 14 percent of the hospital's Medicaid days, and was
developed based on national data regarding the relationship between
Medicare SSI days and Medicaid days. In addition, these commenters
requested that CMS make all acute care hospitals in Puerto Rico
eligible to receive uncompensated care payments, including those that
do not qualify for empirically justified DSH payments, which the
commenters believe would be consistent with statutory language. As an
alternative, these commenters requested that CMS determine a hospital's
eligibility to receive uncompensated care payments and supplemental
payments using the suggested proxy for Medicare SSI days of 40 percent
of the hospital's Medicaid days. These commenters contend that
hospitals that fail to qualify for empirically justified DSH payments
might still qualify for uncompensated care payments by using the 40
percent metric.
Another commenter requested that CMS evaluate alternatives to the
supplemental payment that would better support hospitals in Puerto Rico
in instances of increasing uninsured days. This commenter argued that
the supplemental payment only mitigates the anticipated impact of the
changes to the uncompensated care payment methodology starting in FY
2023 relative to these hospitals' 2022 uncompensated care payment
levels. However, the commenter stated that this approach is not helpful
if uninsured patient volumes rise above the 2022 levels. The same
commenter further expressed that they would alternatively support a
return to the prior method of using a proxy to determine uninsured days
for hospitals in Puerto Rico given the challenges around the collection
of Worksheet S-10 data.
The Medicare Payment Advisory Commission (MedPAC) recommended that
CMS alter its methodology for making interim supplemental payments as
an add-on payment to the IPPS payment rates for Puerto Rico hospitals
to avoid distorting Medicare Advantage (MA) benchmarks. MedPAC argued
that the $80 million in supplemental payments to Puerto Rico hospitals
in 2023 would inappropriately boost payments to MA plans operating in
Puerto Rico by almost $1 billion per year.
Response: We appreciate the concerns and input raised by commenters
regarding the supplemental payment for hospitals in Puerto Rico and IHS
and Tribal hospitals that was established in
[[Page 58993]]
the FY 2023 IPPS/LTCH PPS final rule. We continue to recognize the
unique financial circumstances and challenges faced by Puerto Rico
hospitals and IHS and Tribal hospitals related to uncompensated care
cost reporting on Worksheet S-10, 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 (87 FR 49047). With
respect to comments regarding SSI proxy recommendations, we refer
readers to our response to a similar comment in the FY 2023 IPPS/LTCH
PPS final rule (87 FR 49049 and 49050).
Regarding the commenter's request that all acute care hospitals in
Puerto Rico receive uncompensated care payments regardless of DSH
eligibility, we refer readers to the policy initially adopted in the FY
2014 IPPS/LTCH PPS final rule (78 FR 50622 and 50623), which explains
that hospitals, including Puerto Rico hospitals, must be eligible to
receive empirically justified Medicare DSH payments to receive an
additional Medicare uncompensated care payment for that year. As
discussed in the FY 2023 IPPS/LTCH PPS final rule (87 FR 49048 and
49049), the processes for determining eligibility for the supplemental
payment and making interim and final payments are consistent with the
processes for determining eligibility to receive interim and final
uncompensated care payments adopted in FY 2014 IPPS/LTCH final rule and
the approach used to make interim uncompensated care payments on a per
discharge basis.
With respect to the comments recommending that CMS determine
eligibility to receive empirically justified DSH payments using the
suggested proxy for SSI days of 40 percent of Medicaid days, we note
that in the FY 2024 IPPS/LTCH PPS proposed rule, we did not propose to
adopt a proxy for Puerto Rico hospitals' SSI days for use in
determining eligibility to receive empirically justified Medicare DSH
payments or the amount of such payments. Therefore, these comments are
considered to be outside the scope of the FY 2024 proposed rule.
However, we note that as discussed in the FY 2023 IPPS/LTCH PPS final
rule (87 FR 49050), section 1886(d)(5)(F)(vi) of the Act prescribes the
disproportionate patient percentage used to determine empirically
justified Medicare DSH payments, and it specifically calls for the use
of SSI days in the Medicare fraction and does not allow the use of
alternative data. Therefore, we continue to disagree with the
commenter's assertion that there is legal support for CMS to use a
proxy for Puerto Rico hospitals' SSI days in the calculation of the
empirically justified Medicare DSH payment or in the eligibility
determination for this payment.
Regarding the comments encouraging CMS to evaluate alternatives to
supplemental payments to support Puerto Rico hospitals in the case of
increasing uninsured days, we note that prior to FY 2023, we used low-
income insured days as a proxy for uncompensated care costs. In
contrast, we have never directly considered fluctuations in uninsured
days in the calculation of uncompensated care payments. Therefore, we
continue to believe that the supplemental payments, which are based on
the FY 2022 uncompensated care payments calculated for Puerto Rico
hospitals and IHS and Tribal hospitals using the low-income insured
days proxy, are an appropriate approach to address the difficulties for
Puerto Rico and IHS and Tribal hospitals in reporting uncompensated
care costs.
In response to MedPAC's comment, we continue to believe the
combined amount of empirically justified DSH payments, uncompensated
care payments, and supplemental payments to IHS/Tribal hospitals and
Puerto Rico hospitals will be comparable to the amount these hospitals
would have received if CMS had continued to use the low-income days
proxy to determine Factor 3 of the uncompensated care payment
methodology. As a result, the supplemental payments are expected to
have no significant impact on MA benchmarks in Puerto Rico. We also
note that for the past several years, the MA benchmark rates in Puerto
Rico have excluded beneficiaries with coverage for only Medicare Part A
or only Medicare Part B. For calendar years 2020 and 2021, about 70
percent of uncompensated care payments represented in Puerto Rico claim
records were associated with Part A-only beneficiaries and thus
excluded from the MA ratebook calculation. Accordingly, about 70
percent of any supplemental payments to Puerto Rico providers would be
excluded from the MA ratebook development.
E. 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 our estimate of three
factors: (1) 75 percent of the amount of Medicare DSH payments that
would be made to subsection (d) hospitals under section 1886(d)(5)(F)
of the Act if subsection (r) did not apply; (2) 1 minus the percent
change in the national rate of uninsurance compared to the rate of
uninsurance in 2013; and (3) each eligible hospital's estimated
uncompensated care amount relative to the estimated uncompensated care
amount for all eligible hospitals. In this section of this final rule,
we discuss the data sources and methodologies for computing each of
these factors, our final policies for FYs 2014 through 2023, and our
final policies for FY 2024.
1. Calculation of Factor 1 for FY 2024
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 section 1886(r) of the Act; and (2) the
amount of empirically justified Medicare DSH payments that are made for
the fiscal year. The second element of Factor 1 reflects the statutory
requirement to pay subsection (d) hospitals 25 percent of what would
have otherwise been paid under section
[[Page 58994]]
1886(d)(5)(F) of the Act. In other words, Factor 1 represents 75
percent (100 percent minus 25 percent) of our estimate of Medicare DSH
payments that would be made for the fiscal year in the absence of
section 1886(r) of the Act.
In the FY 2024 IPPS/LTCH PPS proposed rule, we proposed that to
determine Factor 1 in the uncompensated care payment formula for FY
2024, we would 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). Accordingly, we
proposed to determine Factor 1 by developing estimates of both the
aggregate amount of Medicare DSH payments that would be made for FY
2024 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 we
have applied in previous years, these estimates are not revised or
updated subsequent to the publication of our final projections in this
FY 2024 IPPS/LTCH PPS final rule.
Thus, in the FY 2024 IPPS/LTCH PPS proposed rule (88 FR 26989
through 26992), we proposed that to determine the two elements of
proposed Factor 1 for FY 2024, we would use the most recent 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 FY 2023 IPPS/LTCH PPS final rule's
Impact File.\198\ The determination of the amount of DSH payments is
partially based on OACT's Part A benefits projection model. One of the
components 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 2021
through FY 2024 are discussed in the table titled ``Factors Applied for
FY 2021 through FY 2024 to Estimate Medicare DSH Expenditures Using FY
2020 Baseline'' (88 FR 26991).
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\198\ This file is used in estimating the payment impacts of
various policy changes to the IPPS as described in the annual
proposed and final IPPS/LTCH PPS rules.
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For purposes of calculating the proposed Factor 1 and modeling the
impact of the FY 2024 IPPS/LTCH PPS proposed rule, we used OACT's
January 2023 Medicare DSH estimates, which were based on data from the
September 2022 update to the Medicare Hospital Cost Report Information
System (HCRIS) and the FY 2023 IPPS/LTCH PPS final rule IPPS Impact
File, published in conjunction with the FY 2023 IPPS/LTCH PPS final
rule.\199\ Because SCHs that are projected to be paid under their
hospital-specific rate are ineligible for empirically justified
Medicare DSH payments and uncompensated care payments, they were
excluded from the January 2023 Medicare DSH estimates. Furthermore,
because Maryland hospitals are not paid under the IPPS, they are also
ineligible for empirically justified Medicare DSH payments and
uncompensated care payments and were also excluded from the OACT's
January 2023 Medicare DSH estimates. Finally, the 26 hospitals that CMS
anticipates may participate in the Rural Community Hospital
Demonstration Program in FY 2024 were excluded from these estimates
because these hospitals are not eligible to receive empirically
justified Medicare DSH payments or uncompensated care payments under
the payment methodology that applies under the demonstration.
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\199\ FY 2023 IPPS/LTCH PPS final rule IPPS Impact File,
available 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 Final Rule Home Page'' or
``Acute Inpatient--Files for Download.''
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Using the data sources as previously discussed, OACT's January 2023
estimate of Medicare DSH payments for FY 2024 without regard to the
application of section 1886(r)(1) of the Act was approximately $13.621
billion, as explained in the FY 2024 IPPS/LTCH PPS proposed rule (88 FR
26990). Therefore, based on that January 2023 estimate, the estimate of
empirically justified Medicare DSH payments for FY 2024, with the
application of section 1886(r)(1) of the Act, was approximately $3.405
billion (or 25 percent of the total amount of estimated Medicare DSH
payments for FY 2024). Under Sec. 412.106(g)(1)(i), Factor 1 is the
difference between these two OACT estimates. Thus, in the FY 2024 IPPS/
LTCH PPS proposed rule, we proposed that Factor 1 for FY 2024 would be
$10,216,040,319.50, which was equal to 75 percent of the total amount
of estimated Medicare DSH payments for FY 2024 ($13.621 billion minus
$3.405 billion). In the FY 2024 IPPS/LTCH PPS proposed rule, we noted
that, consistent with our approach in previous rulemakings, OACT would
use more recent data to project the final Factor 1 estimates for the FY
2024 IPPS/LTCH PPS final rule if such data became available prior to
the development of the final rule.
In the FY 2024 IPPS/LTCH PPS proposed rule, we noted that 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 that Factor 1
estimates for the final rules are generally consistent with those used
for the Midsession Review of the President's Budget (88 FR 26990). For
additional information on the development of the President's Budget, we
refer readers to the Office of Management and Budget website at https://www.whitehouse.gov/omb/budget. Consistent with historical practice, we
indicated in the proposed rule that we expected that the Midsession
Review would have updated economic assumptions and actuarial analysis,
which we would use to develop Factor 1 estimates in the FY 2024 final
rule.
In the FY 2024 IPPS/LTCH PPS proposed rule (88 FR 26990), we
referred readers to the ``2022 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'' for a general overview of
the principal steps involved in projecting future inpatient costs and
utilization. We also noted 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 referred 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).
[[Page 58995]]
Comment: Some commenters requested greater transparency in the
methodology used by CMS and OACT to calculate Factor 1. Several
commenters specifically requested that a detailed description of the
methodology and the data behind the assumptions be made public.
Specifically, commenters requested more detail from CMS on the
``Other'' component. A few commenters emphasized their inability to
replicate CMS' calculations and requested that the agency clarify how
the effects of the COVID-19 Public Health Emergency (PHE) were
accounted for in the ``Other'' factor. Some commenters suggested that
CMS address this issue by disaggregating the variables that contribute
to the ``Other'' factor and then demonstrating the impact of each of
those variables on the final value, while a few other commenters
requested that CMS publish a detailed methodology of its ``Other''
calculation, including how all the components contribute to its
estimates from year to year. A couple of commenters requested that CMS
clarify why the ``Other'' factor frequently varies in successive
rulemaking cycles. Commenters requested that this information be
provided in advance of the publication of the final rule and in the
IPPS proposed rule each year going forward, so that the data is
available to replicate CMS' DSH calculation and comment sufficiently in
future years.
Additionally, a few commenters asserted that the lack of
opportunity afforded to hospitals to review the data used in rulemaking
is in violation of the Administrative Procedure Act. These commenters
expressed concerns about the lack of transparency in how Factor 1 is
calculated, arguing that hospitals cannot meaningfully comment on the
methodology given the lack of details. In particular, these commenters
asserted that the proposed rule provided neither sufficient details nor
an explanation of the treatment of Medicaid expansions in the
calculation for Factor 1.
Response: We thank the commenters for their input. We disagree with
commenters' assertion regarding the lack of transparency with respect
to the methodology and assumptions used in the calculation of Factor 1.
As explained in the FY 2024 IPPS/LTCH PPS proposed rule and in this
section of this final rule, we have been and continue to be transparent
about the methodology and data used to estimate Factor 1. Regarding the
commenters who reference the Administrative Procedure Act, we note that
under the Administrative Procedure Act, a proposed rule is required to
include either the terms or substance of the proposed rule or a
description of the subjects and issues involved. In this case, the FY
2024 IPPS/LTCH PPS proposed rule included a detailed discussion of our
proposed Factor 1 methodology and the data sources that would be used
in making our final estimate. See 88 FR 26989 through 26992.
Accordingly, commenters had sufficient information to meaningfully
comment on our proposed estimate of Factor 1.
To provide additional context, we note that Factor 1 is not
estimated in isolation from other projections made by OACT. As we
explained in the FY 2024 IPPS/LTCH PPS proposed rule and in other
previous rulemakings, Factor 1 estimates used in our proposed rules are
generally consistent with the economic assumptions and actuarial
analyses used to develop the President's Budget estimates under current
law, which are publicly available, and the Factor 1 estimates used in
our final rules are generally consistent with the economic assumptions
and actuarial analyses used for the Midsession Review of the
President's Budget. As we have in the past, we refer readers to the
``Midsession Review of the President's FY 2024 Budget'' for additional
information on the development of the President's Budget and the
specific economic assumptions used in the Midsession Review of the
President's FY 2024 Budget, forthcoming on the Office of Management and
Budget website at https://www.whitehouse.gov/omb/budget. We recognize
that our reliance on the economic assumptions and actuarial analyses
used to develop the President's Budget and the Midsession Review of the
President's Budget in estimating Factor 1 has an impact on hospitals,
health systems, and other impacted parties who wish to replicate the
Factor 1 calculation, such as modeling the relevant Medicare Part A
portion of the budget. Yet, commenters are able to meaningfully comment
on our proposed estimate of Factor 1 without replicating the budget.
For a general overview of the principal steps involved in
projecting future inpatient costs and utilization, we refer readers to
the ``2023 Annual Report of the Boards of Trustees of the Federal
Hospital Insurance and Federal Supplementary Medical Insurance Trust
Funds,'' available under ``Downloads'' on the CMS website at: https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/ReportsTrustFunds/index.html. 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
(https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/ReportsTrustFunds/index.html). 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.
As described in more detail later in this section, in the FY 2024
IPPS/LTCH PPS proposed rule, we included information regarding the data
sources, methods, and assumptions employed by the actuaries to
determine OACT's estimate of Factor 1 (88 FR 26989 through FR 26992).
We explained that the most recent Medicare DSH payment adjustments
provided in the IPPS Impact File were used, and we provided the
components of all update factors that were applied to the historical
data to estimate the Medicare DSH payments for the upcoming fiscal
year, along with the associated rationale and assumptions. This
discussion also included a description of the ``Other'' and
``Discharges'' assumptions, as well as additional information regarding
how we address the Medicaid and CHIP expansion.
For additional context, the ``Other'' factor column reflects the
expectation that DSH payments will grow faster than IPPS payments in
2023. This expectation is based on the 2023 IPPS Impact File, which
reflects the change in the mix of cases between 2019 and 2021. The
``Other'' factor varies in rulemaking cycles due to changing growth
patterns for DSH payments and Medicaid enrollment. The impact of
[[Page 58996]]
Medicaid enrollment is captured in the ``Other'' column.
For further information on our assumptions regarding Medicaid
expansion in the Factor 1 calculation, later in this section, we
provide a discussion of more recent estimates and assumptions regarding
the Medicaid expansion as part of the discussion of the final Factor 1
for FY 2024. This discussion also incorporates the estimated impact of
the COVID-19 PHE.
Comment: Many commenters questioned the proposed rule's estimate of
the ``Discharges'' component of the Factor 1 calculation. Some
commenters requested that CMS align the discharge volume estimates in
Factor 1 with the forecasted estimates for Federal fiscal year 2022
through Federal fiscal year 2024 cited in the March 2023 Medicare
Trustee Report. Other commenters recommended that CMS use more recent
data to reflect the changes in discharge volumes. Some commenters noted
that the current assumptions of discharge volume may underestimate the
growth in utilization in the Medicare fee-for-service (FFS) population.
Four hospital associations questioned CMS' discharge factor for FY 2024
based on ``the assumption of recent trends recovering back to the long-
term trend and the assumption related to how many beneficiaries will be
enrolled in Medicare Advantage (MA) plans.'' These commenters noted
that they expect that the discharge factor will continue to decrease,
as half of Medicare beneficiaries are now enrolled in MA plans. These
commenters further expressed concern about the effect of this
decreasing trend on hospitals serving a disproportionate share of
lower-income beneficiaries. The same commenters requested that CMS
provide detailed calculations of the discharge estimates in the
proposed rule each year going forward and welcomed the opportunity to
work with CMS to examine the impacts of MA enrollment on FFS inpatient
hospital payments. One commenter recommended that CMS exclude FY 2021
and FY 2022 discharges from the FY 2024 Factor 1 calculation, as data
from those years include atypical trends in Medicare discharges
resulting from the COVID-19 PHE.
Some commenters also raised concerns about the ``Case Mix'' update
factor used in the proposed FY 2024 Factor 1 calculation. Commenters
stated that the proposed ``Case Mix'' update factor underestimates the
complexity of patients seeking care following the postponement or
deferral of care during the COVID-19 PHE. Some commenters requested
that CMS consider the impact of Medicaid disenrollment, which may
inhibit care access and lead to worse outcomes, resulting in more
complex cases and higher hospitalization rates. One commenter requested
that CMS include an acuity factor to reflect the fact that COVID-19
patients have longer lengths of stay and higher acuity than the typical
patient population.
Some commenters requested that CMS increase the FY 2022 market
basket in the Factor 1 update factor by three percentage points to
align with the ``trued up'' market basket cited in the March 2023
MedPAC report to Congress.\200\ Some of these commenters further
recommended that CMS apply the recommendation from MedPAC to increase
the FY 2024 market basket in the Factor 1 update factor by an
additional percentage point.
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\200\ https://www.medpac.gov/document/march-2023-report-to-the-congress-medicare-payment-policy/.
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Response: We thank the commenters for their input on the impact the
COVID-19 PHE may have had on the factors used to estimate DSH payments
for FY 2024. In updating our estimate of Factor 1 for this final rule,
we considered, as appropriate, the same set of factors that we used in
the proposed rule using the most recent available data at the time of
developing this final rule. The ``Discharges'' and ``Case Mix'' factors
incorporate the latest estimates of the COVID-19 PHE's impact on the
Medicare program. The ``Case Mix'' factor is specific for Medicare
inpatient claims. In 2020, the COVID-19 PHE had a significant impact on
the ``Case Mix'' factor, however its impact has lessened in subsequent
years. The impact of COVID-19 discharges is captured in the 2021 and
2022 experience, which is the basis for the projections. The number of
COVID-19 cases has dropped significantly since 2020, therefore we
believe a separate acuity factor would not be necessary. We provide
further details on the updated Factor 1 estimate and data sources as
part of the discussion of the final Factor 1 estimate for FY 2024 in
this section of the rule.
Regarding the comments requesting that we exclude FY 2021 and FY
2022 discharges due to the impacts of the COVID-19 PHE when estimating
Factor 1 for FY 2024, we note that section 1886(r)(2)(A) of the Act
specifies that Factor 1 is based on the amount of disproportionate
share payments that would otherwise be made to subsection (d) hospitals
for the fiscal year. As discussed further in this section, OACT's
estimates of Medicare DSH payments used in the development of Factor 1
reflect the estimated impact of the COVID-19 PHE on DSH payments.
Excluding data from certain periods is not necessary to estimate DSH
payments during FY 2024 for purposes of the Factor 1 calculation. To
reasonably make projections for FY 2024, the FY 2021 and FY 2022 claims
data experience is necessary to inform trends. The FY 2021 and FY 2022
claims are not atypical, in contrast to FY 2020 claims. Furthermore,
the FY 2021 claims data are used for the FY 2023 Impact File, which
make it consistent and reliable to use in making projections of the
amount of DSH payments in FY 2024.
Regarding the comments on the impacts of MA enrollment on the
Medicare FFS discharge volume, we believe the ``Discharge'' factor is a
reasonable projection for purposes of Factor 1 estimates using the
latest available data. For a discussion on trends in MA enrollment, we
refer readers to the 2023 Annual Report of the Boards of Trustees of
the Federal Hospital Insurance and Federal Supplementary Medical
Insurance Trust Funds, which contains actuarial projections and
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. We also note that the estimates
for the ``Discharges'' factor used to estimate Medicare DSH
expenditures incorporate OACT's analyses of ``Discharges'' using only
claims from the Medicare FFS program rather than claims from the MA
program.
In response to commenters who requested that CMS align the
discharge volume estimates in Factor 1 with the estimates in the March
2023 Medicare Trustee Report and that CMS consider using more recent
data to reflect the changes in discharge volume, we have determined
that the use of the most recent available data to calculate Factor 1 at
proposed and final rulemaking is appropriate and consistent with our
approach in previous rulemakings and will produce results that are
generally consistent with the Medicare Trustee Report. In this final
rule, OACT has updated the estimate of Factor 1 with more recent
economic assumptions and actuarial analyses.
Regarding comments about the inpatient hospital update and the FY
2024 update factor in the Factor 1 estimate, we refer readers to the
discussion in the section V.B. of the preamble of this final rule.
Consistent with the inpatient hospital update discussion in section
V.B. of the rule, OACT is using the most recent available
[[Page 58997]]
inpatient hospital update for the final FY 2024 update factor in the
Factor 1 calculation.
After consideration of the public comments we received, we are
finalizing, as proposed, the methodology for calculating Factor 1 for
FY 2024. We discuss the resulting Factor 1 amount for FY 2024 in this
final rule. For this final rule, OACT used the most recently submitted
Medicare cost report data from the March 2023 update of HCRIS to
identify Medicare DSH payments and the most recent Medicare DSH payment
adjustments provided in the Impact File and applied update factors and
assumptions for future changes in utilization and case-mix to estimate
Medicare DSH payments for the upcoming fiscal year. The June 2023 OACT
estimate for Medicare DSH payments for FY 2024, without regard to the
application of section 1886(r)(1) of the Act, was approximately $13.354
billion. This estimate excluded Maryland hospitals participating in the
Maryland All-Payer Model, hospitals participating in the Rural
Community Hospital Demonstration, and SCHs paid under their hospital-
specific payment rate. Therefore, based on this June 2023 estimate, the
estimate of empirically justified Medicare DSH payments for FY 2024,
with the application of section 1886(r)(1) of the Act, was
approximately $3.338 billion (or 25 percent of the total amount of
estimated Medicare DSH payments for FY 2024). Under Sec.
412.106(g)(1)(i), Factor 1 is the difference between these two OACT
estimates. Therefore, the final Factor 1 for FY 2024 is
$10,015,191,021.88, which is equal to 75 percent of the total amount of
estimated Medicare DSH payments for FY 2024 ($13,353,588,029.18 minus
$3,338,397,007.29).
OACT's estimates for FY 2024 for this final rule began with a
baseline of $13.257 billion in Medicare DSH expenditures for FY 2020.
The following table shows the factors applied to update this baseline
through the current estimate for FY 2024:
[GRAPHIC] [TIFF OMITTED] TR28AU23.239
In this table, the discharges column shows the changes in the
number of Medicare FFS inpatient hospital discharges. The discharge
figures for FY 2021 and FY 2022 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 data reflect the impact of the
COVID-19 pandemic. The discharge figure for FY 2023 is based on
preliminary data. The discharge figure for FY 2024 is an assumption
based on recent historical experience and an assumed partial return to
pre-COVID trends. In addition, this column reflects a decrease in FFS
enrollment, as a growing share of beneficiaries have moved into MA
plans. The discharge figures for FY 2021 to FY 2024 incorporate the
actual impact and estimated future impact from the COVID-19 pandemic.
The case-mix column shows the estimated change in case-mix for IPPS
hospitals. The case-mix figures for FY 2021 and FY 2022 are based on
actual claims data adjusted by a completion factor. We note that these
claims data reflect the impact of the COVID-19 pandemic. The case-mix
figure for FY 2023 is based on preliminary data, and the case-mix
figure for FY 2024 is an assumption based on the recommendation of the
2010-2011 Medicare Technical Review Panel.\201\ Accordingly, the case-
mix factor figures for FY 2021 to FY 2024 incorporate the actual impact
and estimated future impact from the COVID-19 pandemic.
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\201\ https://www.cms.gov/research-statistics-data-and-systems/statistics-trends-and-reports/reportstrustfunds/downloads/technicalpanelreport2010-2011.pdf.
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The ``Other'' column reflects the change 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 20 percent add-on for COVID-19 discharges). In addition,
the ``Other'' column includes a factor for the estimated changes in
Medicaid enrollment. We note that this factor also includes the
estimated impacts on Medicaid enrollment from the COVID-19 pandemic and
the end of the PHE declaration. On May 11, 2023, the Biden
Administration ended the national emergency declaration and PHE
declaration.
Based on the most recent available data, Medicaid enrollment is
estimated to change as follows: 12.3 percent in FY 2021, 8.2 percent in
FY 2022, 4.2 percent in FY 2023, and -11.6 percent in FY 2024. In the
future, the assumptions regarding Medicaid enrollment may change based
on actual enrollment in the States.
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, receive fewer hospital services.
Specifically, based on the most recent available data at the time of
developing the proposed rule, OACT assumed per capita spending for
Medicaid beneficiaries who enrolled due to the expansion to be
approximately 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-
[[Page 58998]]
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.
The following table shows the factors that are included in the
``Update'' column of the previous table:
[GRAPHIC] [TIFF OMITTED] TR28AU23.240
2. Calculation of Factor 2 for FY 2024
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). 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 Congressional Budget Office (CBO) estimates
to determine the percent change in the rate of uninsurance beginning in
FY 2018, provided the Secretary determines that the data source is
appropriate and the Chief Actuary of CMS certifies it. 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. In the FY 2024 IPPS/LTCH PPS
proposed rule (88 FR 26992), we proposed to continue to use a
methodology similar to the one that was used in FY 2018 through FY 2023
to determine Factor 2 for FY 2024.
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 are the Federal
Government's official estimates of economic activity (spending) within
the health sector. The information contained in the NHEA are used to
study numerous topics related to the health care sector, including the
following topics: 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, on health care
spending; and comparison of U.S. health care spending to other
countries' health care 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 account 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/
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, our view continues to be 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 2021, 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 2021. 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.
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
[[Page 58999]]
(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 U.S. population. (We refer readers to the website at https://www.census.gov/programs-surveys/cps.html.) The enhanced CPS, available
from SHADAC (available at https://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 estimate of the number of uninsured individuals
in 2019 was extrapolated using the 2019/2018 trend from the American
Community Survey (ACS). Because the 2020 ACS data were not available,
the ACS data were not used for purposes of estimating the number of
uninsured individuals for 2020.\202\ Rather, the 2020 estimate was
extrapolated using the 2020/2018 trend from the CPS as published by the
Census Bureau. The 2021 estimate was based on the population share of
the uninsured from the NHIS. 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/.
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\202\ 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.
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The next metrics needed to compute Factor 2 for FY 2024 are
projections of the rates of uninsurance in CY 2023 and CY 2024. On an
annual basis, OACT projects enrollment and spending trends for the
coming 10-year period. The projections for the rates of uninsurance in
the FY 2024 IPPS/LTCH PPS proposed rule were derived using the most
recent NHEA projections that were available at the time the proposed
rule was developed (published March 28, 2022, with historical data
through 2021). The NHEA projection methodology accounts for expected
changes in enrollment across all the categories of insurance coverage
previously listed. The projected growth rates in enrollment for
Medicare, Medicaid, and CHIP are developed to be consistent with the
2022 Medicare Trustees Report,\203\ updated where possible with more
recent data. Projected rates of growth in enrollment for private health
insurance and the uninsured are based largely on OACT's econometric
models, which rely on a set of macroeconomic assumptions that are
generally based on the 2022 Medicare Trustees Report. Greater detail on
these projected rates of growth in enrollment for private health
insurance and the uninsured can be found in OACT's report titled
``Projections of National Health Expenditure and Health Insurance
Enrollment: 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.
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\203\ https://www.cms.gov/files/document/2022-medicare-trustees-report.pdf.
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b. Factor 2 for FY 2024
Using these data sources and the previously described methodologies
in section IV.E.2.a, at the time of developing the proposed rule, OACT
had estimated that the uninsured rate for the historical, baseline year
of 2013 was 14 percent, while the estimated rates of uninsurance for
CYs 2023 and 2024 were 9.3 percent and 9.2 percent, respectively. As
required by section 1886(r)(2)(B)(ii) of the Act, the Chief Actuary of
CMS certified these estimates. We refer readers to OACT's Memorandum on
Certification of Rates of Uninsured prepared for the FY 2024 IPPS/LTCH
PPS proposed rule for further details on the methodology and
assumptions that were used in the projection of these rates of
uninsurance for the proposed rule.\204\
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\204\ OACT Memorandum on Certification of Rates of Uninsured.
March 3, 2023. Available at: https://www.cms.gov/files/document/certification-rates-uninsured-2024-proposed-rule.pdf.
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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, 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, in the FY 2024 IPPS/LTCH PPS proposed rule, we
proposed to continue to apply the weighted average approach used in
past fiscal years to estimate the rate of uninsurance for FY 2024.
OACT certified the estimate of the rate of uninsurance for FY 2024
determined using this weighted average approach to be reasonable and
appropriate for purposes of section 1886(r)(2)(B)(ii) of the Act. In
the FY 2024 IPPS/LTCH PPS proposed rule (88 FR 26993), we noted that we
might also consider the use of more recent data that may become
available for purposes of estimating the rates of uninsurance used in
the calculation of the final Factor 2 for FY 2024. We noted the
following examples of more up-to-date data that may become available
for use in calculating Factor 2 for FY 2024: (1) data regarding the
impacts of the expiration of the Families First Coronavirus Response
Act's continuous enrollment provision for Medicaid, which permits
states to actively begin disenrolling beneficiaries no longer eligible
for the program starting on April 1, 2023; (2) data on the impact of
the Inflation Reduction Act's extension of enhanced Marketplace premium
tax credits through 2025; and (3) data on the impacts associated with
the Internal Revenue Service's amended regulations that expanded
eligibility for Marketplace subsidies by revising the affordability
test of employer coverage for family members of employees (87 FR 61979
and 62003).
In the proposed rule, we outlined the calculation of the proposed
Factor 2 for FY 2024 as follows:
Percent of individuals without insurance for CY 2013: 14 percent.
Percent of individuals without insurance for CY 2023: 9.3 percent.
Percent of individuals without insurance for CY 2024: 9.2 percent.
Percent of individuals without insurance for FY 2024 (0.25 times
0.093) + (0.75 times 0.092): 9.2 percent.
[[Page 59000]]
1-[verbar]((0.14-0.092)/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
to determine Factor 2. Therefore, we proposed that Factor 2 for FY 2024
would be 65.71 percent.
The proposed FY 2024 uncompensated care amount was
$10,216,040,319.50 * 0.6571 = $6,712,960,093.94.
[GRAPHIC] [TIFF OMITTED] TR28AU23.241
We invited public comments on our proposed Factor 2 for FY 2024.
Comment: Most commenters discussed Factor 2 in the context of the
impact of the temporary COVID-19 PHE provisions on the uninsured rate,
such as expiration of the Families First Coronavirus Response Act's
Medicaid continuous coverage requirement and extension of the American
Rescue Plan's Marketplace enhanced premium tax credits. Large and small
healthcare organizations and associations opposed the proposed Factor 2
and the estimated FY 2024 uninsured rate and urged OACT to update its
estimate of Factor 2 to account for the projected increases in the
number of uninsured individuals as the COVID-19 PHE Medicaid continuous
enrollment provisions expire.
Many commenters also indicated that they expect increases in the
uninsured rates in their communities. To that end, these commenters
urged CMS to use more recent and accurate data sources to account for
the anticipated increases in the uninsured population, citing CMS'
statement in the proposed rule that the agency may consider more recent
data that may become available for the calculation of Factor 2 for the
FY 2024 final rule. Some of these commenters urged CMS to monitor the
forthcoming data to ensure that Factor 2 reflects the current coverage
landscape considering the expiring COVID-19 PHE provisions. A few
commenters expressed their concern that the NHEA data that CMS proposed
to use for Factor 2 do not reflect current trends in the uninsured rate
as the COVID-19 PHE ends, as they appear to be the same data utilized
in the FY 2023 IPPS/LTCH PPS final rule. These commenters requested
that CMS consider applying a one-time increase in Factor 2 to account
for the data lag and the anticipated increase in the uninsured
population in FY 2024 following the expiration of the Medicaid
continuous enrollment provisions, if the agency chooses to continue
with its proposal of utilizing the same NHEA data used in the FY 2023
rule. In addition, one commenter stated as an example that an
additional 0.7 percentage point increase in the uninsured rate for FY
2024 (9.9 percent uninsured, reflecting a projection of approximately
2.4 million additional uninsured individuals) would increase the
proposed uncompensated care payment amount by about $511 million
compared to the proposed rule's uncompensated care amount.
Several commenters referenced various data sources and analyses
that project between 3-18 million individuals will lose their Medicaid
coverage in FY 2024, such as analyses by the Kaiser Family Foundation;
the Congressional Budget Office; the Urban Institute; NORC at the
University of Chicago; and HHS' Assistant Secretary for Planning and
Evaluation (ASPE). Accordingly, these commenters requested that CMS
increase Factor 2 to reflect the anticipated increase in the uninsured
population.
A few commenters requested CMS maintain the same level of total
uncompensated care payments as in the FY 2023 IPPS/LTCH PPS final rule.
Several other commenters opposed the proposed decrease in the total
uncompensated care payments from the level in FY 2023. These commenters
noted that the proposed decrease would disproportionately impact
safety-net hospitals and negatively impact vulnerable patients and
hospitals that are already financially strained.
Response: We thank the commenters for their input regarding the
estimate of proposed Factor 2 discussed in the proposed rule. In the FY
2024 IPPS/LTCH PPS proposed rule we used the most recent available
estimates from the NHEA at that time, and we refer readers to OACT's
Memorandum on Certification of Rates of Uninsured prepared for the
proposed rule for further details on the methodology and assumptions
used in the calculation of the proposed rule's projection of the
uninsured rate.
We indicated that our projection of the rates of uninsurance for CY
2023 and CY 2024 were from the latest NHEA historical data available
and accounted for expected changes in enrollment across all categories
of insurance coverage. As detailed in the proposed rule, we believe
that the most recently updated NHEA data, on balance, best meet all our
considerations for ensuring that the data source used to estimate the
rate of uninsurance meets the statutory requirement that the estimate
be based on data from the Census Bureau, or other sources the Secretary
determines appropriate, and will provide reasonable estimates for the
rate of uninsurance that are available in conjunction with the IPPS
rulemaking cycle.
For the final rule, we are using the NHEA data for the Factor 2
calculation because we continue to believe that it is the most
appropriate measure of changes in the rate of uninsurance.
In response to the comments concerning the data sources used for
calculating Factor 2, in this final rule we are updating Factor 2 using
the most recently updated NHEA projections that were released in June
2023, which reflect the most recent historical data and updated
expectations for the uninsurance rate. We also refer readers to the
OACT memo that accompanies this final rule, which provides additional
information regarding the development of the uninsurance rate
projection.\205\
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\205\ OACT Memorandum on Certification of Rates of Uninsured.
July 3, 2024. Available at: https://www.cms.gov/medicare/medicare-
fee-for-service-Payment/AcuteInpatientPPS/dsh.
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Regarding the comments requesting that CMS maintain total
uncompensated care payments at the FY 2023 level or delay any proposed
changes to mitigate the impact on safety-net hospitals and vulnerable
patients, we believe estimating Factor 2 based on the best available
data is appropriate and consistent with the requirements of section
1886(r)(2)(B)(ii) of the Act.
Comment: Several commenters urged CMS to be transparent in its
calculation of Factor 2 and how it accounts for Medicaid expansion
populations and the expiration of the COVID-19 PHE Medicaid continuous
enrollment provisions. Other commenters urged CMS to be transparent
regarding the data sources used for calculating Factor 2 and the
assumptions behind the uninsured rate.
Response: In response to the comments concerning transparency, we
note that the accompanying OACT memo contains additional background
describing the methods used to derive the FY 2024 rate of uninsured for
this final rule. For purposes of this final
[[Page 59001]]
rule, we are using the most recent NHEA estimates for the rate of
uninsurance, which account for the legislative impacts from the
expiration of the Families First Coronavirus Response Act's Medicaid
continuous coverage requirement and extension of the American Rescue
Plan's Marketplace enhanced premium tax credits and effects of the
COVID-19 PHE on insurance coverage. Although Medicaid enrollment is
expected to decrease significantly, the insured share of the population
is only expected to decline in CY 2024 to 91.5 percent (from 92.3
percent in CY 2023), as many individuals who were not disenrolled from
Medicaid during the public health emergency already had comprehensive
coverage from another source (such as through an employer) and thus
remain insured even when disenrolled from Medicaid. We note that the
most recent NHEA projections are that the uninsured population will
change from 25.7 million in CY 2023 to 28.6 million in CY 2024 and
increase to 29.8 million in CY 2025. For more information about the
methodology and data used to estimate Factor 2, we refer readers to
NHEA's ``Health Insurance Enrollment and Enrollment Growth Rates''
table.\206\
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\206\ Table 17 Health Insurance Enrollment and Enrollment Growth
Rates located under Downloads: NHE Projections--Tables. Available
at: https://www.cms.gov/research-statistics-data-and-systems/statistics-trends-and-reports/nationalhealthexpenddata/nationalhealthaccountsprojected.
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Section 1886(r)(2)(B)(ii) of the Act permits us to use a data
source other than CBO estimates to determine the percent change in the
rate of uninsurance beginning in FY 2018. The NHEA data and methodology
that were used to estimate Factor 2 for this final rule are transparent
and best meet all of our considerations for ensuring reasonable
estimates for the rate of uninsurance that are available in conjunction
with the IPPS rulemaking cycle. We have concluded it is appropriate to
update the projection of the FY 2024 rate of uninsurance using the most
recent NHEA data.
After consideration of the public comments we received, we are
updating the calculation of Factor 2 for FY 2024 using more recent data
from NHEA. The final estimates of the percent of uninsured individuals
have been certified by the Chief Actuary of CMS. The calculation of the
final Factor 2 for FY 2024 using a weighted average of OACT's updated
projections for CY 2023 and CY 2024 is as follows:
Percent of individuals without insurance for CY 2013: 14 percent.
Percent of individuals without insurance for CY 2023: 7.7 percent.
Percent of individuals without insurance for CY 2024: 8.5 percent.
Percent of individuals without insurance for FY 2024 (0.25 times
0.077) + (0.75 times 0.085): 8.3 percent. 1-[verbar]((0.14-0.083)/
0.14)[verbar] = 1-0.4071 = 0.5929 (59.29 percent).
Therefore, the final Factor 2 for FY 2024 is 59.29 percent. The
final FY 2024 uncompensated care amount is $10,015,191,021.88 * 0.5929
= $5,938,006,756.87.
[GRAPHIC] [TIFF OMITTED] TR28AU23.247
3. Calculation of Factor 3 for FY 2024
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 FY 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. 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
[[Page 59002]]
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. 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. We refer readers to the FY 2018
IPPS/LTCH PPS final rule (82 FR 38208 through 38212) for a further
discussion of the methodology used to determine Factor 3 for FY 2018.
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 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 one 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 41423
and 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. 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. However, 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. In the FY 2020 IPPS/LTCH PPS final rule (84 FR 42369), 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 (FY) would more accurately reflect a hospital's
uncompensated care costs, as opposed to averaging multiple years of
unaudited and audited 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. In the FY 2021 IPPS/
LTCH PPS final rule (85 FR 58825), we finalized the use of a low-income
insured days proxy to determine Factor 3 for FY 2021 for IHS and Tribal
hospitals and Puerto Rico hospitals.
In the FY 2021 IPPS/LTCH PPS final rule (85 FR 58825 through
58828), we also finalized the definition of ``uncompensated care'' for
FY 2021 and subsequent fiscal years, for purposes of determining
uncompensated care costs and calculating Factor 3. 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
final rule (85 FR 58825 through 58828) for a discussion of additional
topics related to the definition of uncompensated care.
In the FY 2022 IPPS/LTCH PPS final rule (86 FR 45236 through
45243), consistent with the policy adopted in the FY 2021 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. We continued to use
the low-income insured days proxy to calculate Factor 3 for these IHS
and Tribal hospitals and Puerto Rico hospitals for FY 2022.
b. Background on the Methodology Used To Calculate Factor 3 for FY 2023
and Subsequent Years
Section 1886(r)(2)(C) of the Act both governs the selection of the
data to be used in calculating Factor 3 and 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
[[Page 59003]]
2014 IPPS/LTCH PPS final rule (78 FR 50638), we adopted a process of
making interim payments with final cost report settlement for both the
empirically justified Medicare DSH payments and the uncompensated care
payments required by section 3133 of the Affordable Care Act.
Consistent with that process, we also determined the time period from
which to calculate the numerator and denominator of the Factor 3
quotient in a way that would be consistent with making interim and
final payments. Specifically, we must have Factor 3 values available
for hospitals that we estimate will qualify for Medicare DSH payments
and for those hospitals that we do not estimate will qualify for
Medicare DSH payments but that may ultimately qualify for Medicare DSH
payments at the time of cost report settlement.
As described in the FY 2022 IPPS/LTCH PPS final rule (86 FR 45237),
commenters expressed concerns that the use of only 1 year of data to
determine Factor 3 would lead to significant variations in year-to-year
uncompensated care payments. Some stakeholders recommended the use of 2
years of historical Worksheet S-10 data. In that same final rule (86 FR
45237), we stated that we would consider using multiple years of data
when the vast majority of providers had been audited for more than 1
fiscal year under the revised reporting instructions. Audited FY 2019
cost reports were available for the development of the FY 2023 IPPS/
LTCH PPS proposed and final 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, in the FY 2023 IPPS/LTCH PPS final rule (87 FR 49036
through 49047), we finalized a policy of using a multi-year average of
audited Worksheet S-10 data to determine Factor 3 for FY 2023 and
subsequent fiscal years. We explained our belief that this approach
would be 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. Under this policy, we used a 2-year
average of audited FY 2018 and FY 2019 Worksheet S-10 data to calculate
Factor 3 for FY 2023. However, we also indicated that we expected FY
2024 would be the first year that 3 years of audited data would be
available at the time of rulemaking. Accordingly, for FY 2024 and
subsequent fiscal years, we finalized a policy of using a 3-year
average of the uncompensated care data from the 3 most recent fiscal
years for which audited data are available to determine Factor 3.
Consistent with the approach that we followed when multiple years of
data were previously used in the Factor 3 methodology, if a hospital
does not have data for all 3 years used in the Factor 3 calculation, we
will determine Factor 3 based on an average of the hospital's available
data. We also discontinued the use of the low-income days proxy to
determine Factor 3 for IHS and Tribal hospitals and Puerto Rico
hospitals and instead finalized use of the same multi-year average of
Worksheet S-10 data to determine Factor 3 for FY 2023 and subsequent
fiscal years, as is used to determine Factor 3 for all other DSH-
eligible hospitals.
Because we finalized our proposal to use multiple years of cost
reports to determine Factor 3 starting in FY 2023, we determined that
it would also be 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 FY 2023
IPPS/LTCH PPS final rule (87 FR 49041), we explained that 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. We explained that
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 finalized our proposal 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 did not use the same
cost report to determine the hospital's uncompensated care costs for
both FY 2018 and FY 2019. Rather, we used the cost report that spans
the entirety of FY 2019 to determine uncompensated care costs for FY
2019 and we used 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.
(1) Scaling Factor
To address the effects of calculating Factor 3 using data from
multiple fiscal years, in the FY 2023 IPPS/LTCH PPS final rule (87 FR
49042) we finalized a policy under which we 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 adopted 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 noted 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.
(2) New Hospital Policy for Purposes of Factor 3
In the FY 2023 IPPS/LTCH PPS final rule (87 FR 49042), we modified
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 policy of using multiple years of cost reports to determine
Factor 3, we defined 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. Under this definition, 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 were the most recent
year of cost reports for which audits of Worksheet S-10 data had been
conducted. Thus, hospitals with CCNs (CMS Certification Numbers)
established on or after October 1, 2019, were subject to the new
hospital policy for FY 2023.
Under this modification to the new hospital policy, we continued
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
[[Page 59004]]
available disproportionate patient percentage, it may receive interim
empirically justified DSH payments. However, new hospitals will not
receive interim uncompensated care payments because we would have no
uncompensated care data from 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.
In the FY 2023 IPPS/LTCH PPS final rule (87 FR 49042), we also
modified the methodology used to calculate Factor 3 for new hospitals.
Specifically, while we continued to determine the numerator of the
Factor 3 calculation using the new hospital's uncompensated care costs
reported on Worksheet S-10 of the hospital's cost report for the
current fiscal year, we adopted an approach under which we 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. In addition, we applied a
scaling factor to the Factor 3 calculation for a new hospital. We
explained our belief that 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.
(3) Newly Merged Hospital Policy
In the FY 2023 IPPS/LTCH PPS final rule (87 FR 49042 and 49043), we
stated that we would 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 (79
FR 50021), 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. In the FY 2015 IPPS/
LTCH PPS final rule (79 FR 50021 and 50022), 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.
Consistent with the policy adopted in the FY 2015 IPPS/LTCH PPS
final rule, in the FY 2023 IPPS/LTCH PPS final rule, we stated that we
would 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 modification to the methodology used to determine Factor 3 for
new hospitals described previously, we finalized a policy for
determining 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 apply a scaling factor, as discussed previously, to the
Factor 3 calculation for a newly merged hospital. We stated our belief
that 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. We also explained
that 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.
(4) 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). In the FY 2023 IPPS/LTCH PPS final rule (87 FR 49043), we
adopted a process for trimming CCRs under which we apply the following
steps to determine the applicable CCR separately for each fiscal year
that is included as part of the multi-year average used to determine
Factor 3:
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'').
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)).
(5) 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 uncompensated care costs (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 any fiscal year
that is included as a part of the multi-year average 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
[[Page 59005]]
for the potentially aberrant fiscal year to determine an adjusted
amount of uncompensated care costs for the applicable fiscal year. For
example, if a hospital's FY 2018 cost report is determined to include
potentially aberrant data, data from its FY 2019 cost report would be
used for the ratio calculation.
However, we note that we have audited the Worksheet S-10 data that
will be used in the Factor 3 calculation for a number of hospitals.
Because the UCC data for these hospitals have been subject to audit, we
believe that 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 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). Accordingly, in the FY 2023 IPPS/LTCH PPS final
rule (87 FR 49044), we stated that in addition to the UCC trim
methodology, we will continue to apply a trim specific to certain
hospitals that do not have audited Worksheet S-10 data for one or more
of the fiscal years that are used in the Factor 3 calculation. For FY
2023 and subsequent fiscal years, in the rare case that a hospital's
insured patients' charity care costs for a fiscal year 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 will exclude the hospital from the
prospective Factor 3 calculation. This trim will 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 will 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.
Similar to the approach initially adopted in the FY 2022 IPPS/LTCH
PPS final rule (86 FR 45245 and 45246), in the FY 2023 IPPS/LTCH PPS
final rule (87 FR 49044), we also stated that we would continue to use
a threshold of 3 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 the most recent audited cost
reports for hospitals that are projected to be DSH-eligible. We stated
that we continued to believe these thresholds were appropriate in order
to address potentially aberrant data. However, we modified the
calculation to include Worksheet S-10 data from IHS/Tribal hospitals
and Puerto Rico hospitals consistent with our final policy decision to
begin using Worksheet S-10 data to determine Factor 3 for these
hospitals. In addition, we finalized a policy of applying the same
threshold amounts originally calculated for the FY 2018 reports to
identify potentially aberrant data for FY 2023 and subsequent fiscal
years in order to facilitate transparency and predictability. If a
hospital subject to this trim is determined to be DSH-eligible at cost
report settlement, the MAC will calculate the hospital's Factor 3 using
the same methodology used to calculate Factor 3 for new hospitals.
c. Methodology for Calculating Factor 3 for FY 2024
For FY 2024, we proposed to follow the same methodology as applied
in FY 2023 and that is described in section IV.E.3.b. of the preamble
of this final rule to determine Factor 3 using the most recent 3 years
of audited cost reports from FY 2018, FY 2019, and 2020. For purposes
of the FY 2024 IPPS/LTCH PPS proposed rule, we used reports from the
December 2022 Healthcare Cost Report Information System (HCRIS) extract
to calculate Factor 3. We noted that we intended to use the March 2023
update of HCRIS to calculate the final Factor 3 for the FY 2024 IPPS/
LTCH PPS final rule.
In the FY 2023 IPPS/LTCH PPS final rule (87 FR 49051), we finalized
our proposal to determine Factor 3 for IHS and Tribal hospitals and
Puerto Rico hospitals based on uncompensated care data reported on
Worksheet S-10, and we discontinued the use of low-income insured days
as a proxy for the uncompensated care costs of these hospitals.
Beginning in FY 2023, we established a new supplemental payment for
IHS/Tribal hospitals and Puerto Rico hospitals, because we recognized
that discontinuing the use of the low-income insured days proxy and
relying 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 significant financial disruption
for these hospitals. We refer readers to section IV.D of this final
rule for a further discussion of these payments. We note that in the FY
2024 IPPS/LTCH PPS proposed rule, we did not propose any changes to the
methodology for determining supplemental payments, and we will
calculate the supplemental payments to eligible IHS/Tribal and Puerto
Rico hospitals for FY 2024 consistent with the methodology described in
the FY 2023 IPPS/LTCH PPS final rule (87 FR 49047 through 49051) and in
the regulations at Sec. 412.106(h).
Consistent with the policy adopted in the FY 2023 IPPS/LTCH PPS
final rule and codified in the regulations at Sec.
412.106(g)(1)(iii)(C)(11), for FY 2024 and subsequent fiscal years, we
will use 3 years of audited Worksheet S-10 data to calculate Factor 3
for all eligible hospitals, including IHS and Tribal hospitals and
Puerto Rico hospitals that have a cost report for 2013.
Step 1: Select the hospital's longest cost report for each of the
most recent 3 years of Federal fiscal year audited cost reports (FY
2018, FY 2019, and FY 2020). (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 year, 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, we would
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
[[Page 59006]]
report that spans the relevant Federal fiscal year period.
Step 2: Annualize the 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 all DSH eligible hospitals using
annualized uncompensated care costs (Worksheet S-10 Line 30) based on
cost report data from the most recent 3 years of audited cost reports
(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, and divide that amount by the number of cost reporting
periods with data to compute an average Factor 3 for the hospital.
Multiply the result by a scaling factor.
We received comments regarding the uncompensated care costs
definition, Worksheet S-10 cost report audits, and Factor 3 calculation
instructions.
Comment: Several commenters expressed their support for CMS'
proposal in the FY 2024 IPPS/LTCH PPS proposed rule (88 FR 26997 and
26998) to calculate Factor 3 for FY 2024 based on a three-year average
of audited FY 2018, FY 2019, and FY 2020 Worksheet S-10 data, and the
policy finalized in the FY 2023 IPPS/LTCH PPS final rule to implement a
three-year average based on the most recent available audited data for
subsequent fiscal years. Supporters of this proposal specified several
benefits to the use of a multi-year average of Worksheet S-10 data,
such as minimizing year-to-year volatility, promoting accuracy, and
ensuring stability in future uncompensated care payments. One commenter
noted their long-standing support for using audited Worksheet S-10 data
to promote an accurate and consistent calculation of uncompensated care
costs.
Notably, none of the commenters expressed opposition to using a
three-year average of Worksheet S-10 data to calculate uncompensated
care payments moving forward.
Response: We appreciate the commenters' support for our proposal to
use a three-year average of audited FY 2018, FY 2019, and FY 2020
Worksheet S-10 data to determine each hospital's share of uncompensated
care costs in FY 2024. As explained in the FY 2024 IPPS/LTCH PPS
proposed rule (88 FR 26995), we believe that using a multi-year average
of Worksheet S-10 data will provide assurance that hospitals'
uncompensated care payments remain stable and predictable and will not
be subject to unpredictable swings and anomalies in a hospital's
uncompensated care costs.
Comment: A few commenters suggested approaches to mitigating the
impact of the COVID-19 PHE on the three-year average of Worksheet S-10
data. One commenter recommended that CMS exclude FY 2020 data entirely
from FY 2024 DSH calculations, because the commenter believes the data
are flawed due to COVID-19 PHE impacts. Another recommended that CMS
hold the evaluation period of Worksheet S-10 data constant until data
free of the impacts of the COVID-19 PHE are available. One commenter
encouraged CMS to review the impact of the COVID-19 PHE may have on
accurately capturing uncompensated care as the three-year average range
includes more years with COVID-19 repercussions, while another
recommended that CMS mitigate the effect of anomalies in FYs 2020-2022
cost report data that may adversely impact DSH payments in future
years.
Response: Regarding requests that CMS account for the impact of the
COVID-19 PHE on the three-year average of Worksheet S-10 cost report
data, we note that we will continue to use the three-year average of
the most recently audited cost report data for FY 2024 and subsequent
years, as finalized in the FY 2023 IPPS/LTCH PPS final rule (87 FR
49038). In response to the comments requesting that we exclude FY 2020
data or hold data constant, we continue to believe using the three-year
average will smooth the variation in year-to-year uncompensated care
payments and lessen the impacts of the COVID-19 PHE and future
unforeseen events. Further, we anticipate that there will be less
fluctuation in cost report data as the PHE disruptions on healthcare
utilization recover. We will continue to monitor the impacts of the PHE
and will consider this issue further in future rulemaking, as
appropriate.
Comment: Some commenters suggested alternative approaches to the
uncompensated care payment calculation unrelated to methodological
concepts concerning the blending of historical Worksheet S-10 data.
Such recommendations included that CMS should consider the impact of
the healthcare labor shortage on uncompensated care payments. One
commenter recommended that CMS protect essential hospitals from
fluctuations and cuts to uncompensated care payments, without reducing
the payments to other DSH-eligible hospitals.
Another commenter requested that CMS modify the FY 2024 methodology
to compensate safety-net hospitals for any decrease in FY 2020
uncompensated care payments inadvertently caused by the Factor 3
policies from the FY 2020 IPPS/LTCH PPS final rule. Specifically, this
commenter's recommendation was that CMS should account for FY 2015
uncompensated care costs from reopened FY 2015 Worksheet S-10 on a one-
time basis to calculate Factor 3 for FY 2024.
Further, a handful of commenters expressed concern about the
proposed reduction in uncompensated care payments. These commenters
indicated that the proposed decrease in payments in addition to the
inadequate payment update would be insufficient for these hospitals in
the current financial environment.
Response: With regard to commenters' concerns and suggestions
unrelated to the previously discussed methodological concepts for the
blending of historical Worksheet S-10 data, we consider these public
comments to be outside the scope of the proposed rule, we are not
addressing them in this final rule. However, we appreciate commenters'
input and note that we may address these and other considerations in
future rulemaking.
Concerning the commenter's suggestion to modify uncompensated care
payments to account for payments from a previous year we are continuing
to use Worksheet S-10 data from multiple years to mitigate fluctuations
in the data and smooth variations in year-to-year uncompensated care
payments. Regarding the commenter's suggestion to account for FY 2015
uncompensated care costs from reopened Worksheet S-10, we are not
considering re-using FY 2015 cost reports or supplementing the FY 2024
uncompensated care payments with information from FY 2015. As explained
in the FY 2024 IPPS/LTCH PPS proposed rule, we believe that using a
multi-year average of the most recent audited Worksheet S-10 data will
reflect the most recent available information regarding a hospital's
uncompensated care costs. We note that MACs will continue to have
discretion to determine if a provider revision may be accepted for
amended or reopened cost reports, per 42 CFR 405.1885.
Comment: Many commenters indicated that CMS' proposed reduction to
the DSH payment amount by nearly
[[Page 59007]]
half a billion dollars from FY 2023 will have a disparate impact on DSH
hospitals as they continue to face financial challenges related to the
COVID-19 PHE. These challenges include increasing labor and supply
costs, increasing inflation, and potential Medicare sequestration cuts.
One commenter noted that any payment reduction during a time of
increased operating costs for hospitals could hinder progress in areas
that are top priorities for hospitals. These areas include investments
in value-based payment models, climate policies, and data collection
that are needed to build a foundation for improving health equity.
Response: We thank the commenters for their feedback. We agree that
the COVID-19 PHE presents unique challenges to hospitals' finances.
Regarding the commenters' concerns regarding changes to the amount
available to make uncompensated care payments in this rulemaking, we
note that, as described in the FY 2024 IPPS/LTCH PPS proposed rule, the
statute instructs the Secretary to estimate the amounts of
uncompensated care for a period based on appropriate data, which for FY
2024 include data that reflect the COVID-19 PHE's effect on hospitals.
Comment: Some commenters proposed changes to the definition of
uncompensated care and requested that CMS ensure its methodology
accurately captures the full range of uncompensated care costs that
hospitals incur in their provision of care for disadvantaged patients.
One commenter urged CMS to include all patient care costs in the CCR,
including those for teaching and providing physician and other
professional services, to ensure an accurate distribution of
uncompensated care payments to hospitals with the highest levels of
uncompensated care. This commenter stated that doing so should include
Graduate Medical Education (GME) costs, which are disproportionately
detrimental to teaching hospitals. The commenter further suggested that
CMS revise the data collected on Medicaid shortfalls to better capture
actual shortfalls incurred by hospitals by allowing hospitals to
include unpaid coinsurance and deductibles on Worksheet S-10. Another
commenter suggested treating the unreimbursed portion of state or local
indigent care as charity care.
Response: We appreciate commenters' suggestions for revisions and/
or modifications to Worksheet S-10. We will consider modifications as
necessary to further improve and refine the information that is
reported on Worksheet S-10 to support collection of the information
regarding uncompensated care costs.
Regarding the request to include costs for teaching and providing
physician and other professional services, including GME costs when
calculating the CCR, we note that because the CCR on Line 1 of
Worksheet S-10 is obtained from Worksheet C, Part I, and is also used
in other IPPS rate setting contexts (such as high-cost outliers and the
calculation of the MS-DRG relative weights) from which it is
appropriate to exclude the costs associated with supporting physician
and professional services and GME costs, we remain reluctant to adjust
CCRs in the narrower context of calculating uncompensated care costs.
Therefore, as stated in past final rules, including the FY 2022 IPPS/
LTCH PPS final rule (86 FR 45241 and 45242), we continue to believe
that it is not appropriate to modify the calculation of the CCR on Line
1 of Worksheet S-10 to include any additional costs in the numerator of
the CCR calculation.
With regard to the comments requesting that payment shortfalls from
Medicaid and State and local indigent care programs be included in
uncompensated care cost calculations, we have consistently stated in
past final rules (85 FR 58826; 86 FR 45238; and 87 FR 49039) in
response to similar comments that we believe there are compelling
arguments for excluding such shortfalls from the definition of
uncompensated care. We refer readers to those prior rules for further
discussion.
Comment: Commenters expressed concern that the reductions in
uncompensated care payments do not align with the Federal Government's
focus on equity. One commenter stated that safety-net hospitals provide
eight times more uncompensated care than other hospital types, which
disproportionately impacts safety-net hospitals' payments. Another
commenter requested that CMS revise the current payment policy to
account for the proportion of low-income discharges for each hospital
and the capacity of a hospital to absorb uncompensated care costs. This
commenter recommended changing the uncompensated care payment
calculation to be based on each hospital's uncompensated care and
disproportionate share percentage.
Response: We thank commenters for their continued concern regarding
the distribution of uncompensated care payments and the impact of
uncompensated care payments on safety-net hospitals and for their
recommendations for potential changes to the uncompensated care payment
methodology. We may consider this issue further in future rulemaking,
if appropriate.
We note that in the FY 2024 IPPS/LTCH PPS proposed rule (88 FR
27187 through 27190), we included a Request for Information (RFI) that
sought public feedback on the challenges faced by safety-net hospitals
and potential approaches to help safety-net hospitals meet those
challenges. We are in the process of reviewing the comments received in
response to the RFI.
Comment: In relation to the accuracy of the Worksheet S-10 data,
one commenter requested that CMS regularly review Worksheet S-10 cost
reports for any irregular trends in the data.
Response: The use of the three-year average of the most recently
audited cost report data for FY 2024 and subsequent years will smooth
the variation in year-to-year uncompensated care payments and lessen
the impacts of future unforeseen events, such as the COVID-19 PHE.
Further, we anticipate that there will be less fluctuation in cost
report data as the PHE has ended. We note that the audit process for
Worksheet S-10 cost reports will continue to be an important part of
identifying potential irregularities in the data.
Comment: One commenter commended CMS for the agency's efforts to
develop and improve the audit process for Worksheet S-10 data. Echoing
concerns expressed in previous years, other commenters encouraged CMS
to work with MACs to make the audit process clearer, more consistent,
and more complete. The same commenters recommended that CMS establish a
standardized process across auditors and make audit instructions
publicly available. A few commenters cited the Medicare wage index
audit as a model that CMS could use to clarify the timeline and process
for Worksheet S-10 revisions. Like in the wage index audit process,
these commenters recommended that CMS utilize a public use file, rather
than the HCRIS data file, which would make the audit process more
transparent. One commenter suggested that CMS ensure that Worksheet S-
10 audits impose minimal burden and are equitable and uniform across
hospitals. The same commenter also suggested CMS consider making the
audit process more transparent by disclosing criteria used to identify
hospitals for audits and publishing audit protocols in advance to allow
hospitals time and opportunity to respond to audits and address
findings through notice and comment rulemaking. Given the high costs of
[[Page 59008]]
Worksheet S-10 audits, one commenter recommended that CMS select a
discrete number of hospitals to audit every year. For example, in the
case that CMS audits one third of DSH hospitals per year, every
hospital would be audited once per 3-year cycle. Finally, this
commenter also requested that CMS implement an informal, fast-track
review process for audit appeals similar to the audit criteria the
agency uses for retrospective DSH reimbursement, such that hospitals
have the same protections afforded by the appeal rights for
retrospective DSH reimbursement. One commenter expressed concern with
the handling of Health Resources & Services Administration's (HRSA)
COVID-19 claims and argued that claims not paid for by HRSA funds, but
which are covered under the hospital's financial assistance policy
(FAP), should be included on Worksheet S-10.
Response: We thank commenters for their feedback on the audits of
the FY 2020 Worksheet S-10 data and their recommendations for future
audits. As we have stated previously in response to comments regarding
audit protocols, they are provided to the MACs in advance of the audit
to assure consistency and timeliness in the audit process. CMS began
auditing the FY 2020 Worksheet S-10 data for selected hospitals last
year so that the audited uncompensated care data for these hospitals
would be available in time for use in the FY 2024 IPPS/LTCH PPS
proposed rule. We chose to focus the audit on the FY 2020 cost reports
in order to maximize the available audit resources. We also note that
FY 2020 data are the most recent year of audited data.
We appreciate all commenters' input and recommendations on how to
improve our audit process and reiterate our commitment to continue
working with MACs and providers on audit improvements, which include
making changes to increase the efficiency of the audit process,
building on the lessons learned in previous audit years. Regarding
commenters' requests for a standard audit timeline, we do not intend to
establish a fixed timeline for audits across MACs at this time, to
ensure we can retain the flexibility to use our limited audit resources
to address and prioritize audit needs across all CMS programs each
year. We note that MACs collaborate with providers regarding scheduling
dates during the Worksheet S-10 audit process. We also note that MACs
work closely with providers to balance the time needed to complete the
Worksheet S-10 audits and to minimize the burden on providers and will
continue to do so.
Regarding commenters' requests that CMS make public the audit
instructions and criteria, as we previously stated in the FY 2021 IPPS/
LTCH PPS final rule and prior rules (81 FR 56964; 84 FR 42368; 85 FR
58822), we do not make review protocols public as CMS desk review and
audit protocols are confidential and are for CMS and MAC use only.
Concerning the request to promulgate the Worksheet S-10 audit policy
and protocols, there is no requirement under either the Administrative
Procedure Act or the Medicare statute that CMS adopt the audit
protocols through notice and comment rulemaking. As previously
discussed in the FY 2021 IPPS/LTCH PPS final rule (85 FR 58822), at
this point, to maximize our limited audit resources, we do not plan on
introducing an audit appeals process.
Regarding commenters' recommendations that we establish a similar
process to that used for the wage index audits, at this point we do not
plan to introduce an audit process with such a structure in order to
maximize limited audit resources.
We also note that the quarterly HCRIS data is published as a public
use file, available at https://www.cms.gov/research-statistics-data-and-systems/downloadable-public-use-files/cost-reports/cost-reports-by-fiscal-year. The December HCRIS extract is available for providers to
review at the time the IPPS/LTCH PPS proposed rule is issued and the
March HCRIS is generally available during the comment period.
Regarding comments on the handling of claims under the HRSA-
administered COVID-19 Uninsured Program and the audits of Worksheet S-
10, providers should discuss with their MAC during the Worksheet S-10
audit process if they encounter issues. In the FY 2021 IPPS/LTCH PPS
final rule (85 FR 58827), we noted that one term and condition of the
HRSA Uninsured Program states as follows: ``The Recipient will not
include costs for which Payment was received in cost reports or
otherwise seek uncompensated care reimbursement through federal or
state programs for items or services for which Payment was received.''
Comment: One commenter commended CMS for its efforts to provide
clearer instructions for Worksheet S-10. Three commenters requested
that CMS clarify whether Worksheet S-10 Part I or Part II should be
utilized to calculate Factor 3. A few commenters recommended that CMS
allow providers to submit Worksheet S-10 corrections following the
March 2023 HCRIS deadline. These commenters noted that they were not
aware of the March deadline until the publishing of the proposed rule.
In addition, one commenter requested that CMS clarify the ``normal
timeline'' MACs follow for allowing providers to amend or reopen
previously audited Worksheet S-10 data used to calculate Factor 3. One
commenter requested that CMS clarify inconsistent Worksheet S-10
instructions so that non-Medicare bad debt is not multiplied by CCR.
This commenter stated that CMS' revised instructions indicated that
non-reimbursed Medicare bad debt is not reduced by the CCR, but that
cost report instructions state that non-Medicare bad debt is multiplied
by the CCR.\207\ This commenter indicated that such a practice is
inconsistent with the way non-reimbursable Medicare bad debt is
treated. The commenter also noted that CMS should provide opportunities
for stakeholder feedback on Worksheet S-10 as well as additional
educational outreach on revisions, extended submission deadlines, and
training to hospital staff on accurately reporting data. Finally, one
commenter proposed that CMS create a working group with industry and
government stakeholders to develop standard specifications for the data
fields and formats used for Worksheet S-10 cost reporting of
uncompensated care, empirical DSH, and Medicare bad debt reimbursement.
Response: We appreciate commenters' concerns regarding the need for
clarification of the Worksheet S-10 instructions, as well as their
suggestions for form revisions to improve reporting. We reiterate our
commitment to continuing to work with impacted parties to address their
concerns regarding Worksheet S-10 instructions and reporting through
provider education and further refinement of the instructions as
appropriate. We also encourage providers to share with their respective
MAC any questions regarding clarifications of instructions, reporting,
and submission deadlines.
We continue to believe that our efforts to refine the instructions
and guidance have improved provider understanding of the Worksheet S-10
and added clarity to the instructions. We also recognize that there are
continuing opportunities to further improve the accuracy and
consistency of the information that is reported on the Worksheet S-10,
and to the extent that commenters have raised new questions and
concerns regarding the reporting requirements, we will attempt to
address them through future rulemaking and/or sub-regulatory guidance
and subsequent outreach. However, as stated in previous rules, we
continue to believe that the Worksheet
[[Page 59009]]
S-10 instructions are sufficiently clear and continue to allow
hospitals to accurately complete Worksheet S-10.
Regarding commenters' requests for clarification on whether
Worksheet S-10 Part I or Part II is used for the Factor 3 calculation
for ``new'' hospital and ``newly merged'' hospitals, we would use
information reported on the hospital's Worksheet S-10, Part I to
determine Factor 3 if the hospital is determined to be DSH eligible at
cost report settlement.
Concerning commenters' requests to submit Worksheet S-10
corrections after the March 2023 HCRIS, we note that the December HCRIS
extract is publicly available for providers to review on the CMS
website at the time of the publishing of the IPPS/LTCH PPS proposed
rule. The March update of HCRIS is generally available during the
comment period to the proposed rule. We are continuing to use the March
HCRIS extract, which is the latest data available during this final
rule's development, for Factor 3 calculations.
Concerning commenters' request that CMS clarify the timeline and
procedures MACs follow to amend or reopen previously audited Worksheet
S-10 data, we note that MACs will continue to have discretion to
determine if a provider's report may be accepted. We also note that
MACs will not reject requests related to Worksheet S-10 revisions
solely due to the direct reimbursement not meeting current year amended
cost report or reopening thresholds. For hospital-requested revisions
to Worksheet S-10, MACs make a determination to accept or reject the
amended cost report or cost report reopening consistent with the
current instructions at CMS Pub. 100-06, Chapter 8, available at
www.cms.gov/regulations-and-guidance/guidance/manuals/internet-only-manuals-ioms-items/cms019018.
Regarding the commenters' request that CMS to clarify whether non-
Medicare bad debt is multiplied by CCR, we believe that the Worksheet
S-10 instructions are clear and indicate that the CCR will not be
applied to the deductible and coinsurance amounts for insured patients
approved for charity care and non-reimbursed Medicare bad debt.
Regarding the comments requesting changes to Worksheet S-10 and/or
further clarification of the reporting instructions, we note that these
comments fall outside the scope of this final rule.
As discussed in the FY 2024 IPPS/LTCH PPS proposed rule (88 FR
26998), for purposes of identifying new hospitals, for FY 2024, the FY
2020 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, 2020, would be subject to the
new hospital policy in FY 2024. If a new hospital is ultimately
determined to be eligible for Medicare DSH payments for FY 2024, the
hospital would receive an uncompensated care payment calculated using a
Factor 3, where the numerator is the uncompensated care costs reported
on Worksheet S-10 of the hospital's FY 2024 cost report, and the
denominator is the sum of the uncompensated care costs reported on
Worksheet S-10 of the FY 2020 cost reports for all DSH-eligible
hospitals. In addition, we would apply a scaling factor, as discussed
previously, to the Factor 3 calculation for a new hospital. As we
explained in the FY 2023 IPPS/LTCH PPS final rule (87 FR 49042), 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.
In the proposed rule, we stated that for FY 2024, the eligibility
of a newly merged hospital to receive interim uncompensated care
payments and the amount of any interim uncompensated care payments,
would be based on the uncompensated care costs from the FY 2018, FY
2019, and FY 2020 cost reports available for the surviving CCN at the
time this final rule is developed. However, at cost report settlement,
we would determine the newly merged hospital's final uncompensated care
payment based on the uncompensated care costs reported on its FY 2024
cost report. That is, we would 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 2024 cost report. The denominator
would be the sum of the uncompensated care costs reported on Worksheet
S-10 of the FY 2020 cost reports for all DSH-eligible hospitals, which
is the most recent fiscal year for which audits have been conducted. We
would also apply a scaling factor, as described previously.
Comment: A couple of commenters expressed support for the policy
currently in place for newly merged hospitals. This policy states that
uncompensated care payments for a merged hospital will be based on the
surviving hospital's cost report for the current fiscal year, and that
the final uncompensated care payments for these hospitals will be
determined during cost report settlement. These commenters also
indicated support for the policy in place for new hospitals, which
states that MACs will make the final determination concerning whether
hospitals are eligible to receive DSH payments at cost report
settlement based on the new hospital's cost report.
Response: We appreciate the support for our policies for new and
newly merged hospitals.
As we explained in the FY 2024 IPPS/LTCH PPS proposed rule (88 FR
26998), for a hospital that is subject to the trim for potentially
aberrant data and 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 2024 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 2024 cost report. Then we would 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 2024 cost report, while the denominator would reflect the
sum of the uncompensated care costs reported on Worksheet S-10 of the
FY 2020 cost reports of all DSH-eligible hospitals. In addition, we
would apply a scaling factor, as discussed previously, to the Factor 3
calculation for the hospital. We stated that we continue to 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.
We did not receive any comments on the discussion of CCR trim
methodology or the UCC trim methodology.
For purposes of this final rule, the statewide average CCR was
applied to 7 hospitals' FY 2018 reports, of which 3 hospitals had FY
2018 Worksheet S-10 data. The statewide average CCR was applied to 13
hospitals' FY 2019 reports, of which 6 hospitals had FY 2019 Worksheet
S-10 data. The statewide average CCR was applied to 10 hospitals' FY
2020 reports, of which 3 hospitals had FY 2020 Worksheet S-10 data.
In the FY 2024 IPPS/LTCH PPS proposed rule (88 FR 26999), we stated
that for purposes of this FY 2024 IPPS/LTCH PPS final rule, we intended
to use data from the March 2023 HCRIS extract to calculate Factor 3. We
explained that the March HCRIS extract would be the
[[Page 59010]]
latest quarterly HCRIS extract that would be publicly available at the
time of the development of this final rule.
Regarding requests from providers to amend and/or reopen previously
audited Worksheet S-10 data for the most recent 3 cost reporting years
that are used in the methodology for calculating Factor 3, we noted
that MACs follow normal timelines and procedures. We explained that for
purposes of the Factor 3 calculation for FY 2024, any amended reports
and/or reopened reports would need to have completed the amended report
and/or reopened report submission processes by the end of March 2023.
In other words, if the amended report and/or reopened report was not
available for the March HCRIS extract, then that amended and/or
reopened report data would not be a part of the FY 2024 IPPS/LTCH PPS
final rule's Factor 3 calculation. We noted that the March HCRIS data
extract would be available during the comment period for the proposed
rule if providers want to verify that their amended and/or reopened
data is reflected in the March HCRIS extract.
Comment: One commenter commended CMS for using the latest available
data (i.e., the December 2022 HCRIS data) for determining DSH
eligibility for the proposed rule and encouraged CMS to use the latest
data that may become available prior to the development of the final
rule (i.e., the March 2023 HCRIS update as indicated in the proposed
rule) to ensure the proper allocation of uncompensated care payments.
Response: We appreciate the commenter's support for our use of a
later HCRIS extract for calculating Factor 3 for FY 2024. We are using
the March HCRIS extract to calculate Factor 3 for this FY 2024 IPPS/
LTCH PPS final rule. We believe on balance this is the best available
data for the purposes of calculating Factor 3 for FY 2024. We also
intend to continue utilizing the most recent data available for the
applicable rulemaking, which generally means the respective December
HCRIS extract for purposes of Factor 3 calculations in future proposed
rules. Furthermore, as noted in the FY 2024 IPPS/LTCH PPS proposed
rule, we continue to intend to use the respective March HCRIS extract
for future final rules.
d. 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. Typically, we use 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. In the FY 2023 IPPS/LTCH PPS
final rule (87 FR 49045), we calculated interim uncompensated care
payments based on the 3-year average of discharges from FY 2018, FY
2019, and FY 2021.
Consistent with the approach adopted in the FY 2023 IPPS/LTCH PPS
final rule, for FY 2024, we proposed to calculate the average of FY
2019, FY 2021, and FY 2022 historical discharge data, rather than a 3-
year average of the most recent 3 years of discharge data from FY 2020,
FY 2021, and FY 2022. We stated that we continued to believe that
computing a 3-year average using the most recent 3 years of discharge
data would potentially underestimate the number of discharges for FY
2024, due to the effects of the COVID-19 pandemic during FY 2020, which
was the first year of the COVID-19 pandemic. Therefore, as explained in
the FY 2024 IPPS/LTCH IPPS proposed rule (88 FR 26999), we believed
that our proposed approach may result in a better estimate of the
number of discharges during FY 2024, for purposes of the interim
uncompensated care payment calculation. In addition, we noted that
including discharge data from FY 2022 to compute this 3-year average
would be consistent with the proposal to use FY 2022 Medicare claims in
the IPPS ratesetting, as discussed in section I.E. of the preamble of
this FY 2024 IPPS/LTCH PPS final rule. As discussed in the proposed
rule, we would use the resulting 3-year average of the number of
discharges to calculate a per discharge payment amount that would be
used to make interim uncompensated care payments to each projected DSH-
eligible hospital during FY 2024. The interim uncompensated care
payments made to a hospital during the fiscal year would 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 2024.
We requested comments on our proposal to use data from FY 2019, FY
2021, and FY 2022 to compute a 3-year average of the number of
discharges in order to calculate the per discharge amount for purposes
of making interim uncompensated care payments to projected DSH eligible
hospitals during FY 2024.
Comment: Several commenters supported CMS' proposal to exclude FY
2020 data from the per-discharge amount calculation for interim
uncompensated care payments. In contrast, one commenter noted that the
use of FY 2019, FY 2021, and FY 2022 data would overestimate the
discharge volume and decrease interim uncompensated care payments in FY
2024. The same commenter recommended alternative approaches, such as
using the average of the two most recent years (FY 2020 and FY 2021)
and applying a national adjustment factor to normalize the data based
on projected discharge trends.
Response: We agree with the commenter that using FY 2019 data to
calculate the per-discharge amount for interim uncompensated care
payments may overestimate the discharge volume, in general. For
example, the updated claims data used to estimate the FY 2024
discharges in the Factor 1 calculation indicate that discharge volumes
are not expected to return to pre-pandemic levels during FY 2024;
therefore, we believe omitting FY 2019 data from the per-discharge
amount calculation for interim uncompensated care payments may more
accurately estimate FY 2024 discharges. However, we note that we
continue to believe the FY 2020 discharge data would underestimate
discharges due to the effects of the COVID-19 PHE in FY 2020.
Accordingly, to address these concerns regarding the use of FY 2019
discharge data, we are finalizing our proposal with modification, and
will calculate the per-discharge amount of uncompensated care payments
using FY 2021 and FY 2022 discharge data.
As we explained in the FY 2024 IPPS/LTCH PPS proposed rule, we
finalized a voluntary process in the FY 2021 IPPS/LTCH PPS final rule
(85 FR 58833 and 58834), through which a hospital may submit a request
to its MAC for a lower per discharge interim uncompensated care payment
amount,
[[Page 59011]]
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 that 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 will 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 discharges for the
current fiscal year. 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 in this FY 2024 IPPS/LTCH PPS final rule
for 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 would not change how the
total uncompensated care payment amount will be reconciled at cost
report settlement.
We received comments related to the uncompensated care payment
reconciliation process.
Comment: A couple of commenters recommended that CMS use the
traditional payment reconciliation process to calculate final
uncompensated care payments pursuant to section 1886(r)(2) of the Act.
These commenters did not object to CMS using prospective estimates,
derived from the best data available, to calculate interim payments for
uncompensated care costs. However, the commenters stated that interim
payments should be subject to later reconciliation based on estimates
derived from actual data from the applicable Federal fiscal year. These
same commenters noted that CMS' failure to provide meaningful
explanations for uncompensated care payment calculations is in
violation of the Administrative Procedure Act. Commenters also
recommended that CMS satisfy its legal obligation by providing
hospitals the opportunity to review and comment on the more recent data
used in rulemaking before the agency publishes the final rule.
Response: Consistent with the position that we have taken in past
rulemaking, we continue to believe that applying our best estimates of
the three factors used in the calculation of uncompensated care
payments to determine payments prospectively is most conducive to
administrative efficiency, finality, and predictability in payments (78
FR 50628; 79 FR 50010; 80 FR 49518; 81 FR 56949; 82 FR 38195; 84 FR
42373; 85 FR 58833; 86 FR 45246; and 87 FR 49046). We continue to
believe that, in affording the Secretary the discretion to estimate the
three factors used to determine uncompensated care payments and by
including a prohibition against administrative and judicial review of
those estimates in section 1886(r)(3) of the Act, Congress recognized
the importance of finality and predictability under a prospective
payment system. As a result, we do not agree with the commenter's
suggestion that we should establish a process for reconciling our
estimates of uncompensated care payments, which would be contrary to
the notion of a prospective payment system. Furthermore, we note that
this rulemaking has been conducted consistent with the requirements of
the Administrative Procedure Act and Title XVIII of the Act. Under the
Administrative Procedure Act, a proposed rule is required to include
either the terms or substance of the proposed rule, or a description of
the subjects and issues involved. In this case, the FY 2024 IPPS/LTCH
PPS proposed rule included a detailed discussion of our proposed
methodology for calculating Factor 3 and the data that would be used.
We made public the best data available at the time of the proposed rule
to allow hospitals to understand the anticipated impact of the proposed
methodology and submit comments, and we have considered those comments
in determining our final policies for FY 2024.
After consideration of the comments received, we are finalizing our
proposal to follow the same methodology used in the FY 2023 IPPS/LTCH
PPS final rule to calculate Factor 3 for FY 2024 using data from the
most recent 3 years of audited cost reports from FY 2018, FY 2019, and
2020, based on the March 2023 HCRIS extract. In addition, we are
finalizing our proposal for determining the per-discharge amount of
interim uncompensated care payments with modification. Specifically,
for this FY2024 IPPS/LTCH PPS final rule, we calculated the per-
discharge amount of interim uncompensated care payments using the FY
2021 and FY 2022 discharge data.
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 conjunction with this final rule, we will publish on the CMS
website a table listing Factor 3 for hospitals that we estimate will
receive empirically justified Medicare DSH payments in FY 2024 (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
[[Page 59012]]
projected to be DSH-eligible, with a N/A in the Factor 3 column.
Hospitals had 60 days from the date of public display of the FY
2024 IPPS/LTCH PPS proposed rule in the Federal Register to review the
table and supplemental data file published on the CMS website in
conjunction with the proposed rule and to notify CMS in writing of
issues related to mergers and/or to report potential upload
discrepancies due to MAC mishandling of 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). In the
proposed rule, we stated that comments raising issues or concerns that
are specific to the information included in the table and supplemental
data file should be submitted by email to the CMS inbox at
[email protected]. We indicated that we would address comments
related to mergers and/or reporting upload discrepancies submitted to
the CMS DSH inbox as appropriate in the table and the supplemental data
file that we publish on the CMS website in conjunction with the
publication of the FY 2024 IPPS/LTCH PPS final rule. We also stated
that all other comments submitted in response to our proposed policies
for FY 2024 must be submitted in one of the three ways found in the
ADDRESSES section of the proposed rule before the close of the comment
period in order to be assured consideration. In addition, we noted that
the CMS DSH inbox is not intended for Worksheet S-10 audit process
related emails, which should be directed to the MACs.
Hospitals had 15 business days from the date of public display of
the FY 2023 IPPS/LTCH PPS final rule to review and submit via email any
updated information on mergers and/or to report upload discrepancies
(87 FR 49047). We did not receive comments during this notification
period regarding mergers or data upload issues. In the FY 2023 IPPS/
LTCH PPS final rule, we also noted that historical cost reports are
publicly available on a quarterly basis on the CMS website for analysis
and additional review of cost report data, separate from the
supplemental data file published with the annual final rule.
As we have stated in previous rulemaking (see, for example, 87 FR
49046 and 86 FR 45249), in the FY 2024 IPPS/LTCH PPS proposed rule (88
FR 27000), we stated our belief 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.
Therefore, for FY 2024 and subsequent fiscal years, we proposed to
discontinue the 15 business day period after display of the final rule
for hospitals to submit any updated information on mergers and/or to
report upload discrepancies, because there will have been sufficient
opportunity for hospitals to provide information on these issues during
the comment period for the proposed rule. We invited public comments on
this proposal.
Comment: One commenter expressed disagreement with the proposal to
discontinue the 15-day period for hospitals to notify CMS of any data
discrepancies after display of the final rule. This commenter asserted
that the proposal affects all hospitals, not only those with recent or
pending mergers. The commenter stated that the time period after the
final rule is an important opportunity to address errors and/or verify
the final rule's DSH Supplemental File.
Response: We appreciate this commenter sharing their concerns
regarding the proposal to discontinue the 15-day period following the
final rule. However, we believe the opportunity for providers to notify
CMS of discrepancies during the comment period on the proposed rule
affords a sufficient opportunity to address data discrepancies and
mergers. In addition, we note there is a policy for determining Factor
3 for hospitals that merge after the final rule's Factor 3 calculation
(i.e., newly merged hospitals during FY 2024). Accordingly, we are
finalizing our proposal to discontinue the notification period
following display of the final rule as proposed.
F. Counting Certain Days Associated With Section 1115 Demonstration in
the Medicaid Fraction
1. Background
Section 1886(d)(5)(F) of the Social Security Act (the Act) provides
for additional Medicare inpatient prospective payment system (IPPS)
payments to subsection (d) hospitals \208\ that serve a significantly
disproportionate number of low-income patients. These payments are
known as the Medicare disproportionate share hospital (DSH) adjustment,
and the statute specifies two methods by which a hospital may qualify
for the DSH payment adjustment.
---------------------------------------------------------------------------
\208\ Defined in section 1886(d)(1)(B) of the Act.
---------------------------------------------------------------------------
Under the first method, hospitals that are located in an
urban area and have 100 or more beds may receive a 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 method, 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 Indirect Medical Education (IME)
adjustment under Sec. 412.105(b).
Section 1115(a) of the Act gives the Secretary the authority to
approve a demonstration requested by a State which, ``in the judgment
of the Secretary, is likely to assist in
[[Page 59013]]
promoting the objectives of [Medicaid.]'' In approving a section 1115
demonstration, the Secretary may waive compliance with any Medicaid
State plan requirement under section 1902 of the Act to the extent and
for the period he finds necessary to enable the State to carry out such
project. The costs of such project that would not otherwise be included
as Medicaid expenditures eligible for Federal matching under section
1903 of the Act may be regarded as such federally matchable
expenditures to the extent and for the period prescribed by the
Secretary.
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 of people
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 Act. Therefore, we refer in
what follows to groups extended health insurance through a
demonstration as ``demonstration expansion groups.'')
2. History of 42 CFR 412.106(b)(4) and the Deficit Reduction Act of
2005
Prior to 2000, some States had chosen to only cover Medicaid
populations under their State plans when State plan coverage was
mandatory under the statute, and they did not provide State plan
coverage for populations for whom the statute made State plan coverage
optional. Instead, coverage for these optional State plan coverage
groups (as well as groups not eligible for even optional coverage)
could be provided through demonstrations approved under section 1115 of
the Act. We referred to these demonstration groups that could have been
covered under optional State plan coverage as ``hypothetical'' groups--
consisting of patients that could have been but were not covered under
a State plan, but that received the same or very similar package of
insurance benefits under a demonstration as did individuals eligible
for those benefits under the State plan. Many other States, however,
still elected to cover optional State plan coverage groups under their
Medicaid State plans instead of through a demonstration. In order to
avoid disadvantaging hospitals in States that covered such optional
State plan coverage groups under a demonstration, CMS developed a
policy of counting such hypothetical group patients in the numerator of
the Medicaid fraction of the Medicare DSH calculation (hereinafter, the
DPP Medicaid fraction numerator) as if those patients were eligible for
Medicaid.
Such demonstrations could also include individuals who could not
have been covered under a State plan, such as childless adults for
whom, at the time, State plan coverage was not mandatory under the
statute, nor was optional State plan coverage available. We refer to
these groups as ``expansion'' groups. Prior to 2000, CMS did not
include expansion groups in the DPP Medicaid fraction numerator, even
if individuals in that group received the same package of hospital
insurance benefits under a demonstration as hypothetical groups and
those eligible for Medicaid under the State plan.
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 expansion groups that received Medicaid-like benefits under a
section 1115 demonstration in calculating the Medicare DSH adjustment.
The policy adopted in the January 2000 interim final rule (65 FR 3136)
permitted hospitals to include in the DPP Medicaid fraction numerator
all patient days of groups made eligible for title XIX matching
payments through a 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). Speaking literally, neither expansion groups nor hypothetical
groups were in fact ``eligible for medical assistance under a State
plan''--meaning neither group was eligible for Medicaid benefits. But,
in CMS' view, certain section 1115 demonstrations introduced an
ambiguity into the DSH statute (section 1886(d)(5)(F)(vi) of the Act)
that justified including both hypothetical and expansion groups in the
DPP Medicaid fraction numerator. Specifically, CMS thought it
appropriate to count the days of individuals in these demonstration
groups because the demonstrations provided them the same or very
similar benefits as the benefits provided to Medicaid beneficiaries
under the State plan. As we explained in that rule (65 FR 3137),
allowing hospitals to include patient days for section 1115
demonstration expansion groups in the DPP Medicaid fraction numerator
is fully consistent with the Congressional goals of the Medicare DSH
payment adjustment to recognize the higher costs to hospitals of
treating low-income individuals covered under Medicaid. This policy was
effective for discharges occurring on or after January 20, 2000.
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 DPP
Medicaid fraction numerator. We explained that in allowing hospitals,
in our 2000 rulemaking, 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 hospital benefits, that are similar to the benefits
provided to Medicaid beneficiaries under a State plan. But within a few
years, we had become aware that certain section 1115 demonstrations
provided some expansion groups with benefit packages so limited that
the benefits were unlike the relatively expansive health insurance
(including insurance for inpatient hospital services) provided to
beneficiaries under a Medicaid State plan. Thus, we explained in the FY
2004 IPPS final rule 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 DPP Medicaid fraction numerator because the benefits granted to the
expansion group are too limited, and therefore, unlike the package of
benefits received as Medicaid benefits under a State plan. Our
intention in discussing family planning benefits provided under a
section 1115 demonstration was not to single out family planning
benefits, but instead to provide a concrete example of how the changes
being made in the FY 2004 IPPS final rule would refine the Secretary's
prior policy set forth in the January 2000 interim final rule (65 FR
3136). This refinement was to allow only the days of those
demonstration expansion groups who are provided benefits, and
specifically inpatient hospital benefits, equivalent to the
[[Page 59014]]
health care insurance that Medicaid beneficiaries receive under a State
plan, to be included in the DPP Medicaid fraction numerator. 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. [thinsp]412.106(b)(4)(i) to provide that
for purposes of determining the DPP Medicaid fraction numerator, 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 DPP Medicaid fraction numerator only if they are days of patients
made eligible for inpatient hospital services under either a State
Medicaid plan or a section 1115 demonstration, and who are not also
entitled to benefits under Medicare Part A.
In 2005, the United States Court of Appeals for 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 DPP Medicaid fraction numerator was contrary to the plain
language of the Act. Subsequently, the United States District Court for
the District of Columbia reached the same conclusion, reasoning that if
our policy after 2000 of counting the days of demonstration expansion
groups was correct, then patients in demonstration expansion groups
were necessarily ``eligible for medical assistance under a State plan''
(that is, eligible for Medicaid), and the Act had always required
including their days in the Medicaid fraction.
Shortly after these court decisions, in early 2006, Congress
enacted the Deficit Reduction Act of 2005 (the DRA) (Pub. L. 109-171,
February 8, 2006). Section 5002 of the DRA amended section
1886(d)(5)(F)(vi) of the Act to clarify the Secretary's discretion to
regard as eligible for Medicaid those not so eligible and to include in
or exclude from the DPP Medicaid fraction numerator demonstration days
of patients regarded as eligible for Medicaid. First, by distinguishing
between ``patients who . . . were eligible for medical assistance under
a State plan approved under subchapter XIX'' (that is, Medicaid) and
``patients not so eligible but who are regarded as such because they
receive benefits under a demonstration project,'' section 5002(a) of
the DRA clarified that groups that receive benefits through a section
1115 demonstration are not ``eligible for medical assistance under a
State plan approved under title XIX.'' This provision effectively
overruled the earlier court decisions that held that expansion groups
were made eligible for Medicaid under a State plan. Second, the DRA
stated ``the Secretary may, to the extent and for the period the
Secretary determines appropriate, include patient days of patients not
so eligible but who are regarded as such because they receive benefits
under a demonstration project approved under title XI.'' Thus, the
statute provides the Secretary the discretion to determine ``the
extent'' to which patients ``not so eligible'' for Medicaid benefits
``may'' be ``regarded as'' eligible ``because they receive benefits
under a demonstration project approved under title XI.'' Third, this
same language provides the Secretary with further authority to
determine the days of which patients regarded as being eligible for
Medicaid to include in the DPP Medicaid fraction numerator and for how
long.
Having provided the Secretary with the discretion to decide whether
and to what extent to include patients who receive benefits under a
demonstration project, Congress expressly ratified in section 5002(b)
of the DRA our prior and then-current policies on counting
demonstration days in the Medicaid fraction. As stated before, our pre-
2000 policy was not to include in the DPP Medicaid fraction numerator
days of section 1115 demonstration expansion groups unless those
patients could have been made eligible for Medicaid under a State plan
(the ``hypothetical'' groups). We changed that policy in 2000 to
include in the DPP Medicaid fraction numerator all patient days of
demonstration expansion groups made eligible for matching payments
under title XIX, regardless of whether they could have been made
eligible for Medicaid under a State plan. And for FY 2004, before the
DRA was enacted, CMS had further refined this policy and included in
the DPP Medicaid fraction numerator the days of only a small subset of
demonstration expansion group patients regarded as eligible for
Medicaid: those that were eligible to receive inpatient hospital
insurance benefits under the terms of a section 1115 demonstration.
Thus, by ratifying the Secretary's pre-2000 policy, the January 2000
interim final rule, and the FY 2004 IPPS final rule, the DRA further
established that the Secretary had always had the discretion to
determine which demonstration expansion group patients to regard as
eligible for Medicaid and whether or not to include any of their days
in the DPP Medicaid fraction numerator.
Because at the time the DRA was passed the language of Sec.
412.106(b)(4) already addressed the treatment of section 1115 days to
exclude some expansion populations that received limited health
insurance benefits through the demonstration, 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 from the
Medicaid fraction of the DSH calculation. We believed instead that the
language of Sec. 412.106(b)(4) reflected our view that only those
eligible to receive inpatient hospital insurance benefits under a
demonstration project could be ``regarded as'' ``eligible for medical
assistance'' under Medicaid. Thus, considering this history and the
text of the DRA, we understand the Secretary to have broad discretion
to decide (1) whether and the extent to which to ``regard as'' eligible
for Medicaid because they receive benefits under a demonstration those
patients ``not so eligible'' under the State plan, and (2) of such
patients regarded as Medicaid eligible, the days of which types of
these patients to count in the DPP Medicaid fraction numerator and for
what period of time to do so.
We do not believe that either the statute or the DRA permit or
require the Secretary to count in the DPP Medicaid fraction numerator
days of just any patient who is in any way related to a section 1115
demonstration. Rather, section 1886(d)(5)(F)(vi) of the Act limits
including days of expansion group patients to those who may be
``regarded as'' ``eligible for medical assistance under a State plan
approved under title XIX.''
3. Uncompensated/Undercompensated Care Funding Pools Authorized Through
Section 1115 Demonstrations
CMS's overall policy for including section 1115 demonstration days
in the DPP Medicaid fraction numerator has
[[Page 59015]]
rested on the presumption that the demonstration provided a package of
health insurance benefits that were essentially the same as what a
State provided to its Medicaid population. More recently, however,
section 1115 demonstrations have been used to authorize funding a
limited and narrowly circumscribed set of payments to hospitals. For
example, some section 1115 demonstrations include funding for
uncompensated/undercompensated care pools that help to offset
hospitals' costs for treating uninsured and underinsured individuals.
These pools do not extend health insurance to such individuals nor are
they similar to the package of health insurance benefits provided to
participants in a State's Medicaid program under the State plan.
Rather, such funding pools ``promote the objectives of Medicaid'' as
required under section 1115 of the Act, but they do so by providing
funds directly to hospitals, rather than providing health insurance to
patients. These pools help hospitals that treat the uninsured and
underinsured stay financially viable so they can treat Medicaid
patients.
By providing hospitals payment based on their uncompensated care
costs, the pools directly benefit those providers, and, in turn, albeit
less directly, the patients they serve. Unlike demonstrations that
expand the group of people who receive health insurance beyond those
groups eligible under the State plan and unlike Medicaid itself,
however, uncompensated/undercompensated care pools do not provide
inpatient health insurance to patients or, like insurance, make
payments on behalf of specific, covered individuals.\209\ In these
ways, payments from these pools serve essentially the same function as
Medicaid DSH payments under sections 1902(a)(13)(A)(iv) and 1923 of the
Act, which are also title XIX payments to hospitals meant to subsidize
the cost of treating the uninsured, underinsured, and low-income
patients and that promote the hospitals' financial viability and
ability to continue treating Medicaid patients. Notably, as numerous
Federal courts across the country have universally held, the patients
whose care costs are indirectly offset by such Medicaid DSH payments
are not ``eligible for medical assistance'' under the Medicare DSH
statute and are not included in the DPP Medicaid fraction numerator.
See, for example, Adena Regional Medical Center v. Leavitt, 527 F.3d
176 (D.C. Cir. 2008); Owensboro Health, Inc. v. HHS, 832 F.3d 615 (6th
Cir. 2016).
---------------------------------------------------------------------------
\209\ For more information on this distinction, as upheld by
courts, we refer readers to Adena Regional Medical Center v.
Leavitt, 527 F.3d 176 (D.C. Cir. 2008), and Owensboro Health, Inc.
v. HHS, 832 F.3d 615 (6th Cir. 2016).
---------------------------------------------------------------------------
We also note that demonstrations can simultaneously authorize
different programs within a single demonstration, thereby creating a
group of people the Secretary regards as Medicaid eligible because they
receive health insurance through the demonstration, while also creating
a separate category of payments that do not provide health insurance to
individuals, such as uncompensated/undercompensated care pools for
providers.
4. Recent Court Decisions and Rulemaking Proposals on the Treatment of
1115 Days in the Medicare DSH Payment Adjustment Calculation
Several hospitals challenged our policy of excluding uncompensated/
undercompensated care days and premium assistance days from the DPP
Medicaid fraction numerator, which the courts have recently decided in
a series of cases.\210\ These decisions held that the current language
of the regulation at Sec. 412.106(b)(4) requires CMS to count in the
DPP Medicaid fraction numerator patient days for which hospitals have
received payment from an uncompensated/undercompensated care pool
authorized by a section 1115 demonstration, as well as days of patients
who received premium assistance under a section 1115 demonstration.
Interpreting this regulatory language, which was adopted before the DRA
was enacted, two courts concluded that if a hospital received payment
for a patient's otherwise uncompensated inpatient hospital treatment,
that patient is ``eligible for inpatient hospital services'' within the
meaning of the current regulation, and therefore, their patient day
must be included in the DPP Medicaid fraction. Likewise, a court
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, and those patient days must be counted.
---------------------------------------------------------------------------
\210\ 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).
---------------------------------------------------------------------------
As discussed previously, it was never our intent when we adopted
the current language of the regulation to include in the DPP Medicaid
fraction numerator days of patients that benefitted so indirectly from
a demonstration. In the FY 2022 IPPS/LTCH PPS proposed rule (86 FR
25459) (hereinafter, the FY 2022 proposed rule), we stated that we
continued to believe, as we have consistently believed since at least
2000, that it is not appropriate to include patient days associated
with funding pools and premium assistance authorized by section 1115
demonstrations in the DPP Medicaid fraction numerator because the
benefits provided patients under such demonstrations are not similar to
Medicaid benefits provided beneficiaries under a State plan and may
offset costs that hospitals incur when treating uninsured and
underinsured individuals. In the FY 2022 proposed rule, we proposed to
revise our regulations to more clearly state that in order for an
inpatient day to be counted in the DPP Medicaid fraction numerator, the
section 1115 demonstration must provide inpatient hospital insurance
benefits directly to the individual whose day is being considered for
inclusion. 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 DPP Medicaid
fraction numerator. Because neither premium assistance nor
uncompensated/undercompensated care pools are inpatient hospital
insurance benefits directly provided to individuals, nor are they
comparable to the breadth of benefits available under a Medicaid State
plan, we stated that individuals associated with such assistance and
pools should not 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. Thus, they argued, those types of days should be included
in the DPP Medicaid fraction numerator. Following review of these
comments, in the final rule with comment period that appeared in the
December 27, 2021 Federal Register, which finalized certain provisions
of the
[[Page 59016]]
FY 2022 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 proposed rule, in the FY 2023 IPPS/LTCH PPS proposed rule (87 FR
28398) (hereinafter, the FY 2023 proposed rule), we proposed to 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 (1) receive health insurance authorized by a section
1115 demonstration or (2) patients who pay for all or substantially all
of the cost of 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 regarded as Medicaid eligible, we
proposed to use our discretion under the Act to include in the DPP
Medicaid fraction numerator only (1) the days of those patients who
obtained 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 (2) 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 in either case that the
patient is not also entitled to Medicare Part A (87 FR 28398 through
28402).
In the FY 2023 IPPS/LTCH PPS final rule (87 FR 49051), we noted
that the agency received numerous, detailed comments on our proposal.
We indicated that due to the number and nature of the comments that we
received, and after further consideration of the issue, we had
determined not to move forward with the FY 2023 proposal. We stated
that we expected to revisit the treatment of section 1115 demonstration
days for purposes of the DSH adjustment in future rulemaking (87 FR
49051).
In a proposed rule published in the Federal Register on February
28, 2023 (88 FR 12623), hereinafter referred to as the February 2023
proposed rule, we proposed revisions to our regulations on the counting
of days associated with individuals eligible for certain benefits
provided by section 1115 demonstrations in the Medicaid fraction of a
hospital's disproportionate patient percentage, as discussed in greater
detail below. We proposed the revised regulation would be effective for
discharges occurring on or after October 1, 2023.
5. Amendment to 42 CFR 412.106(b)(4)
Consistent with our interpretation of the Medicare DSH statute over
more than two decades and the history of our policy on counting section
1115 demonstration days in the DPP Medicaid fraction numerator set
forth in our regulations, considering the series of adverse cases
interpreting the current regulation, in light of what we proposed in
the FY 2022 and FY 2023 proposed rules and our consideration of the
comments we received thereon, and considering the comments we received
on the February 2023 proposed rule (88 FR 12623), we are amending the
regulation at Sec. 412.106(b)(4) as proposed. In order for days
associated with section 1115 demonstrations to be counted in the DPP
Medicaid fraction numerator, the statute requires those days to be of
patients who can be ``regarded as'' eligible for Medicaid. Accordingly,
and consistent with the proposed approach set forth in the FY 2023
proposed rule and with our longstanding interpretation of the statute
and as amended by the DRA, and with the current language of Sec.
412.106(b)(4), we are modifying our regulations to explicitly state our
long-held view that only 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 can be ``regarded
as'' eligible for Medicaid.
Similar to our statements in the FY 2023 and February 2023 proposed
rules, and in further considering the comments received regarding the
treatment of the days of patients provided premium assistance through a
section 1115 demonstration to buy health insurance, we are finalizing
our proposal that such patients can also be regarded as eligible for
Medicaid under section 1886(d)(5)(F)(vi) of the Act. Therefore, we are
finalizing our proposal for purposes of the Medicare DSH calculation in
section 1886(d)(5)(F)(vi) of the Act to ``regard as'' ``eligible for
medical assistance under a State plan approved under title XIX''
patients who (1) receive health insurance authorized by a section 1115
demonstration or (2) buy health insurance with premium assistance
provided to them under a section 1115 demonstration, where State
expenditures to provide the health insurance or premium assistance is
matched with funds from title XIX.
Furthermore, of these expansion groups we proposed to regard as
eligible for Medicaid, we are finalizing our proposal to include in the
DPP Medicaid fraction numerator only the days of those patients who
receive from the demonstration (1) health insurance that covers
inpatient hospital services or (2) premium assistance that covers 100
percent of the premium cost to the patient, which the patient uses to
buy health insurance that covers inpatient hospital services, provided
in either case that the patient is not also entitled to Medicare Part
A.
Finally, we are finalizing our proposed amendment of the regulation
to state specifically that patients whose inpatient hospital costs are
paid for with funds from an uncompensated/undercompensated care pool
authorized by a section 1115 demonstration are not patients ``regarded
as'' eligible for Medicaid, and the days of such patients may not be
included in the DPP Medicaid fraction numerator.
As discussed previously, we continue to believe it is not
appropriate to include in the DPP Medicaid fraction numerator days of
all patients who may benefit in some way from a section 1115
demonstration. First, we do not believe the statute permits everyone
receiving a benefit from a section 1115 demonstration to be ``regarded
as'' ``eligible for medical assistance under a State plan approved
under title XIX'' merely because they receive a limited benefit.
Second, even if the statute were so to permit, as discussed herein, the
Secretary believes the DRA provides him with discretion to determine
which patients ``not so eligible'' for Medicaid under a State plan may
be ``regarded as'' eligible. Thus, the Secretary is regarding as
Medicaid eligible only those patients who receive as ``benefits'' from
a demonstration health insurance or premium assistance to buy health
insurance, because--at root--``medical assistance under a State plan
approved under title XIX'' provides Medicaid beneficiaries with health
insurance, not simply medical care. Third, the DRA also gives the
Secretary the authority to decide which days of patients ``regarded
as'' Medicaid eligible to include in the DPP Medicaid fraction
numerator. Using this discretion, we are including only the days of
those patients who receive from a demonstration (1) health insurance
that covers inpatient hospital services or (2) premium assistance that
[[Page 59017]]
covers 100 percent of the premium cost to the patient, which the
patient uses to buy health insurance that covers inpatient hospital
services, provided in either case that the patient is not also entitled
to Medicare Part A.
We note this policy is a change from the proposal included in the
FY 2023 proposed rule, which would have required that the insurance
provide EHB and the premium assistance cover at least 90 percent of the
cost of the insurance. The feedback we received on that proposal from
interested parties included concerns regarding, among other issues, the
burden associated with verifying whether a particular insurance program
in which an individual was enrolled provided EHB, how to determine
whether a particular premium assistance program covered at least 90
percent of the cost of the insurance, and the difficulty in receiving
accurate information on those issues in a timely manner. In light of
this feedback, the rule we proposed in February 2023 and are now
finalizing maintains the policy established in the regulations at least
as far back as FY 2004 that days associated with individuals who obtain
health insurance from a demonstration that covers inpatient hospital
services be included in the DPP Medicaid fraction numerator. We do not
believe that it would be unduly difficult for providers to verify that
a particular insurance program includes inpatient benefits. (We refer
readers to section XII.B.2. of this final rule for more information on
the burden estimate associated with this final rule.) For those
individuals who buy health insurance covering inpatient hospital
services using premium assistance received from a demonstration, we
proposed and are finalizing that the premium assistance cover 100
percent of the individual's cost of the premium to be included in the
DPP Medicaid fraction numerator. Indeed, it may be difficult to
distinguish between patients who, on the one hand, receive through a
demonstration health insurance for inpatient hospital services or 100
percent premium assistance to purchase health insurance and patients
who, on the other hand, are eligible for medical assistance under the
State plan: all patients receive health insurance paid for with title
XIX funds, and all may be enrolled in a Medicaid managed care plan. In
the proposal, we stated that we also do not believe that it will be
difficult for providers to verify that a particular demonstration
covers 100 percent of the premium cost to the patient, as it is our
understanding that all premium assistance demonstrations currently meet
that standard. In other words, as a practical matter, if a hospital is
able to document that a patient is in a demonstration that explicitly
provides premium assistance, then that documentation would also
document that a patient is in a demonstration that covers 100 percent
of the individual's costs of the premium. We also stated in the
proposal that we believe our proposed standard of 100 percent of the
premium cost to the beneficiary is appropriate because it encapsulates
all current demonstrations as a practical matter. We also said that if
in the future there is a demonstration that explicitly provides premium
assistance that does not cover 100 percent of the individual's costs
for the premium, we may revisit this issue in future rulemaking.
As we have consistently stated, individuals eligible for medical
assistance under title XIX are eligible for, among other things,
specific benefits related to the provision of inpatient hospital
services in the form of inpatient hospital insurance. Because funding
pool payments to hospitals authorized by a section 1115 demonstration
do not provide health insurance to any patient, nor do the payments
inure to any specific individual, uninsured patients whose costs are
subsidized by uncompensated/undercompensated care pool payments to
hospitals do not receive benefits to the extent that or in a manner
similar to the full equivalent of ``medical assistance'' available to
those eligible under a Medicaid State plan. Uninsured or underinsured
individuals, whether or not they benefit from uncompensated/
undercompensated care pool payments to hospitals, do not have health
insurance provided by the Medicaid program. Thus, we continue to
believe that patients whose costs are associated with uncompensated/
undercompensated care pools may not be ``regarded as'' Medicaid-
eligible, and we are using the Secretary's discretion to not regard
them as such. Even if they could be so regarded and irrespective of
whether the Secretary has the discretion to not regard them as such,
the Secretary also is using his authority to not include the days of
such patients in the DPP Medicaid fraction numerator: Such patients
have not obtained insurance under the demonstration, and including all
uninsured patients associated with uncompensated/undercompensated care
pools could distort the Medicaid proxy in the Medicare DSH calculation
that is used to determine the low-income, non-senior population a
hospital serves.\211\ An uninsured patient who does not pay their
hospital bill (thereby creating uncompensated care for the hospital) is
not necessarily a low-income patient.
---------------------------------------------------------------------------
\211\ See, Becerra v. Empire Health Foundation, 142 S. Ct. 2354,
2358 (2022) (the Medicaid fraction counts the low-income, non-senior
population).
---------------------------------------------------------------------------
Accordingly, in this rule, we are finalizing our proposal to revise
our regulations at Sec. [thinsp]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''
``because they receive benefits under a demonstration project approved
under title XI'' in section 1886(d)(5)(F)(vi) of the Act to mean
patients provided health insurance benefits by a section 1115
demonstration. Specifically, we are finalizing our proposal to regard
as Medicaid eligible for purposes of the Medicare DSH payment
adjustment patients (1) who receive health insurance through a section
1115 demonstration itself or (2) who purchase health insurance with the
use of premium assistance provided by a section 1115 demonstration,
where State expenditures to provide the insurance or premium assistance
is matchable with funds from title XIX. In addition, even if the
statute would permit a broader reading, the Secretary is exercising his
discretion under section 1886(d)(5)(F)(vi) of the Act to ``regard as''
Medicaid eligible only those patients. Furthermore, whether or not the
Secretary has discretion to determine who is ``regarded as'' Medicaid
eligible, we are using the authority provided the Secretary to limit
the days of those section 1115 demonstration patients included in the
DPP Medicaid fraction numerator to only those of individuals who
receive from the demonstration (1) health insurance that covers
inpatient hospital services or (2) premium assistance that covers 100
percent of the premium cost to the patient, which the patient uses to
buy health insurance that covers inpatient hospital services, provided
in either case that the patient is not also entitled to Medicare Part
A. And we are finalizing our proposal to explicitly exclude from the
DPP Medicaid fraction numerator the days of patients with uncompensated
care costs for which a hospital is paid from a funding pool authorized
by a section 1115 demonstration project.
Finally, we are finalizing as proposed that our revised regulation
would be effective for discharges occurring on or after October 1,
2023. As has been our practice for more than two decades, we
[[Page 59018]]
have made our periodic revisions to the counting of certain section
1115 patient days in the Medicare DSH calculation effective based on
patient discharge dates. Doing so again here treats all providers
similarly and does not impact providers differently depending on their
cost reporting periods.
In developing the proposal we are finalizing, we considered
counting the days of patients in the DPP Medicaid fraction numerator
whose inpatient hospital costs are paid for with funds from an
uncompensated/undercompensated care pool authorized by a section 1115
demonstration. However, after consideration, as discussed in the
proposal and in greater detail herein, because of the Secretary's
interpretation of the statute and electing to exercise his discretion
for policy reasons, we did not propose to include counting in the DPP
Medicaid fraction numerator the days of patients whose inpatient
hospital costs are paid for with funds from an uncompensated/
undercompensated care pool authorized by a section 1115 demonstration.
We invited public comments with regard to our statutory interpretation
and our election to exercise the Secretary's authority discussed above,
as well as our proposal not to count in the DPP Medicaid fraction
numerator days of patients whose inpatient hospital costs are paid to
hospitals from uncompensated/undercompensated care pool funds
authorized by a section 1115 demonstration.
6. Responses to Comments on CMS 1788-P
In section II.E. of the February 2023 proposed rule (88 FR 12629-
12632), we addressed relevant comments the agency received on the
proposed rules for FY 2022 and FY 2023 on the treatment of certain 1115
days in the Medicare DSH payment adjustment calculation (86 FR 25459
and 87 FR 28398). We direct the reader to section II.E. of the February
2023 proposed rule to review those comments and responses.
The agency received several timely comments on the February 2023
proposed rule. Many commenters submitted comments similar or identical
to those that were submitted on the FY 2022 and FY 2023 proposals. Some
of the comments we received on the February 2023 proposed rule were out
of scope of the proposal. We will keep these comments in mind for
future rulemaking.
Comment: Several commenters argued that CMS is prohibited from
finalizing our proposed revisions with respect to days associated with
1115 demonstrations. Many of these commenters argued that section
1886(d)(5)(F)(vi) of the Act prohibits the Secretary from
distinguishing days of patients that receive any benefit at all under a
demonstration from patients made eligible under a demonstration for
health insurance coverage that includes inpatient hospital services. In
addition, many of these commenters also argued that two Federal appeals
courts have held that the statute requires all patients who are
``capable of receiving a demonstration project's helpful or useful
effect by reason of a demonstration project's authority'' be counted in
the Medicare DSH DPP Medicaid numerator, citing Forrest General
Hospital v. Azar, 926 F.3d 221 (5th Cir. 2019), and Bethesda Health,
Inc. v. Azar, 980 F.3d 121 (D.C. Cir. 2020). Some commenters argued
that CMS was prohibited from revising our regulations in light of these
court decisions and the decision in HealthAlliance Hospitals, Inc. v.
Azar, 346 F. Supp. 3d 43 (D.D.C. 2018).
Response: We thank commenters for their input but we continue to
believe that the language ``regarded as'' ``eligible for medical
assistance under a State plan approved under title XIX'' ``because they
receive benefits under a demonstration project approved under title
XI,'' in section 1886(d)(5)(F)(vi) of the Act, as amended by the
Deficit Reduction Act of 2005, Public Law 109-171, 120 Stat. 4, 31
(Feb. 8, 2006) (``DRA'') sec. 5002, means patients provided health
insurance by a section 1115 demonstration, because health insurance is
what patients covered under a Medicaid State plan receive under title
XIX.
As we explained in the FY 2023 proposed rule (87 FR 28108 and
28400) and reiterated again in the February 2023 proposed rule (88 FR
12623), we believe the statutory phrase ``regarded as such'' refers to
patients who are regarded as eligible for medical assistance under a
State plan approved under title XIX, and therefore, should be
understood to refer to patients who receive benefits that are most like
those that Medicaid-eligible patients get. Patients covered by a
Medicaid State plan receive a guarantee of payment for an extensive
list of medical services paid for with Medicaid funds--effectively
health insurance. In other words, for the purposes of Medicare DSH,
patients ``regarded as'' Medicaid-eligible under a demonstration are
people the Medicaid program treats as if they are eligible for Medicaid
because a demonstration approved under title XI provides them the same
or very similar benefits that Medicaid beneficiaries receive under the
State plan, and which are paid for with Medicaid funds. Patients who do
not receive the same or very similar benefits, but who might receive
from a demonstration a benefit that is not effectively health insurance
(such as receiving treatment at a hospital) are not ``regarded as''
Medicaid-eligible.
Moreover, we believe the DSH statute also provides the Secretary
the discretion to determine which patients to ``regard[ ] as''
``eligible for medical assistance under a State plan approved under
title XIX'' and to further determine, of those ``regarded as''
Medicaid-eligible, which patient days to include in the Medicare DSH
DPP Medicaid fraction numerator. Therefore, under the Secretary's
discretion, we are including in the DPP Medicaid fraction numerator
only patients regarded as eligible for Medicaid who are provided by a
section 1115 demonstration (1) health insurance that covers inpatient
hospital services or (2) premium assistance that covers 100 percent of
the premium cost to the patient, which the patient uses to buy health
insurance that covers inpatient hospital services, provided in either
case that the patient is not also entitled to Medicare Part A.
In amending the DSH statute in 2006, Congress in section 5002 of
the DRA provided the Secretary with: (1) authority to determine which
types of patients extended benefits through a section 1115
demonstration to regard as eligible for Medicaid; and (2) discretion to
count or not count in the DPP Medicaid fraction numerator days of
patients regarded as Medicaid-eligible. We know this because, as
discussed above, DRA section 5002(a) confirmed that (1) groups that
receive benefits through a section 1115 demonstration are not Medicaid-
eligible (meaning they do not receive benefits under a State plan), and
(2) the Secretary's pre-2000 policy of excluding expansion populations
from the DPP (like patients in Portland Adventist and Cookville \212\
who received the same benefits as Medicaid beneficiaries, only under a
demonstration) was proper under the DSH statute at the time (i.e., pre-
DRA amendments). Thus, section 5002(a) of the DRA effectively
overturned the Portland Adventist and Cookville cases that had held
demonstration expansion groups received Medicaid benefits under a State
plan. And by ratifying in DRA section 5002(b) the separate policies
adopted in rulemaking in
[[Page 59019]]
January 2000 and for FY 2004, in which the Secretary first included in
the DSH calculation all days of expansion groups and then later limited
the inclusion to only the days of expansion group patients receiving
coverage of inpatient hospital services, Congress affirmed that the
Secretary could determine the contours and limits of what it meant
under the amended statute for patients to be ``regarded as [Medicaid-
eligible] because they receive benefits under a demonstration project''
and the ``extent'' to which to include the days of those patients in
the DSH DPP Medicaid fraction numerator.
---------------------------------------------------------------------------
\212\ Portland Adventist Med. Ctr. v. Thompson, 399 F.3d 1091,
1096 (9th Cir. 2005); Cookeville Reg'l Med. Ctr. v. Thompson, 2005
U.S. Dist. LEXIS 33351, *18 (D.D.C. Oct. 28, 2005).
---------------------------------------------------------------------------
In light of this history, we believe that commenters' reliance on
the quotation from Portland Adventist, to say CMS ``has refused to
implement the DSH provision in conformity with the intent behind the
statute'' does not reflect the statute as amended and is therefore
incorrect. In amending the DSH statute in the DRA, Congress effectively
overturned Portland Adventist and clearly stated the authority the
Secretary has, and has always had, to determine whether a recipient of
benefits under a section 1115 demonstration may be regarded as
Medicaid-eligible and, if so, that the Secretary may decide whether to
include such patient day in the DPP Medicaid fraction numerator.
As earlier noted, Section 5002(b) of the DRA ratified CMS' January
2000 policy of including all demonstration expansion group days in the
DPP Medicaid fraction numerator as those that the Secretary regarded as
days of Medicaid-eligible patients. But Congress also ratified CMS' FY
2004 policy that narrowed the type of expansion days included in the
DPP Medicaid fraction numerator to only those of patients receiving
coverage of inpatient hospital services. In revising the DSH regulation
(42 CFR 412.106(b)(4)) for FY 2004, the agency noted that hospitals
were claiming days of patients in the DPP Medicaid fraction numerator
who were extended only limited benefits (like coverage for family
planning services) by a section 1115 demonstration. Thus, in amending
the DSH regulation for FY 2004 under the pre-DRA DSH statute, the
Secretary affirmed his view that a patient receiving such limited
benefits from a demonstration was not similar enough to a patient
eligible for Medicaid under a State plan to include the demonstration
patient's day in the DPP Medicaid fraction numerator. In other words,
the FY 2004 rule--the current regulation we are amending in this rule--
underscored the Secretary's belief that patients receiving only some
benefit provided by a demonstration, but not the more comprehensive
coverage provided under a Medicaid State plan, was not enough to regard
such patient as Medicaid-eligible and to count their patient days as
Medicaid days for purposes of the DSH calculation.
Moreover, by amending the DSH statute in DRA section 5002(a) to
explicitly permit the Secretary to consider certain demonstration days
as Medicaid days and include them in the DSH calculation, and by
ratifying in section 5002(b) the Secretary's policy of including only
demonstration days of patients provided select benefits (coverage of
inpatient hospital services), we disagree that the DSH statute requires
counting as Medicaid days in the DPP Medicaid fraction numerator all
days of patients merely ``considered or accounted to be capable of
receiving a demonstration project's helpful or useful effects,'' as
some commenters assert. Rather, the DSH statute, as amended by the DRA,
permits demonstration expansion groups to be ``regarded as'' Medicaid-
eligible only when they get benefits similar to those of State plan
beneficiaries; provides the Secretary with discretion to determine, in
the context of Medicare DSH calculations, whether populations that
receive benefits under a section 1115 demonstration are ``regarded as''
eligible for Medicaid; and likewise provides the Secretary further
discretion to determine ``the extent'' to which the days of those
regarded as Medicaid-eligible may be included in the Medicare DSH DPP
Medicaid fraction numerator. Therefore, considering our prior
rulemakings on this subject and Congress' intervention in enacting
section 5002 of the DRA, we disagree with commenters who read section
1886(d)(5)(F)(vi) of the Act to mandate that all days of patients who
may benefit in any way from a section 1115 demonstration must be
included in the DSH DPP Medicaid fraction numerator.
The text of the statute also confirms the Secretary's authority in
these respects. The statute clearly uses discretionary language. It
specifies that ``the Secretary may, to the extent and for the period
the Secretary determines appropriate, include patient days of patients
not so eligible but who are regarded as such because they receive
benefits under a demonstration project approved under title XI.'' As
the Supreme Court recently explained, ``may'' is quintessentially
discretionary language and has repeatedly emphasized that the use of
``may'' in a statute is intended to confer discretion rather than
establish a requirement.\213\ ``The use of the word `may' . . . thus
makes clear that . . . the Secretary `has the authority, but not the
duty.' '' Lopez v. Davis, 531 U.S. 230, 241 (2001). So, while the DSH
statute, section 1886(d)(5)(F)(vi)(II) of the Act, specifies the DPP
Medicaid fraction numerator includes the days of patients ``eligible
for medical assistance under a State plan approved under title XIX,''
(if they are not also entitled to Medicare Part A), the DRA provides
that the Secretary may include the days of those ``not so eligible''
(that is, patients not eligible for Medicaid). The additional clause
``to the extent and for the period the Secretary determines
appropriate'' provides even more evidence that Congress sought to give
the Secretary the authority to determine which ``patient days of
patients not so eligible [for Medicaid] but who are regarded as such''
to count in the DPP Medicaid fraction numerator. In other words, the
statute expressly contemplates that the Secretary may include the days
of patients who are not actually eligible for Medicaid under the State
plan but who the Secretary treats for all intents and purposes under a
section 1115 demonstration as if they were so eligible. But the statute
does not command that the Secretary must count such patients.
Accordingly, we disagree with commenters who stated that the statute
requires we count in the DPP Medicaid fraction numerator all patients
who benefit in any way from a demonstration. Rather, the plain reading
of the statute authorizes the Secretary to determine, as ``the
Secretary determines [is] appropriate,'' whether patients are regarded
as being eligible for Medicaid and, if so, ``the extent'' to which to
include their days in the DPP Medicaid fraction numerator. Moreover,
even if we are incorrect in interpreting the statute to give the
Secretary the authority to determine what patients may be ``regarded
as'' Medicaid-eligible, the statute still clearly provides the
Secretary authority to choose not to include all days of patients so
regarded under a demonstration.
---------------------------------------------------------------------------
\213\ See Opati v. Republic of Sudan, 140 S. Ct. 1601, 1609
(2020) (The Court has ``repeatedly observed'' that ``the word `may'
clearly connotes discretion.''). See also, for example, Weyerhaeuser
Co. v. United States Fish & Wildlife Serv., 139 S. Ct. 361, 371
(2018); Jama v. Immigration & Customs Enforcement, 543 U.S. 335, 346
(2005).
---------------------------------------------------------------------------
Some commenters disagreed with this position, suggesting that all
patients who benefit from a demonstration (e.g. even if they are
uninsured or do not receive 100 percent of their premium costs as
premium assistance from a demonstration) must be regarded as eligible
for Medicaid and included in the DPP Medicaid fraction numerator. While
it is true that courts have
[[Page 59020]]
interpreted the regulation we are replacing with the rule we are
finalizing in that manner, we note that the current regulation was
drafted prior to the enactment of DRA section 5002 and, therefore, the
regulation does not interpret the language the DRA added to the
Medicare statute, which, as we explain above and previously, gives the
Secretary wide discretion whether to consider demonstration days as
Medicaid-eligible days and whether to count them in the Medicaid
fraction. Our revised regulation uses the authority granted to the
Secretary under the DRA to not regard as eligible for Medicaid
individuals eligible for certain 1115 demonstration benefits; and in
the event they are ``regarded as'' Medicaid-eligible, the revised
regulation uses the authority granted the Secretary under the DRA to
not count their days in the DPP Medicaid fraction numerator.
Also, to the extent commenters read the Forrest General or Bethesda
cases as interpreting section 1886(d)(5)(F)(vi) of the Act to require
that any patient who benefits from an approved demonstration is
``regarded as'' eligible for Medicaid and required to be included in
the DPP Medicaid fraction, as their comments suggest, we respectfully
disagree with that reading of those cases. Rather, we believe the
better readings of Forrest General and Bethesda are that the courts
determined that days of any patient who is ``regarded as'' eligible for
medical assistance under the DSH regulation (which the courts found
uninsured patients to be because they received the ``benefit'' of
inpatient hospital services) must be included in the Medicaid fraction.
While, for the reasons already stated, we also disagree with the
courts' finding that uninsured patients can be ``regarded as'' eligible
for Medicaid under the current regulation, we nonetheless believe this
is the better reading of the courts' decisions and, indeed, is what has
led us to revising our regulations. The commenters' readings of these
cases cannot square the decisions with Congress' ratification in DRA
section 5002(b) of the Secretary's rulemakings that at first included
all demonstration days and then excluded many types of demonstration
days from the DPP Medicaid fraction numerator. Additionally, we do not
believe anything in the courts' decisions, or in the HealthAlliance
decision, limits the Secretary's authority to amend his own
regulations.
We believe that the revisions we have proposed are consistent with
the amended DSH statute and our authority provided thereunder and, for
the reasons stated above and in the February 2023 proposed rule, we
believe that days associated with uncompensated/undercompensated care
pools and premium assistance demonstrations which cover less than 100
percent of the costs of the premium to the patient should not be
included in the DPP Medicaid fraction numerator. We are finalizing the
proposed changes to the regulation in this rule to clarify who,
under1886(d)(5)(F)(vi) of the Act, as amended, the Secretary regards as
eligible for Medicaid because of benefits provided by a section 1115
demonstration and which patient days the Secretary will and will not
include in the Medicare DSH DPP Medicaid fraction numerator. We believe
that our revisions are consistent with the statute and our statutory
authority and are not precluded by the court decisions cited by the
commenters.
Comment: Some commenters argued that our proposal violated the
Administrative Procedure Act because it is arbitrary and capricious and
irrationally overbroad.
Response: For reasons we articulated both in the February 2023
proposed rule and above, we do not believe our proposal is arbitrary,
capricious or overbroad. We believe that our proposal conforms with the
DSH statute, as amended, and the authority given to the Secretary under
the Act as it relates to calculating a hospital's disproportionate
patient percentage.
Comment: Several commenters specifically objected to our proposal
to exclude from counting in the DPP Medicaid fraction numerator days
associated with uncompensated/undercompensated care funding pools
authorized by section 1115 demonstrations. These commenters argued that
patients whose hospital costs were paid for by a section 1115 funding
pool must be ``regarded as'' Medicaid-eligible under the statute
because such patients ``effectively'' receive insurance paid for with
Medicaid funds under section 1115 demonstrations. Thus, they assert,
these uninsured patients cannot reasonably be distinguished from
patients who receive insurance from the Medicaid program. Commenters
also asserted in the same vein that uninsured patients receive as
benefits from a demonstration's uncompensated/undercompensated funding
pool program inpatient hospital services that are the same inpatient
benefits that Medicaid beneficiaries receive because the inpatient care
they receive from hospitals is the same.
Response: We thank commenters for their input, however we
respectfully disagree with the factual predicates and the legal
conclusions of these assertions. First, we disagree with the
proposition that uninsured patients whose costs may be partially paid
to hospitals by uncompensated/undercompensated care pools effectively
have insurance which includes inpatient hospital benefits. Therefore,
we do not believe that these patients are indistinguishable from
Medicaid beneficiaries and expansion group patients who receive health
insurance under the State plan or demonstration, respectively, and
whose days the Secretary includes in the DPP Medicaid fraction
numerator. Uninsured patients, unlike Medicaid or expansion group
patients, do not have health insurance.
It is clear, insurance is beneficial to specific patients in ways
that uncompensated/undercompensated care pool payments to hospitals are
not or could not possibly be to such patients.\214\ Medicaid and other
forms of health insurance are not merely mechanisms of payment to
providers for costs of patient care: Health insurance provides a
reasonable expectation on the part of the insurance holder that they
can seek treatment without the risk of financial ruin. On the other
hand, hospitals may bill uninsured patients for the full cost of their
care and refer their medical debts to collection agencies when they are
unable to pay, even if some of their medical treatment costs may be
paid to the provider by an uncompensated/undercompensated care pool.
Thus, it remains the case that uninsured patients may avoid treatment
for fear of being unable to pay for it. For example, if two patients
receive identical care from a hospital that accepts government-funded
insurance, but one of them has insurance as a Medicaid beneficiary or
receives insurance through a section 1115 demonstration and, therefore,
is financially protected, while the other patient is uninsured and
spends years struggling to pay their hospital bill--even if the
hospital receives partial payment from a demonstration-authorized
uncompensated/undercompensated care pool for that patient's treatment--
the two patients have not received the same ``benefit'' from the
government or one that could
[[Page 59021]]
reasonably be ``regarded as'' comparable. This distinction between
insured and uninsured patients is meaningful in this context, and we
believe it is a sound basis on which to distinguish the treatment of
patient days in the DSH calculation of uninsured patients who may in
some way benefit from a section 1115 demonstration-authorized
uncompensated/undercompensated care pool and the days of patients
provided health insurance as a Medicaid beneficiary under a State plan
or through a demonstration as part of an expansion group.
---------------------------------------------------------------------------
\214\ See Health Insurance Coverage and Health--What the Recent
Evidence Tells Us (https://www.nejm.org/doi/pdf/10.1056/nejmsb1706645); Economic and Employment Effects of Medicaid
Expansion Under ARP Commonwealth Fund (https://www.commonwealthfund.org/publications/issue-briefs/2021/may/economic-employmenteffects-medicaid-expansion-under-arp). To be
clear, we mention these studies only in support of our assertion
that having health insurance is fundamentally different than not
having insurance.
---------------------------------------------------------------------------
Second, we also respectfully disagree with commenters who have
stated that uninsured patients whose costs may be paid to hospitals by
an uncompensated/undercompensated care pool receive the same benefits
as patients eligible for Medicaid because the inpatient hospital care
is likely the same for both groups. As stated above, within the meaning
of section 1886(d)(5)(F)(vi) of the Act, the ``benefits'' provided to
the individual by Medicaid and other forms of insurance a patient
receives is the promise of a payment made on behalf of a specific
patient to a provider of care for providing the care, not the care
itself the hospital provides. The provision of inpatient hospital
services and payment for such services are two distinct issues, and
because a hospital treats a patient presenting a need for medical care
does not indicate anything about whether or how the hospital may be
paid for providing that care. And, similarly, the fact that a
demonstration provides pool funding from which hospitals may be paid in
no way creates an obligation under the demonstration to provide
inpatient hospital care to any individual, nor does it create a
reasonable expectation on behalf of a specific individual that a
hospital must treat them or that such treatment will be paid for under
the demonstration. Thus, the similarity of care a patient may receive
and for which a hospital may receive some payment from a
demonstration's uncompensated/undercompensated care fund is irrelevant
to the question of whether the ``benefits'' provided a patient
``because'' of a demonstration may be ``regarded as'' something akin to
``medical assistance under a State plan approved under title XIX'' such
that the Secretary could choose to count that patient's day in the DPP
Medicaid fraction numerator. And even if hospitals that receive some
Medicaid funds to provide similar treatment to uninsured patients
permits or requires the Secretary to regard those patients as Medicaid-
eligible for DSH calculation purposes, the Secretary has still
rationally distinguished such patients from Medicaid-eligible patients
and is choosing not to count them in the DPP Medicaid fraction
numerator.
Comment: Some commenters argued that because partial payment of
costs by a demonstration's uncompensated/undercompensated care fund to
hospitals for the cost of treating uninsured/underinsured patients may
be ``medical assistance'' within the meaning of the Medicaid statute,
that the Medicare DSH statute requires the uninsured/underinsured
patient to be ``regarded as'' eligible for Medicaid and their patient
days included in the DPP Medicaid fraction numerator.
Response: We disagree with the conclusion that individuals who may
benefit from a demonstration's uncompensated/undercompensated care pool
payments to hospitals must be ``regarded as'' eligible for Medicaid
because those payments may be considered ``medical assistance'' under
the Medicaid statute and that their patient days must be included in
the DPP Medicaid fraction numerator. We believe this conclusion is
precluded in light of Congress' amendment of the DSH statute and its
ratification of the then-existing DSH regulation, which we are amending
through this rule.
As discussed above, Congress ratified the Secretary's FY 2004
regulation, which limited the agency's prior DSH policy of including in
the DSH DPP Medicaid fraction all expansion days authorized by a
section 1115 demonstration. In limiting the January 2000 regulation,
the agency determined a demonstration needed to extend coverage for
inpatient hospital services, one form of ``medical assistance'' (under
SSA section 1905(a)(1)), to individuals to include the days of such
patients in the DPP Medicaid fraction numerator. As an example of the
limitation promulgated in the FY 2004 rule, no longer would the
Secretary consider a demonstration's provision of coverage only for
family planning services sufficiently similar to the comprehensive
coverage Medicaid beneficiaries receive under a State plan. Thus,
despite family planning services being ``medical assistance'' under
section 1905(a)(4)(C) of the Act, the FY 2004 rulemaking precluded
including in the DPP Medicaid fraction numerator the days of patients
receiving only that limited ``medical assistance'' under a
demonstration because it was not similar enough to the medical
assistance benefits Medicaid-eligible patients received. Therefore, the
days of expansion group patients who only received coverage of this
particular type of medical assistance (family planning services) were
no longer included in the DSH DPP Medicaid fraction. Congress ratified
the FY 2004 regulation, thereby confirming that not every provision of
``medical assistance'' through a section 1115 demonstration constitutes
a ``benefit'' under the DSH statute that requires the Secretary to
regard the recipient as Medicaid-eligible and to include the patient
day in the DSH DPP Medicaid fraction. Thus, even if the ``benefit'' an
uninsured patient receives because a hospital is paid something under a
section 1115 demonstration for providing that patient inpatient
services could be considered ``medical assistance,'' the Secretary need
not regard that patient as Medicaid-eligible for DSH purposes or
include their patient day in the DPP Medicaid fraction numerator.
In keeping with this view, we continue to disagree with commenters
that our prior discussions of court cases like Adena Regional Medical
Center v. Leavitt, 527 F.3d 176 (D.C. Cir. 2008), and Owensboro Health,
Inc. v. HHS, 832 F.3d 615 (6th Cir. 2016), are irrelevant to this
discussion because those cases did not involve section 1115
demonstrations. We rely on these cases to refute the idea that the
provision of something beneficial--like the provision of inpatient
hospital services to the uninsured--even when paid for with Medicaid
funds, transforms those things into ``medical assistance'' or makes the
recipient of them ``eligible for medical assistance'' as those phrases
are used in the Medicaid statute. The Medicaid program can subsidize
the treatment of low-income uninsured patients without making those
individuals eligible for ``medical assistance.'' The phrase, ``eligible
for medical assistance under a state plan approved under title XIX'' is
a term of art that Congress uses to identify patients that are eligible
for Medicaid. As the D.C. Circuit put the point: ``Congress has,
throughout the various Medicare and Medicaid statutory provisions,
consistently used the words `eligible' to refer to potential Medicaid
beneficiaries and `entitled' to refer to potential Medicare
beneficiaries.'' Northeast Hospital Corp. v. Sebelius, 657 F. 3d 1, 12,
(D.C. Cir. 2011). Congress simply followed suit when referring to the
two programs in the Medicare DSH DPP provisions. Becerra v. Empire
Health Foundation, 142 S. Ct. 2354 (2022). Indeed, the Medicaid DSH
provision in section 1923 of the Act is a good example of how a
Medicaid state plan may subsidize the treatment of low-income,
uninsured patients without making those
[[Page 59022]]
individuals eligible for ``medical assistance'' as that phrase is used
in the Medicaid statute. The Courts of Appeals have repeatedly rejected
lawsuits that presented some variation of the argument that when
hospitals received Medicaid DSH payments--i.e., payments funded by
title XIX--because they incurred costs treating low-income uninsured
patients, it meant that the uninsured patients treated were thereby
rendered eligible for Medicaid (or received ``medical assistance'').
They were not. Likewise here, a subsidy approved under section 1115 to
hospitals for costs they incur in treating un- and under-insured
patients--i.e., in the form of title XIX payments from a section 1115-
approved uncompensated care fund--does not render the patients whose
cost may be covered in part by those payments eligible for ``medical
assistance.'' We therefore disagree with comments suggesting that
patients whose costs may be offset by demonstration-authorized pool
funding to hospitals receive ``medical assistance'' within the meaning
of the Medicare DSH provision at section 1886(d)(5)(F)(vi) of the Act
that would require the Secretary to regard such patients as eligible
for Medicaid and that those patients days must be included in the DPP
Medicaid fraction numerator.
Furthermore, even if uninsured patients could be regarded as
eligible for Medicaid, we would not include them in the DPP Medicaid
fraction numerator for policy reasons. The DPP is intended to be a
proxy calculation for the percentage of low-income patients a hospital
treats. Congress has defined the proxy to count in the Medicare
fraction the days of patients entitled to Medicare Part A and SSI; the
days of patients not entitled to Medicare but eligible for Medicaid are
counted in the Medicaid fraction. Thus, because Medicaid has never
covered everyone that could be considered low-income--for instance, it
generally did not cover low-income, childless adults before passage of
the Affordable Care Act--therefore not every low-income patient was
ever necessarily accounted for in the DPP Medicaid proxy. If we counted
all uninsured patients who could be said to have benefited from an
uncompensated/undercompensated care pool (whether low income patients
or not, because one need not be low-income to be uninsured and leave a
hospital bill unpaid), we could potentially include in the DPP proxy
not just all low-income patients in States with uncompensated/
undercompensated care pools, including those who have never been, and
in our view should not be accounted for int the DPP Medicaid proxy, but
also patients who are not low-income but who do not have insurance and
did not pay their hospital bill, who we also believe should not be
included in the DPP Medicaid fraction numerator. This would be a
distortion from how Congress intended the DSH calculation to work,
where the DPP is a proxy for the percentage of low-income patients that
hospitals serve based on patients covered by Medicare or Medicaid. We
note that in contrast to an individual who could afford but elects not
to buy insurance and lets bills go unpaid, an individual who receives
insurance coverage under Medicaid or a section 1115 demonstration, by
definition, must meet low-income standards.
Comment: Some commenters pointed out that in the recently approved
Texas demonstration, the Special Terms and Conditions of that program
only permit payment from the approved uncompensated/undercompensated
care pool for costs incurred providing medical services to uninsured
individuals as ``charity care'' and thus only the hospitals' costs of
patients ``who demonstrated financial need according to the provider's
charity care policy'' could be paid from such fund. They assert that
this undercuts the above rationale for exercising the Secretary's
discretion to exclude uncompensated/undercompensated care days from
inclusion in the DPP Medicaid fraction numerator.
Response: We respectfully disagree that the provision in the Texas
program undercuts our rationale. As stated above, we think the fact
that an individual is provided health insurance through Medicaid or a
demonstration is a salient and rational basis for distinguishing
individuals that should and should not count in the low-income proxy
that is the DPP Medicaid fraction numerator. Moreover, a policy that
incentivizes states to expand Medicaid eligibility by including in the
DPP Medicaid fraction numerator only the days of patients made eligible
for health insurance under a State plan or section 1115 demonstration
is sound policy. And while recognizing that the objectives of the
Medicaid program can be advanced through the approval of uncompensated/
undercompensated care pools in section 1115 demonstration programs
because they help keep hospitals financially viable to provide services
to Medicaid patients, these funding pools do not provide individuals
with a right to seek medical care or any guarantee that the cost of any
care will be made on their behalf. Thus, we continue to believe that
there is a rational basis to distinguish for Medicare payment purposes
days of uninsured patients from those who receive health insurance
coverage under a Medicaid State plan or section 1115 demonstration.
Also, counting all patients that may be ``capable of receiving a
demonstration project's helpful or useful effect by reason of a
demonstration project's authority'' in States with uncompensated/
undercompensated care pools could drastically and unfairly increase DSH
payments to hospitals located in States with those programs in
comparison to hospitals in States without them, even though the cost
burden on hospitals of treating low-income, uninsured patients might be
higher in States without uncompensated/undercompensated care pools,
precisely because they do not have uncompensated/undercompensated care
pools. The purpose ``of the DSH provisions is not to pay hospitals the
most money possible; it is instead to compensate hospitals for serving
a disproportionate share of low-income patients.'' \215\ We do not
believe that purpose would be furthered by regarding uninsured patients
associated with uncompensated/undercompensated care pool funding as if
they were patients eligible for Medicaid or counting them in the DPP
Medicaid fraction numerator.
---------------------------------------------------------------------------
\215\ Becerra v. Empire Health Found., 142 S. Ct. 2354, 2367
(2022) (emphasis added).
---------------------------------------------------------------------------
Thus, while we continue to believe that the statute does not permit
patients who might indirectly benefit from uncompensated/
undercompensated care pool funding to be ``regarded as'' eligible for
Medicaid, if the statute permits us to regard such patients as eligible
for medical assistance under title XIX, the statute also provides the
Secretary with the discretion to determine whether to do so. We are
electing to exercise the Secretary's discretion not to regard as
eligible for Medicaid patients that may indirectly benefit from
uncompensated/undercompensated funding pools. In any event, we believe
the statute also expressly provides the Secretary with the authority to
determine whether to include patient days of patients regarded as
eligible for Medicaid in the DPP Medicaid fraction numerator ``to the
extent and for the period'' that the Secretary deems appropriate. Thus,
we are also exercising the Secretary's discretion not to include in the
DPP Medicaid fraction numerator patient days of patients associated
with
[[Page 59023]]
uncompensated/undercompensated care pool payments.
Comment: Some commenters stated that because CMS does not have
evidence that uncompensated/undercompensated care pools are improperly
used, we lack the authority to exclude days associated with those
programs from the numerator of the Medicaid fraction.
Response: Our interpretation of the DSH statute and policy choices
we are finalizing in this rule to exclude counting patient days for
which hospitals are paid from demonstration-approved uncompensated/
undercompensated care pools is not based on any conclusion that such
funding mechanisms are being improperly used; and for the reasons
previously stated, we believe we have the authority to do so. To the
extent approved by a section 1115 demonstration, funding pools can play
a proper role in paying hospitals with title XIX funds for
uncompensated costs they incur treating un- and under-insured patients.
In doing so, these funding pools can further the objectives of the
Medicaid program, as required by section 1115 of the Act, by helping to
financially stabilize hospitals that serve Medicaid beneficiaries. We
do not, however, agree that the fact that demonstration funding pools
can be used properly under section 1115 of the Act requires us, under
section 1886(d)(5)(F)(vi) of the Act, to count days associated with
them in the DPP Medicaid fraction numerator. As we have stated,
individuals who have the cost of their care partially offset through
the use of uncompensated/undercompensated care pools do not receive
``medical assistance'' that is sufficiently similar to the benefits
individuals eligible for Medicaid receive under title XIX for us to
regard them as eligible for Medicaid for the purposes of Medicare DSH
or to count them in the DPP Medicaid fraction numerator, even if they
could be regarded as Medicaid eligible under the Medicare statute.
Comment: Many commenters objected to our proposal to exercise the
Secretary's discretion to limit including in the DPP Medicaid fraction
numerator days of patients who receive premium assistance under a
section 1115 demonstration to only the days of those patients receiving
such assistance that covers 100 percent of the premium cost to the
patient and that are used to buy health insurance for inpatient
hospital services. Some of these commenters stated that they believe
CMS has ignored the burden of this proposal on hospitals.
A commenter noted that CMS stated that ``if in the future there is
a demonstration that explicitly provides premium assistance that does
not cover 100 percent of the individual's costs for the premium,'' that
it ``may revisit this issue in future rulemaking.'' The commenter
asserted it is unclear who would furnish this data to hospitals or how
hospitals would obtain the patient-specific data that they would need
to prove eligibility for each patient under the proposed rule.
Therefore, the commenter believes that the proposed limitation on
counting patients receiving premium assistance pursuant to a section
1115 waiver is arbitrary and capricious.
Another commenter stated that CMS does not adequately consider the
undue burden on hospitals to obtain the information necessary to
document these proposed requirements for each patient whose patient
days the hospital is seeking to include. Another commenter noted that
CMS's existing regulation at Sec. 412.106(b)(4)(iii) requires
providers ``of furnishing data adequate to prove eligibility for each
Medicaid patient day.'' The commenter believes that the proposal would
place an undue burden on hospitals to be able to count days associated
with section 1115 premium assistance programs. The commenter also noted
that CMS did not address adequately how hospitals are supposed to
determine how much specific patients are paying in premiums to their
private health plans or how much the premium assistance under the
demonstration is funding for those patients. The commenter was also
concerned that CMS has not clarified how hospitals would determine if
the 100 percent threshold is met, thus potentially putting at risk even
those waiver days that could qualify. The commenter also noted that if
all the waiver programs already satisfy the standard of 100 percent of
the individual's costs of the premium, it is unclear why CMS needs a
new regulation to carve out premium assistance programs that do not
even exist.
Response: As we explained both herein and in our proposal, we
believe that premium assistance that covers 100 percent of the costs of
the premium to the patient, used to purchase health insurance coverage
of inpatient hospital services is the level and type of benefit that is
most similar to the benefits provided by the Medicaid program under
title XIX of the Act--namely, health insurance that covers inpatient
hospital benefits. Therefore, because this threshold of premium
assistance to buy health insurance covering inpatient services provides
the same benefit to individuals as Medicaid beneficiaries receive,
albeit obtained through a slightly different mechanism, we believe it
is an appropriate threshold to distinguish between individuals we will
count for the purposes of calculating Medicare DSH and those we will
not. Thus, we are choosing to not include in the DPP Medicaid fraction
numerator the days of patients who buy insurance with demonstration-
authorized premium assistance that accounts for less than 100 percent
of their premium costs because the benefit the government is providing
is not similar enough to that which Medicaid-eligible beneficiaries
receive. Additionally, we disagree with the commenters who believe that
we have ignored the burden of this proposal on providers. In our
February 2023 proposal, we stated that it was our understanding that
all states with current 1115 premium assistance demonstration programs
provide 100 percent premium assistance to individuals; and based on
this understanding we quantified as best we could that it would cost
310 hospitals a total of approximately $18,350,169 annually to
determine whether a patient received under a demonstration's premium
assistance program 100 percent of the cost of their premium for
inpatient hospital services coverage (88 FR 12632). While commenters
may disagree as to the accuracy of our estimate, we believe that our
estimate was reasonable and demonstrates that the burden to providers
was not ignored.
We are unsure why some commenters have significant concerns with
verifying an individual's section 1115 eligibility and the amount of
premium assistance when hospitals are already communicating with their
state Medicaid office to verify an individual's eligibility. We do not
understand why it is unclear who would furnish this data to hospitals
or how hospitals would obtain the patient-specific data that they would
need to prove eligibility for each patient under the proposed premium
assistance rule. The states have this information as part of the
section 1115 demonstration requirements. Finally, as a commenter
recognizes, it remains the hospitals' burden to furnish data adequate
to prove eligibility for each Medicaid patient day it claims in the DPP
Medicaid fraction numerator, and we believe that the state will
continue to be able to furnish hospitals with the eligibility data
necessary for the hospitals to do so.
We note, as discussed below, since our proposal it has come to our
attention that, in addition to the current
[[Page 59024]]
1115 demonstrations that all provide 100 percent premium assistance to
at least some individuals, at least one demonstration--Massachusetts'
discussed in more detail below--also provides a sliding scale of
premium assistance to other individuals, dependent on their income
levels. Therefore, we are revising our burden estimate accordingly, as
discussed in more detail below in section XII.B.2. of this final rule.
Comment: One commenter stated that the proposed requirement that
premium assistance fund 100 percent of an individual's health insurance
premium to have that patient's inpatient hospital day included in the
DPP Medicaid fraction numerator ``will complicate and negate the
counting of certain Medicaid patients.'' This commentator asserts that
the Massachusetts 1115 demonstration provides premium assistance to
enrollees in the state's Medicaid program (MassHealth), including those
who have access to employer-sponsored health insurance (ESI), and to
other non-Medicaid-eligible residents who purchase health insurance in
the state's health insurance exchange (Health Connector). They claim
setting the threshold at 100 percent of the patient's premium costs may
cause an increased burden on Massachusetts and the state's providers to
determine which patients receive 100 percent premium assistance.
Response: We acknowledge the commenter appears concerned that, by
finalizing the premium assistance proposal, Medicaid enrollees made to
participate in the MassHealth premium assistance program, where some
enrollees may be responsible for paying a small portion of premiums,
would not be counted in the DPP Medicaid fraction numerator. We
believe, however, that concern is unfounded. Under our proposal, the
days of such Medicaid enrollees would be counted in the DPP Medicaid
fraction numerator (assuming such enrollees are not also entitled to
Medicare Part A), notwithstanding some small premium cost sharing
required of the enrollees. As described by the commenter, these
individuals are Medicaid enrollees under the State plan; the fact that
the Secretary has approved a section 1115 demonstration for
Massachusetts to leverage available ESI with premium assistance does
not change the nature of an individual's status as a Medicaid enrollee
under the State plan, and their Medicaid patient days, as they have
always been, will continue to be included in the DPP Medicaid fraction
numerator as a Medicaid day (assuming these enrollees are not also
entitled to Medicare Part A). The requirement that the demonstration
cover 100 percent of the cost of the premium to the patient only
applies to individuals who are not eligible for Medicaid under the
State plan.
We also disagree that our premium assistance proposal will
unreasonably burden hospitals or the state in determining which days of
patients who receive premium assistance through an 1115 demonstration
may properly be included in the DPP Medicaid fraction numerator. To the
extent a hospital seeks to include a day in the DPP Medicaid fraction
of a Medicaid enrollee who receives premium assistance to purchase ESI,
we are not aware why the hospital would bear any greater burden to
determine such patient's Medicaid-enrollee status than if such patient
did not receive premium assistance. These patients are entitled to
Medicaid under the State plan and should therefore be identifiable in
any Medicaid eligibility system a state already maintains. Nothing in
the comments we received suggests otherwise.
This commenter also notes that Massachusetts's section 1115
demonstration provides premium assistance to other, non-Medicaid-
eligible individuals, and that while the premium assistance covers 100
percent of the patient's premium costs for some low-income individuals,
others must contribute to the cost of their premiums depending on their
income level and health plan choice. The commenter is concerned because
they do not believe that current eligibility systems would inform
hospitals whether an enrollee in the state's health exchange had their
premium entirely covered or only partially covered with premium
assistance provided through the demonstration, and thus, hospitals
would be burdened with attempting to obtain this information, which may
not be possible unless the state were to modify its own systems that
communicate with providers.
While we acknowledge that the premium assistance policy we are
finalizing will lead to an increased burden on Massachusetts and
providers in that state to identify which non-Medicaid-eligible
patients have received premium assistance that covers 100 percent of
their premium costs for that patient day to be included in the DPP
Medicaid fraction, we do not believe that the burden involved is
unreasonable. The commenters did not provide any supporting information
as to the extent of the burden or why they believe it would be
unreasonable for Massachusetts or hospitals in that state to bear such
burden.
While one commenter did point to a quotation in our proposed rule
to support the difficulty in obtaining the required information, we
believe that this quote has been misunderstood by the commenter. The
commenter quotes our proposal as ``CMS notes it may be difficult for
hospitals to distinguish between patients with premium assistance paid
for by Medicaid from patients who are otherwise covered by Medicaid
through fee-for-service or managed care.'' In the proposal (88 FR
12628), we stated in the context of acknowledging a change in our
premium assistance proposal from the FY 2023 proposed rule, which would
have required premium assistance that covered at least 90 percent of
the cost of the patient's premium for EHB coverage to be included in
the DPP Medicaid fraction numerator, that the February 2023 proposal
would require premium assistance to cover 100 percent of the patient's
premium cost for inpatient hospital coverage to count. As a basis for
changing our proposal, we said, ``Indeed, it may be difficult to
distinguish between patients who, on the one hand, receive through a
demonstration health insurance for inpatient hospital services or 100
percent premium assistance to purchase health insurance and patients
who, on the other hand, are eligible for medical assistance under the
State plan: all patients receive health insurance paid for with title
XIX funds, and all may be enrolled in a Medicaid managed care plan.''
Our point here was to show that those patients who receive under a
demonstration 100 percent premium assistance to buy health insurance
that provides inpatient hospital coverage look very similar to patients
who receive health insurance under either a demonstration or a Medicaid
State plan, thereby establishing why we have chosen to ``regard as''
Medicaid-eligible such premium assistance recipients and to count their
patient days in the Medicare DSH DPP Medicaid numerator fraction. The
proposal language the commenter noted was not a statement about the
ease or difficulty a hospital may have in determining which patients
receive--either under a State plan or 1115 demonstration--health
insurance or premium assistance that covers 100 percent of a patient's
premium costs for insurance coverage of inpatient hospital services.
We do not believe it will be unreasonably difficult for providers
to obtain from the state information on whether certain non-Medicaid-
eligible patients qualify through the demonstration to receive premium
[[Page 59025]]
assistance that covers 100 percent of the cost of their premium for
insurance that covers inpatient hospital services. The current
Massachusetts section 1115 demonstration provides premium assistance of
100 percent of the cost of premiums to individuals making 150 percent
or less of the Federal Poverty Level (FPL), and it provides a sliding
scale of premium assistance to non-Medicaid-eligible residents whose
income levels range from above 150 percent to over 1,000 percent FPL.
(See MassHealth Medicaid and CHIP Section 1115 Demonstration (Project
Number 11-W-00030/1 and 21-00071/1), Special Terms and Conditions
(STCs), attachment C (Cost Sharing), https://www.medicaid.gov/medicaid/section-1115-demonstrations/downloads/ma-masshealth-ca-demstrtn-aprvl-05192023.pdf.) As stated in the September 28, 2022 Massachusetts
Demonstration Extension Approval Letter, ``to evaluate the impact of
the premium policy, the Commonwealth must continue to assess
beneficiary access to and utilization of health care services,
enrollment continuity, number and frequency of coverage gaps, and
beneficiary experiences with care.'' Therefore, to comply with the
terms of the section 1115 demonstration, Massachusetts can reasonably
be expected to have information on the patients extended premium
assistance through the demonstration, including patients' income levels
relative to FPL and thus the level of premium assistance each patient
receives, and to be able to provide that information to hospitals. See
https://www.medicaid.gov/medicaid/section-1115-demonstrations/downloads/ma-masshealth-ca1.pdf, page 14. We believe that, because the
state already collects the information hospitals would need to
determine which individuals receive 100 percent premium assistance for
insurance coverage of inpatient hospital services, there should be no
significant hurdle to hospitals obtaining this information from the
state.
Comment: One commenter noted that in the proposal, CMS listed a
number of states the agency believed to have a section 1115
demonstration that may be affected by the premium assistance proposal,
and that this list did not include Indiana. The commenter agreed that
Indiana is not among those states that operate such a demonstration.
Another commenter noted that Connecticut was not among the states
listed as having a section 1115 premium assistance program and
requested clarification that the Connecticut program would qualify.
Response: We appreciate the commenter's thoughts on Indiana's 1115
premium assistance demonstration as it might relate to the proposal we
are finalizing; we agree with the commenter that Indiana does not
currently operate a section 1115 premium assistance demonstration that
would be affected by the rule we proposed and are finalizing.
With respect to Connecticut, we agree with the commenter that
individuals eligible for premium assistance under the current
demonstration (which was approved subsequent to the issuance of the
NPRM) would be ``regarded as'' eligible for Medicaid under the
revisions to our regulations and included in the DPP Medicaid numerator
(if not also entitled to Medicare Part A) because the demonstration
covers 100 percent of the costs of the premium to individuals eligible
for it. We note, however, that should the Connecticut program, or any
other currently approved premium assistance program authorized under
section 1115 of the Act, be revised or approved in the future so that
premium assistance under the demonstration does not cover 100 percent
of the costs of the premium to the individual or does not cover 100
percent of the costs of the premium for all individuals eligible for
it, only the days of those individuals for whom the demonstration
covers 100 percent of the cost of the premium to the individuals may be
included in the DPP Medicaid fraction numerator under our revised
regulations. We have added Connecticut to the list of states in the
final rule that currently operate premium assistance programs
authorized by section 1115 of the Act.
Comment: Some commenters suggested that the Secretary cannot
finalize either the uncompensated/undercompensated care days policy or
the premium assistance policy we proposed and apply them to currently
approved demonstrations because of providers' reliance interests. They
argue once the Secretary approves a section 1115 demonstration ``for
purposes of the Medicaid program,'' it cannot exclude patient days
attributable to such demonstration ``for purposes of the Medicare DSH
patient percentage.'' They argue for the Secretary to do so would
constitute a ``take back'' and has no basis in the text of the Medicare
statute. In the alternative, some commenters stated that even if CMS
had the authority to finalize the proposal with respect to currently
approved demonstrations, we should not or specifically requested that
we not.
Response: We respectfully disagree with the commenters'
interpretation of the statute and the effects of finalizing this rule.
As stated above, we believe the Medicare statute provides the Secretary
with the discretion to determine what patients may be ``regarded as''
Medicaid-eligible for purposes of being counted in the Medicare DSH DPP
Medicaid fraction numerator and whether to include therein any or which
days of patients so regarded. The Medicaid statute, section 1115(a) of
the Act, separately provides the Secretary with the authority to
authorize Medicaid demonstrations that waive Medicaid requirements and
provide expenditure authority to states to incur costs not permitted
under a State plan so that states may experiment with ways of using
Medicaid funds to ``assist in promoting the objective of'' the Medicaid
program. Thus, the Medicare DSH policies finalized here will not change
the terms of any current demonstration or the calculations of Medicaid
payments made thereunder. Therefore, by going through this notice and
comment rulemaking to clarify our Medicare regulation (42 CFR
412.106(b)(4)) on the treatment of section 1115 patient days in the
calculation of Medicare DSH payment adjustments, the Secretary is not
``taking back'' any Medicaid payments that hospitals or states might
otherwise be entitled to under an approved Medicaid section 1115
demonstration. Nor does finalizing this prospective rule unsettle any
legitimate reliance interest the hospitals may otherwise have in future
Medicare DSH payment adjustments. With respect to the argument that CMS
should not finalize the proposal with respect to currently approved
demonstrations, for the reasons explained more fully in our February
2023 proposed rule and herein, we believe that, assuming CMS has the
discretion to ``regard'' uninsured individuals as eligible for Medicaid
(which we do not believe we can), we believe that the better policy is
to exclude their days from the DPP Medicaid fraction numerator and to
also exclude days of those receiving premium assistance that is less
than 100 percent of the cost of their premiums for inpatient health
insurance.
Comment: Some commenters state the proposed changes will have
serious financial ramifications for hospitals at a time the hospitals
can least afford it. Specifically, commenters raised the financial
hardships hospitals have been experiencing over the last few years due
to the Covid-19 pandemic, recent inflationary cost pressures, and other
causes of financial strain, to suggest that reductions in DSH payments
that may result from finalizing this proposal are
[[Page 59026]]
``reason alone'' the proposal should be withdrawn. Some of these
commenters expressed concern that the proposal would have a negative
effect on health equity in general and safety net hospitals
specifically. Other commenters expressed concern that the proposed
changes to our regulations would make it more difficult for hospitals
to participate in the 340B Program.
Response: We appreciate the points the commenters raise and are
sympathetic to the financial hardships faced by many hospitals and
acknowledge that the proposed revisions to the regulations affect the
calculation of the disproportionate patient percentage, which in turn
affects the DSH adjustment, and that a certain DSH adjustment threshold
is statutorily required for participation in the 340B Program as well
as the unique concerns of safety net hospitals, and health equity
remains an important goal of the Secretary. We note, however, as
described above, that the Secretary is constrained by the statute as to
which patients can be regarded as eligible for Medicaid under a
demonstration, even though they are not actually Medicaid-eligible, and
therefore whether such patient days may be included in the DPP Medicaid
fraction numerator in calculating any DSH payment adjustment. And even
if the statute does not require the Secretary to exclude from the DPP
Medicaid fraction days of uninsured patients whose hospital care is
paid to hospitals from uncompensated/undercompensated care pools or
days of patients who receive less in premium assistance than 100
percent of their premium costs to purchase health insurance that covers
inpatient hospital care, the Secretary believes that these parameters
best further the goals of the Medicare DSH payment adjustment, which is
to pay hospitals extra for treating a disproportionate share of low
income patients. Additionally, maximizing the size of Factor 1 or the
number of hospitals that qualify for HRSA's 340B Program is neither
required by the Medicare statute nor an appropriate policy goal of
Medicare DSH policy. As the Supreme Court recently said, the purpose
``of the DSH provisions is not to pay hospitals the most money
possible; it is instead to compensate hospitals for serving a
disproportionate share of low-income patients.'' \216\ To the extent
hospitals may be suffering financially because of the COVID-19
pandemic, recent inflationary cost pressures, and other causes of
financial strain, the commenters have not demonstrated whether or how
such strains have had the effect of causing hospitals to treat a
disproportionate share of low-income patients, and therefore it is
beyond the boundaries of this rule to address such financial strain.
---------------------------------------------------------------------------
\216\ Becerra v. Empire Health Found., 142 S. Ct. 2354, 2367
(2022) (emphasis added).
---------------------------------------------------------------------------
By using our discretion to regard as Medicaid eligible for purposes
of the DPP Medicaid fraction numerator only the days of demonstration
patients for which the demonstration provides health insurance or
premium assistance to purchase health insurance, and to only include
the days of those patients that receive from a demonstration health
insurance for inpatient hospital services or premium assistance to buy
inpatient hospital insurance, where the premium assistance accounts for
100 percent of the premium cost to the patient, we believe we are
acting in accordance with Congress' intent to count some, but not
necessarily all, low-income patients in the proxy.
For the reasons stated previously, the DRA's ratification of the
Secretary's prior regulations on including or excluding demonstration
group patient days from the DPP Medicaid numerator also supports the
Secretary having the discretion to exclude days of uninsured patients
and patients that do not receive health insurance for inpatient
hospital services, and for those receiving premium assistance, where
the assistance is less than 100 percent of the premium cost to the
patient. By ratifying the Secretary's prior regulation that explicitly
stated that our intent was to include in the fraction only the days of
those that most looked like Medicaid-eligible patients, the limits we
are proposing here fully align with Congress's amendment of the
statute.
In summary, we proposed 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'' ``because they receive benefits under a
demonstration project approved under title XI'' in section
1886(d)(5)(F)(vi) of the Act to mean patients (1) who receive health
insurance through a section 1115 demonstration itself or (2) who
purchase health insurance with the use of premium assistance provided
by a section 1115 demonstration, where State expenditures to provide
the insurance or premium assistance may be matched with funds from
title XIX. Alternatively, we proposed exercising the discretion the
statute provides the Secretary to limit to those two groups the
patients the Secretary ``regard[s] as'' ``eligible for medical
assistance under a State plan'' ``because they receive benefits under a
demonstration.'' Moreover, using the Secretary's authority to determine
the days of which demonstration groups ``regarded as'' Medicaid
eligible to include in the DPP Medicaid fraction numerator, we proposed
that only the days of those patients who receive from the demonstration
(1) health insurance that covers inpatient hospital services or (2)
premium assistance that covers 100 percent of the premium cost to the
patient, which the patient uses to buy health insurance that covers
inpatient hospital services, are to be included, provided in either
case that the patient is not also entitled to Medicare Part A. Finally,
we proposed exercising the Secretary's discretion to not regard as
Medicaid-eligible patients whose costs are paid to hospitals from
uncompensated/undercompensated care pool funds authorized by a section
1115 demonstration; and we similarly proposed exercising the
Secretary's authority to exclude the days of such patients from being
counted in the DPP Medicaid fraction numerator, even if those patients
could be ``regarded as'' ``eligible for medical assistance under a
State plan authorized by title XIX.'' Thus, we proposed explicitly
excluding from counting in the DPP Medicaid fraction numerator any days
of patients for which hospitals are paid from demonstration-authorized
uncompensated/undercompensated care pools.
Finally, we proposed our revised regulation would be effective for
discharges occurring on or after October 1, 2023. As has been our
practice for more than two decades, we have made our periodic revisions
to the counting of certain section 1115 patient days in the Medicare
DSH calculation effective based on patient discharge dates. Doing so
again here treats all providers similarly and does not impact providers
differently depending on their cost reporting periods.
For all the reasons stated in the February 2023 proposal and
herein, after considering the comments received on this proposal, we
are finalizing the rule as proposed. We are making some minor
formatting changes to the regulation text to conform to the Office of
Federal Register Document Drafting Handbook. See regulations text which
appears at the end of this of final rule.
[[Page 59027]]
V. Other Decisions and Changes to the IPPS for Operating System
A. Changes to MS-DRGs Subject to Postacute Care Transfer Policy and MS-
DRG Special Payments Policies (Sec. 412.4)
1. Background
Existing regulations at 42 CFR 412.4(a) define discharges under the
IPPS as situations in which a patient is formally released from an
acute care hospital or dies in the hospital. Section 412.4(b) defines
acute care transfers, and Sec. 412.4(c) defines postacute care
transfers. Our policy set forth in Sec. 412.4(f) provides that when a
patient is transferred and his or her length of stay is less than the
geometric mean length of stay for the MS-DRG to which the case is
assigned, the transferring hospital is generally paid based on a
graduated per diem rate for each day of stay, not to exceed the full
MS-DRG payment that would have been made if the patient had been
discharged without being transferred.
The per diem rate paid to a transferring hospital is calculated by
dividing the full MS-DRG payment by the geometric mean length of stay
for the MS-DRG. Based on an analysis that showed that the first day of
hospitalization is the most expensive (60 FR 45804), our policy
generally provides for payment that is twice the per diem amount for
the first day, with each subsequent day paid at the per diem amount up
to the full MS-DRG payment (Sec. 412.4(f)(1)). Transfer cases also are
eligible for outlier payments. In general, the outlier threshold for
transfer cases, as described in Sec. 412.80(b), is equal to the fixed-
loss outlier threshold for nontransfer cases (adjusted for geographic
variations in costs), divided by the geometric mean length of stay for
the MS-DRG, and multiplied by the length of stay for the case, plus 1
day.
We established the criteria set forth in Sec. 412.4(d) for
determining which DRGs qualify for postacute care transfer payments in
the FY 2006 IPPS final rule (70 FR 47419 through 47420). The
determination of whether a DRG is subject to the postacute care
transfer policy was initially based on the Medicare Version 23.0
GROUPER (FY 2006) and data from the FY 2004 MedPAR file. However, if a
DRG did not exist in Version 23.0 or a DRG included in Version 23.0 is
revised, we use the current version of the Medicare GROUPER and the
most recent complete year of MedPAR data to determine if the DRG is
subject to the postacute care transfer policy. Specifically, if the MS-
DRG's total number of discharges to postacute care equals or exceeds
the 55th percentile for all MS-DRGs and the proportion of short-stay
discharges to postacute care to total discharges in the MS-DRG exceeds
the 55th percentile for all MS-DRGs, CMS will apply the postacute care
transfer policy to that MS-DRG and to any other MS-DRG that shares the
same base MS-DRG. The statute at subparagraph 1886(d)(5)(J) to the Act
directs CMS to identify MS-DRGs based on a high volume of discharges to
postacute care facilities and a disproportionate use of postacute care
services. As discussed in the FY 2006 IPPS final rule (70 FR 47416), we
determined that the 55th percentile is an appropriate level at which to
establish these thresholds. In that same final rule (70 FR 47419), we
stated that we will not revise the list of DRGs subject to the
postacute care transfer policy annually unless we are making a change
to a specific MS-DRG.
To account for MS-DRGs subject to the postacute care policy that
exhibit exceptionally higher shares of costs very early in the hospital
stay, Sec. 412.4(f) also includes a special payment methodology. For
these MS-DRGs, hospitals receive 50 percent of the full MS-DRG payment,
plus the single per diem payment, for the first day of the stay, as
well as a per diem payment for subsequent days (up to the full MS-DRG
payment (Sec. 412.4(f)(6))). For an MS-DRG to qualify for the special
payment methodology, the geometric mean length of stay must be greater
than 4 days, and the average charges of 1-day discharge cases in the
MS-DRG must be at least 50 percent of the average charges for all cases
within the MS-DRG. MS-DRGs that are part of an MS-DRG severity level
group will qualify under the MS-DRG special payment methodology policy
if any one of the MS-DRGs that share that same base MS-DRG qualifies
(Sec. 412.4(f)(6)).
Prior to the enactment of the Bipartisan Budget Act of 2018 (Pub.
L. 115-123), under section 1886(d)(5)(J) of the Act, a discharge was
deemed a ``qualified discharge'' if the individual was discharged to
one of the following postacute care settings:
A hospital or hospital unit that is not a subsection (d)
hospital.
A skilled nursing facility.
Related home health services provided by a home health
agency provided within a timeframe established by the Secretary
(beginning within 3 days after the date of discharge).
Section 53109 of the Bipartisan Budget Act of 2018 amended section
1886(d)(5)(J)(ii) of the Act to also include discharges to hospice care
provided by a hospice program as a qualified discharge, effective for
discharges occurring on or after October 1, 2018. In the FY 2019 IPPS/
LTCH PPS final rule (83 FR 41394), we made conforming amendments to
Sec. 412.4(c) of the regulation to include discharges to hospice care
occurring on or after October 1, 2018, as qualified discharges. We
specified that hospital bills with a Patient Discharge Status code of
50 (Discharged/Transferred to Hospice--Routine or Continuous Home Care)
or 51 (Discharged/Transferred to Hospice, General Inpatient Care or
Inpatient Respite) are subject to the postacute care transfer policy in
accordance with this statutory amendment.
2. Changes for FY 2024
As discussed in section II.C. of the preamble of the proposed rule
and this final rule, based on our analysis of FY 2022 MedPAR claims
data, we proposed to make changes to a number of MS-DRGs, effective for
FY 2024. Specifically, we proposed to do the following:
Reassign procedures describing thrombolysis when performed
for pulmonary embolism from MS-DRGs 166, 167, and 168 (Other
Respiratory System O.R. Procedures with MCC, with CC, and without CC/
MCC, respectively) to proposed new MS-DRG 173 (Ultrasound Accelerated
and Other Thrombolysis for Pulmonary Embolism).
Create proposed new base MS-DRG 212 (Concomitant Aortic
and Mitral Valve Procedures) for cases reporting an aortic valve repair
or replacement procedure and a mitral valve repair or replacement
procedure in addition to another concomitant cardiovascular procedure.
Reassign the procedures involving cardiac defibrillator
implants by deleting MS-DRGs 222 through 227 (Cardiac Defibrillator
Implant, with and without Cardiac Catheterization, with and without
AMI/HF/shock, with and without MCC, respectively) and create proposed
new MS-DRG 275 (Cardiac Defibrillator Implant with Cardiac
Catheterization and MCC) for cases reporting cardiac defibrillator
implant with cardiac catheterization with MCC, and proposed new MS-DRGs
276 and 277 (Cardiac Defibrillator Implant with MCC and without MCC,
respectively) for cases reporting cardiac defibrillator implant.
Reassign procedures describing thrombolysis performed on
peripheral vascular structures from MS-DRGs 252, 253, and 254 (Other
Vascular Procedures with MCC, with CC, and without CC/MCC,
respectively) to proposed new MS-DRG 278 (Ultrasound Accelerated and
Other
[[Page 59028]]
Thrombolysis of Peripheral Vascular Structures with MCC) and proposed
new MS-DRG 279 (Ultrasound Accelerated and Other Thrombolysis of
Peripheral Vascular Structures without MCC).
Create proposed MS-DRGs 323 and 324 (Coronary
Intravascular Lithotripsy with Intraluminal Device with MCC and without
MCC, respectively) for cases reporting C-IVL with placement of an
intraluminal device, create proposed new base MS-DRG 325 (Coronary
Intravascular Lithotripsy without Intraluminal Device) for cases
reporting C-IVL without the placement of an intraluminal device, delete
MS-DRG 246 (Percutaneous Cardiovascular Procedures with Drug-Eluting
Stent with MCC or 4+ Arteries or Stents), MS-DRG 247 (Percutaneous
Cardiovascular Procedures with Drug-Eluting Stent without MCC), MS-DRG
248 (Percutaneous Cardiovascular Procedures with Non-Drug-Eluting Stent
with MCC or 4+ Arteries or Stents) and MS-DRG 249 (Percutaneous
Cardiovascular Procedures with Non-Drug-Eluting Stent without MCC) and
create proposed new MS-DRG 321 (Percutaneous Cardiovascular Procedures
with Intraluminal Device with MCC or 4+ Arteries/Intraluminal Devices)
and proposed new MS-DRG 322 (Percutaneous Cardiovascular Procedures
with Intraluminal Device without MCC).
Delete MS-DRGs 338 through 340 (Appendectomy with
Complicated Principal Diagnosis with MCC, with CC, and without CC/MCC,
respectively) and MS-DRGs 341 through 343 (Appendectomy without
Complicated Principal Diagnosis with MCC, with CC, and without CC/MCC,
respectively) describing appendectomy with and without a complicated
principal diagnosis and create proposed new MS-DRGs 397, 398, and 399
(Appendix Procedures with MCC, with CC, without CC/MCC, respectively).
As discussed in the proposed rule, in light of the proposed changes
to the MS-DRGs for FY 2024, according to the regulations under Sec.
412.4(d), we evaluated the MS-DRGs using the general postacute care
transfer policy criteria and data from the December 2022 update of the
FY 2022 MedPAR file. If an MS-DRG qualified for the postacute care
transfer policy, we also evaluated that MS-DRG under the special
payment methodology criteria according to regulations at Sec.
412.4(f)(6). We continue to believe it is appropriate to assess new MS-
DRGs and reassess revised MS-DRGs when proposing reassignment of
procedure codes or diagnosis codes that would result in material
changes to an MS-DRG. We noted that while CMS proposed the reassignment
of procedure codes from MS-DRGs 252, 253, and 254 to proposed new MS-
DRGs 278 and 279, we do not consider the proposed revision to
constitute a material change that would warrant reevaluation of the
postacute care status of MS-DRGs 252, 253, and 254. We noted this base
MS-DRG (MS-DRG 252) does not currently qualify for postacute care
transfer status. CMS may further evaluate what degree of shifts in
cases for existing MS-DRGs warrant consideration for the review of
postacute care transfer and special payment policy status in future
rulemaking.
We stated that proposed new MS-DRG 276 would qualify to be included
on the list of MS-DRGs that are subject to the postacute care transfer
policy. As described in the regulations at Sec. 412.4(d)(3)(ii)(D),
MS-DRGs that share the same base MS-DRG will all qualify under the
postacute care transfer policy if any one of the MS-DRGs that share
that same base MS-DRG qualifies. We therefore proposed to add proposed
new MS-DRGs 276 and 277 to the list of MS-DRGs that are subject to the
postacute care transfer policy. MS-DRGs 166, 167, and 168 are currently
subject to the postacute care transfer policy. As a result of our
review, these MS-DRGs, as proposed to be revised, would continue to
qualify to be included on the list of MS-DRGs that are subject to the
postacute care transfer policy. We note that, as discussed in section
II. of this final rule, we are finalizing these proposed changes to the
MS-DRGs.
CMS has updated its analysis using the March 2023 update of the FY
2022 MedPAR file, and has developed the following chart which sets
forth the analysis of the postacute care transfer policy criteria
completed for this final rule with respect to each of these new or
revised MS-DRGs. We note that this chart is updated from the MedPAR
file used in the proposed rule (the December 2022 update of the FY 2022
MedPAR file).
BILLING CODE 4120-01-P
[[Page 59029]]
[GRAPHIC] [TIFF OMITTED] TR28AU23.242
During our annual review of proposed new or revised MS-DRGs and
analysis of the December 2022 update of the FY 2022 MedPAR file, we
reviewed the list of proposed revised or new MS-DRGs that qualify to be
included on the list of
[[Page 59030]]
MS-DRGs subject to the postacute care transfer policy for FY 2024 to
determine if any of these MS-DRGs would also be subject to the special
payment methodology policy for FY 2024. Based on our analysis of
proposed changes to MS-DRGs included in the proposed rule, we
determined that proposed new MS-DRG 276 meets the criteria for the MS-
DRG special payment methodology. As described in the regulations at
Sec. 412.4(f)(6)(iv), MS-DRGs that share the same base MS-DRG will all
qualify under the MS-DRG special payment policy if any one of the MS-
DRGs that share that same base MS-DRG qualifies. Therefore, we proposed
that proposed new MS-DRG 277 also would be subject to the MS-DRG
special payment methodology, effective for FY 2024. For this FY 2024
final rule, we updated this analysis using data from the March 2023
update of the FY 2022 MedPAR file.
[GRAPHIC] [TIFF OMITTED] TR28AU23.243
Comment: One commenter, citing extremely high early stay costs,
expressed concern about adding MS-DRGs 276 and 277 to the post-acute
transfer policy unless the full cost of the cardiac defibrillator and
the cost to implant is covered. The commenter stated that payment to
the transferring hospital for these MS-DRGs would be twice the per-diem
amount the first day and with each subsequent day paid at the per-diem
amount up until the full MS-DRG payment.
Response: The commenter described the payment methodology under the
post-acute care transfer policy. However, CMS proposed that these MS-
DRGs also be added to the list of MS-DRGs subject to the special
payment policy. Under this policy, the transferring hospital would
receive 50 percent of the full MS-DRG payment, plus a single per diem
payment, for the first day of the stay, as well as a per diem payment
for subsequent days (up to the full MS-DRG payment). The intent of the
special payment policy is specifically to address MS-DRGs with high
initial costs, such as the one-time cost of surgically implanted
devices. We believe the proposed addition of MS-DRGs 276 and 277 to the
special payment policy adequately addresses the specific concerns
expressed by the commenter.
After consideration of public comments we received, we are
finalizing our proposal to add new MS-DRGs 276 and 277 to the list of
MS-DRGs that are subject to the postacute care transfer policy and the
MS-DRG special payment methodology for FY 2024.
The postacute care transfer and special payment policy status of
these MS-DRGs is reflected in Table 5 associated with this final rule,
which is listed in section VI. of the Addendum to this final rule and
available on the CMS website.
B. Changes in the Inpatient Hospital Update for FY 2024 (Sec.
412.64(d))
1. FY 2024 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 2024, we stated in the proposed rule that we are
setting the applicable percentage increase by applying the adjustments
listed in this section in the same sequence as we did for FY 2023. (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 stated
that 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 2024 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
[[Page 59031]]
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 proposed to base the FY 2024 market basket update used to
determine the applicable percentage increase for the IPPS on IHS Global
Inc.'s (IGI's) fourth quarter 2022 forecast of the 2018-based IPPS
market basket rate-of-increase with historical data through third
quarter 2022, which was estimated to be 3.0 percent. We also proposed
that if more recent data subsequently became available (for example, a
more recent estimate of the market basket update), we would use such
data, if appropriate, to determine the FY 2024 market basket update in
the final rule.
Comment: Several commenters stated that hospitals continue to face
significant inflationary pressures. Commenters specifically expressed
concern that the proposed hospital IPPS payment update for FY 2024 does
not adequately consider the cost growth that hospitals have faced over
the last few years, noting cost increases related to workforce
(including contract labor), drugs, medical supplies, personal
protective equipment (PPE), and capital investment. The commenters
stated that the significant inflation over the past several years has
not been fully captured by the IPPS payment updates during the COVID
years.
Several commenters requested that CMS use its exceptions and
adjustments authority to increase the FY 2024 IPPS hospital market
basket update higher than proposed. One commenter urged CMS to review
the hospital cost data and the margin on Medicare reimbursement and
readjust payment rates based on the new baseline cost of care that has
resulted from supply shocks and labor shortages. A few commenters
suggested CMS apply a market basket increase of at least 3.8 percent,
reflecting MedPAC's March 2023 Report to Congress recommending a one-
percent increase to the FY 2024 market basket and requested that CMS
consider a FY 2024 market basket that more accurately represents
inflation on hospital expenses. One commenter supported a higher market
basket payment update under the IPPS to reflect the actual effects of
inflation on hospital operating costs and endorsed an annual inflation-
based payment update based on the full Medicare Economic Index (MEI)
while one commenter requested CMS use its authority to increase the FY
2024 IPPS hospital payment update to at least 5 percent.
Many commenters stated that they have experienced their lowest
margins in decades and anticipated additional worse operating losses in
at least the next two fiscal years. One commenter stated that in its
March 2023 report to Congress, MedPAC reported overall Medicare
hospital margins were negative 6.2 percent in 2021 (after accounting
for temporary COVID-19 relief funds). Moreover, the commenter stated
that MedPAC also projected hospitals' Medicare margins in 2023 to be
lower than in 2021, driven in part by the growth in hospitals' input
costs, which exceeded the forecasts CMS used to set Medicare payment
rate updates, and in part by the expected expiration of Federal relief
funds and temporary Medicare payment increases related to the public
health emergency. The commenter stated that MedPAC also projects that
even ``relatively efficient'' hospitals' Medicare margins will fall
below break-even in 2023.
One commenter stated that while the 2022 market basket increase of
4 percent provided some relief from the additional costs of COVID-19
for 2023, the proposed FY 2024 market basket update would not carry
these elevated costs associated with COVID-19 forward into 2024 even
though the commenter stated that additional costs of COVID-19 still
exist. The commenter noted that hospitals are now faced with rebuilding
long-term funds, paying longer-term inflated costs of supplies and
equipment and high wages due to the lack of staffing that still exists
as a result of COVID burn out. Several commenters stated that this
year's proposed update is inadequate and requested that CMS address the
market basket update in the final rule.
One commenter noted that CMS proposed ``that if more recent data
subsequently become available, we would use such data, if appropriate,
to determine the FY 2024 market basket update in the final rule.'' The
commenter urged CMS to use more recent data that include the recent
inflationary increases in cost; and in the absence of such data urged
CMS to consider an alternative approach to better align the market
basket increases with increases in cost to treat patients. A few
commenters appreciated the proposed payment increase but also stated
agreement with other commenters that the proposed increase is
inadequate given inflation and labor and supply pressures that
hospitals, particularly rural hospitals, have been facing and continue
to face.
Many commenters had significant concerns that the proposed IPPS
payment update does not adequately reflect labor costs. Commenters
stated the significant increases in labor expenses over the last couple
of years have been largely driven by increased utilization of contract
staff (due to workforce shortages) and growth in employee salaries. One
commenter cited their own analysis of payroll data to calculate the
increased cost of labor, which it stated was significantly higher than
the annual increases for compensation prices that CMS finalized over
the last several years. Given what they stated was the significant
difference between the increased cost of labor versus what CMS
estimates using the ECIs, the commenters stated they had significant
concerns that CMS' data source for estimating the cost of labor does
not capture current market dynamics and underestimates the actual cost
of healthcare labor. Many commenters cited analysis that nursing staff
shortages are predicted to continue for the next several years.
Specifically, commenters raised concerns about the CMS use of the
Bureau of Labor Statistics' Employment Cost Index (ECI) in the IPPS
market basket. Commenters stated they believe the BLS' ECI does not
accurately reflect the shift from salaried employees to contract labor
since the ECI does not collect data for contract staff, and thus does
not capture extraordinary labor cost growth associated with hospitals'
increased reliance on clinicians contracted through staffing agencies
in response to supply shortages. One commenter highlighted their belief
that a closely related measure--the Employer Costs for Employee
Compensation (ECEC)--may be a better and more timely data source for
growth in hospital compensation costs compared to the ECI. The
commenter claimed that all else equal, if the hospital ECI growth had
matched the hospital ECEC growth, this would have meant an additional
three percentage point increase in the IPPS hospital market basket over
the 2019 to 2022 time period. Several commenters recommended that CMS
use its exceptions and adjustments authority to adopt new or
supplemental data sources such as commercial databases on hospital
payrolls, to ensure labor costs are adequately reflected in the FY 2024
payment update in the final rule.
One commenter also requested CMS identify more accurate data inputs
and use its existing authority to calculate the
[[Page 59032]]
final rule ``base'' (before additional adjustments) market basket
update with data that better reflect the rapidly increasing input
prices facing hospitals. The commenter suggested that CMS should
consider using the average growth rate in allowable Medicare costs per
risk adjusted discharge for IPPS hospitals between FY 2019 and FY 2021
to calculate the FY 2024 final rule market basket update rather than
using the growth in the ECI as the price proxy for compensation in the
IPPS market basket. The commenter requested using Medicare cost report
data from Worksheets D-1, Part II, Lines 48 and 49 and S-3, Part 1,
Column 13 to determine the Medicare costs per discharge. The commenter
stated that this growth rate will capture the increased cost of
contract labor, unlike the ECI. Based on their analysis of Medicare
cost report data, they found that this methodology would yield an
unadjusted market basket update of 4.39 percent for FY 2024 rather than
the 2.8 percent net market basket update proposed by CMS. The commenter
also stated that Medicare margins have declined over the last 20 years
and believes this is due to persistently inadequate Medicare market
basket updates. They further stated that hospitals' financial
situations are so precarious that MedPAC recommended to Congress that
it increase IPPS and OPPS payments over current law to preserve access.
Response: We acknowledge commenters' concerns regarding recent
trends in inflation. Section 1886(b)(3)(B)(iii) of the Act states the
Secretary shall update IPPS payments based on a market basket
percentage increase based on an index of appropriately weighted
indicators of changes in wages and prices that are representative of
the mix of goods and services included in such inpatient hospital
services. The 2018-based IPPS market basket is a fixed-weight,
Laspeyres-type price index that measures the change in price, over
time, of the same mix of goods and services purchased by hospitals in
the base period. As we discussed in response to similar comments in the
FY 2023 IPPS/LTCH PPS final rule (87 FR 49053), the IPPS market basket
increase would reflect the prospective price pressures described by the
commenters as increasing during a high inflation period (such as faster
wage price growth or higher energy prices), but would inherently not
reflect other factors that might increase the level of costs, such as
the quantity of labor used or any shifts between contract and staff
nurses (which would be reflected in the Medicare cost report data). We
disagree that costs as reported on the Medicare cost report are a
suitable data source for determining the trend in compensation prices
for the market basket update. The Medicare cost report data also
reflects factors that are beyond those that impact wage or price
growth. For instance, overall Medicare costs per discharge as reported
by hospitals on the Medicare cost report would also reflect observed
IPPS case-mix (and associated higher payments to hospitals), which from
2019 to 2022 has increased faster than in prior years and would be
associated with the use of more skilled care and medical/drug supplies
needed to provide these services.
Regarding commenters' request that CMS consider other methods and
data sources to calculate the final rule market basket update, we
believe that the 2018-based IPPS market basket continues to
appropriately reflect IPPS cost structures and we believe the price
proxies used (such as those from BLS that reflect wage and benefit
price growth) are an appropriate representation of price changes for
the inputs used by hospitals in providing services. As discussed in
appendix B of this final rule, in its March report, MedPAC recommended
that the Congress update the inpatient hospital rates by the amount
specified in current law plus one percent. Given that we believe the
2018-based IPPS market basket reflects an index of appropriately
weighted indicators of changes in wages and prices that are
representative of the mix of goods and services included in such
inpatient hospital services and the percentage change of the 2018-based
IPPS market basket is based on IGI's more recent forecast reflecting
the prospective price pressures for FY 2024, we do not believe it would
be appropriate to use our exceptions and adjustment authority to create
a separate payment that would have the effect of modifying the current
law update.
The ECI (published by the BLS) measures the change in the hourly
labor cost to employers, independent of the influence of employment
shifts among occupations and industry categories. We acknowledge that
the ECI measures only reflect price changes and does not capture
changes in quantity or mix of labor such as increased utilization of
contract staff as noted by the commenter. We believe that the ECI for
hospital workers is accurately reflecting the price change associated
with the labor used to provide hospital care and appropriately does not
reflect other factors that might affect labor costs (such as a shift in
occupations that may occur due to increases in case-mix). The ECEC data
cited by the commenter is limited in its usefulness in the market
basket because it reflects averages across all employees (similar to
another BLS wage series, Average Hourly Earnings, available from the
Current Employment Statistics program). According to BLS documentation,
the ECEC reflects average compensation in the economy at a point in
time, including both changes in compensation and changes in employment.
The wage measure in the market basket should not reflect changes in
employment to be consistent with the statute that the market basket
percentage increase be based on an index of appropriately weighted
indicators of changes in wages and prices. The ECEC, an indicator that
also includes changes in employment, is not as appropriate to use as
the ECI in the IPPS market basket. For these reasons, we believe the
ECI continues to be an appropriate measure to use in the IPPS market
basket.
We note that the Medicare cost report data shows contract labor
hours account for about 4 percent of total compensation hours
(reflecting employed and contract labor staff) for IPPS hospitals in
2021. Therefore, while we acknowledge that the ECI measures only
reflect price changes for employed staff, we believe that the ECI for
hospital workers is accurately reflecting the price change associated
with the labor used to provide hospital care (as employed workers'
hours account for 96 percent of hospital compensation hours).
Therefore, we believe it continues to be an appropriate measure to use
in the IPPS market basket. We also note that when developing its
forecast for the ECI for hospital workers, IGI considers overall labor
market conditions (including rise in contract labor employment due to
tight labor market conditions) as well as trends in contract labor
wages, which both have an impact on wage pressures for workers employed
directly by the hospital.
We would highlight that the market basket percentage increase is a
forecast of the price pressures that are expected to be faced in 2024.
As projected by IGI (a nationally recognized economic and financial
forecasting firm with which CMS contracts to forecast the price proxies
of the market baskets) and upward price pressures are expected to slow
in FY 2024 relative to FY 2022 and FY 2023. As is our general practice,
we proposed that if more recent data became available, we would use
such data, if appropriate, to derive the final FY 2024 IPPS market
basket update for the final rule. We appreciate the commenter's concern
regarding inflationary pressure and the request to use more recent data
to determine the
[[Page 59033]]
FY 2024 IPPS market basket update. For this final rule, we are
incorporating a projection of the 2018-based IPPS market basket that is
based on the most recent forecast from IHS Global Inc. For this final
rule, based on the more recent IGI second quarter 2023 forecast with
historical data through the first quarter of 2023, the projected 2018-
based IPPS market basket increase factor for FY 2024 is 3.3 percent,
which is 0.3 percentage point higher than the projected FY 2024 market
basket increase factor in the proposed rule based on IGI's fourth
quarter 2022 forecast, and reflects a projected increase in
compensation prices of 4.3 percent. We would note that the 10-year
historical average (2013-2022) growth rate of the 2018-based IPPS
market basket is 2.5 percent reflecting a 10-year historical average
(2013-2022) growth rate compensation prices equal to 2.4 percent.
Comment: One commenter recommended that CMS reevaluate the data
sources it uses for rebasing its market basket and calculating the
annual market basket update, including labor costs. They strongly
encouraged CMS to adopt new or supplemental data sources in future
rulemaking that more accurately reflect the costs to hospitals, such as
through use of more real time data from the hospital community. They
stated that they believe that the current market basket does not
account for the higher costs of contract labor, which has become more
common in hospitals in an era of clinical labor shortages. One
commenter requested that CMS rebase the market baskets more frequently
and at least every three years to ensure the market basket reflects the
appropriate mix of services provided to Medicare beneficiaries.
Response: CMS appreciates the commenter's request to rebase more
frequently. Section 404 of Public Law 108-173 states the Secretary
shall establish a frequency for revising the cost weights of the IPPS
market basket more frequently than once every 5 years. As published in
the FY 2006 IPPS final rule (70 FR 47403), we established a rebasing
frequency of every four years, in part because the cost weights
obtained from the Medicare cost reports do not indicate much of a
change in the weights from year to year. The most recent rebasing of
the IPPS market basket was for the FY 2022 payment update and reflected
a base year of 2018 costs. Given recent concerns raised by commenters
regarding changes in costs as a result of recent inflation and the
COVID-19 pandemic, we also have been regularly monitoring the Medicare
cost report data to assess whether a rebasing is technically
appropriate, and we will continue to do so in the future. Based on a
preliminary analysis of the Medicare cost report data for IPPS
hospitals for 2021 that became available for this final rule, the IPPS
compensation cost weight for 2021 is estimated to be about 1 percentage
point lower than the 2018-based IPPS market basket compensation cost
weight of 53.0 percent, and reflects a combined decrease in the salary
and benefit cost weights that is larger than the increase in the
contract labor cost weight. The major cost categories that
preliminarily show an increase in the cost weight over this period are
pharmaceuticals (proxied by the PPI--Commodity--Special Index--
Pharmaceuticals for human use, prescription) and home office contract
labor compensation costs (which would be proxied by the ECI for
Professional and Related workers). We plan to review the 2021 Medicare
cost report data in more detail as well as 2022 Medicare cost report
data as soon as complete information is available and evaluate these
data for future rebasing of the IPPS market basket.
Regarding the comment about using new or supplemental data sources
in future rulemaking, we believe the Medicare cost report data is the
most complete, timely and relevant data source for the development of
the cost weights. We also welcome feedback on alternative publicly
available data sources that could be used to evaluate the cost
conditions facing hospitals and the subsequent derivation of the market
basket cost weights.
Comment: Several commenters, including many associations, urged CMS
to use its special exceptions and adjustments authority under section
1886(d)(5)(I)(i) of the Act to implement a retrospective adjustment for
FY 2024 to account for the difference between the market basket update
that was implemented for FY 2022 and what the currently projected
market basket is for FY 2022. Commenters stated this is, in large part,
because the market basket is a time-lagged estimate that cannot fully
account for unexpected changes that occur, such as historic inflation
and increased labor and supply costs. They stated this is exactly what
occurred at the end of the calendar year 2021 into calendar year 2022,
which resulted in a large forecast error in the FY 2022 market basket
update. Commenters stated the IPPS reimbursement has failed to keep
pace with inflation as costs for drugs, supplies, insurance premiums,
and labor have increased. They recommended that CMS utilize the FY 2024
update to include a retrospective adjustment and methodology change to
make the FY 2022 actual 5.7 percent market basket percentage increase
to be more reflective of the costs hospitals face, including the true
impact of inflation. One commenter also urged CMS to reflect the
forecast error in FY 2022 as well as an additional 1.0 percent on top
of the proposed FY 2024 market basket increase. One commenter requested
that CMS use its special exceptions and adjustment authority to make a
one-time retrospective adjustment of 10-15 percent to the market basket
to account for what it stated hospitals should have received in 2022
when accounting for inflation, while another commenter stated that at a
minimum, CMS should address what it stated was the gross underpayment
that occurred in FY 2022 via a one-time adjustment of at least 3
percent.
One commenter urged CMS to use its exceptions and adjustments
authority to apply a one-time adjustment to course correct for its
significantly lower estimates of costs for FY 2021 through FY 2023. The
commenter stated that because the annual payment update builds on the
prior year's payment rate, failing to correct what it described as CMS'
gross underestimation of the payment updates during the pandemic will
further perpetuate inaccuracies in the payment rate moving forward,
resulting in a permanent cut to hospital payments. Similarly, another
commenter stated that in three of the last five years for which they
had data to compare, they observed that the forecasted hospital market
basket data used to set IPPS payment rates has fallen short of actual
market basket data. They estimated, based on actual expenditure data
from the 2023 Medicare Trustees Report, that in 2021 hospitals may have
lost nearly $1 billion and in 2022 hospitals may have lost more than $4
billion as a result of the forecast error assumptions.
Several commenters suggested CMS should consider implementing a
market basket forecast error adjustment within the methodology for
calculating the annual IPPS payment update. One commenter stated that
this change would reduce the risk hospitals face when rapid inflation
causes CMS's forecasted hospital market basket percentage increase to
be out of alignment with the actual hospital market basket percentage
increase. One commenter stated that CMS should do so if forecast error
is more than 0.5 percentage point while another commenter recommended a
threshold of 1.5 percentage points. One commenter stated that unlike
other industries, hospitals cannot simply raise prices to
[[Page 59034]]
bring in additional revenue, but rather can only bring in additional
revenue by renegotiating higher payments with employers and health
insurers, something that is increasingly difficult in the current
fiscal environment. They stated that if hospitals are unable to grow
revenue from other sources, they must make cuts to important service
lines just like any other business to remain financially viable.
One commenter also noted that for both the SNF PPS and the capital
IPPS, CMS is making the forecast error adjustments based on a threshold
level of difference between the update and the market basket that was
adopted through rulemaking in prior years.
Response: While the projected IPPS hospital market basket updates
for FY 2021 and FY 2022 were under forecast (actual increases less
forecasted increases were positive), this was largely due to
unanticipated inflationary and labor market pressures as the economy
emerged from the COVID-19 PHE. However, an analysis of the forecast
error of the IPPS market basket over a longer period of time shows the
forecast error has been both positive and negative. For example, the
10-year cumulative forecast error showed a negative forecast error
(that is, forecasted increases were greater than actual increases) of
1.1 percentage points (2013 through 2022). In addition, for each year
from 2012 through 2020, the forecasted FY hospital market basket update
implemented in the final rule was higher than the actual hospital
market basket update once historical data were available, with 7 out of
the 9 years having a negative forecast error greater than 0.5
percentage point (in absolute terms). Only considering the forecast
error for years when the final hospital market basket update was lower
than the actual market basket update does not consider the numerous
years that providers benefited from the forecast error. Relatedly, the
capital PPS and SNF PPS forecast error adjustments were adopted very
early in both payment systems and, unlike what commenters are
requesting here for the IPPS, forecast errors over many years have been
consistently addressed within each of the Capital PPS and SNF PPS
For these reasons, we do not believe it is appropriate to include
adjustments to the market basket update for future years based on the
difference between the actual and forecasted market basket increase in
prior years. We thank the commenters for their comments. After
consideration of the comments received and consistent with our
proposal, we are finalizing to use more recent data to determine the FY
2024 market basket update for the final rule. Specifically, based on
more recent data available, we determined final applicable percentage
increases to the standardized amount for FY 2024, as specified in the
table that appears later in this section.
In the FY 2012 IPPS/LTCH PPS final rule (76 FR 51689 through
51692), we finalized our methodology for calculating and applying the
productivity adjustment. As we explained in that rule, section
1886(b)(3)(B)(xi)(II) of the Act, as added by section 3401(a) of the
Affordable Care Act, defines this productivity adjustment as equal to
the 10-year moving average of changes in annual economy-wide, private
nonfarm business MFP (as projected by the Secretary for the 10-year
period ending with the applicable fiscal year, 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 private
nonfarm business 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 IPPS/LTCH PPS 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 2024, we proposed a productivity adjustment of 0.2 percent.
Similar to the proposed market basket update, for the proposed rule,
the estimate of the proposed FY 2024 productivity adjustment was based
on IGI's fourth quarter 2022 forecast. As noted previously, we proposed
that if more recent data subsequently became available, we would use
such data, if appropriate, to determine the FY 2024 productivity
adjustment for the final rule.
Comment: Several commenters expressed concern about the application
of the productivity adjustment, stating that the PHE has had
unimaginable impacts on hospital productivity. They state that even
before the PHE, OACT indicated that hospital productivity will be less
than the general economy-wide productivity, which is the measure that
is required by law to be used to derive the productivity adjustment.
Given that CMS is required by statute to implement a productivity
adjustment to the market basket update, commenters asked the agency to
work with Congress to permanently eliminate what they stated is an
unjustified reduction to hospital payments. Further, they asked CMS to
use its ``exceptions and adjustments'' authority to remove the
productivity adjustment for any fiscal year that was covered under PHE
determination (i.e., 2020 (0.4 percent), 2021 (0.0 percent), 2022 (0.7
percent), and 2023 (0.3 percent) from the calculation of the market
basket update for FY 2024 and any year thereafter. A few commenters
expressed concerns about the proposed productivity adjustment given the
extreme and uncertain circumstances under which hospitals and health
systems are currently operating and urged CMS to eliminate the
productivity cut for FY 2024.
Response: While we appreciate the commenters' concerns, section
1886(b)(3)(B)(xi) of the Act requires the application of the
productivity adjustment. As required by statute, the FY 2024
productivity adjustment is derived based on the 10-year moving average
growth in economy-wide productivity for the period ending FY 2024.
We thank the commenters for their comments. After consideration of
the comments received and consistent with our proposal, we are
finalizing as proposed to use more recent data to determine the FY 2024
productivity adjustment for the final rule.
Based on more recent data available for this FY 2024 IPPS/LTCH PPS
final rule (that is, IGI's second quarter 2023 forecast of the 2018-
based IPPS market basket rate-of-increase with historical data through
the first quarter of 2023), we estimate that the FY 2024 market basket
update used to determine the applicable percentage increase for the
IPPS is 3.3 percent. Based on more
[[Page 59035]]
recent data available for this FY 2024 IPPS/LTCH PPS final rule (that
is, IGI's second quarter 2023 forecast of the productivity adjustment),
the current estimate of the productivity adjustment for FY 2024 is 0.2
percentage point.
As previously discussed, based on the more recent data available,
for this final rule, we have determined four final applicable
percentage increases to the standardized amount for FY 2024. For FY
2024, depending on whether a hospital submits quality data under the
rules established in accordance with section 1886(b)(3)(B)(viii) of the
Act (hereafter referred to as a hospital that submits quality data) and
is a meaningful EHR user under section 1886(b)(3)(B)(ix) of the Act
(hereafter referred to as a hospital that is a meaningful EHR user),
there are four possible applicable percentage increases that can be
applied to the standardized amount, as specified in this table.
[GRAPHIC] [TIFF OMITTED] TR28AU23.244
In the FY 2020 IPPS/LTCH PPS final rule (84 FR 42344), we revised
our regulations at 42 CFR 412.64(d) to reflect the current law for the
update for FY 2020 and subsequent fiscal years. Specifically, in
accordance with section 1886(b)(3)(B) of the Act, we added paragraph
(d)(1)(viii) to Sec. 412.64 to set forth the applicable percentage
increase to the operating standardized amount for FY 2020 and
subsequent fiscal years as the percentage increase in the market basket
index, subject to the reductions specified under Sec. 412.64(d)(2) for
a hospital that does not submit quality data and Sec. 412.64(d)(3) for
a hospital that is not a meaningful EHR user, less a productivity
adjustment. (As previously noted, section 1886(b)(3)(B)(xii) of the Act
required an additional reduction each year only for FYs 2010 through
2019.)
Section 1886(b)(3)(B)(iv) of the Act provides that the applicable
percentage increase to the hospital-specific rates for SCHs and MDHs
equals the applicable percentage increase set forth in section
1886(b)(3)(B)(i) of the Act (that is, the same update factor as for all
other hospitals subject to the IPPS). Therefore, the update to the
hospital-specific rates for SCHs and MDHs also is subject to section
1886(b)(3)(B)(i) of the Act, as amended by sections 3401(a) and
10319(a) of the Affordable Care Act. As discussed in section V.F. of
the preamble of this final rule, section 4102 of the Consolidated
Appropriations Act, 2023 (Public Law 117-328), enacted on December 29,
2022, extended the MDH program through FY 2024 (that is, for discharges
occurring on or before September 30, 2024). We refer readers to section
V.F. of the preamble of this final rule for further discussion of the
MDH program.
For FY 2024, we proposed the following updates to the hospital-
specific rates applicable to SCHs and MDHs: A proposed update of 2.8
percent for a hospital that submits quality data and is a meaningful
EHR user; a proposed update of 0.55 percent for a hospital that submits
quality data and is not a meaningful EHR user; a proposed update of
2.05 percent for a hospital that fails to submit quality data and is a
meaningful EHR user; and a proposed update of -0.2 percent for a
hospital that fails to submit quality data and is not an meaningful EHR
user. We proposed that if more recent data subsequently became
available (for example, a more recent estimate of the market basket
update and the productivity adjustment), we would use such data, if
appropriate, to determine the update in the final rule.
We did not receive any public comments on our proposed updates to
hospital-specific rates applicable to SCHs and MDHs. The general
comments we received on the proposed FY 2024 update (including the
proposed market basket update and productivity adjustment) are
discussed earlier in this section. For FY 2024, we are finalizing the
proposal to determine the update to the hospital specific rates for
SCHs and MDHs in this final rule using the more recent available data,
as previously discussed.
For this final rule, based on more recent available data we are
finalizing the following updates to the hospital specific rates
applicable to SCHs and MDHs (the same update factor as for all other
hospitals subject to the IPPS, consistent with the applicable
percentage increases for the IPPS): An update of 3.1 percent for a
hospital that submits quality data and is a meaningful EHR user; an
update of 0.625 percent for a hospital that submits quality data and is
not a meaningful EHR user; an update of 2.275 percent for a hospital
that fails to submit quality data and is a meaningful EHR user; and an
update of -0.2 percent for a hospital that fails to submit quality data
and is not a meaningful EHR user.
2. FY 2024 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
[[Page 59036]]
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 2024, consistent with section 1886(b)(3)(B) of the Act, as
amended by section 602 of Public Law 114-113, we are setting the
applicable percentage increase for Puerto Rico hospitals by applying
the following adjustments in the following sequence. Specifically, the
applicable percentage increase under the IPPS for Puerto Rico hospitals
will be equal to the rate of-increase in the hospital market basket for
IPPS hospitals in all areas, subject to a 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 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 2022 forecast of the 2018-based IPPS
market basket update with historical data through third quarter 2022,
in the FY 2024 IPPS/LTCH PPS proposed rule, in accordance with section
1886(b)(3)(B) of the Act, as discussed previously, for Puerto Rico
hospitals we proposed a market basket update of 3.0 percent less a
productivity adjustment of 0.2 percentage point. Therefore, for FY
2024, depending on whether a Puerto Rico hospital is a meaningful EHR
user, we stated there would be two possible applicable percentage
increases that could be applied to the standardized amount. Based on
these data, we determined the following proposed applicable percentage
increases to the standardized amount for FY 2024 for Puerto Rico
hospitals:
For a Puerto Rico hospital that is a meaningful EHR user,
we proposed a FY 2024 applicable percentage increase to the operating
standardized amount of 2.8 percent (that is, the FY 2024 estimate of
the proposed market basket rate-of-increase of 3.0 percent less 0.2
percentage point for the proposed productivity adjustment).
For a Puerto Rico hospital that is not a meaningful EHR
user, we proposed a FY 2024 applicable percentage increase to the
operating standardized amount of 0.55 percent (that is, the FY 2024
estimate of the proposed market basket rate-of-increase of 3.0 percent,
less an adjustment of 2.25 percentage point (the proposed market basket
rate-of-increase of 3.0 percent x 0.75 for failure to be a meaningful
EHR user), and less 0.2 percentage point for the proposed productivity
adjustment).
As noted previously, we proposed that if more recent data
subsequently became available, we would use such data, if appropriate,
to determine the FY 2024 market basket update and the productivity
adjustment for the FY 2024 IPPS/LTCH PPS final rule.
We did not receive any public comments on our proposed updates to
the standardized amount for FY 2024 for Puerto Rico hospitals. The
general comments we received on the proposed FY 2024 update (including
the proposed market basket update and productivity adjustment) are
discussed in greater detail earlier in this section. For FY 2024, we
are finalizing the proposal to determine the update to the standardized
amount for FY 2024 for Puerto Rico hospitals in this final rule using
the more recent available data, as previously discussed.
As previously discussed in section V.A.1, based on more recent data
available for this final rule (that is, IGI's second quarter 2023
forecast of the 2018-based IPPS market basket rate-of-increase with
historical data through the first quarter of 2023), we estimate that
the FY 2024 market basket update used to determine the applicable
percentage increase for the IPPS is 3.3 percent and the productivity
adjustment is 0.2 percent. For FY 2024, 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, accordance with section 1886(b)(3)(B) of
the Act, we determined the following applicable percentage increases to
the standardized amount for FY 2024 for Puerto Rico hospitals:
For a Puerto Rico hospital that is a meaningful EHR user,
an applicable percentage increase to the FY 2024 operating standardized
amount of 3.1 percent (that is, the FY 2024 estimate of the market
basket rate-of-increase of 3.3 percent less an adjustment of 0.2
percentage point for the productivity adjustment).
For a Puerto Rico hospital that is not a meaningful EHR
user, an applicable percentage increase to the operating standardized
amount of 0.625 percent (that is, the FY 2024 estimate of the market
basket rate-of-increase of 3.3 percent, less an adjustment of 2.475
percentage point (the market basket rate-of-increase of 3.3 percent x
0.75 for failure to be a meaningful EHR user), and less an adjustment
of 0.2 percentage point for the productivity adjustment).
[[Page 59037]]
[GRAPHIC] [TIFF OMITTED] TR28AU23.245
C. Sole Community Hospitals (SCHs) (Sec. 412.92)
1. Background
Section 1886(d)(5)(D) of the Act provides special payment
protections under the IPPS to sole community hospitals (SCHs). Section
1886(d)(5)(D)(iii) of the Act defines an SCH in part as a hospital that
the Secretary determines is located more than 35 road miles from
another hospital or that, by reason of factors such as isolated
location, weather conditions, travel conditions, or absence of other
like hospitals (as determined by the Secretary), is the sole source of
inpatient hospital services reasonably available to Medicare
beneficiaries. The regulations at 42 CFR 412.92 set forth the criteria
that a hospital must meet to be classified as an SCH. For more
information on SCHs, we refer readers to the FY 2009 IPPS/LTCH PPS
final rule (74 FR 43894 through 43897).
In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41430), effective
for SCH applications received on or after October 1, 2018, we modified
the effective date of SCH classification from 30 days after the date of
CMS's written notification of approval to the date that the MAC
receives the complete SCH application. As we explained in that final
rule, section 401 of the Medicare, Medicaid, and SCHIP Balanced Budget
Refinement Act (BBRA) of 1999 (Pub. L. 106-113, Appendix F) amended
section 1886(d)(8) of the Act to add paragraph (E) which authorizes
reclassification of certain urban hospitals as rural if the hospital
applies for such status and meets certain criteria. The effective date
for rural reclassification status under section 1886(d)(8)(E) of the
Act is set forth at 42 CFR 412.103(d)(1) as the filing date, which is
the date CMS receives the reclassification application (Sec.
412.103(b)(5)). One way that an urban hospital can reclassify as rural
under Sec. 412.103 (specifically, Sec. 412.103(a)(3)) is if the
hospital would qualify as a rural referral center (RRC) as set forth in
Sec. 412.96, or as an SCH as set forth in Sec. 412.92, if the
hospital were located in a rural area. A geographically urban hospital
may simultaneously apply for reclassification as rural under Sec.
412.103(a)(3) by meeting the criteria for SCH status (other than being
located in a rural area), and apply to obtain SCH status under Sec.
412.92 based on that acquired rural reclassification. However, as we
explained in the FY 2019 final rule, the rural reclassification is
effective as of the filing date, whereas under our policy at that time,
the SCH status was effective 30 days after approval. In addition, while
Sec. 412.103(c) states that the CMS Regional Office will review the
application and notify the hospital of its approval or disapproval of
the request within 60 days of the filing date, the regulations do not
set a timeframe by which CMS must decide on an SCH request. We stated
that therefore, geographically urban hospitals that obtain rural
reclassification under Sec. 412.103 for the purposes of obtaining SCH
status may face a payment disadvantage because, under the policy at
that time, they are paid as rural until the SCH application is approved
and the SCH classification and payment adjustment become effective 30
days after approval.
In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41430), to minimize
the lag between the effective date of rural reclassification under
Sec. 412.103 and the effective date for SCH status, we revised our
policy so that the effective date for SCH classification and for the
payment adjustment would be the date that the MAC receives the complete
SCH application, effective for SCH applications received on or after
October 1, 2018, as reflected in Sec. 412.92(b)(2)(i) and (iv). We
stated that a complete application includes a request and all
supporting documentation needed to demonstrate that the hospital meets
criteria for SCH status as of the date of application. We also stated
that for an application to be complete, all criteria must be met as of
the date the MAC receives the SCH application. We further stated that a
hospital applying for SCH status on the basis of a Sec. 412.103 rural
reclassification must submit its Sec. 412.103 application no later
than its SCH application in order to be considered rural as of the date
the MAC receives the SCH application.
As we explained in the FY 2019 IPPS/LTCH PPS final rule, we
believed that updating the regulations at Sec. 412.92 to provide an
effective date for SCH status that is consistent with the effective
date for rural reclassification under Sec. 412.103 would benefit
hospitals by minimizing any payment disadvantage caused by the lag
between the effective date of rural reclassification and the effective
date of SCH status. We also stated that we believe that aligning the
SCH effective date with the Sec. 412.103 effective date supports
agency efforts to reduce regulatory burden because it would provide for
a more uniform policy.
In addition, we made parallel changes to the effective date for a
Medicare dependent hospital (MDH) status determination under Sec.
412.108(b)(4) such that for applications received on or after October
1, 2018, a determination of MDH status would be effective as of the
date that the MAC receives the complete application, rather than the
prior effective date of 30 days after the date the MAC provides written
notification to the hospital. Similar to applications for SCH status,
we stated that a complete application includes a request and all
supporting documentation needed to demonstrate that the hospital meets
criteria for MDH status as of the date of application. We further
stated that for an application to be complete, all criteria must be met
as of the date the MAC receives the MDH application. For example, a
cost report must be settled at
[[Page 59038]]
the time of application for a hospital to use that cost report as one
of the cost reports required in Sec. 412.108(a)(1)(iv)(C).
We refer the reader to the FY 2019 IPPS/LTCH PPS final rule (83 FR
41430) for further discussion of these changes to the effective dates
of SCH and MDH status beginning with applications received on or after
October 1, 2018.
As explained in the FY 2019 IPPS/LTCH PPS final rule, we
specifically modified the effective date for SCH status for consistency
with the effective date for rural reclassification in order to minimize
any payment disadvantage caused by the lag between the effective date
of rural reclassification and the effective date of SCH status for
hospitals applying for both rural reclassification under Sec.
412.103(a)(3) by meeting the criteria for SCH status (other than being
located in a rural area), and applying to obtain SCH status under Sec.
412.92 based on that acquired rural reclassification. As previously
discussed, by meeting the criteria for SCH status (other than being
located in a rural area), a hospital can qualify for rural
reclassification per the regulations at Sec. 412.103(a)(3), which then
allows it to meet all the criteria for SCH status--including the rural
requirement at Sec. 412.92(a).
2. Change of Effective Date for SCH Status in the Case of a Merger
For some hospitals, eligibility for SCH classification may depend
on the hospital's merger with a nearby ``like hospital'' as defined in
Sec. 412.92(c)(2) \217\ and meeting other criteria at Sec. 412.92(a).
The merger allows the two hospitals involved to operate under a single
provider agreement. The regulations at Sec. 412.92(c)(2) define a like
hospital as a nearby hospital that furnishes short-term acute care and
whose total inpatient days attributable to units of the nearby hospital
that provide a level of care characteristic of the level of care
payable under the acute care hospital inpatient prospective payment
system are greater than 8 percent of the similarly calculated total
inpatient days of the hospital seeking SCH designation. In this
scenario, prior to the merger, the applicant hospital was not eligible
for SCH classification due to its proximity to a nearby like hospital.
When the applicant hospital subsequently merges with the nearby like
hospital, it is potentially eligible for SCH classification.
---------------------------------------------------------------------------
\217\ 42 CFR 412.92(c)(2): Like hospital means a hospital
furnishing short-term, acute care. Effective with cost reporting
periods beginning on or after October 1, 2002, for purposes of a
hospital seeking sole community hospital designation, CMS will not
consider the nearby hospital to be a like hospital if the total
inpatient days attributable to units of the nearby hospital that
provides a level of care characteristic of the level of care payable
under the acute care hospital inpatient prospective payment system
are less than or equal to 8 percent of the similarly calculated
total inpatient days of the hospital seeking sole community hospital
designation.
---------------------------------------------------------------------------
If an SCH application is approved, under current policy, the
effective date of the SCH classification is the date the MAC receives
the complete application. In situations where SCH classification is
contingent on a merger, a hospital is not considered to have submitted
a complete application to the MAC unless the application contains the
notification that the merger was approved. We have heard concerns that
in these situations the time difference between the effective date of
the hospital merger, which may be retroactive, and the effective date
of the SCH status, which is based on the date the complete application
is received by the MAC, including the merger approval, may be
problematic for hospitals because they cannot benefit from the special
payment protections that are afforded to SCHs until the effective date
of the SCH classification. We have also heard concerns that different
merger requirements across states could potentially introduce an uneven
playing field for providers seeking SCH classification because the
timeframe for a merger approval could vary from one state or region to
another.
Therefore, in an effort to address these concerns and in light of
our continuing experience in applying these policies, in the FY 2024
IPPS/LTCH PPS proposed rule (88 FR 27007), we proposed to revise Sec.
412.92(b)(2) so that for SCH applications received on or after October
1, 2023, where (1) a hospital's SCH approval is dependent on its merger
with another nearby hospital, and (2) the hospital meets the other SCH
classification requirements, the SCH classification and payment
adjustment would be effective as of the effective date of the approved
merger if the MAC receives the complete application within 90 days of
CMS' written notification to the hospital of the approval of the
merger. We explained that this 90-day timeframe would provide
sufficient time for a hospital to submit a complete SCH application,
while addressing the concerns, as previously discussed, that merger
approval may be delayed for reasons beyond a hospital's control. Under
this proposal, if the MAC does not receive the complete application
within 90 days of CMS' notification of the merger approval, SCH
classification would be effective as of the date the MAC receives the
complete application, including documentation of the merger approval,
and in accordance with the regulations at Sec. 412.92(b)(2)(i).
In connection with this proposal, we also proposed to change the
effective date of rural reclassification for a hospital qualifying for
rural reclassification under Sec. 412.103(a)(3) by meeting the
criteria for SCH status (other than being located in a rural area), and
also applying to obtain SCH status under Sec. 412.92, where
eligibility for SCH classification depends on a hospital merger.
Specifically, we proposed that in these circumstances, and subject to
the requirements set forth at proposed new Sec. 412.92(b)(2)(vi), the
effective date for rural reclassification would be as of the effective
date set forth in proposed new Sec. 412.92(b)(2)(vi).
We note that we did not propose to modify any SCH classification
requirements or what constitutes a ``complete application''. The SCH
application must, therefore, include all required documentation that
would constitute a ``complete application'' including documentation of
the hospital's merger approval. We also note that we did not propose
any change to the effective date for an SCH application that does not
involve a merger.
In the proposed rule, we stated that we continue to believe that
our current approach in determining the effective date for SCH
classification where the SCH application is contingent on a hospital
merger is reasonable. However, in light of our experience in applying
these policies and the concerns we have heard about the timeframes
involved, we believe that our proposed revision to the effective date
for hospitals applying for SCH classification where that classification
is dependent on a merger is also reasonable and appropriate and would
benefit hospitals by minimizing the time difference between the
effective date of the merger and the effective date of SCH status. We
noted that we did not propose a parallel change to the effective date
policy for MDH classification because eligibility for MDH
classification is not dependent on proximity to nearby providers and,
therefore, MDH classification would generally not be contingent on a
merger taking place. However, we sought comment on the need for such a
proposal, which we would consider for future rulemaking as appropriate.
Comment: Commenters supported CMS' proposed change to the effective
date for SCH status for SCH applications received on or after October
1, 2023, in the case of a merger where eligibility for SCH
classification depends on a hospital merger. Commenters also supported
the proposed conforming change to the effective date of rural
[[Page 59039]]
reclassification for a hospital qualifying for rural reclassification
under Sec. 412.103(a)(3) by meeting the criteria for SCH status (other
than being located in a rural area), and also applying to obtain SCH
status under Sec. 412.92 where eligibility for SCH classification
depends on a hospital merger.
Response: We appreciate the commenters' support.
Comment: Commenters requested that CMS apply these proposals
retroactively and provided various ideas for a retroactive effective
date. One commenter suggested that we apply our proposed change
retroactively to FY 2019, when CMS last changed the effective date for
SCHs (83 FR 41430). The commenter stated that the reasoning given to
the FY 2019 modification of the SCH effective date would apply to
providers submitting a combined merger and SCH application.
Specifically, the commenter indicated that the FY 2019 regulatory
change to the SCH effective date was intended to minimize any payment
disadvantage caused by the lag between the effective date of rural
reclassification and the effective date of SCH status, and to reduce
regulatory burden by providing for a more uniform policy. The same
commenter stated that different CMS Regional Offices and/or MACs have
applied different requirements and effective dates for SCH
classifications in the case of a merger where eligibility for SCH
classification depends on a hospital merger, and in order to avoid
differing treatment, CMS should adopt this proposal retroactively to FY
2019. Alternatively, the commenter suggested that CMS could apply the
change to any situation for which the parties have preserved appeal
rights over the effective date determination for an SCH approval. Other
commenters suggested that CMS apply the change retroactively for
providers who were seeking SCH classification during the COVID-19
pandemic and were affected by the lag time between their merger and SCH
classification.
Response: We appreciate the commenters' ideas and suggestions.
However, we do not agree that we should apply our proposed changes
retroactively. The IPPS is a prospective system and, we generally make
changes to IPPS regulations effective prospectively based on the date
of discharge or the start of a cost reporting period within a certain
Federal fiscal year. Under that approach, we believe that applying this
change for a merger that already took place may constitute retroactive
rulemaking--and would be a departure from our usual practice in IPPS--
regardless of whether there's a pending administrative appeal. We
believe that following our usual approach and adopting the new
effective date policies for SCH and rural reclassification applications
where SCH eligibility is dependent on a hospital merger that are
received on or after October 1, 2023 will allow for the most equitable
application among all IPPS providers seeking to qualify for SCH
classification and rural reclassification (as applicable). For these
reasons, we are finalizing, without modification, that our proposed
changes to the SCH and the rural reclassification effective dates will
apply prospectively for applications received on or after October 1,
2023.
Comment: Several commenters requested that CMS clarify its current
policy definition of a ``complete application'' for cases contingent on
a merger.
Response: As stated in the FY 2024 IPPS/LTCH PPS proposed rule (88
FR 27008), we did not propose to modify any SCH classification
requirements or what constitutes a ``complete application''. We refer
the commenters to the Chapter 28 of the Provider Reimbursement Manual
(PRM), section 2810. B. (https://www.cms.gov/regulations-and-guidance/guidance/manuals/downloads/p151_28.zip), for a list of documentation
that must be included with its request for SCH classification. In
addition to the documentation list in the PRM, for an SCH application
where eligibility for SCH classification is dependent on a hospital
merger, that documentation must include confirmation that the merger
has been approved by CMS (for example, a CMS tie-in notice recognizing
the two CCNs as merged). We note that we intend to update the list of
required documentation in the PRM to include documentation indicating
that the merger has been approved by CMS for SCH classification
requests that are dependent on a hospital merger.
After consideration of the public comments we received, we are
finalizing our policies as proposed, without modification.
Specifically, we are finalizing our proposal to revise Sec. 412.92 by
adding a new paragraph (b)(2)(vi) to specify that for applications
received on or after October 1, 2023, where eligibility for SCH
classification is dependent on a merger, the effective date of the SCH
classification will be as of the effective date of the approved merger
if the MAC receives the complete application within 90 days of CMS'
written notification to the hospital of the approval of the merger. If
the MAC does not receive the complete application within 90 days of
CMS' written notification of the merger approval, SCH classification
will be effective as of the date the MAC receives the complete
application in accordance with the regulations at Sec.
412.92(b)(2)(i). We are also finalizing our proposal to make conforming
changes to the existing regulations at Sec. 412.92(b) by adding an
exception referencing paragraph Sec. 412.92(b)(2)(vi) to the language
describing the effective date for applications received on or after
October 1, 2018 at Sec. 412.92(b)(2)(i), and by revising and
streamlining the language at Sec. 412.92(b)(2)(ii)(C) and (b)(2)(iv)
to reference Sec. 412.92(b)(2)(i) as the effective date policy in
effect for applications received on or after October 1, 2018. In
addition, we are finalizing our proposed technical correction to
paragraph (b)(1)(v) by revising the word ``forward'' to ``forwards''.
We are also finalizing our proposal to make a conforming change to
the regulations at Sec. 412.103(d) by modifying the effective date of
rural reclassification for a hospital qualifying for rural
reclassification under Sec. 412.103(a)(3) by meeting the criteria for
SCH status (other than being located in a rural area), and also
applying to obtain SCH status under Sec. 412.92 where eligibility for
SCH classification depends on a hospital merger. We are finalizing our
proposed amendment to Sec. 412.103(d)(1) and the proposed addition of
new Sec. 412.103(d)(3) to provide that, subject to the hospital
meeting the requirements set forth at Sec. 412.92(b)(2)(vi), the
effective date for rural reclassification for such hospital will be as
of the effective date determined under Sec. 412.92(b)(2)(vi).
D. Rural Referral Centers (RRCs) Annual Updates to Case-Mix Index (CMI)
and Discharge Criteria (Sec. 412.96)
Under the authority of section 1886(d)(5)(C)(i) of the Act, the
regulations at Sec. 412.96 set forth the criteria that a hospital must
meet in order to qualify under the IPPS as a rural referral center
(RRC). RRCs receive special treatment under both the DSH payment
adjustment and the criteria for geographic reclassification.
Section 402 of Public Law 108-173 raised the DSH payment adjustment
for RRCs such that they are not subject to the 12-percent cap on DSH
payments that is applicable to other rural hospitals. RRCs also are not
subject to the proximity criteria when applying for geographic
reclassification. In addition, they do not have to meet the requirement
that a hospital's average hourly wage must exceed, by a certain
[[Page 59040]]
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 will 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 national median CMI
value for FY 2024 is based on the CMI values of all urban hospitals
nationwide, and the regional median CMI values for FY 2024 are based on
the CMI values of all urban hospitals within each census region,
excluding those hospitals with approved teaching programs (that is,
those hospitals that train residents in an approved GME program as
provided in Sec. 413.75). These values are based on discharges
occurring during FY 2022 (October 1, 2021 through September 30, 2022),
and include bills posted to CMS' records through March 2023. Because
this is the latest available data, we believe that it is the best
available data for use in calculating the national and regional median
CMI values and is consistent with our proposal to use the FY 2022
MedPAR claims data for FY 2024 ratesetting.
In the FY 2024 IPPS/LTCH PPS proposed rule (88 FR 27009), we
proposed that, in addition to meeting other criteria, if rural
hospitals with fewer than 275 beds are to qualify for initial RRC
status for cost reporting periods beginning on or after October 1,
2023, they must have a CMI value for FY 2022 that is at least--
1.8067 (national--all urban); or
The median CMI value (not transfer-adjusted) for urban
hospitals (excluding hospitals with approved teaching programs as
identified in Sec. 413.75) calculated by CMS for the census region in
which the hospital is located.
The proposed median CMI values by region were set forth in the
table in the proposed rule (88 FR 27010). We stated in the proposed
rule that we intended to update the proposed CMI values in the FY 2024
final rule to reflect the updated FY 2022 MedPAR file, which will
contain data from additional bills received through March 2023.
Comment: Commenters supported our proposal to use FY 2022 data to
calculate the national and regional median CMI values for FY 2024.
Response: We appreciate the commenters' support.
Therefore, based on the best available data (FY 2022 bills received
through March 2023), 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,
2023, they must have a CMI value for FY 2022 that is at least:
1.80655 (national--all urban); or
The median CMI value (not transfer-adjusted) for urban
hospitals (excluding hospitals with approved teaching programs as
identified in Sec. 413.75) calculated by CMS for the census region in
which the hospital is located.
The final CMI values by region are set forth in the following
table.
[[Page 59041]]
[GRAPHIC] [TIFF OMITTED] TR28AU23.246
A hospital seeking to qualify as an RRC should obtain its hospital-
specific CMI value (not transfer-adjusted) from its MAC. Data are
available on the Provider Statistical and Reimbursement (PS&R) System.
In keeping with our policy on discharges, the CMI values are computed
based on all Medicare patient discharges subject to the IPPS MS-DRG-
based payment.
3. Discharges
Section 412.96(c)(2)(i) provides that CMS set forth the national
and regional numbers of discharges criteria in each year's annual
notice of prospective payment rates for purposes of determining RRC
status. As specified in section 1886(d)(5)(C)(ii) of the Act, the
national standard is set at 5,000 discharges. In the FY 2024 IPPS/LTCH
PPS proposed rule (88 FR 27010), for FY 2024, we proposed to update the
regional standards based on discharges for urban hospitals' cost
reporting periods that began during FY 2021 (that is, October 1, 2020,
through September 30, 2021). Because this is the latest available cost
reporting data, we believe that it 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 2021 for FY 2024 ratesetting.
In the FY 2024 IPPS/LTCH PPS proposed rule (88 FR 27010), we
proposed that, in addition to meeting other criteria, a hospital, if it
is to qualify for initial RRC status for cost reporting periods
beginning on or after October 1, 2023, must have, as the number of
discharges for its cost reporting period that began during FY 2021, at
least--
5,000 (3,000 for an osteopathic hospital); or
If less, the median number of discharges for urban
hospitals in the census region in which the hospital is located. (We
refer readers to the table set forth in the FY 2023 IPPS/LTCH PPS
proposed rule at 88 FR 27010).
In the proposed rule, we stated that we intended to update to
update these numbers in the FY 2024 final rule based on the latest
available cost report data.
Comment: Commenters supported our proposal to use FY 2021 data to
calculate median number of discharges by region for FY 2024.
Response: We appreciate the commenters' support.
Therefore, based on the best available discharge data at this time,
that is, for cost reporting periods that began during FY 2021, the
final median number of discharges for urban hospitals by census region
are set forth in the following table.
[GRAPHIC] [TIFF OMITTED] TR28AU23.248
We note that because the median number of discharges for hospitals
in each census region is greater than the national standard of 5,000
discharges, under this final rule, 5,000 discharges is the minimum
criterion for all hospitals, except for osteopathic hospitals for which
the minimum criterion is 3,000 discharges.
E. Payment Adjustment for Low-Volume Hospitals (Sec. 412.101)
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 low-volume hospital payment adjustment is implemented in the
regulations at 42 CFR 412.101. The additional payment adjustment to a
low-volume hospital provided for under section 1886(d)(12) of the Act
is in
[[Page 59042]]
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.
1. Recent Legislation
As discussed in the FY 2023 IPPS/LTCH PPS final rule, beginning
with FY 2023, the low-volume hospital qualifying criteria and payment
adjustment were set to revert to the statutory requirements that were
in effect prior to FY 2011 (87 FR 49060). Subsequent legislation
extended, for FYs 2023 and 2024, the temporary changes to the low-
volume hospital qualifying criteria and payment adjustment originally
provided for by section 50204 of the Bipartisan Budget Act of 2018 for
FYs 2019 through 2022 as follows:
Section 101 of the Continuing Appropriations and Ukraine
Supplemental Appropriations Act, 2023 (Pub. L. 117-180), enacted on
September 30, 2022, through December 16, 2022.
Section 101 of the Further Continuing Appropriations and
Extensions Act, 2023 (Pub. L. 117-229), enacted on December 16, 2022,
through December 23, 2022.
Section 4101 of the Consolidated Appropriations Act, 2023
(CAA 2023) (Pub. L. 117-328), enacted on December 29, 2022, through
September 30, 2024.
We discuss the extension of these temporary changes for FY 2023 and
FY 2024 in greater detail in this section of this rule and in the FY
2024 IPPS/LTCH proposed rule (88 FR 27010 through 27011). Beginning in
FY 2025, 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, which
were extended and modified through subsequent legislation.
2. Extension of the Temporary Changes to the Low-Volume Hospital
Definition and Payment Adjustment Methodology for FYs 2023 and 2024
As discussed in the FY 2019 IPPS/LTCH PPS final rule (83 FR 41398
through 41399), section 50204 of the Bipartisan Budget Act of 2018
(Pub. L. 115-123) modified the definition of a low-volume hospital and
the methodology for calculating the payment adjustment for low-volume
hospitals for FYs 2019 through 2022. 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).
In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41399), to implement
this requirement, we specified a continuous, linear sliding scale
formula to determine the low-volume hospital payment adjustment for FYs
2019 through FY 2022 that is similar to the continuous, linear sliding
scale formula used to determine the low-volume hospital payment
adjustment originally established by the Affordable Care Act and
implemented in the regulations at Sec. 412.101(c)(2)(ii) in the FY
2011 IPPS/LTCH PPS final rule (75 FR 50240 through 50241). Consistent
with the statute, we provided that qualifying hospitals with 500 or
fewer total discharges will receive a low-volume hospital payment
adjustment of 25 percent. For qualifying hospitals with fewer than
3,800 discharges but more than 500 discharges, the low-volume payment
adjustment is calculated by subtracting from 25 percent the proportion
of payments associated with the discharges in excess of 500. As such,
for qualifying hospitals with fewer than 3,800 total discharges but
more than 500 total discharges, the low volume hospital payment
adjustment for FYs 2019 through FY 2022 was calculated using the
following formula:
Low-Volume Hospital Payment Adjustment = 0.25-[0.25/3300] x (number of
total discharges-500) = (95/330)-(number of total discharges/13,200)
For this purpose, we specified that the ``number of total
discharges'' is determined as total discharges, which includes Medicare
and non-Medicare discharges during the fiscal year, based on the
hospital's most recently submitted cost report. The low-volume hospital
payment adjustment for FYs 2019 through 2022 is set forth in the
regulations at Sec. 412.101(c)(3).
As described previously, recent legislation extended through FY
2024 the definition of a low-volume hospital and the methodology for
calculating the payment adjustment for low-volume hospitals in effect
for FYs 2019 through FY 2022 pursuant to the Bipartisan Budget Act of
2018. Specifically, under sections 1886(d)(12)(C)(i) and
1886(d)(12)(C)(i)(III) of the Act, as amended, for FY 2023 and FY 2024,
a low-volume hospital must be more than 15 road miles from another
subsection (d) hospital and have less than 3,800 discharges during the
fiscal year.
In addition, under section 1886(d)(12)(D)(ii) of the Act, as
amended, for FY 2023 and FY 2024, the low-volume hospital payment
adjustment is determined using a continuous linear sliding scale
ranging from 25 percent for low-volume hospitals with 500 or fewer
discharges to 0 percent for low-volume hospitals with greater than
3,800 discharges.
[[Page 59043]]
[GRAPHIC] [TIFF OMITTED] TR28AU23.249
Based on the current law, beginning with FY 2025, 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, as amended, defines a low-volume
hospital, for FYs 2005 through 2010 and FY 2025 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. As previously
noted, 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). Furthermore, as
amended, section 1886(d)(12)(B) of the Act requires, for discharges
occurring in FYs 2005 through 2010 and FY 2025 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 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. Therefore, in order for a hospital to continue to qualify as a
low-volume hospital on or after October 1, 2024, 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)). We refer readers to the FY 2023 IPPS/LTCH PPS
final rule for further discussion.
As discussed in section V.E.4. of the preamble of this final rule,
we proposed to make conforming changes to the regulation text in Sec.
412.101 to reflect the extension of the changes to the qualifying
criteria and the payment adjustment methodology for low-volume
hospitals through FY 2024.
Comment: Many commenters supported the extension of the changes to
the low-volume hospital qualifying criteria and payment adjustment
methodology for FYs 2023 and 2024.
Response: We appreciate the commenters sharing their support for
the extension of the temporary changes to the low-volume hospital
payment adjustment FYs 2023 and 2024.
As discussed later in the section, we are finalizing our proposals
without modification on the extension of the changes to the qualifying
criteria and the payment adjustment methodology for low-volume
hospitals through FY 2024, after consideration of the public comments.
3. Extension of the Temporary Changes to the Low-Volume Hospital
Definition and Payment Adjustment Methodology for FY 2023
Prior to the enactment of Public Law 117-180, the temporary changes
to the low-volume hospital qualifying criteria and payment adjustment
originally provided by section 50204 of the Bipartisan Budget Act of
2018 were set to expire October 1, 2022. As previously discussed, these
temporary changes to the low-volume hospital payment policy were
extended through December 16, 2022 by section 101 of Public Law 117-
180, through December 23, 2022 by section 101 of Public Law 117-229,
and through September 30, 2024 by section 4101 of Public Law 117-328.
In accordance with section 1886(d)(12)(C)(i) of the Act, as amended,
for FY 2023 a low-volume hospital must be more than 15 road miles from
another subsection (d) hospital and must have less than 3,800
discharges during the fiscal year.
We addressed the extension provided by section 101 of the
Continuing Appropriations and Ukraine Supplemental Appropriations Act,
2023 (Pub. L. 117-180) for the portion of FY 2023 beginning on October
1, 2022, and ending on December 16, 2022 (in other words, occurring
before December 17, 2022) in Change Request 12970 (Transmittal 117400),
issued December 9, 2022. For additional information on this extension,
please refer to the transmittal https://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/Transmittals/r11740otn.
We subsequently addressed the additional extensions of these
provisions for FY 2023, specifically, through December 23, 2022, as
provided by section 101 of the Further Continuing Appropriations and
Extensions Act, 2023 (Pub. L. 117-229) and through September 30, 2023,
as provided by section 4101 of the CAA 2023 (Pub. L. 117-328) in Change
Request 13103 (Transmittal 11878), issued February 23, 2023. For
additional information, please refer to the transmittal https://www.cms.gov/files/document/r11878otn.pdf.
We proposed to make conforming changes to the regulations text in
Sec. 412.101 to codify these extensions for
[[Page 59044]]
FY 2023 as discussed in section V.E.4. of the preamble of this final
rule.
Comment: Many commenters supported the extension of the definition
and payment of the low-volume hospital payment adjustment for FY 2023.
A commenter urged CMS to expeditiously process claims and provide
instructions to MACs for extensions, especially in instances when
extensions are made retroactively. The commenter indicated seamless
transition of these payments are crucial for rural providers.
Response: We appreciate the commenters sharing their support for
legislative action of the extension. As we have said in the past, we
will make every effort to implement any extension of the low-volume
payment policy as expeditiously as possible.
After consideration of the public comments we received regarding
the temporary changes to the qualifying criteria and the payment
adjustment methodology for low-volume hospitals through FY 2023, we are
finalizing our proposal without modification for the FY 2023
extensions.
4. Payment Adjustment for FY 2024 and Conforming Changes to Regulations
As discussed earlier, section 4101 of the CAA 2023 extended through
FY 2024 the modified definition of a low-volume hospital and the
methodology for calculating the payment adjustment for low-volume
hospitals in effect for FYs 2019 through 2022. Specifically, under
section 1886(d)(12)(C)(i) of the Act, as amended, for FYs 2019 through
2024, 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. Under
section 1886(d)(12)(D) of the Act, as amended, for discharges occurring
in FYs 2019 through 2024, 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).
As previously discussed, in the FY 2019 IPPS/LTCH PPS final rule
(83 FR 41399), we specified a continuous, linear sliding scale formula
to determine the low volume payment adjustment, as reflected in the
regulations at Sec. 412.101(c)(3)(ii). Consistent with the statute, we
provided that qualifying hospitals with 500 or fewer total discharges
will receive a low-volume hospital payment adjustment of 25 percent.
For qualifying hospitals with fewer than 3,800 discharges but more than
500 discharges, the low-volume payment adjustment is calculated by
subtracting from 25 percent the proportion of payments associated with
the discharges in excess of 500. As such, for qualifying hospitals with
fewer than 3,800 total discharges but more than 500 total discharges,
the low-volume hospital payment adjustment at Sec. 412.101(c)(3)(ii)
is calculated using the following formula:
Low-Volume Hospital Payment Adjustment = 0.25-[0.25/3300] x (number of
total discharges-500) = (95/330)-(number of total discharges/13,200)
For this purpose, the ``number of total discharges'' is determined
as total discharges, which includes Medicare and non-Medicare
discharges during the fiscal year, based on the hospital's most
recently submitted cost report, as explained previously.
Consistent with the extension of the methodology for calculating
the payment adjustment for low-volume hospitals through FY 2024, we
proposed to continue using the previously specified continuous, linear
sliding scale formula to determine the low-volume hospital payment
adjustment for FY 2024. We also proposed to make conforming changes to
the regulation text in Sec. 412.101 to reflect the extensions of the
changes to the qualifying criteria and the payment adjustment
methodology for low-volume hospitals in accordance with provisions of
the Continuing Appropriations and Ukraine Supplemental Appropriations
Act, 2023, the Further Continuing Appropriations and Extensions Act,
2023, and the CAA 2023. Specifically, we proposed to make conforming
changes to paragraphs (b)(2)(iii) and (c)(3) introductory text of Sec.
412.101 to reflect that the low-volume hospital payment adjustment
policy in effect for FY 2023 and FY 2024 is the same low-volume
hospital payment adjustment policy in effect for FYs 2019 through 2022
(as described in the FY 2019 IPPS/LTCH PPS final rule (83 FR 41398
through 41399)). In addition, in accordance with the provisions of the
Continuing Appropriations and Ukraine Supplemental Appropriations Act,
2023, the Further Continuing Appropriations and Extensions Act, 2023,
and the CAA 2023, for FY 2025 and subsequent fiscal years, we proposed
to make conforming changes to paragraphs (b)(2)(i) and (c)(1) of Sec.
412.101 to reflect that the low-volume hospital payment adjustment
policy in effect for those years is the same the low-volume hospital
payment adjustment policy in effect for FYs 2005 through 2010, as
described previously.
Comment: In addition to expressing support for FY 2023, many
commenters supported the extension to the FY 2024 definition and
payment of the low-volume hospital payment adjustment.
Response: We appreciate the commenters sharing their support for
the extension of the low-volume hospital definition and payment
adjustment for FY 2024, and for legislative action for the permanent
modification of the low-volume hospital payment policy.
Comment: Many commenters urged CMS to collaborate with Congress to
make permanent the modifications to the low-volume hospital payment
policy. Some commenters urged CMS to continue the temporary changes to
the definition of a low-volume hospital and the methodology for
calculating the payment adjustment for low-volume hospitals for FY 2024
and subsequent years. Commenters stated that not continuing these
temporary changes would result in significant reductions in payment
that could impede the services hospitals, including those in rural
communities, provide in the communities they serve.
Response: We appreciate the feedback from comments urging CMS to
explore ways to continue the enhanced low-volume hospital payment
policy for FY 2024 and subsequent years, we note that the statute only
extends the temporary changes to the low-volume hospital policy for FYs
2023 and 2024. Therefore, beginning with FY 2025, the low-volume
hospital qualifying criteria and the amount of the payment adjustment
to such hospitals will revert back to those policies that were in
effect prior to the amendments made by recent legislation.
After consideration of the public comments on the payment
adjustment methodology for low-volume hospitals through FY 2024, we are
finalizing our proposal to codify these extensions to the regulation
text in Sec. 412.101 without modification.
5. Process for Requesting and Obtaining the Low-Volume Hospital Payment
Adjustment for FY 2024
In the FY 2011 IPPS/LTCH PPS final rule (75 FR 50238 through 50275
and 50414) and subsequent rulemaking,
[[Page 59045]]
most recently in the FY 2023 IPPS/LTCH PPS final rule (87 FR 49062
through 49063), 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 the revised Sec.
412.101(b)(2)(i) and (iii), a hospital's most recently submitted cost
report is used to determine if the hospital meets the discharge
criterion to receive the low-volume payment adjustment in the current
year. As discussed in the FY 2019 IPPS/LTCH PPS final rule (83 FR 41399
and 41400), we use cost report data to determine if a hospital meets
the discharge criterion because this is the best available data source
that includes information on both Medicare and non-Medicare discharges.
(For FYs 2011 through 2018, the most recently available MedPAR data
were used to determine the hospital's Medicare discharges because non-
Medicare discharges were not used to determine if a hospital met the
discharge criterion for those years.) Therefore, a hospital 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 earlier, in addition to the discharge criterion,
for FY 2019 and subsequent fiscal years, eligibility for the low-volume
hospital payment adjustment is also dependent upon the hospital meeting
the applicable mileage criterion specified in the revised Sec.
412.101(b)(2)(i) or (iii) for the fiscal year. Specifically, to meet
the mileage criterion for FY 2024, as noted earlier, a hospital must be
located more than 15 road miles from the nearest subsection (d)
hospital, as was the case for FYs 2019 through 2023. (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 our previously established process, for FY 2024, we
proposed that a hospital must submit a written request for low-volume
hospital status to its MAC that includes sufficient documentation to
establish that the hospital meets the applicable mileage and discharge
criteria (as described earlier). Specifically, we proposed that for FY
2024, a hospital must make a written request for low-volume hospital
status that is received by its MAC no later than September 1, 2023, in
order for the low-volume, add-on payment adjustment to be applied to
payments for its discharges beginning on or after October 1, 2023. If a
hospital's written request for low-volume hospital status for FY 2024
is received after September 1, 2023, 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 2024 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 2023 may continue to receive a low-
volume hospital payment adjustment for FY 2024 without reapplying if it
continues to meet both the discharge and the mileage criteria (which,
as discussed previously, are the same qualifying criteria that apply
for FY 2023). In this case, a hospital's request can include a
verification statement that it continues to meet the mileage criterion
applicable for FY 2023. (Determination of meeting the discharge
criterion is discussed earlier in this section.) We note that a
hospital must continue to meet the applicable qualifying criteria as a
low-volume hospital (that is, the hospital must meet the applicable
discharge criterion and mileage criterion for the fiscal year) to
receive the payment adjustment in that fiscal year; that is, low-volume
hospital status is not based on a ``one-time'' qualification (75 FR
50238 through 50275). Consistent with historical policy, a hospital
must submit its request, including this written verification, for each
fiscal year for which it seeks to receive the low-volume hospital
payment adjustment, and in accordance with the timeline described
earlier.
We did not receive any comments on our process for requesting and
obtaining the low-volume payment adjustment for FY 2024. For the
reasons discussed in this final rule and in the FY 2024 IPPS/LTCH PPS
proposed rule, we are finalizing our proposal, without modification.
F. Medicare-Dependent, Small Rural Hospital (MDH) Program (Sec.
412.108)
1. Background
Section 1886(d)(5)(G) of the Act provides special payment
protections, under the IPPS, to a Medicare-dependent, small rural
hospital (MDH). Section 1886(d)(5)(G)(iv) of the Act defines a MDH as a
hospital that is
[[Page 59046]]
located in a rural area, or is located in an all-urban State but meets
one of the specified statutory criteria for rural reclassification (as
added by section 50205 of the Bipartisan Budget Act of 2018, Pub. L.
115-123), has not more than 100 beds, is not an sole community hospital
(SCH), and has a high percentage of Medicare discharges (that is, not
less than 60 percent of its inpatient days or discharges during the
cost reporting period beginning in FY 1987 or two of the three most
recently audited cost reporting periods for which the Secretary has a
settled cost report were attributable to inpatients entitled to
benefits under Part A). The regulations at 42 CFR 412.108 set forth the
criteria that a hospital must meet to be classified as an 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).)
2. Implementation of Legislative Extension of MDH Program
Since the extension of the MDH program through FY 2012 provided by
section 3124 of the Affordable Care Act, the MDH program has been
extended multiple times by subsequent legislation, most recently for
FYs 2023 through 2024, as discussed further in this section (that is,
for discharges occurring before October 1, 2024.) (Additional
information on the extensions of the MDH program after FY 2012 and
through FY 2022 can be found in the FY 2023 IPPS/LTCH PPS final rule
(87 FR 49064).) As discussed in the FY 2023 IPPS/LTCH PPS final rule,
the MDH program provisions at section 1886(d)(5)(G) of the Act were set
to expire at the end of FY 2022 (87 FR 49064). Subsequently, the MDH
program was extended by additional legislation as follows:
Division D, Section 102 of the Continuing Appropriations
and Ukraine Supplemental Appropriations Act, 2023 (Public Law 117-180),
enacted on September 30, 2022, amended sections 1886(d)(5)(G)(i) and
1886(d)(5)(G)(ii)(II) of the Act to provide for an extension of the MDH
program through December 16, 2022.
Division C, Section 102 of the Further Continuing
Appropriations and Extensions Act, 2023 (Pub. L. 117-229), enacted on
December 16, 2022, amended sections 1886(d)(5)(G)(i) and
1886(d)(5)(G)(ii)(II) of the Act to provide for an extension of the MDH
program through December 23, 2022.
Division FF, Section 4102 of the Consolidated
Appropriations Act, 2023 (Pub. L. 117-328), enacted on December 29,
2022, amended sections 1886(d)(5)(G)(i) and 1886(d)(5)(G)(ii)(II) of
the Act to provide for an extension of the MDH program through FY 2024
(that is, for discharges occurring on or before September 30, 2024).
In the FY 2024 IPPS/LTCH PPS proposed rule (88 FR 27014), we
proposed to 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 the extension of the MDH
program through FY 2024.
We note that the legislative extensions of the MDH program provided
by section 102 of Pub. L. 117-180 and section 102 of Public Law 117-
229, which collectively extended the program through December 23, 2022,
were signed into law prior to a statutory expiration of the MDH
program. Generally, as a result of these extensions, a provider that
was classified as an MDH as of September 30, 2022, continued to be
classified as an MDH as of October 1, 2022, with no need to reapply for
MDH classification. (For more information on the MDH extensions through
December 23, 2022, see Change Request 12970 and Change Request 13103,
which are available online at https://www.cms.gov/files/document/R11740OTN.pdf and https://www.cms.gov/files/document/r11878otn.pdf,
respectively.) In contrast, the legislative extension provided by
section 4102 of Public Law 117-328 was signed into law on December 29,
2022, after the December 24, 2022, expiration of the MDH program.
Generally, as a result of this extension and consistent with previous
extensions of the MDH program, a provider that was classified as an MDH
as of December 23, 2022, was reinstated as a MDH effective December 24,
2022, with no need to reapply for MDH classification.
The regulations at Sec. 412.92(b)(2)(v) allow MDHs to apply for
classification as a SCH 30 days prior to the anticipated expiration of
the MDH program, and if approved, to be granted such status effective
with the expiration of the MDH program. As discussed in Change Requests
12970 and 13103, because the MDH program did not, in fact, expire as of
the anticipated October 1, 2022, or December 17, 2022, expiration
dates, any MDH that applied for SCH classification per the regulations
at Sec. 412.92(b)(2)(v) in anticipation of either of those expiration
dates would not have been classified as a SCH as of October 1, 2022, or
December 17, 2022, as applicable. Furthermore, we are not aware of any
hospitals that applied for SCH classification in this manner in advance
of the December 24, 2022, expiration of the MDH program. However, as
discussed in Change Request 13103, if there are any such hospitals and
those hospitals are unsure about their MDH status, those hospitals
should contact their MACs. We note that in accordance with Change
Request 13103, a provider affected by the MDH program extension that
also applied for SCH classification per the regulations at Sec.
412.92(b)(2)(v) or cancelled its rural reclassification under Sec.
412.103 in anticipation of the expiration of the MDH program will
receive a notice from its MAC detailing its status in light of the MDH
program extension.
Therefore, as collectively provided by division D, section 102 of
the Continuing Appropriations and Ukraine Supplemental Appropriations
Act, 2023, division C, section 102 of the Further Continuing
Appropriations and Extensions Act, 2023, and division FF, section 4102
of the Consolidated Appropriations Act, 2023, providers that were
classified as MDHs as of September 30, 2022, generally continue to be
classified as MDHs as of October 1, 2022, with no need to reapply for
MDH classification. However, as discussed in Change Requests 12970 and
13103, if a MDH cancelled its rural classification under Sec.
412.103(g) effective on or after October 1, 2022, its MDH status may
not be applied continuously or automatically reinstated, as applicable
(and as described previously). In order to meet the criteria to become
an MDH, generally a hospital must be located in a rural area. To
qualify for MDH status, some MDHs may have reclassified as rural under
the regulations at Sec. 412.103. With the anticipated expiration of
the MDH provision, some of these providers may have requested a
cancellation of their rural classification. Therefore, in order to
qualify for MDH status, these providers must request to be reclassified
as rural under 42 CFR 412.103(b) and reapply for MDH classification in
accordance with the regulations at 42 CFR 412.108(b). As discussed, all
other hospitals with MDH status as of September 30, 2022 continue to be
classified as MDHs effective October 1, 2022. We refer readers to
Change Requests 12970 and 13103 for further discussion on the
extensions of the MDH program through FY 2023.
Comment: Commenters supported our proposals to make conforming
changes to the regulations to reflect the legislation extending the MDH
provision. Commenters also urged CMS to expeditiously process claims
and provide instructions to MACs during program extensions, especially
in instances when extensions are made
[[Page 59047]]
retroactively. They noted that seamless transition of programmatic
support are crucial life lines for rural providers.
Response: We appreciate the commenters' support and their concern
for the legislative interruption of Medicare programs that support
rural providers. We note that in response to the multiple legislative
extensions since the September 1, 2022, expiration (listed previously),
CMS has issued multiple program instructions as expeditiously as
possible to the MACs so that rural providers could benefit from the
special payment protections afforded to MDHs.
After consideration of the public comments we received, we are
adopting as final the proposed conforming changes to the regulations
text at Sec. Sec. 412.90 and 412.108 to reflect the extension of the
MDH program through FY 2024 in accordance with division FF, section
4102 of the Consolidated Appropriations Act, 2023 (Pub. L. 117-328). We
are finalizing the proposed changes in paragraphs (a)(1) and
(c)(2)(iii) of Sec. 412.108 and paragraph (j) of Sec. 412.90 without
modification.
G. 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 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, 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 could 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 same 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.
2. Calculation of Prior Year IME Resident to Bed Ratio When There Is a
Medicare GME Affiliation Agreement
Section 1886(d)(5)(B) of the Act provides that IPPS hospitals that
have residents in an approved graduate medical education (GME) program
receive an additional payment to reflect the higher indirect patient
care costs of teaching hospitals relative to nonteaching hospitals. The
regulations regarding the calculation of this additional payment, known
as the indirect medical education (IME) adjustment, are located at
Sec. 412.105. The IME adjustment factor is calculated using a
hospital's ratio of residents to beds, which is represented as r, and a
statutorily set multiplier, which is represented as c, in the following
equation: c x [(1 + r)\.405\-1]. 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. Thus, for FY
2024, the IME multiplier is 1.35. The formula is traditionally
described in terms of a certain percentage increase in payment for
every 10-percent increase in the resident-to-bed ratio. 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 4621(b)(1) of the Balanced Budget Act of 1997 (Pub. L. 105-
33) amended section 1886(d)(5)(B) of the Act by adding a clause (vi) to
provide that, effective for cost reporting periods beginning on or
after October 1, 1997, the resident-to-bed ratio may not exceed the
ratio calculated during the prior cost reporting period (after
accounting for the cap on the hospital's number of full-time equivalent
(FTE) residents). We implemented this policy in the August 29, 1997,
final rule with comment period (62 FR 46003) and the May 12, 1998 final
rule (63 FR 26323) under regulations at Sec. 412.105(a)(1). In
general, the resident-to-bed ratio from the prior cost reporting
period, which is to be used as the cap on the resident-to-bed ratio for
the current cost reporting period, should reflect the prior year FTE
count subject to the FTE cap on the number of allopathic and
osteopathic residents, but not subject to the three-year rolling
average. We note that the resident-to-bed ratio cap is a cap on the
resident-to-bed ratio calculated for all residents, including
allopathic, osteopathic, dental, and podiatry residents (63 FR 26324,
May 12, 1998). However, as described in existing Sec.
412.105(a)(1)(i), the numerator of the resident-to bed ratio cap may be
adjusted to reflect an increase in the current cost reporting period's
resident-to-bed ratio due to residents in a new GME program or new
Rural Track Program, a Medicare GME affiliation agreement, or due to
residents displaced by the closure of a hospital or a residency
program. Under other circumstances where the exception does not apply,
such as an increase in the number of podiatry or dentistry residents or
a decrease in the number of beds (that is, the denominator of the
resident-to-bed ratio), the ratio can increase after a 1-year delay.
The law requires a hospital's IME payment to be
[[Page 59048]]
determined based on the lower of the two ratios (see section
1886(d)(5)(B)(vi)(I) of the Act and regulations at 42 CFR
412.105(a)(1)(i)). An increase in the current cost reporting period's
ratio (subject to the FTE cap on the overall number of allopathic and
osteopathic residents) thereby establishes a higher cap for the
following cost reporting period.
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 50069), we amended our
regulations to require that each Medicare GME affiliation agreement
must have a shared rotational arrangement. The regulations for
``Medicare GME affiliation agreements'' are at 42 CFR 413.75(b) and
(f). In the FY 2023 IPPS/LTCH PPS final rule (87 FR 49075, August 10,
2022), we expanded the regulations regarding Medicare GME affiliation
agreements to permit urban and rural hospitals that participate in the
same separately accredited family medicine Rural Track Program (RTP)
and have rural track FTE limitations to enter into ``Rural Track
Medicare GME Affiliation Agreements''.
As previously mentioned, as described in existing Sec.
412.105(a)(1)(i), the numerator of the prior year resident-to bed ratio
may be adjusted to reflect an increase in the current cost reporting
period's resident-to-bed ratio due to residents in a Medicare GME
affiliation agreement (among other limited reasons). As discussed in
the FY 2024 IPPS/LTCH PPS proposed rule (88 FR 27016), we have
occasionally received inquiries related to adjusting the prior year
numerator when the hospital is training more residents in the current
year as a result of an IME FTE cap increase under the terms of a
Medicare GME affiliation agreement. A hospital can train more residents
in the current year versus the prior year under the terms of a Medicare
GME affiliation agreement as a result of several scenarios. As an
example, Hospital A and Hospital B participate in a Medicare GME
affiliation agreement over a period of several years, and generally,
under the terms of the agreement, Hospital A is giving IME FTE cap
slots to Hospital B:
Example of Medicare GME Affiliations:
[GRAPHIC] [TIFF OMITTED] TR28AU23.250
In this example, we see that Hospital B's IME cap increases from
2019 to 2020 and again from 2020 to 2021 because it receives cap slots
from Hospital A. However, we also see that Hospital A experiences a net
increase in its FTE cap from 2021 to 2022, even though it continues to
loan IME slots to Hospital B. This is because, under the terms of the
Medicare GME affiliation agreement, Hospital A loans one less IME FTE
to Hospital B in 2022 than it did in 2021. In the FY 2024 IPPS/LTCH PPS
proposed rule, we proposed to clarify how to determine the net increase
in FTEs in the current year numerator as compared to the prior year
numerator as a result of the terms of a Medicare GME affiliation
agreement. We explained that to determine this change accurately, we
need to isolate only changes resulting from the Medicare GME
affiliation agreement, and not, for example, an increase in the
resident-bed-ratio due to participation in new programs, or due to a
change in the number of beds in the denominator. Under the current cost
report instructions (Transmittal 20) on Form CMS-2552-10, Worksheet E,
Part A line 20, regarding the determination the prior year IRB ratio,
states:
Line 20--In general, enter from the prior year cost report the
intern and resident to bed ratio by dividing line 12 by line 4
(divide line 3.14 by line 3 if the prior year cost report was the
Form CMS-2552-96). However, if the provider is participating in
training residents in a new medical residency training program(s)
under 42 CFR 413.79(e) for a new program started prior to October 1,
2012, add to the numerator of the prior year intern and resident to
bed ratio (that is, line 12 of the prior cost report, which might be
zero), if applicable, the number of FTE residents in the current
cost reporting period that are in the initial period of years of a
new program (line 16) (that is, the period of years is the minimum
accredited length of the program). For a new program started prior
to October 1, 2012, contact your contractor for instructions on how
to complete this line if you have a new program for which the period
of years is less than or more than three years. For urban hospitals
that began participating in training residents in a new program for
the first time on or after October 1, 2012, under 42 CFR
413.79(e)(1), if this cost reporting period is prior to the cost
reporting period that coincides with or follows the start of the
sixth program year of the first new program started, then divide
line 16 of this cost report by line 4 of the prior year cost report
(see 79 FR 50110 (August 22, 2014)). For rural hospitals
participating in a new program on or after October 1, 2012, under 42
CFR 413.79(e)(3), for each new program started, if this cost
reporting period is prior to the cost reporting period that
coincides with or follows the start of the sixth program year of
each particular new program, then add the amount from line 12 of the
prior year (if greater than zero) and line 16 of this cost report,
and divide the sum by line 4 of the prior year's cost report (see 79
FR 50110 (August 22, 2014)). If the provider is participating in a
Medicare GME affiliation agreement or rural track Medicare GME
affiliation agreement under 42 CFR 413.79(f), and the provider
increased its current year FTE cap and current year FTE count due to
this affiliation agreement, identify the lower of: (a) the
difference between the current year numerator and the prior year
numerator, and
[[Page 59049]]
(b) the number by which the FTE cap increased per the affiliation
agreement, and add the lower of these two numbers to the prior
year's numerator (see 42 CFR 412.105(a)(1)(i)). If the hospital is
participating in a valid emergency Medicare GME affiliation
agreement under a Sec. 1135 waiver, and a portion of this cost
report falls within the time frame covered by that emergency
affiliation agreement, then, effective on and after October 1, 2008,
enter the current year resident-to-bed ratio from line 19 (see 73 FR
48649 (August 19, 2008) and 42 CFR 412.105(f)(1)(vi)). Effective for
cost reporting periods beginning on or after October 1, 2002, if the
hospital is training FTE residents in the current year that were
displaced by the closure of another hospital or program, also adjust
the numerator of the prior year ratio for the number of current year
FTE residents that were displaced by hospital or program closure
(see 42 CFR 412.105(a)(1)(iii)). The amount added to the prior
year's numerator is the displaced resident FTE amount that you would
not be able to count without a temporary cap adjustment. This is the
same amount of displaced resident FTEs entered on line 17. For cost
reporting periods beginning on or after October 1, 2022, for urban
and rural hospitals participating in a rural track program(s),
adjust the numerator by adding to the amount on Worksheet E, Part A,
line 12, of the prior year cost report (if greater than zero) the
FTEs in the rural track program(s) on line 16 of this worksheet, if
this cost report is still prior to the cost reporting period that
coincides with or follows the start of the sixth program year of
that rural track program (italics emphasis added).
Our proposed clarification focused on the italicized text as
previously detailed:
If the provider is participating in a Medicare GME affiliation
agreement or rural track Medicare GME affiliation agreement under 42
CFR 413.79(f), and the provider increased its current year FTE cap
and current year FTE count due to this affiliation agreement,
identify the lower of: (a) the difference between the current year
numerator and the prior year numerator, and (b) the number by which
the FTE cap increased per the affiliation agreement, and add the
lower of these two numbers to the prior year's numerator (emphasis
added).
We have been asked by teaching hospitals to clarify what lines on
the cost report to use to determine that the provider ``increased its
current year FTE cap,'' and that the provider increased its ``current
year FTE count'' due to the affiliation agreement. We have also been
asked to clarify what line on the cost report represents the ``current
year numerator,'' specifically, whether this value refers to current
year line 12, or line 15, or line 18.
Line 8 states: Enter the adjustment (increase or decrease) to the
FTE count for allopathic and osteopathic programs for affiliated
programs in accordance with 42 CFR 413.75(b), 413.79(c)(2)(iv) and 63
FR 26340 (May 12, 1998), and 67 FR 50069 (August 1, 2002).
Line 10 states: Enter the FTE count for allopathic and osteopathic
programs in the current year from your records. Do not include
residents in the initial years of the new program.
Line 12 states: Enter the result of the lesser of line 9, or line
10 added to line 11.
Line 15 states: Enter the sum of lines 12 through 14 divided by
three.
Line 18 states: Enter the sum of lines 15, 16 and 17.
Line 19 states: Enter the current year resident to bed ratio by
dividing line 18 by line 4 [beds].
As discussed in the FY 2024 IPPS/LTCH PPS proposed rule (88 FR
27017 through 27018), if the provider is participating in a Medicare
GME affiliation agreement (or rural track Medicare GME affiliation
agreement under 42 CFR 413.75(b)), the provider first has to make sure
that in fact, it increased its current year FTE cap, and second, that
it increased its current year allowable FTE count. We proposed to
clarify that, to determine if there is an increase in the current year
FTE cap ``due to this affiliation agreement,'' the provider would check
if the difference of current year line 8 minus prior year line 8 is
positive. If yes, next the provider would determine if the difference
of current year allowable allopathic and osteopathic FTE count line 12
minus prior year allowable allopathic and osteopathic FTE count line 12
is positive. The provider would determine the difference between
current year line 12 and prior year line 12 by first excluding any
dental and podiatry FTEs on line 11 of both years, if applicable. If
negative, then the provider did not increase its current year allowable
allopathic and osteopathic FTE count due to the affiliation agreement,
and there is no adjustment made to the prior year IRB ratio. If
positive, the provider would proceed with the next part of the
determination to ``identify the lower of: (a) the difference between
the current year numerator and the prior year numerator, and (b) the
number by which the FTE cap increased per the affiliation agreement,
and add the lower of these two numbers to the prior year's numerator.''
We further proposed to clarify that the ``current year numerator''
referred to in the excerpt from Worksheet E, Part A line 20 is line 15;
that is, the current year numerator before making any adjustments for
new programs, new RTPs, or displaced residents, but including residents
counted under the terms of a Medicare GME affiliation agreement, and
subject to the three-year rolling average. We explained the reasons for
this in detail and restate the explanation in this section of this
final rule. We also acknowledged that the phrase ``current year
numerator'' in the context of line 20 must refer to a different value
than the numerator of the ``current year resident to bed ratio'' in
line 19, which states, ``Enter the current year resident to bed ratio
by dividing line 18 by line 4.'' In the context of Medicare GME
affiliation agreements in line 20, the current year numerator cannot
refer to line 18, as line 18 represents the current year IRB ratio with
various adjustments, including the FTEs in new programs from line 16,
and FTEs displaced by hospital or program closure on line 17. As
previously stated, we need to isolate only changes associated with the
Medicare GME affiliation agreement, and including FTEs associated with
new programs or closed programs on line 18 would introduce extraneous
variables into the equation.
Next, we noted that the ``current year numerator'' is not line 12.
Line 12 is the current year allowable FTE count; that is, the lower of
the current year FTE count or the adjusted FTE cap, which reflects the
FTE adjustment under the terms of the Medicare GME affiliation
agreement. The current year allowable FTE count on line 12 is used in
the 3-year rolling average calculation on line 15, which sums the
current year allowable FTE count, the prior year allowable FTE count,
and the penultimate year FTE count, and divides the result by 3. While
it may seem that averaging the current year FTEs with FTEs from prior
years interferes with determining only changes to the current year FTEs
under an affiliation agreement, the law and regulations require that
additional FTEs added due to a Medicare GME affiliation agreement are
subject to the 3-year rolling average (see section 1886(d)(5)(B)(viii)
of the Act and 42 CFR 413.79(f), regarding a Medicare GME affiliated
group, which provides that a hospital may receive a temporary
adjustment to its FTE cap, which is subject to the averaging rules
under Sec. 413.79(d), to reflect residents added or subtracted because
the hospital is participating in a Medicare GME affiliated group (as
defined under Sec. 413.75(b)). Because any additional FTEs due to
participation in a Medicare GME affiliation agreement must be included
in the rolling average on line 15, we stated that we believe that the
``current year numerator'' referred to on Worksheet E, Part A line 20
is line 15,
[[Page 59050]]
not line 12. This contrasts with the ``prior year numerator,'' which we
note is line 12, as the instructions for line 20 state: ``In general,
enter from the prior year cost report the intern and resident to bed
ratio by dividing line 12 by line 4.'' (See 42 CFR 412.105(a)(1)(i),
which states ``this ratio may not exceed the ratio for the hospital's
most recent prior cost reporting period after accounting for the cap on
the number of allopathic and osteopathic full-time equivalent residents
as described in paragraph (f)(1)(iv) of this section.'' This regulation
does not require accounting for the 3-year rolling average.) Therefore,
we proposed to clarify the instructions on Worksheet E, Part A line 20
as follows, in italics:
If the provider is participating in a Medicare GME affiliation
agreement or rural track Medicare GME affiliation agreement under 42
CFR 413.79(f), and the provider increased its current year FTE cap
(difference of current year line 8 and prior year line 8 is
positive) and increased its current year allowable FTE count
(difference of current year line 12 (excluding current year dental
and podiatry from line 11) and prior year line 12 (excluding prior
year dental and podiatry from line 11) is positive) due to this
affiliation agreement, identify the lower of: a) the difference
between the current year numerator line 15 and the prior year
numerator line 12 of the prior year cost report, and b) the number
by which the FTE cap increased per the affiliation agreement
(difference of current year line 8 and prior year line 8), and add
the lower of these two numbers to the prior year's numerator line 12
of the prior year cost report.
Comment: Several commenters appreciated CMS's proposed
clarification to the IME worksheet on the Medicare cost report when
hospitals enter into a Medicare GME affiliation agreement, stating it
will assist hospitals in ensuring that they complete the worksheet and
report FTE counts in the proper manner. A commenter supported CMS's
clarification efforts and another asked CMS to continue listening to
teaching hospitals when specific policies are unclear.
Other commenters disagreed with aspects of CMS's proposed
clarification. Another commenter noted that CMS's proposed
clarification involves a comparison of the total allowable FTEs from
the prior year and the current year as reported on line 12 (``. . . the
provider . . . increased its current year allowable FTE count
(difference of current year line 12 (excluding current year dental and
podiatry from line 11) and prior year line 12 (excluding prior year
dental and podiatry from line 11) is positive) due to this affiliation
agreement . . .'' (88 FR 27017-27018, emphasis added). The commenter
noted that the total allowable FTE count on line 12 is subject to the
FTE cap, and since there are many hospitals that have IME FTE counts
limited by their FTE caps, utilizing this line may not be the most
accurate reflection of an actual increase or decrease in FTEs between
years. The commenter suggested that a better reflection of an increase/
decrease between years would be to compare the actual current year FTEs
from line 10 between years before any FTE cap limits are applied.
Two commenters that opposed CMS's proposed clarification focused on
another part of the clarification, where CMS proposed to compare
current year line 15 and prior year line 12 (``. . . identify the lower
of: (a) the difference between the current year numerator line 15 and
the prior year numerator line 12 of the prior year cost report . . .'')
(88 FR 27018). The commenters provided two examples where they believed
the prior year numerator would not be sufficiently increased as a
result of this proposed clarification. In the first example, a hospital
experiences a decrease in its three-year rolling average FTE count in
the current year as a result of a decrease in its number of dental and
podiatric FTEs, even though its allopathic and osteopathic FTE count
and its FTE cap increase under the terms of a Medicare GME affiliation
agreement. In the second example, a hospital's allopathic and
osteopathic FTE count and cap similarly increase in the current year as
a result of a Medicare GME affiliation agreement, but the hospital's
three-year rolling average FTE count is nevertheless lower than the
prior-year allowable FTE count as a result of a significantly lower FTE
count in the penultimate year. Furthermore, the commenters noted that
in these examples CMS's proposed clarification would result in an
inappropriate reduction to the numerator of the prior-year IRB ratio,
since subtracting prior year line 12 from current year line 15 would
result in a negative number. In addition, these commenters argued that
CMS's proposed language does not account for rural track FTE
affiliation agreements.
Response: We appreciate commenters' support of our proposed
clarification and the careful review from those who raised concerns
about it. Specifically, we proposed to add the following italicized
language to Worksheet E, Part A, line 20 of CMS-Form-2552-10:
If the provider is participating in a Medicare GME affiliation
agreement or rural track Medicare GME affiliation agreement under 42
CFR 413.79(f), and the provider increased its current year FTE cap
(difference of current year line 8 and prior year line 8 is
positive) and increased its current year allowable FTE count
(difference of current year line 12 (excluding current year dental
and podiatry from line 11) and prior year line 12 (excluding prior
year dental and podiatry from line 11) is positive) due to this
affiliation agreement, identify the lower of: (a) the difference
between the current year numerator line 15 and the prior year
numerator line 12 of the prior year cost report, and (b) the number
by which the FTE cap increased per the affiliation agreement
(difference of current year line 8 and prior year line 8), and add
the lower of these two numbers to the prior year's numerator line 12
of the prior year cost report (88 FR 27018).
We do not concur with the commenters who disagreed with certain
aspects of the proposed clarification, because we believe the
commenters overlooked key portions of the law and regulations in
drawing their conclusions. First, we reiterate that the point of
permitting the numerator of the prior year IRB ratio to be adjusted due
to the exceptions listed at 42 CFR 412.105(a)(1)(i) (for example, a new
GME program or new Rural Track Program, a Medicare GME affiliation
agreement, or due to residents displaced by the closure of a hospital
or a residency program) is to more equitably compute a hospital's IME
payment in certain situations where the IME cap increases year-over-
year, so that the hospital is not held to a lower IME payment based on
the prior year's FTE cap. Second, once the appropriate adjustments are
made to the numerator of the prior year IRB ratio, the law at section
1886(d)(5)(B)(vi) of the Act requires that for actual payment, we take
the lower of the current year IRB ratio or the prior year IRB ratio.
That is, line 21 on Worksheet E, Part A states, ``Enter the lesser of
line 19 or 20.'' It appears that the commenters disregarded this key
point.
In the examples the commenters provided, they argued that under
CMS's proposed clarification, the prior year IRB ratio is not
sufficiently increased, and that the comparison of current year line 15
to prior year line 12 distorts the calculation of the IRB ratio.
However, we have reviewed the examples and the adjustments that
commenters suggested, and the result is that even if the prior year
numerator were increased in the manner requested by commenters, this
would not increase a hospital's IME payment, since doing so would have
no effect on the value of the current year numerator: in both examples,
the current year IRB ratio on line 19 would still be lower than the
prior year IRB ratio on line 20, so that the current year IRB ratio
would be reported on line 21. This demonstrates that there is no need
to increase the prior year numerator
[[Page 59051]]
above the current year numerator; it is only necessary to ensure that
the prior year numerator is adjusted to accommodate the additional FTEs
counted as a result of certain increases to a hospital's IME FTE cap.
In this way we also address the commenters' concern that the
proposed clarification distorts the calculation of the IRB ratio, and
their contention that a hospital is harmed if its current year three-
year average FTE count is less than its prior year total allowable FTE
count, either through a decrease in dental or podiatry FTEs or because
of a low FTE count in the penultimate year. Since the law requires IME
payment to be based on the lesser of the current year IRB ratio or the
prior year IRB ratio, if a hospital's current year FTE count goes down,
then payment would logically be made based on the current year's lower
IRB ratio; payment based on last year's higher ratio would result in an
overpayment in the current year. Thus, if a hospital increases its cap
through a Medicare GME affiliation agreement, but, for whatever reason,
its three-year average FTE count is less than the prior year total
allowable FTE count, then an adjustment to the prior year numerator
will make no difference, as the law requires that the hospital use the
lower of the current year IRB ratio or prior year IRB ratio for IME
payment.
Similarly, we do not believe it is appropriate to compare line 10
of the current year to line 10 of the prior year, as a commenter
suggested. First, the FTEs used in the IRB ratio are subject to a
hospital's IME FTE cap, which applies to line 12 but not to line 10.
Second, the following fairly common scenario demonstrates how comparing
line 10 to line 10 may lead to unfair results. Assume a hospital is
training FTEs significantly over its FTE cap, and even though it has
increased its FTE cap via a Medicare GME affiliation agreement, it is
still training FTEs in excess of that affiliated cap. However, this
hospital's current year FTE count on line 10 is somewhat less than the
prior year FTE count on line 10. Specifically, assume that in 2020,
Hospital A has an FTE cap of 100 (line 9 = 100) and trains 200
allopathic and osteopathic FTE residents (line 10 = 200); further
assume that Hospital A does not train any dental or podiatry residents
(line 11 = 0; line 12 = 100). In 2021, Hospital A has difficulty
filling positions in a certain program, and therefore, it experiences a
reduction in its FTE count and trains 190 allopathic and osteopathic
residents (line 10 = 190). However, under the terms of a Medicare GME
affiliation agreement, Hospital A increases its FTE cap by 10 to 110
(line 8 = 10; line 9 = 110; line 12 = 110). Thus, the hospital's total
FTE count decreased from 200 to 190, but because its FTE cap increased
from 100 to 110 under the Medicare GME affiliation agreement, its
allowable FTE count actually increased by 10, from 100 to 110. If we
were to take the difference between the current year line 10 (190 FTEs)
and prior year line 10 (200 FTEs), the result would be a negative
number (-10), and there would be no adjustment to the prior year
numerator, since the FTE count decreased in the current year. But under
CMS's proposed clarification, the hospital increased its allowable FTE
count, and when we determine the difference between current year line
12 (110) and prior year line 12 (100), the result is a positive
difference of 10, allowing the hospital to adjust the prior year
numerator by +10. In this manner, the hospital's IME payment will
reflect the fact that its current year allowable FTE count increased by
10 relative to the prior year allowable FTE count. That is also why we
proposed to clarify the language on line 20 to require that the
hospital increase its allowable FTE count, as follows:
[[Page 59052]]
[GRAPHIC] [TIFF OMITTED] TR28AU23.251
In addition, the commenters correctly pointed out that the
instructions should specifically reference line 7.02 to allow
consideration of a cap increase under the terms of a rural track
Medicare GME affiliation agreement. Therefore, in this final rule we
are revising the instructions on line 20 to include this reference to
line 7.02 of Worksheet E, Part A. We are finalizing our proposed
clarification to the instructions on line 20 of Worksheet E, Part A of
the Medicare cost report, in addition to adding the bolded changes
stated later
[[Page 59053]]
in this section in response to comments, as follows:
[GRAPHIC] [TIFF OMITTED] TR28AU23.252
We did not propose any changes to the regulation text at 42 CFR
412.105, as we believe the appropriate regulations text already exists
at 42 CFR 412.105(a)(1)(i) and 413.79(f), indicating that an adjustment
may be made to the prior year numerator due to an increase in the
Medicare GME affiliated cap, that the lower of the current or prior
year IRB ratio is used for payment, and that FTE residents added under
a Medicare GME affiliation agreement are subject to the rolling
average. Rather, as we stated, we proposed to clarify the Medicare cost
report instructions Form CMS-2552-10 Worksheet E, Part A, line 20 to
more clearly indicate how these calculations are performed. We intend
to insert the finalized clarification into the next update of the
Medicare cost report instructions Form CMS-2552-10 Worksheet E, Part A,
line 20.
3. Training in New REH Facility Type
In the Hospital Outpatient Prospective Payment System CY 2023 final
rule with comment (87 FR 71748) CMS finalized certain payment policies
and conditions of participation (CoPs) with respect to rural emergency
hospitals (REHs). Section 125 of Division CC of the Consolidated
Appropriations Act, 2021 (CAA) added a new section 1861(kkk) of the Act
to establish REHs as a new Medicare provider type, effective January 1,
2023. REHs are facilities that convert from either a critical access
hospital (CAH) or a rural hospital (or one treated as such under
section 1886(d)(8)(E) of the Act) with not more than 50 beds, and that
do not provide acute care inpatient services with the exception of
post-hospital extended care services furnished in a unit of the
facility that is a distinct part licensed as a skilled nursing
facility. By statute, REH services include emergency department
services and observation care and, at the election of the REH, other
outpatient medical and health services furnished on an outpatient
basis, as specified by the Secretary through rulemaking. REHs are a new
provider type established by the CAA, 2021 to address the growing
concern over closures of rural hospitals. Similar to CAHs, REHs are
intended to provide much needed healthcare services, often times as the
initial and only accessible point of care for individuals living in
rural underserved areas.
As part of the comments received in response to the CY 2023
Outpatient Prospective Payment System (OPPS) proposed rule (87 FR
44502) and the proposed rule establishing REH CoPs (87 FR 40350), CMS
received the request to designate REHs as graduate medical education
(GME) eligible facilities similar to the GME designation for CAHs (87
FR 72164). CMS' current policy with respect to CAHs and GME is
discussed in the August 16, 2019 Federal Register (84 FR 42411). In
that rule we finalized the policy that effective with portions of cost
reporting periods beginning on or after October 1, 2019, a hospital may
include FTE residents training at a CAH in its direct GME and IME FTE
counts as long as it meets the nonprovider setting requirements
currently included at 42 CFR 412.105(f)(1)(ii)(E) and 413.78(g). We
stated that while a CAH is considered a ``provider of services'' under
section 1861(u) of the Act, the term ``nonprovider'' is not explicitly
defined in the statute. Furthermore, section 1861(e) of the Act, which
states in part that the term ``hospital'' does not include, unless the
context otherwise requires, a critical access hospital (as defined in
section 1861(mm)(1) of the Act), underscores the sometimes ambiguous
status of CAHs. We stated that we believe that the lack of both an
explicit statutory definition of ``nonprovider'' and a definitive
determination as to whether a CAH is considered a hospital along with
the fact that a CAH is a facility primarily engaged in patient care (we
referred readers to section 1886(h)(5)(K) of the Act which states that
the term ``nonprovider setting that is primarily engaged in furnishing
patient care'' means a nonprovider setting in which the primary
activity is the care and treatment of patients, as defined by the
Secretary), provides flexibility within the current statutory language
to consider a CAH as a ``nonprovider'' setting for direct GME and IME
payment purposes.
Section 125(a)(1)(A) of the CAA, 2021, amended section 1861(e) of
the Social Security Act by inserting the phrase ``or a rural emergency
hospital (as defined in subsection (kkk)(2))'', such that the language
now states that the term ``hospital'' does not include, unless the
context otherwise requires, a critical access hospital (as defined in
section 1861(mm)(1) of the Act) or a rural emergency hospital (as
defined in subsection (kkk)(2)). Given the inclusion of REHs in the
last sentence of section 1861(e) and the fact that an REH is a facility
primarily engaged in patient care (see the previous discussion of
1886(h)(5)(K)), we believe that statutory flexibility also exists for
REHs to be considered nonprovider settings for GME payment purposes. In
addition, facilities currently designated as CAHs, which serve as
nonprovider sites, may choose to convert to REH status to be able to
continue to provide healthcare
[[Page 59054]]
services within their communities. We believe that increasing access to
physicians in rural areas can be supported by a flexible policy which
would allow for residency training to continue at these former CAHs and
begin at other newly designated REHs, which may have not previously
trained residents. Therefore, we proposed to add a new paragraph (d) at
42 CFR 419.92 to state that effective for portions of cost reporting
periods beginning on or after October 1, 2023, a hospital may include
FTE residents training at an REH in its direct GME and IME FTE counts
as long as it meets the nonprovider setting requirements included at 42
CFR 412.105(f)(1)(ii)(E) and 413.78(g) and any succeeding regulations.
Consistent with our policy regarding residency training at CAHs during
a hospital's cap building period (84 FR 42415), if a hospital is at
some point in its 5-year cap-building period as of October 1, 2023, and
as of that date is sending residents in a new program to train at a
REH, assuming the regulations governing nonprovider site training are
met, the time spent by FTE residents training at the REH on or after
October 1, 2023, will be included in the hospital's FTE cap
calculation.
As an alternative to being considered a nonprovider site, we stated
in the August 16, 2019 Federal Register (84 FR 42415), that a CAH may
decide to continue to incur the costs of training residents in an
approved residency training program(s) and receive payment based on 101
percent of the reasonable costs for those training costs. In this
situation no hospital can include the residents training at the CAH in
its direct GME and IME FTE counts. We believe REHs may make a similar
decision to incur residency training costs directly consistent with the
statutory language at section 1886(k)(2)(D) of the Act, which refers to
nonhospital providers, and the aforementioned flexibility provided
under 1861(e) of the Act. Specifically, we proposed under the authority
of section 1886(k)(2)(D) of the Act to add a new paragraph (d) at 42
CFR 419.92 indicating that effective for portions of cost reporting
periods beginning on or after October 1, 2023, REHs may decide to incur
the costs of training residents in an approved residency training
program(s) and receive payment based on 100 percent of the reasonable
costs for those training costs, consistent with the reasonable cost
principles at section 1861(v)(1)(A) of the Act. As is the case when
CAHs incur GME costs directly, no hospital can include the residents
training at the REH in its direct GME and IME FTE counts when the REH
chooses to be paid for direct GME costs instead of functioning as a
nonprovider site and as such, residency training in this instance is
not limited by FTE resident caps.
In summary, we proposed that effective for portions of cost
reporting periods beginning on or after October 1, 2023, an REH may
decide to be a nonprovider site such that if the requirements at 42 CFR
412.105(f)(1)(ii)(E) and 413.78(g) are met, a hospital can include the
FTE residents training at the REH in its direct GME and IME FTE counts
for Medicare payment purposes, or, the REH may decide to incur direct
GME costs and be paid based on reasonable costs for those training
costs. We proposed to add a new paragraph (d) at 42 CFR 419.92 to
implement these provisions.
Comment: Commenters supported the proposal to treat REHs similar to
CAHs for Medicare GME payment purposes such that an REH may choose to
function as a nonprovider setting consistent with 42 CFR
412.105(f)(1)(ii)(E) and 413.78(g) or choose to be paid based on
reasonable costs for the GME training costs that it incurs.
Many commenters stated that allowing REHs to be GME eligible
facilities will help promote greater physician participation in rural
healthcare thereby improving workforce shortages in rural areas and in
turn improve patient access to care in underserved areas. Commenters
noted the correlation between where residents train and where they
practice such that increasing residency training in rural areas has a
positive impact on physician supply and interest in serving in rural
areas. A commenter noted that while the proposal is not a complete
solution to oncology workforce challenges in rural areas, they support
it as an initial step toward improving access to cancer care in rural
communities. The commenter encouraged CMS to consider future policies
to retain practitioners of various specialties, including oncology, in
rural and underserved settings. A few commenters stated that family
physicians are an essential source of emergency care in rural areas and
are uniquely suited to work in REHs. The commenters stated that
multiple studies have demonstrated that, while many family physicians
provide emergency care in urban and suburban communities, rural family
physicians are more likely to work in emergency departments. The
commenters stated that The Accreditation Council for Graduate Medical
Education (ACGME) requirements for family medicine residents include
several proficiencies important for providing emergency care and that
in addition to emergency services, REHs can offer other outpatient
services like pregnancy and delivery care, behavioral health services,
and primary care, all of which are within family physicians' scope of
training. The commenters therefore believe that REHs would be a
valuable training site for family medicine residents. A commenter
stated that it is critically important that REHs be adequately staffed,
considering the important role that they play in rural communities. The
commenter stated that as long as the rotations at REHs meet the
requirements set out by the ACGME, thereby ensuring that residents are
still receiving the high-quality education they deserve, they support
the expansion of considering REHs as nonprovider sites for purposes of
GME training and payment. A commenter expressed support for the
proposal and noted that a large part of their state is designated as a
Health Professional Shortage Area and reimbursement for GME training
programs is an important piece to sustain and hopefully grow healthcare
in these areas. Another commenter stated that allowing REHs to attract,
educate, and be reimbursed for training additional healthcare workforce
will help sustain these critical healthcare access points across rural
parts of their state. A commenter stated they anticipate the proposed
policy will be favorable to rural communities and REHs as it would
provide for continued training of residents in rural areas for
converting CAHs and offer the opportunity for additional rural training
of residents that might not otherwise be viable in the absence of the
proposal.
Response: We appreciate the commenters' support. After
consideration of the public comments received, we are finalizing our
proposal that effective for portions of cost reporting periods
beginning on or after October 1, 2023, an REH may decide to be a non-
provider site. If the requirements at 42 CFR 412.105(f)(1)(ii)(E) and
413.78(g) and any succeeding regulations are met, a hospital can
include the FTE residents training at the REH in its direct GME and IME
FTE counts for Medicare payment purposes. In the alternative, the REH
may decide to incur direct GME costs and be paid based on reasonable
costs for those training costs. We are finalizing our proposed
regulation text to include these provisions at 42 CFR 419.92(d).
Comment: A commenter stated that the designation of REHs as GME-
eligible
[[Page 59055]]
facilities is a perfect example of how a flexible policy can increase
access to physicians in rural areas. The commenter stated that the
proposed policy reduces barriers to Tribal facilities that may be
considering redesignation to an REH by eliminating one of the cons from
the equation, that is, deciding whether it can cut its training program
and continue providing adequate care to its patient populations. The
commenter stated as this new provider type rolls out, CMS must continue
to address the concerns that come up from Tribal facilities to ensure
that the REH program operates as intended, to best serve folks in rural
areas. One of these identified concerns is that the REH payment
structure does not include the all-inclusive encounter rate, so the new
provider type is not as attractive as it could be to Indian Health Care
Providers (IHCPs). These are the kinds of issues that come up and can
be addressed when CMS engages with Tribes.
Response: We appreciate hearing that the proposed policy may help
alleviate concerns related to REH designation for Tribal facilities.
Regarding the REH payment structure, while the proposed policy
discussed in this section is not related to general REH payment
policies, we appreciate hearing the concerns brought up by Tribal
facilities regarding the REH program and look forward to continued
discussions with Tribes to address these concerns.
Comment: Several commenters stated that the proposed policy to
consider REHs as GME eligible training sites will allow small rural
teaching hospitals and CAHs that convert to REHs to minimize
unnecessary financial burdens when they convert and choose to continue
their educational mission. The commenters stated that the REH program
should provide stability in health care delivery systems for
communities that would otherwise experience the closure of a hospital
and that the proposal helps limit the financial barriers for any REH
with the capacity to operate as a rural training site. Another
commenter stated that their concern lies principally in the financial
viability of the REH model, given the prohibition on providing
inpatient services, and therefore the commenter's advocacy focuses on
ensuring that REHs retain every opportunity to participate fully in
Medicare as permitted by Congress in the CAA, 2021. The commenters
thanked CMS for the proposal to incorporate REHs into the GME program
via the ``nonprovider'' designation and permit REHs the same
opportunities as CAHs to receive reimbursement for the costs incurred
in training residents.
However, some commenters expressed concern over the proposed
payment methodology should an REH choose to be reimbursed directly for
training costs. Several commenters asked that CMS adopt cost-based
reimbursement at 101 percent for REHs that choose to incur direct GME
costs since CAHs currently receive reimbursement at 101 percent of
reasonable costs for residency training and therefore CMS should
maintain consistency for CAHs that convert to REHs. The commenters
stated that hospitals that choose to convert to REHs do not make the
decision lightly and are more likely to be independent CAHs, have a
three-year negative operating margin, and have a relatively low average
daily census. The commenters stated that hospitals that convert to REHs
and decide to train residents are doing so while in a precarious
financial position and thus should receive higher reimbursement. The
commenters stated that aligning the REH GME policy with the policy
applicable to CAHs is consistent with CMS' approach in other areas of
law for REHs, such as mirroring many CAH conditions of participation
for REHs. A few commenters stated that the REH provider type was
created with the express goal of enabling CAHs to transition into REHs
to keep their doors open amid financial challenges. The commenters
stated that they do not believe REHs should be penalized in their GME
payments when transitioning from a CAH to an REH. Another commenter
requested that CMS pay for residency training at CAHs at 101 percent of
the reasonable cost under section 1861(v) of the Social Security Act,
which would align with CAH payments based on reasonable cost
principals.
Response: We appreciate the comments indicating that allowing REHs
to be GME eligible facilities will reduce financial barriers to REH
conversion and aid in supporting the financial viability of REHs. We
understand the commenters' request to reimburse REHs based on 101
percent of reasonable costs when they choose to be paid for the direct
costs of training residents as is the case for CAHs. However, there is
no statutory basis for reimbursing REHs for the direct costs of GME at
101 percent of reasonable costs. Whereas the statutory language for CAH
inpatient and outpatient reimbursement at sections 1814(l) and 1834(g)
of the Act specifically refers to 101 percent of reasonable costs,
payments made to REHs for outpatient services under section 1834(x) of
the Act are generally made under the Outpatient Prospective Payment
System plus 5 percent. Furthermore, sections 1886(k)(2)(D) of the Act
(Payment to Nonhospital Providers) and 1861(v)(1)(A) of the Act
(Reasonable Cost) do not specify reimbursement at 101 percent of
reasonable costs. Therefore, as noted previously, we are finalizing the
proposed policy that if an REH chooses to be reimbursed for its direct
GME costs, it will be reimbursed based on 100 percent of reasonable
costs. As stated in the proposed rule (88 FR 27019), if an REH chooses
to be reimbursed for the direct costs of residency training, it is not
limited by FTE residency caps. Therefore, training at REHs that choose
to be reimbursed directly are Medicare GME payments that are made above
the statutorily mandated caps and thus provide for additional funding
supporting training in rural areas despite payment at 100 percent of
reasonable costs as opposed to 101 percent of reasonable costs.
Comment: Several commenters submitted comments specific to REHs and
rural track programs (RTPs). Commenters stated that the size of REH
facilities and training requirements from the ACGME will likely limit
the number of residents who train at these sites, but with new
opportunities for hospitals to expand training through RTPs, REH GME
has the potential to create training partnerships in rural areas with
larger academic medical centers. The commenters stated that the
learning experience provided to trainees in rural areas is unique and
additional resources like REH GME may have positive patient care
outcomes in these underserved areas. A commenter stated that as
evidenced by their strong advocacy for RTPs (formerly rural training
tracks) and the inclusion of hospitals located in rural areas among the
beneficiaries of resident cap relief legislation, they support
innovative strategies that will incentivize bringing physician services
to those living in rural areas. Another commenter stated they expect
the proposed policy will enable REHs to serve as rotator sites for
RTPs, which would enhance resident training in rural areas and
potentially improve timely access to care in areas with an REH. The
commenter specifically requested CMS clarify in the final rule that
REHs will be able to serve as rotator sites in RTPs.
Response: We appreciate the comments noting that training at REHs
may help to expand RTPs. Since we are finalizing a policy to treat REHs
similar to CAHs for Medicare GME payment purposes, REHs can serve as a
rural training site in an RTP in the same
[[Page 59056]]
manner as a CAH would. Note that if an REH has reclassified as rural
under 42 CFR 412.103 (section 1886(d)(8)(E) of the Act), it would only
be considered rural for IME payment purposes in the event it is serving
as a non-provider site. We refer readers to the current policies
concerning RTPs as discussed in the December 27, 2021 Federal Register,
which implements section 127 of the CAA, 2021 (86 FR 73445).
Comment: A commenter stated that as the REH model evolves, it would
be helpful for CMS to evaluate and request feedback from participating
facilities to help guide future policy. The commenter encouraged CMS to
continue working collaboratively to provide support for facilities
converting, or considering converting, to the new REH status, as well
as provide clarity and support for those considering participating as a
GME training facility.
Response: We appreciate the commenter's recommendation to continue
collaborative efforts that will support facilities interested in REH
status. We encourage individuals to contact CMS or their Medicare
Administrative Contractor (MAC) should they have any questions on
specific policies concerning REHs and Medicare GME payments.
Comment: A commenter stated that to further alleviate workforce
shortages and address the needs of rural and medically underserved
communities, they urge CMS to work with members of the United States
Senate Committee on Health, Education, Labor, and Pensions (HELP). The
commenter stated that the Senate HELP Committee recently sought
feedback from the public on healthcare workforce shortages, and
provided several recommendations to reduce barriers to care, diversify
the healthcare workforce, increase funding for GME programs
specifically designated for mental health and substance use disorder
providers, and advance technology solutions to reduce administrative
friction and workforce burnout. The commenter stated by working
together, CMS and the Senate HELP Committee can effectively address
workforce shortages, increase community resources, and mitigate
closures of rural hospitals. The commenter stated they welcome the
opportunity to discuss their investments and recommendations with CMS
and also encouraged CMS to work with Congress on additional policy
changes and investments that support the healthcare workforce and rural
and medically underserved communities.
A commenter stated that they support other initiatives to transform
physician training programs from urban settings, currently representing
the majority of programs, and having more robust training options in
rural communities. The commenter recommended that the financial support
and resources for such training programs be sustainable and allow
residents to fully complete their training without the concern of
funding gaps. The commenter stated that they aim to ensure continuous
financial support for training programs, avoiding any interruptions or
breaks in funding. The commenter noted that since most rural hospitals
are unable to financially support residency training positions
independently, they rely on federally funded GME resources.
A commenter requested that similar to the GME designation for CAHs,
REHs also include advanced practice nursing education. The commenter
stated that this designation is essential, especially since 221
clinical sites for nurse anesthesia have been designated as having CAH
status and are eligible to convert to REH status. The commenter stated
that certified registered nurse anesthetists (CRNAs) predominate in
rural hospitals, and it is critical that these educational
opportunities are available for CRNAs and other advanced practice
registered nurses. The commenter stated that in some states, CRNAs are
the sole anesthesia providers in nearly100 percent of rural hospitals,
affording these medical facilities obstetrical, surgical, trauma
stabilization, and pain management capabilities. The commenter stated
that the importance of CRNA services in rural areas was highlighted in
a recent study which examined the relationship between socioeconomic
factors related to geography, insurance type, and the distribution of
anesthesia provider type. The study correlated CRNAs with lower income
populations and correlated anesthesiologist services with higher-income
populations. The commenter stated that of particular importance to the
implementation of public benefit programs in the U.S., the study showed
that compared with anesthesiologists, CRNAs are more likely to work in
areas with lower median incomes and larger populations of citizens who
are unemployed, uninsured, and/or Medicaid beneficiaries.
Response: The policy finalized in this rule relates specifically to
Medicare GME payments made to REH facilities. These payments are made
only for the training of medical, dental, and podiatry residents.
Because Medicare GME payments do not include payments for training
CRNAs and because the policy finalized in this rule is limited in scope
to residency training at REHs, we consider these comments to be out of
scope and are not responding to them in this final rule.
H. Reasonable Cost Payment for Nursing and Allied Health Education
Programs (Sec. Sec. 413.85 and 413.87)
1. 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 42 CFR 413.85. The most recent substantive 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 Advantage 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 MA organizations. Section 541 of the BBRA
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
[[Page 59057]]
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 calendar year, 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 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) *
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) of the Act 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 1886(h)(3)(D) to total
direct GME payments estimated for the same portions of periods under
section 1886(h)(3) of the Act. Accordingly, we stated in the August 1,
2000 IFC (65 FR 47038) that each year, we would determine and publish
in a final rule the total amount of nursing and allied health education
payments made across all hospitals during the fiscal year 2 years prior
to the current calendar year 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-U)
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 CY 2021, we
proposed and finalized the NAH MA add-on rates in the FY 2023 IPPS/LTCH
PPS proposed and final rules. We stated that for CYs 2022 and after, we
would similarly propose and finalize their respective NAH MA rates and
direct GME percent reductions in subsequent IPPS/LTCH PPS rulemakings
(see 87 FR 49073, August 10, 2022).
In the FY 2024 IPPS/LTCH PPS proposed rule, we proposed the rates
for CY 2022. Consistent with the use of HCRIS data for past calendar
years, we proposed to use data from cost reports ending in FY 2020
HCRIS (the fiscal year that is 2 years prior to CY 2022) to compile
these national amounts: NAH pass-through payment, Part A Inpatient
Days, MA Inpatient Days.
For the proposed rule, we accessed the FY 2020 HCRIS data from the
fourth quarterly HCRIS update of 2022. 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
year, which in the proposed rule and in this final rule, is CY 2022,
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 increased 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 2022, the direct GME projections are based
on the fourth quarterly update of CY 2020 HCRIS, adjusted for the CPI-U
and for increasing MA enrollment.
For CY 2022, the proposed national rates and percentages, and their
data sources are set forth in this table. We stated in the proposed
rule that we intend to update these numbers in the FY 2024 final rule
based on the latest available cost report data.
[[Page 59058]]
[GRAPHIC] [TIFF OMITTED] TR28AU23.253
We did not receive any comments on the proposed national NAH MA
rates and percentages.
For this final rule, consistent with the use of HCRIS data for past
calendar years, for CY 2022, we use data from cost reports ending in FY
2020 HCRIS (the fiscal year that is 2 years prior to CY 2022) to
compile these national amounts: NAH pass-through payment, Part A
Inpatient Days, MA Inpatient Days. For this final rule, we accessed the
HCRIS data from the first quarterly HCRIS update of 2023. 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 year, which in this final rule, is CY 2022 as the best
available cost report data. Next, consistent with the method we
described previously from the August 1, 2000 IFC, we increased 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 2022, the direct GME
projections are based on FY 2020 HCRIS, and the final national rates
and percentages, and their data sources are set forth in this table.
[GRAPHIC] [TIFF OMITTED] TR28AU23.254
In summary, we are finalizing our proposal to use NAH MA add-on
rates as well as the direct GME MA percent reductions for CY 2022,
based on sufficient HCRIS data to develop the rates for these years. We
expect to propose to issue the rates for CY 2023 in the FY 2025 IPPS/
LTCH PPS proposed rule, when sufficient HCRIS data is available to
develop the rates for CY 2023.
Section 4143 of the CAA 2023 (enacted December 29, 2022), called
``Waiver of Cap on Annual Payments for Nursing and Allied Health
Education Payments,'' amends section 1886(l)(2)(B) of the Act to state
that for portions of cost reporting periods occurring in each of CYs
2010 through 2019, the $60 million payment limit, or payment ``pool,''
shall not apply to the total amount of additional payments for nursing
and allied health education to be distributed to hospitals that, as of
the date of enactment of this clause, are operating a school of
nursing, a school of allied health, or a school of nursing and allied
health. As noted previously, section 541 of the BBRA limited total
spending under the NAH MA provision to no more than $60 million in any
calendar year. Under CR 11642 issued on November 19, 2020, CMS
instructed MACs to recalculate historical payments to hospitals
consistent with the $60 million limit per calendar year, and make
applicable adjustments to NAH MA payments. In the FY 2023 IPPS/LTCH PPS
proposed rule (88 FR 27022), we proposed a method for the MACs to
implement section 4143 in the absence of the $60 million limit on the
pool.
In addition, section 541 of the BBRA 1999 also provides that direct
GME payments for MA utilization will be reduced to the extent that
these additional payments are made for nursing and allied health
education programs. However, section 4143 of the CAA 2023 also provides
that in not applying the $60 million limit for each of 2010 through
2019, the Secretary shall not take into account any increase in the
total amount of such additional payment amounts for such nursing and
allied health education for portions of cost reporting periods
occurring in the year. In the proposed rule, we proposed to interpret
this to mean that, pursuant to the requirement set out at section
4143(b) of CAA 2023, MACs shall not change the DGME MA percent
reduction amounts specified in CR 11642 for CYs 2010 through 2018, and
CR 12407 for CY 2019 (and CR 12596 which corrected the DGME MA percent
reduction related to CY 2018 specified in CR 11642).
The following table shows the recalculated pool amounts for CYs
2010 through 2019. We proposed that MACs would first determine whether
hospitals that received revised payments under CR 11642 were still
receiving NAH MA payments on an interim basis as of December 29, 2022.
For example, if a hospital's payments for a NAH program(s) were
adjusted under CR 11642, but that hospital since closed all of its NAH
programs, that hospital would not be eligible under section 4143 to
receive adjusted payments for CYs 2010 through 2019, even if the
hospital itself has remained operational.
Second, we proposed that MACs would use the table in this section
of this rule to recalculate an eligible hospital's NAH MA payment for
portions of cost reporting periods occurring in CY 2010 through CY 2019
that are still within the 3-year reopening period. The formula is
specified previously in this section.
Third, we proposed that the MACs would subtract the payment amount
determined under CR 11642 (or CR 12596 or CR 12407 as applicable) for a
[[Page 59059]]
CY from the recalculated amount in the second step, as previously
detailed.
Fourth, we proposed that the MACs would determine the amount owed
to a hospital in a CY as the amount calculated in the third step plus
the difference, if any, between that amount and the amount previously
recouped under CR 11642 (or CR 12596 or CR 12407 as applicable) or the
amount that would have been recouped under CR 11642 (or CR 12596 or CR
12407 as applicable) if not for the enactment of section 4143 of the
CAA 2023, if such difference for a CY is greater than $0. We noted that
by adding this difference to the amount calculated in the third step,
the amounts previously recouped under CR 11642 (or CR 12596 or CR 12407
as applicable) would be returned to hospitals, and recoupments that
would have occurred under CR 11642 (or CR 12596 or CR 12407 as
applicable) if not for the enactment of section 4143 of the CAA 2023
would not occur.
[GRAPHIC] [TIFF OMITTED] TR28AU23.255
We did not propose any changes to the regulations text at 42 CFR
413.87.
Comment: Multiple commenters stated that they support the steps
outlined in the proposed rule as the method of returning the full
amount of NAH MA recoupments to hospitals. Commenters also stated that
they support the process outlined in previously issued CR 13122 as a
first step towards returning a portion of the recoupments to hospitals
while we engaged in rulemaking to implement section 4143 in full. One
commenter asked that CMS provide guidance to the MACs instructing them
to use the same variables that were in place prior to the release of
Change Request 11642, to help ensure that the payments returned are
accurate. Another commenter that expressed support for CMS's proposal
urged CMS to direct MACs to expeditiously recalculate and reconcile NAH
payments before the final rule goes into effect on October 1, 2023.
Response: We appreciate the supportive comments, and we are
finalizing the proposed methodology, such that the amounts previously
recouped under CR 11642 (or CR 12596 or CR 12407 as applicable) will be
returned to hospitals, and recoupments that would have occurred under
CR 11642 (or CR 12596 or CR 12407 as applicable) if not for the
enactment of section 4143 of the CAA 2023 will not occur. By returning
the amounts previously recouped, the amounts would be consistent with
the amounts calculated with variables in place prior to the release of
CR 11642. After issuance of this final rule, we will issue another CR
to reflect this finalized methodology. The exact timeframe and details
of the implementation process will be specified in the CR.
Comment: A commenter stated that under CMS's proposal, many
hospitals will not have full payment restored as required by section
4143 of the CAA. Specifically, several commenters added that CMS's
proposed approach to not allow reopening after the 3-year reopening
period is inconsistent with the language in section 4143(c), which
states, ``The amendments made by this section shall apply to payments
made for portions of cost reporting periods occurring in 2010 through
2019.'' Another commenter stated that the ``reopening regulations at 42
CFR 405.1885 do not require the three-year reopening limitation when
related to reimbursement changes mandated by law.'' One commenter
expressed concern that the proposal that would only permit corrections
to cost reports within the three-year reopening time period as of 12/
29/2022 (that is, cost reports finalized prior to 12/29/2019 will not
be reopened). A different commenter stated that Congress eliminated the
cap for all years between 2010 and 2019, and it ``was clearly Congress'
intent that nursing and allied health programs be made whole for past
underpayments so long as they were still functioning at the time CAA,
2023 was passed.''
Response: As commenters are aware, in the proposed rule, we noted
that the provision applies to ``each of 2010 through 2019,'' and
included a table called CALCULATION TABLE FOR SECTION 4143 OF CAA OF
2023 that includes revised Section 4143 Pool amounts for each of CYs
2010 through 2019. That is, we provided revised payment rates for as
far back as 2010, thereby conforming with the retroactive aspect of
this provision. However, we proposed that MACs would use the table to
recalculate an eligible hospital's NAH MA payment only for portions of
cost reporting periods occurring in CY 2010 through CY 2019 that are
still within the 3-year reopening period. We have reviewed the comments
and the language in section 4143, subsection (c) regarding
``Retroactive Application,'' and we do not believe that language
overrides CMS's existing reopening regulations. Rather, we believe the
statute indicates that Congress instructed us to ensure that necessary
payments ``apply'' retroactively. We note that any recoupments under CR
11642 (or CR 12596 or CR 12407 as applicable) occurred during the last
three years, and thus we can reverse the recoupments by reopening cost
reports affected by those CRs consistent with the reopening
regulations. Further, because those CRs and the recoupments conducted
under them are the source of the underpayments corrected by Section
4143 and this implementing rule, we do not believe it is necessary to
reopen other cost reports to ``apply'' ``the
[[Page 59060]]
amendments made under Section 4143.'' In addition, we do not understand
the commenter's concern that the proposal would only permit corrections
to cost reports within the three-year reopening time period ``as of 12/
29/2022''; nowhere in the proposal did we specify such a requirement.
On the contrary, we point out that generally, there should be no
concern that a cost report reopening timeframe would expire since the
time that the cost report was adjusted under CR 11642. We note that CR
11642 states that ``MACs shall not make recalculations or
reconciliations for MA nursing and allied health education payments or
MA direct GME payments for cost reports that are already beyond the 3-
year reopening period as of the implementation date of this CR.'' CR
11642 further instructed MACs to complete their work between
approximately December 14, 2020, and March 2022. This means that during
that implementation timeframe, MACs would only have made adjustments to
cost reports from 2010 and 2019 that were still open or reopenable.
Thus, for example, a 2010 cost report would likely not have been
reopenable as of December 14, 2020, and therefore would not have been
subject to any recoupment under CR 11642. (If such a cost report were
reopenable as of December 14, 2020, and was in fact reopened pursuant
to CR 11642, it would be reopenable again for three years from the date
of the reopening to implement CR 11642, meaning that it remains
reopenable until December 14, 2023, at the earliest). Accordingly,
there would either be no need to reverse a recoupment to that 2010 cost
report, or that cost report would have been adjusted and would be
subject to a reversal of that adjustment under Section 4143.
Furthermore, if, after applying CR 11642 to a still open or reopenable
cost report, the MAC subsequently settled that cost report, then that
cost report should still fall within a new 3-year reopening period
because the earliest possible reopening to implement CR 11642 would
have occurred on December 14, 2020. Accordingly, since applicable cost
reports would either still be open or would fall within a recently
restarted 3-year reopening period, it is not obvious to us that there
is any conflict between Congress's instructions to apply section 4143
retroactively and our reopening regulations. In the absence of such
conflict, we decline to create an exception to our reopening
regulations.
In addition, some commenters refer to restoration of ``past
underpayments'' or being ``made whole for past underpayments'' under
section 4143. We disagree with this position and point out that
hospitals were generally being overpaid. Specifically, prior to
issuance of CR 11642 on November 19, 2020, the MACs were relying on the
instructions contained in CR 2692, which CMS had issued in 2003. Under
these instructions, NAH MA payments were calculated on the basis of
aggregate data that had not been updated since CY 2001, when total MA
patient days were still relatively low, and the size of the NAH MA
payment pool was $43,663,043 (refer to CR 2692, Transmittal A-03-043,
https://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/downloads/a03043.pdf). Over the course of those years from 2003 through
2020, MACs were calculating NAH MA payments to individual hospitals
using contemporaneous hospital-specific data, which, as the years
passed, reflected the significant increase in MA patient days during
this period. Because hospital-specific MA patient days are one of the
factors used in the calculation of a hospital's NAH MA payments in a
calendar year (see Sec. 413.87(e)(1)(iii)), the interaction of the
aggregate data that had not been updated since 2001 and the
contemporaneous hospital-specific data for each calendar year resulted
in significant empirical overpayments to hospitals.
Under CR 11642, CMS instructed MACs to recalculate historical
payments to hospitals consistent with the $60 million limit per
calendar year (applicable as of CY 2010 and after), and use updated
national data and make applicable adjustments to NAH MA payments. Under
our proposal for the implementation of section 4143, the amounts
previously recouped under CR 11642 (or CR 12596 or CR 12407 as
applicable) will be returned to hospitals, and recoupments that would
have occurred under CR 11642 (or CR 12596 or CR 12407 as applicable) if
not for the enactment of section 4143 of the CAA 2023 will not occur.
In other words, CMS only imposed the $60 million cap that section
4143(a)(2)(ii) stated ``shall not apply [for 2010-2019] to those
hospitals that, as of [December 29, 2022], are operating a school of
nursing, a school of allied health, or a school of nursing and allied
health'' via the previously described CRs, and all cost reports
affected by those CRs are within the three-year reopening window. We
believe we can fulfill Congress's instructions to apply section 4143
retroactively without creating an exception to our reopening
regulations. For the reasons stated previously, we do not believe an
override or exception to the reopening regulations is required, and we
are finalizing our proposal to recalculate an eligible hospital's NAH
MA payment only for portions of cost reporting periods occurring in CY
2010 through CY 2019 that are still within the 3-year reopening period.
Comment: Some commenters disagreed with CMS's proposal that MACs
would first determine whether hospitals that received revised payments
under CR 11642 were still receiving NAH MA payments on an interim basis
as of December 29, 2022. One commenter stated that there is nothing in
the statute that suggests a hospital must receive payments on an
interim basis, only that a nursing and allied health program ``was
operating'' on December 29, 2022. This commenter asked that CMS
eliminate the reference to payments on an interim basis and indicate
that all hospitals operating a nursing and allied health program as of
December 29, 2022, are eligible under section 4143 to receive adjusted
nursing and allied health MA payments for CYs 2010 through 2019. Other
commenters recommended that instead of interim rates, the MACs should
apply Section 4143 to hospitals that file pass-through costs for NAH
programs on their cost reports, because these hospitals still have
their NAH programs even though the MAC disallowed their pass-through
costs as a result of audits. Another commenter stated that some
hospitals may have closed their NAH programs because the MACs
disallowed payment. This commenter asserted that regardless of why a
NAH program may have closed prior to December 29, 2022, it seems unfair
not to provide the same relief for underpayments they received in the
past when they were operating those programs. In cases where the MACs
disallowed payment, and the hospitals are appealing those
determinations, the commenters argued that, even though the hospitals
were not receiving interim payments as of December 29, 2022, they were
still operating their programs, and they expect their NAH payments to
be recognized after a successful appeal.
Response: We understand that there may be a few possible reasons
why a hospital may not have been receiving NAH MA payments on an
interim basis as of December 29, 2022, even though the hospital had not
formally closed its NAH program(s). For example, the hospital's NAH
pass-through amount may be too small to qualify for interim payments.
Also, as the commenters describe, the MAC may have disallowed the
hospital's pass-through payments, and the hospital might currently be
in
[[Page 59061]]
the process of appealing that determination. Alternatively, a hospital
may have several years of cost reports that it filed with NAH costs,
but those cost reports may not yet be settled, and thus, the MAC has
not yet made a determination as to the allowability of the NAH pass-
through costs with regard to interim payments. In the first case, where
the NAH pass-through amount is too small to qualify for interim
payments, if the hospital's NAH pass-through would otherwise qualify
for interim payments as of December 29, 2022, if the amount had been
large enough, then for the purpose of implementing Section 4143, we
would treat the hospital as though it was receiving interim payments as
of December 29, 2022. With regard to multiple cost reporting years that
have not yet been settled, it may be that CR 11642 was not yet applied
to those cost reports, in which case there would be no need for
reversal of a recoupment upon eventual settlement of those cost
reports. However, regarding the situation where the MAC has disallowed
the NAH payment, we understand that in many cases the MACs have found
that hospitals are not ``operating'' the NAH program(s) consistent with
the regulations at 42 CFR 413.85, although hospitals may believe that
``as of the date of enactment'' of section 4143, the hospitals ``are
operating'' a school or nursing and/or allied health. Where the MACs
have disallowed the NAH payment, settled the cost report(s), and the
hospitals are appealing the disallowance, then we believe the normal
appeals process should be followed, and NAH payments, under section
4143 or otherwise, are held in abeyance pending the outcome of the
appeals. Thus, we proposed to use receipt of interim payments as of
December 29, 2022 as an indicator of eligibility of NAH pass-through
payments; lack of such pass-through payment could indicate a MAC
disallowance, which should be adjudicated through the normal appeals
process. If the hospitals should be successful in their appeals to
restore NAH pass-through payment, then for the purpose of implementing
section 4143, we would treat the hospitals as though they were
receiving interim payments as of December 29, 2022. If, on the other
hand, a hospital closed its NAH program(s), whether the closure was
allegedly a result of MAC disallowances or due to some other reason, we
do not believe that section 4143 applies in those cases, because
section 4143 clearly states that payments should only be made to
``those hospitals that, as of the date of enactment, are operating a
school of nursing, a school of allied health, or a school of nursing
and allied health (emphasis added).'' Thus, in this final rule, we are
still requiring that MACs first determine whether hospitals that
received revised payments under CR 11642 were still receiving NAH MA
payments on an interim basis as of December 29, 2022, with the
exception of hospitals whose NAH pass-through payment would otherwise
qualify for interim payments as of December 29, 2022, if the amount had
been large enough, and hospitals that will be successful in their
appeals to restore NAH pass-through payment.
Comment: One commenter believed that no money should be siphoned
away from DGME funding to pay for nonphysician training. Though the
commenter appreciates the role that nonphysician providers play, the
commenter believed that there should be a funding source separate from
GME funding. This commenter also expressed concern that the rule does
not contain proposals to ensure that in the future, too much MA DGME
would not be removed from GME funding, and recommended that CMS put
robust guardrails in place to ensure that GME funding updates are made
accurately every year moving forward.
Response: This comment is generally out of the scope of the
proposals made in the FY 2024 IPPS/LTCH PPS proposed rule; therefore,
we are not responding to it directly at this time. However, with regard
to ensuring accurate (and timely) payment rate updates, we note that
starting with the rates for CY 2020 and CY 2021, we proposed and
finalized the NAH MA add-on rates in the FY 2023 IPPS/LTCH PPS proposed
and final rules. We stated that for CYs 2022 and after, we would
similarly propose and finalize their respective NAH MA rates and direct
GME percent reductions in subsequent IPPS/LTCH PPS rulemakings (see 87
FR 49073 August 10, 2022). In the FY 2024 IPPS/LTCH PPS proposed rule,
we proposed the rates for CY 2022, and we are finalizing the CY 2022
rates in this final rule. Accordingly, we have established an annual
process to ensure issuance of updated NAH MA and DGME MA rates that are
as updated and accurate as possible.
In summary, after consideration of the public comments received, we
are finalizing the proposed methodology for the implementation of
section 4143, such that the amounts previously recouped under CR 11642
(or CR 12596 or CR 12407 as applicable) will be returned to hospitals,
and recoupments that would have occurred under CR 11642 (or CR 12596 or
CR 12407 as applicable) if not for the enactment of section 4143 of the
CAA 2023 will not occur. After issuance of this final rule, we will
issue another CR to reflect this finalized methodology.
I. 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).
Effective for FY 2021, we modified our relative weight methodology
for MS-DRG 018 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 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 a serious or immediately life-threatening disease or
condition to gain access to an investigational medical product (drug,
biologic, or medical device) for treatment outside of clinical trials
when, among other criteria, there is no comparable or satisfactory
alternative therapy to diagnose, monitor, or treat
[[Page 59062]]
the disease or condition (21 CFR 312.305).\218\
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\218\ https://www.fda.gov/news-events/expanded-access/expanded-access-keywords-definitions-and-resources.
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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 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 2024, we proposed 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, as calculated
using the same proposed modifications to our existing methodology, as
adopted in the FY 2021 IPPS/LTCH PPS final rule (85 FR 58842), that we
proposed to use to adjust the case count for purposes of the relative
weight calculations, as described in section II.D. of the preamble of
the proposed rule and this final rule. As discussed in that section,
the December update of the FY 2022 MedPAR claims data now includes a
field that identifies whether or not the claim includes expanded access
use of immunotherapy. For the FY 2022 MedPAR claims data, this field
identifies whether or not the claim includes condition code ZB. For the
FY 2023 MedPAR data and for subsequent years, this field will identify
whether or not the claim includes condition code 90. The MedPAR files
now also include information for claims with the payer-only condition
code ``ZC'', which 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).
We refer the readers to section II.D. of the preamble of the proposed
rule and this final rule for further discussion of our proposed changes
to our methodology for identifying clinical trial claims and expanded
access use claims in MS-DRG 018 and our proposed modifications to the
methodology used to adjust the case count for purposes of the relative
weight calculations.
Consistent with these proposals, and using the same methodology
that we proposed to use to adjust the case count for purposes of the
relative weight calculations, we proposed to calculate the adjustment
to the payment amount for expanded access use of immunotherapy and
applicable clinical trial cases as follows:
Calculate the average cost for cases assigned to MS-DRG
018 that either (a) contain ICD-10-CM diagnosis code Z00.6 and do not
contain condition code ``ZC'' or (b) contain condition code 90 (or, for
FY 2024 ratesetting, which is based on the FY 2022 MedPAR data,
condition code ``ZB'').
Calculate the average cost for all other cases 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.
We refer the readers to section II.D. of the preamble of the
proposed rule and this final rule for further discussion of these
proposed methodology changes.
Consistent with our calculation of the proposed adjustor for the
relative weight calculations, for the proposed rule we proposed to
calculate this adjustor based on the December 2022 update of the FY
2022 MedPAR file for purposes of establishing the FY 2024 payment
amount. Specifically, in accordance with 42 CFR 412.85 (for operating
IPPS payments) and 412.312 (for capital IPPS payments), we proposed to
multiply the FY 2024 relative weight for MS-DRG 018 by a proposed
adjustor of 0.28 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 also
proposed to update the value of the adjustor based on more recent data
for the final rule.
We did not receive any comments specifically relating to the
proposed payment adjustment for applicable clinical trial and expanded
access use immunotherapy cases and are therefore finalizing our
proposal without modification. We are also finalizing our proposal to
update the value of this adjustor based on more recent data for this
final rule. Therefore, using the March 2023 update of the FY 2022
MedPAR data, we are finalizing an adjustor of 0.27 for FY 2024, which
will be multiplied by the final FY 2024 relative weight for MS-DRG 018
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.
J. Hospital Readmissions Reduction Program
1. Statutory Basis for the Hospital Readmissions Reduction Program
Section 1886(q) of the Act established the Hospital Readmissions
Reduction Program. 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.
[[Page 59063]]
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); and
FY 2023 IPPS/LTCH PPS final rule (87 FR 49081 through
49094).
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 did not make any proposals or updates in the FY 2024 IPPS/LTCH
PPS proposed rule (88 FR 27024) for the Hospital Readmissions Reduction
Program. We refer readers to section V.G.5. of the preamble for an
updated estimate of the financial impact of using the proportion of
dually eligible beneficiaries, Excess Readmission Ratios, and aggregate
payments for each condition/procedure and all discharges for applicable
hospitals from the FY 2024 Hospital Readmissions Reduction Program
applicable period (that is, July 1, 2019, through June 30, 2022).
While we did not make any proposals or updates to the Hospital
Readmissions Reduction Program, we did receive comments noting
additional opportunities for addressing health equity. Suggestions
included expanding social risk adjustments, particularly to include
homelessness Z codes in risk adjustments, a comment not to use dual
eligibility status, and a comment to expand social risk adjustments to
decrease annual readmissions penalties. A few commenters urged CMS to
find more ways to support safety net hospitals including by
incorporating an essential hospital definition in the peer grouping
methodology. We thank the commenters for their input, and we will
consider these comments for future rulemaking.
K. Hospital Value-Based Purchasing (VBP) Program: Policy Changes
1. Background
a. Overview
Section 1886(o) of the Act requires the Secretary to establish a
hospital value-based purchasing program (the Hospital VBP Program)
under which value-based incentive payments are made in a fiscal year
(FY) to hospitals that meet performance standards established for a
performance period for such fiscal year. Both the performance standards
and the performance period for a fiscal year are to be established by
the Secretary.
For descriptions of our current policies for the Hospital VBP
Program, we refer readers to our codified requirements for the Hospital
VBP Program at 42 CFR 412.160 through 412.168.
b. FY 2024 Program Year Payment Details
Section 1886(o)(7)(B) of the Act instructs the Secretary to reduce
the base operating DRG payment amount for a hospital for each discharge
in a fiscal year by an applicable percent. Under section 1886(o)(7)(A)
of the Act, the sum of these reductions in a fiscal year must equal the
total amount available for value-based incentive payments for all
eligible hospitals for the fiscal year, as estimated by the Secretary.
We finalized details on how we would implement these provisions in the
FY 2013 IPPS/LTCH PPS final rule (77 FR 53571 through 53573), and we
refer readers to that rule for further details.
Under section 1886(o)(7)(C)(v) of the Act, the applicable percent
for the FY 2024 program year is 2.00 percent. Using the methodology we
adopted in the FY 2013 IPPS/LTCH PPS final rule (77 FR 53571 through
53573), we estimate that the total amount available for value-based
incentive payments for FY 2024 is approximately $1.7 billion, based on
the March 2023 update of the FY 2022 MedPAR file.
As finalized in the FY 2013 IPPS/LTCH PPS final rule (77 FR 53573
through 53576), we will utilize a linear exchange function to translate
this estimated amount available into a value-based incentive payment
percentage for each hospital, based on its Total Performance Score
(TPS). We published proxy value-based incentive payment adjustment
factors in Table 16 associated with the proposed rule (which is
available via CMS website). We are publishing updated proxy value-based
incentive payment adjustment factors in Table 16A associated with this
final rule (which is available via the CMS website). We note that these
proxy adjustment factors will not be used to adjust hospital payments
for FY 2024 as they were calculated using the historical baseline and
performance periods for the FY 2023 Hospital VBP Program. These updated
proxy factors were calculated using the March 2023 update to the FY
2022 MedPAR file. The updated slope of the linear exchange function
used to calculate these proxy factors was 2.6517299103, and the
estimated amount available for value-based incentive payments to
hospitals for FY 2024 is approximately $1.7 billion. We will add Table
16B to display the actual value-based incentive payment adjustment
factors, exchange function slope, and estimated amount available for
the FY 2024 Hospital VBP Program. We expect that Table 16B will be
posted in Fall 2023.
2. Retention and Removal of Quality Measures
a. Retention of Previously Adopted Hospital VBP Program Measures and
Relationship Between the Hospital IQR and Hospital VBP Program Measure
Sets
In the FY 2013 IPPS/LTCH PPS final rule (77 FR 53592), we finalized
a policy to retain measures from prior program years for each
successive program year, unless otherwise proposed and finalized. In
the FY 2019 IPPS/LTCH PPS final rule (83 FR 41440 through 41441), we
finalized a revision to our regulations at 42 CFR 412.164(a) to clarify
that once we have complied with the statutory prerequisites for
adopting a measure for the Hospital VBP Program (that is, we have
selected the measure from the Hospital IQR Program measure set and
included data on that measure on Hospital Compare for at least one year
prior to its inclusion in a Hospital VBP Program performance period),
the Hospital VBP Program statute does not require that the measure
continue to remain in the Hospital IQR Program.
We did not propose any changes to these policies in the FY 2024
IPPS/LTCH PPS proposed rule.
[[Page 59064]]
b. Codification of the Current Hospital VBP Program Measure Removal
Factors
In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41441 through
41446), we finalized eight measure removal factors for the Hospital VBP
Program, and we refer readers to that final rule for details. In the FY
2024 IPPS/LTCH PPS proposed rule, we proposed to codify at 42 CFR
412.164(c) of our regulations these eight measure removal factors as
well as the policies for updating measure specifications and retaining
measures (88 FR 27025). We believe that this codification will make it
easier for interested parties to find these policies and will further
align the Hospital VBP Program regulations with the regulations we have
codified for other quality reporting programs.
We invited public comment on this proposal.
We did not receive any comments on this proposal and are finalizing
this proposal as proposed with minor technical modifications to
regulation text at 42 CFR 412.164(c).
c. Substantive Measure Modifications
(1) Adoption of Substantive Measure Updates to the Medicare Spending
per Beneficiary (MSPB)--Hospital Measure (CBE #2158) Beginning With the
FY 2028 Program Year
In the FY 2024 IPPS/LTCH PPS proposed rule, we proposed to adopt
substantive measure updates to the MSPB Hospital measure (CBE #2158) in
the Hospital VBP Program beginning with the FY 2028 program year (88 FR
27025 through 27026). We adopted the MSPB Hospital measure in the
Hospital VBP Program in the FY 2012 IPPS/LTCH PPS final rule beginning
with the FY 2014 program year (76 FR 51654 through 51658). We continue
to believe that the MSPB Hospital measure provides important data on
resource use (addressing the Meaningful Measures Framework priority of
making care affordable), which is why we proposed substantive updates
to the MSPB Hospital measure in the Hospital VBP Program under the
Efficiency/Cost Domain. We refer readers to the FY 2019 IPPS/LTCH PPS
final rule for a broader discussion of the Meaningful Measures
Framework (83 FR 41147).
We previously adopted the same substantive updates to the MSPB
Hospital measure for use in the Hospital IQR Program in the FY 2023
IPPS/LTCH PPS final rule (87 FR 49257 through 49263). The substantive
updates to the MSPB Hospital measure are three refinements which ensure
a more comprehensive and consistent assessment of hospital performance
by capturing more episodes and adjusting the measure calculation:
An update to allow readmissions to trigger new episodes to
account for episodes and costs that are currently not included in the
measure but that could be within the hospital's reasonable influence;
A new indicator variable in the risk adjustment model for
whether there was an inpatient stay in the 30 days prior to episode
start date; and
An updated MSPB amount calculation methodology to change
one step in the measure calculation from the sum of observed costs
divided by the sum of expected costs (ratio of sums) to the mean of
observed costs divided by expected costs (mean of ratios).
These refinements also appear in a summary of the measure re-
evaluation on the CMS QualityNet website posted in July 2020.\219\
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\219\ Medicare Spending Per Beneficiary (MSPB) Measure
Methodology. Available at: https://qualitynet.cms.gov/inpatient/measures/mspb/methodology.
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We presented the three substantive updates to the MSPB Hospital
measure (CBE #2158) to the consensus-based entity (CBE) \220\ in the
Fall 2020 cycle for measure re-endorsement. During the Fall 2020 11-
month endorsement cycle, the re-evaluated MSPB Hospital measure was
reviewed by the Scientific Methods Panel (SMP), Cost and Efficiency
Standing Committee, and Consensus Standards Approval Committee
(CSAC).\221\ The re-evaluated measure passed on the reliability and
validity criteria when reviewed by the SMP. The Cost and Efficiency
Standing Committee reviewed each aspect of the re-evaluated measure in
detail across three meetings. The CSAC approved the Standing
Committee's endorsement recommendation unanimously and re-endorsed the
MSPB Hospital measure (CBE #2158) in June 2021 with the three
refinements.\222\ Following re-endorsement, we included the updated
measure in CMS's ``List of Measures Under Consideration (MUC) for
December 1, 2021.'' \223\ The re-evaluated MSPB Hospital measure
(MUC2021-131) underwent Measure Applications Partnership (MAP) \224\
review during the 2021-2022 cycle. On December 15, 2021, the MAP
Hospital Workgroup supported the re-evaluated measure for rulemaking.
On January 19, 2022, the MAP Coordinating Committee upheld the MAP
Hospital Workgroup's preliminary recommendation to support the re-
evaluated measure for rulemaking. More detail on the discussion is
available in the MAP's final report.\225\
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\220\ In previous years, we referred to the consensus-based
entity by corporate name. We have updated this language to refer to
the consensus-based entity more generally.
\221\ The submission materials, including the testing results,
are available at: https://mmshub.cms.gov/sites/default/files/cost-and-efficiency-final-report-fall-2020.pdf.
\222\ Centers for Medicare & Medicaid Services. (2020) Cost and
Efficiency Final Report--Fall 2020 Cycle. Available at: https://mmshub.cms.gov/sites/default/files/cost-and-efficiency-final-report-fall-2020.pdf.
\223\ Centers for Medicare & Medicaid Services. (2021) List of
Measures Under Consideration for December 1, 2021. Available at:
https://mmshub.cms.gov/sites/default/files/Overview-of-the-2021-MUC-List-20220308-508.pdf.
\224\ Interested parties convened by the consensus-based entity
will provide input and recommendations on the Measures under
Consideration (MUC) list as part of the pre-rulemaking process
required by section 1890A of the Act. We refer readers to https://p4qm.org/PRMR-MSR for more information.
\225\ Centers for Medicare & Medicaid Services. (2022) Measure
Applications Partnership 2021-2022 Considerations for Implementing
Measures in Federal Programs: Clinician, Hospital, and Post-Acute
Care Long-Term Care. Available at: https://mmshub.cms.gov/sites/default/files/map_2021-2022_considerations_for_implementing_measures_in_federal_programs_final_report.pdf.
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For the purpose of continuing to assess hospitals' efficiency and
resource use and to meet statutory requirements under section
1886(o)(2)(B)(ii) of the Act, we proposed to adopt the substantive
updates to the MSPB Hospital measure in the Hospital VBP Program under
the Efficiency and Cost Reduction Domain. As previously stated, we
previously adopted the same substantive updates to the measure in the
Hospital IQR Program (87 FR 49257 through 49263), and we intend to
begin posting the updated measure data on Care Compare beginning in
January 2024, which will enable us to post data on the substantive
updates to the measure for at least one year before the proposed
beginning of the performance period for the FY 2028 program year
(discharges beginning January 1, 2026).
We proposed to adopt the substantive updates to the MSPB Hospital
measure (CBE #2158) in the Hospital VBP Program beginning with the FY
2028 program year. We refer readers to section V.K.4.c of the preamble
of this final rule where we discuss our defined baseline and
performance periods for this updated measure under the Hospital VBP
Program. We also proposed that the performance standards calculation
methodology for the updated MSPB Hospital measure will be the same as
that which we currently use for the measure. The performance standards
for the updated measure for the FY 2028 program year are not yet
available.
We invited public comment on this proposal.
[[Page 59065]]
Comment: Many commenters supported the proposal to implement the
substantive updates to the MSPB Hospital measure in Hospital VBP
Program. Several commenters commended CMS for its alignment with the
Hospital IQR Program. A commenter cited the updates to readmission
terminology as a significant factor in their support.
Response: We thank commenters for their support, and we aim to
maintain alignment with the Hospital IQR Program in line with our
statutory requirements and to update our existing measures when
possible.
Comment: A few commenters did not support the proposal and
expressed concern that allowing readmissions to trigger new episodes
could lead to the same costs being attributed to hospitals twice and
provide a misleading portrayal of hospital performance.
Response: As previously stated in the FY 2023 IPPS/LTCH PPS final
rule (87 FR 49257 through 49263) where we adopted the MSPB re-evaluated
measure in the Hospital IQR Program, the refinement allows readmissions
to trigger new episodes which will result in some services being
assigned to multiple episodes. These services, however, will only be
counted once per episode, so the cost of these services will not be
counted twice within the same episode. Additionally, the presence of an
inpatient admission within 30 days before the start date of an episode
based on a readmission is controlled for in the risk adjustment model
to account for the additional complexity that readmissions may
entail.\226\ Further, the inclusion of episodes triggered by
readmissions does not necessarily result in a worse measure score for
the provider. Such episodes still use the observed over expected cost
ratios, where it is possible for the observed cost to be lower than
expected cost, if the hospital performed better on the episode than
expected.
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\226\ Medicare Spending Per Beneficiary (MSPB) Measure
Methodology. Available at: https://qualitynet.cms.gov/inpatient/measures/mspb/methodology.
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Comment: A few commenters did not support the proposal to adopt the
re-evaluated MSPB Hospital measure citing concern that hospitals have
not had enough time to understand how these measure refinements will
impact hospital performance. A few commenters recommended allowing
hospitals to have a better understanding of the impact the measure
updates will have on performance. Specifically, commenters recommended
delaying implementation in the Hospital VBP Program so that hospitals
have a better understanding of how the updates impacted hospital
performance in the Hospital IQR Program, including allowing hospitals
to see performance metrics, prior to implementation in the Hospital VBP
Program. A commenter requested to see the calculations and impact
changes before being able to appropriately comment, and a commenter
recommended delaying adoption for one year to allow for more robust
feedback. Additionally, a few commenters expressed concern that the
measure will increase the burden on hospitals because they will have to
monitor and validate two different performance rates using two
different measure specifications. A few commenters also expressed
concern that the policy will result in two slightly different measure
specifications being used simultaneously in the two different programs
which they believe could yield different results and make it more
difficult to interpret results.
Response: We appreciate the commenters' concerns. As we have
previously stated in the FY 2024 IPPS/LTCH PPS proposed rule (88 FR
27025 through 27026), we adopted the re-evaluated version of the MSPB
Hospital measure into the Hospital IQR Program to accommodate the
statutory and regulatory requirements as well as to provide interested
parties with an opportunity to become familiar with the new version of
the measure and provide feedback. We staged our proposals across the
Hospital IQR Program and Hospital VBP Program to accommodate statutory
and regulatory requirements, as further discussed later in this
section. We refer readers to the FY 2023 IPPS/LTCH PPS final rule (87
FR 49257 through 49263) for more information on the policy to adopt the
substantive updates to MSPB Hospital measure in the Hospital IQR
Program, which provided interested parties with an opportunity to
become familiar with the new version of the measure and provide
feedback prior to our proposal to adopt the measure updates in the
Hospital VBP Program. Hospital-specific reports for the re-evaluated
MSPB Hospital measure in the Hospital IQR Program will be available for
review in October 2023. Further, hospitals will be able to see their
performance in the Hospital IQR Program for four years prior to measure
implementation in the Hospital VBP Program beginning with the FY 2028
program year.
We acknowledge the commenters' concerns that two slightly different
versions of the measure will be in use across the Hospital IQR and
Hospital VBP Programs simultaneously until the measure is removed from
the Hospital IQR Program with the FY 2028 payment determination.
Section 1886(o)(2)(C)(i) of the Act and 42 CFR 412.164(b) state that
measures must be publicly reported for one year in the Hospital IQR
Program prior to the beginning of the performance period in the
Hospital VBP Program. Additionally, section 1886(o)(2)(B)(ii) of the
Act outlines that the Hospital VBP Program must contain an efficiency
measure. As part of routine measure maintenance, we will continue to
monitor the measure's impact on hospitals.
Comment: A commenter recommended suppressing one set of measures
from public reporting to reduce confusion caused by two different
publicly reported rates.
Response: Results for the MSPB Hospital measure currently
implemented in the Hospital VBP Program will continue to be available
on data.medicare.gov along with other Hospital VBP Program data until
the re-evaluated measure is implemented under the finalized policy
outlined in section V.K.2.a of this rule. We intend to continue
publishing re-evaluated MSPB Hospital measure data on Care Compare for
the period of time in which hospitals report on two versions of the
measure to provide important cost measure information to the public. In
addition, we will make sure it is clear which version of the measure is
being displayed in which location through outreach and education
efforts.
Comment: A few commenters did not support the re-evaluated MSPB
Hospital measure proposal because they believed that the measure was
not adequately tested and adjusted for social risk factors. A commenter
believed that measure scores shifted when social risk factors were
applied within the risk model. A commenter recommended implementing a
social risk factor adjustment in calculating measure performance
because they believed that it will improve measure reliability. A
commenter specifically stated that they believed that the endorsement
review suggested low reliability and validity. Another commenter
expressed concern about the scientific acceptability of the measure,
and a commenter believed that there would be a potential inverse
relationship between outcomes, adjustment for social risk factors, and
medical complexities due to vulnerable patient groups driving
performance differences.
Response: We respectfully disagree with the commenters that the re-
evaluated MSPB Hospital measure has low reliability and validity. The
CBE rated the measure's reliability as high
[[Page 59066]]
when endorsing the measure. The average reliability score of hospitals
with at least 25 episodes was .92,\227\ which far exceeds the standard
generally considered as `high' reliability. The CBE rated the measure's
validity as moderate when endorsing the measure.\228\ Further, as part
of the CBE endorsement submission we assessed the impact of social risk
factors on the measure, conducting testing based on CBE precedents, as
well as supplemented with novel testing and in response to specific
stakeholder feedback. Specifically, we tested whether the inclusion of
sex, dual eligibility status, race/ethnicity, the AHRQ socioeconomic
status (SES) index, components of the AHRQ SES index, and the Area
Deprivation Index could meaningfully be incorporated into the measure's
risk adjustment model so as not to penalize the hospital for the
patients they treat, while also not setting a lower standard of care
for hospitals with patients who have social risk factors. Results
showed that the inclusion of these social risk factors in the risk
model had a limited and inconsistent effect on measure scores, and some
of the variation that was captured by tested covariates was
attributable to the hospital in which the episodes were initiated. The
CBE's Scientific Methods Panel carefully reviewed the testing results
on the impacts of social risk factors on the measure and our
recommendation to continue not including them in the measure's risk
adjustment model and passed the measure on the validity criterion.
While social risk factors continue to not be included in the measure's
risk adjustment model, we plan to continue to conduct testing and
monitoring of the impact of social risk factors on the measure as part
of normal measure maintenance.
---------------------------------------------------------------------------
\227\ The submission materials, including the testing results,
are available at: https://mmshub.cms.gov/sites/default/files/cost-and-efficiency-final-report-fall-2020.pdf.
\228\ The submission materials, including the testing results,
are available at: https://mmshub.cms.gov/sites/default/files/cost-and-efficiency-final-report-fall-2020.pdf.
---------------------------------------------------------------------------
Comment: Several commenters expressed concerns about the re-
evaluated MSPB Hospital measure, including their beliefs that the
measure does not inform performance by condition, there could be an
increased number of episodes included in the measure that could impact
performance, and the explanation of how services are allocated to an
episode is unclear on how this would not penalize a hospital twice.
Response: Regarding the commenter's concern about hospitals being
penalized twice, this refinement will not result in hospitals being
penalized twice because the re-evaluated MSPB Hospital measure, whether
used in the Hospital IQR Program or Hospital VBP Program, and the
condition- and procedure-specific readmission measures used in the
Hospital Readmissions Reduction Program assess readmissions for
different purposes. The re-evaluated MSPB Hospital measure assesses
hospitals' cost efficiency on readmissions and other costs for both the
hospital and patient, while the condition- and procedure- specific
measures in the Hospital Readmissions Reduction Program are intended to
reduce avoidable readmissions.
We respectfully disagree that there could be an increased number of
episodes included in the measure and thus impact performance due to
readmissions triggering new episodes. The inclusion of episodes
triggered by readmissions does not necessarily result in a worse
measure score for the provider. Such episodes still use the observed
over expected cost ratios, where it is possible for the observed cost
to be lower than expected cost, if the hospital performed better on the
episode than expected. Additionally, allowing readmissions to trigger
new MSPB Hospital episodes does not impact a hospital's readmissions
rates, given that it merely captures episodes that are based on
existing readmissions so that those episodes can be used to assess
hospital performance.
Comment: A commenter requested additional clarification around what
is a hospital's reasonable influence for a readmission. They expressed
concern that it may be difficult for hospitals to track readmissions
without understanding what CMS considers to be reasonable influence and
recommended providing additional information on Care Compare prior to
FY 2028.
Response: We interpret ``reasonable influence'' in the comment to
mean the appropriateness to hold the hospital accountable for the costs
associated with the readmissions if they are influenced not only by the
hospital's care decisions but also other factors that the hospital may
not have influence over (for example, a patient's age, comorbidities,
or other risk factors). The Technical Expert Panel (TEP) that provided
feedback to the measure developer on the re-evaluated MSPB Hospital
measure agreed that readmissions should trigger MSPB episodes to
capture costs in the subsequent 30 days post-discharge for the
readmissions because they believed that it is clinically appropriate to
hold a hospital responsible for these costs.\229\ Allowing readmissions
to trigger new episodes (i) encourages hospitals to provide cost
efficient care and improve care coordination not only during initial
hospitalizations, but also during readmissions, (ii) increases the
number of episodes for which a clinician can be scored, and (iii)
captures potentially high-cost services that are otherwise excluded.
Additionally, allowing readmissions to trigger new MSPB Hospital
episodes does not impact a hospital's readmissions rates, given that it
merely captures episodes that are based on existing readmissions so
that those episodes can be used to assess hospital performance.
Furthermore, readmissions trigger an episode similarly to how initial
admissions trigger in an episode, in that the episode window starts
three days prior to the inpatient stay (whether it's an initial
admission or readmission) and ends 30 days after discharge--thus, this
refinement to measure construction will not result in any additional
burden for hospitals to track.
---------------------------------------------------------------------------
\229\ Physician Cost Measures and Patient Relationship Codes TEP
Summary Report. (2020). Available at: https://www.cms.gov/files/zip/physician-cost-measures-and-patient-relationship-codes-pcmp.zip.
---------------------------------------------------------------------------
We provide clarification on (i) how readmissions trigger an
episode, and (ii) the impact of the re-evaluated MSPB Hospital measure
as follows. An episode is opened, or triggered, by an initial admission
to an inpatient hospital, and the episode window starts three days
prior to this index admission and ends 30 days after discharge. If a
readmission for the same patient occurs within the 30-day post-
discharge of the first episode, then the readmission triggers a new
episode. This new episode's window starts three days prior to the
readmission and ends 30 days after discharge from the readmission. The
hospital managing the readmission is now being measured under similar
cost efficiency incentives by the new episode. Specifically, the new
episode includes the costs in the post-discharge period of the
readmission not previously captured. The refinement to allow
readmissions to trigger a new episode will result in some services
being assigned to multiple episodes. These services, however, are
counted only once per episode (that is, cost will not be double-
counted). The revised measure calculation compares each hospital's
observed episode costs to predicted episode costs among their peers for
patients with the same
[[Page 59067]]
observable characteristics, rather than to a pre-defined standard. By
comparing hospitals to other hospitals that are all attributed in the
same way, we expect this comparison to be fair. This helps maintain
care coordination incentives of the re-evaluated MSPB Hospital measure.
Further, the inclusion of episodes triggered by readmissions does not
necessarily result in a worse measure score for the provider--such
episodes still use the observed over expected cost ratios, where it is
possible for the observed cost to be lower than expected cost if the
hospital performed better on the episode than expected. Additionally,
the prior inpatient admission characteristic is controlled for in the
risk adjustment model to avoid unfairly penalizing the hospital
attributed to the newly triggered episode. An illustration of this
refinement is available in Appendix B of the Measure Information Form
(MIF) document available at: https://qualitynet.cms.gov/files/647f8ba16f7752001c37e302?filename=2023_HIQR_Re-eval_MSPB_%20MIF.pdf.
We also wish to note that because the updated version of this
measure was adopted in the Hospital IQR Program in the FY 2023 IPPS/
LTCH PPS final rule (87 FR 49257 through 49263), hospitals will receive
hospital-specific reports for the re-evaluated MSPB Hospital measure on
an annual basis, which include patient-level episode information, prior
to public display on the Compare tool. In addition, hospitals receive
hospital-specific reports for seven readmission measures used in the
Hospital IQR and Hospital Readmissions Reduction Programs that provide
patient-level readmissions information.
Comment: A few commenters had recommendations for the re-evaluated
MSPB Hospital measure including ensuring that the re-evaluated MSPB
Hospital measure is reliable and valid for efficiency and cost
reduction and exploring whether adding a new variable indicating a
patient had an inpatient stay in the 30 days prior to an episode may
unfairly disadvantage hospitals that frequently provide care to
patients with a high case mix index.
Response: As discussed earlier, the re-evaluated MSPB Hospital
measure rated high for reliability and moderate for validity during the
CBE endorsement process. As part of the CBE endorsement submission, we
undertook three approaches to empirically examine the extent to which
the re-evaluated MSPB Hospital measure captures what it intends to
capture. Firstly, we examined the relationship between risk adjusted
episode cost ratios and episodes with and without post-admission events
that are known indicators of high cost or intensive care. Secondly, we
examined the relationship between a hospital's average expected episode
cost and average episode rates of several service use categories, to
test whether the risk adjustment model can predict patient need for
certain services. Thirdly, we examined the relationship between the re-
evaluated MSPB Hospital measure and other cost-specific measures,
efficiency-related measures, and measures in other Hospital VBP Program
domains. For all three types of validity testing, we observed results
that were in line with our expectations, demonstrating that the measure
is functioning as intended.
We thank the commenter for their feedback regarding performance of
hospitals with high case mix index. There has been extensive testing
done on the measure to demonstrate the validity of its risk adjustment
model. In general, the re-evaluated MSPB Hospital measure's risk
adjustment methodology accounts for patient case-mix and other factors
by adjustment for patient age and severity of illness. Specifically,
the risk adjustment methodology includes 12 age categorical variables,
79 hierarchical condition category (HCC) indicators, status indicator
variables for whether the beneficiary qualifies for Medicare through
disability or age and End-Stage Renal Disease (ESRD), indicators to
account for disease interactions, an indicator of whether the
beneficiary recently required long-term care, and the Medicare
Severity-Diagnosis Related Group (MS-DRG) of the index hospitalization.
We believe that this provides adequate adjustment for patient acuity.
For the re-evaluated MSPB Hospital measure specifically, a variable
indicator showing whether there was an inpatient stay in the 30 days
prior to an episode start date is added to the risk adjustment model to
account for differences in expected cost for episodes that are
triggered by readmissions. This prior inpatient admission
characteristic is controlled for in the risk adjustment model to ensure
that the hospital attributed to the newly triggered episode from a
readmission is not unfairly penalized for providing care to the patient
during the episode that could be higher cost due to the readmission
status. This refinement was supported by the TEP. As part of routine
measure maintenance, we plan to continue to conduct testing and monitor
the impact of risk factors on the measure.
After consideration of the public comments we received, we are
finalizing this policy as proposed.
(2) Adoption of Substantive Measure Updates to the Hospital-Level Risk-
Standardized Complication Rate (RSCR) Following Elective Primary Total
Hip Arthroplasty (THA) and/or Total Knee Arthroplasty (TKA) (CBE #1550)
Measure Beginning With the FY 2030 Program Year
In the FY 2024 IPPS/LTCH PPS proposed rule, we proposed to adopt
substantive measure updates to the Hospital-level Risk-Standardized
Complication Rate (RSCR) Following Elective Primary Total Hip
Arthroplasty (THA) and/or Total Knee Arthroplasty (TKA) (CBE #1550)
(hereinafter referred to as the THA/TKA Complication measure),
beginning with the FY 2030 program year (88 FR 27026). We adopted the
THA/TKA Complication measure in the FY 2015 IPPS/LTCH PPS final rule
beginning with the FY 2019 program year for use in the Hospital VBP
Program (79 FR 50062 through 50063). We continue to consider the
clinical outcomes of the THA/TKA Complication measure a high priority,
and we believe that this measure provides important data on resource
use (addressing the Meaningful Measures Framework priority of making
care affordable), which is why we proposed to adopt substantive updates
to the THA/TKA Complication measure in the Hospital VBP Program under
the Clinical Outcomes Domain.
We previously adopted the same substantive updates to the THA/TKA
Complication measure for use in the Hospital IQR Program as a re-
evaluated measure in the FY 2023 IPPS/LTCH PPS final rule (87 FR 49257
through 49263). We also listed the re-evaluated THA/TKA Complication
measure in the publicly available document entitled ``List of Measures
Under Consideration for December 1, 2021,'' \230\ with identification
number MUC2021-118. The MAP reviewed the re-evaluated the measure and
voted to conditionally support the measure for rulemaking for use
pending CBE review and endorsement of the measure update. The MAP Rural
Health Advisory Group reviewed this re-evaluated measure on December 8,
2021, and agreed that the measure was suitable for use with rural
providers given that there would be no undue consequences for rural
hospitals.\231\ The CBE re-endorsed the
[[Page 59068]]
original measure in July of 2021,\232\ and we intend to submit the re-
evaluated measure to the CBE for endorsement in Fall 2024.
---------------------------------------------------------------------------
\230\ Centers for Medicare & Medicaid Services. (2021) List of
measures under consideration for December 1, 2021. Available at:
https://www.cms.gov/files/document/measures-under-consideration-list-2021-report.pdf.
\231\ Centers for Medicare & Medicaid Services. (2022) MAP 2021-
2022 Considerations for Implementing Measures Final Report--
Clinicians, Hospitals, and PAC-LTC. Available at: https://mmshub.cms.gov/sites/default/files/map_2021-2022_considerations_for_implementing_measures_in_federal_programs_final_report.pdf.
\232\ CMS Measure Inventory Tool. (2023) Hospital-level risk-
standardized complication rate (RSCR) following elective primary
total hip arthroplasty (THA) and/or total knee arthroplasty (TKA)
Measure Specifications. Available at: https://cmit.cms.gov/cmit/#/MeasureView?variantId=11547§ionNumber=1.
---------------------------------------------------------------------------
The substantive updates to the THA/TKA Complication measure are the
inclusion of index admission diagnoses and in-hospital comorbidity data
from Medicare Part A claims. Additional comorbidities prior to the
index admission are assessed using Part A inpatient, outpatient, and
Part B office visit Medicare claims in the 12 months prior to index
(initial) admission. As a claims-based measure, hospitals will not be
required to submit additional data for calculating the updated measure.
We refer readers to the FY 2023 IPPS/LTCH PPS final rule (87 FR 49263
through 49267), which describes the same updates we proposed to apply
to the THA/TKA Complication measure in the Hospital VBP Program,
including updates to the risk adjustment and measure calculations.
Adopting these substantive measure updates into the Hospital VBP
Program will expand the measure outcome to include 26 additional
mechanical complication ICD-10 codes. The additional ICD-10 codes
capture the following diagnoses: fracture following insertion of
orthopedic implant, joint prosthesis, or bone plate of the pelvis,
femur, tibia or fibula, and periprosthetic fracture around internal
prosthetic hip, hip joint, knee, knee joint, and other or unspecified
internal prosthetic joint. We refer readers to FY 2023 IPPS/LTCH PPS
final rule (87 FR 49264) for further information on these additional
included ICD-10 codes that are included in the updated measure as
adopted for the Hospital IQR Program.
Section 1886(o)(2)(A) of the Act requires the Hospital VBP Program
to select measures that have been specified for the Hospital IQR
Program. We note that although section 1886(b)(3)(B)(viii)(IX)(aa) of
the Act generally requires measures specified by the Secretary in the
Hospital IQR Program be endorsed by the entity with a contract under
section 1890(a) of the Act, section 1886(b)(3)(B)(viii)(IX)(bb) of the
Act states that in the case of a specified area or medical topic
determined appropriate by the Secretary for which a feasible and
practical measure has not been endorsed by the entity with a contract
under section 1890(a) of the Act, the Secretary may specify a measure
that is not endorsed as long as due consideration is given to measures
that have been endorsed or adopted by a consensus organization
identified by the Secretary. We reviewed CBE-endorsed measures and were
unable to identify any other CBE-endorsed measures on this topic, and,
therefore, we believe that the exception in section 1886
6(b)(3)(B)(viii)(IX)(bb) of the Act applies. We note that we intend to
submit the re-evaluated measure to the CBE for endorsement in Fall
2024.
For the purpose of continuing to assess clinical outcomes, we
proposed to adopt the substantive measure updates to the THA/TKA
Complication measure (CBE #1550) in the Hospital VBP Program under the
Clinical Domain beginning with the FY 2030 program year. As previously
stated, we previously adopted the same substantive updates to the
measure in the Hospital IQR Program (87 49257 through 49263), and we
intend to begin posting the updated measure data on Care Compare
beginning in July 2023, which will enable us to post data on the
substantive updates to the measure for at least one year before the
proposed beginning of the FY 2030 performance period, April 1, 2025,
through March 31, 2028.
We proposed to adopt the substantive updates to THA/TKA
Complications measure (CBE #1550) in the Hospital VBP Program beginning
with the FY 2030 program year. We refer readers to section V.K.4.c of
the preamble of this final rule where we discuss our defined baseline
and performance periods for this updated measure under the Hospital VBP
Program. We also proposed that the performance standards calculation
methodology for the updated THA/TKA Complications measure will be the
same as that which we currently use for the measure. The performance
standards for the updated measure for FY 2030 are not yet available.
We invited public comment on this proposal.
Comment: Many commenters supported the proposal to implement the
re-evaluated THA/TKA Complications measure in Hospital VBP Program,
with a commenter noting they believed that it is important to ensure
measure specifications align across programs. A commenter believed the
measure updates will reduce duplicative reporting requirements for
hospitals participating in both programs, increase accountability for
hospitals by rewarding hospitals with lower complication rates, and
provide patients with information to guide their choices regarding
where to seek care. The commenter also believed that the measure
updates have the potential to lower healthcare costs by decreasing the
likelihood of costly readmissions. A commenter noted that they believed
that the expansion of the numerator events for this measure provides a
more comprehensive picture of hospital performance for hip and knee
arthroplasty procedures. A few commenters indicated their support of
the inclusion of the 26 additional mechanical complication ICD-10 codes
because the codes are clinically appropriate to be paired with
arthroplasty and will improve the measure's accuracy. A commenter
specifically mentioned the measure cohort expansion to include
admission diagnoses and in-hospital comorbidity data in their support
because they believed that it enables the inclusion of the 26
additional mechanical complication ICD-10 codes.
Response: We thank commenters for their support. We agree that it
is important to align measures across programs where possible and that
the 26 additional mechanical complication ICD-10 codes are clinically
appropriate.
Comment: A few commenters did not support the substantive updates
to the THA/TKA Complications measure citing concerns with the length of
the delay in implementation, the inability to assess impact prior to
implementation and ability to appropriately comment, and public
confusion with the measure currently in the Hospital IQR Program. A
commenter noted that they believe that the proposal does not provide
enough information to demonstrate the anticipated improvements once
implemented.
Response: Section 1886(o)(2)(C)(i) of the Act and 42 CFR 412.164(b)
state that measures must be publicly reported for one year in the
Hospital IQR Program prior to the beginning of the performance period
in the Hospital VBP Program. As we stated in the FY 2024 IPPS/LTCH PPS
proposed rule (88 FR 27026), we previously adopted the re-evaluated
THA/TKA Complication measure into the Hospital IQR Program to
accommodate these statutory and regulatory requirements. We staged our
proposals across the Hospital IQR Program and Hospital VBP Program to
accommodate the statutory requirement. Therefore, we do not want to
alter the public reporting timeline of the measures. Hospital-specific
reports for the re-evaluated THA/TKA Complications measure in the
Hospital IQR Program were released to hospitals
[[Page 59069]]
in May 2023. Additionally, hospitals will be able to see their
performance in the Hospital IQR Program for 6 years prior to measure
implementation in the Hospital VBP Program beginning with the FY 2030
program year. Further, like the re-evaluated MSPB Hospital measure, we
will make sure it is clear which version of the measure is being
publicly displayed in which location through outreach and education
efforts.
Comment: A few commenters expressed concern that the measure will
increase burden on hospitals because they will have to monitor and
validate two different performance rates, with a commenter expressing
concern regarding the number of hospitals that participate in the
Hospital VBP Program versus the Hospital IQR Program. The commenter
recommended monitoring reporting rates to make sure no reporting gaps
occur when the measure is removed from the Hospital IQR Program.
Response: We acknowledge the commenters' concerns regarding burden
of reporting two slightly different versions of the measure in the
Hospital IQR and Hospital VBP Programs simultaneously. However, we
respectfully disagree that the proposed transition of the re-evaluated
THA/TKA Complication measure from the Hospital IQR Program to the
Hospital VBP Program will cause significant data collection burden.
Hospitals will not be required to submit additional data for
calculating the measure as it is a claims-based measure. Section
1886(o) of the Act and at 42 CFR 412.164(b) of our regulations state
that measures must be publicly reported for one year in the Hospital
IQR Program prior to the beginning of the performance period in the
Hospital VBP Program. As we have previously stated in the FY 2024 IPPS/
LTCH PPS proposed rule (88 FR 27026 through 27027), we adopted the
revised version of the THA/TKA Complication measure into the Hospital
IQR Program first to accommodate the statutory and regulatory
requirements. The benefits of keeping the original THA/TKA
Complications measure until the statutory timeframe for the updated
measure has been met outweighs the burden of reporting two measures. We
refer readers to FY 2023 IPPS/LTCH PPS final rule (87 FR 49263 through
49267), which provided interested parties with an opportunity to become
familiar with the new version of the measure and provide feedback prior
to our proposed adoption of that revised measure in the Hospital VBP
Program.
Comment: Several commenters recommended that CMS consider modifying
the measure to capture both inpatient and outpatient procedures in the
case that the shift of procedures from an inpatient setting to an
outpatient setting alters the measure validity and reliability or
impacts performance.
Response: We thank the commenters for their feedback. We are
monitoring the shifts of THA/TKA from the inpatient to outpatient
setting as well as the potential impacts on this inpatient only
measure. The proposed re-evaluated THA/TKA Complication measure is case
mix adjusted for patient comorbidities and is a relative performance
measure for hospitals performing these elective THA/TKA
procedures.\233\ As such, we believe that this measure accurately
reflects hospital performance even if patients receiving these
procedures in the inpatient setting tend to be sicker, on average, than
those treated in an outpatient setting. We also refer readers to
section XIV.B.3.b of the CY 2024 OPPS proposed rule for a proposal to
adopt the THA/TKA Patient-Reported Outcome-based Performance Measure
(PRO-PM) in the Hospital Outpatient Quality Reporting (OQR) Program.
---------------------------------------------------------------------------
\233\ For more detailed measure specifications, we refer readers
to the ``2022 Procedure-Specific Complication Measure Updates and
Specifications: THA/TKA'' at the CMS.gov QualityNet website at:
https://qualitynet.cms.gov/inpatient/measures/complication/methodology.
---------------------------------------------------------------------------
Comment: A few commenters expressed concerns about the inclusion of
the additional ICD-10 codes, including that the feedback from subject
matter experts have not been reviewed or endorsed by the CBE and that
the additional codes will negatively impact patients and clinicians in
small community hospitals.
Response: As stated in the proposed rule (88 FR 27026), the re-
evaluated measure was conditionally supported by the MAP in December of
2021. The CBE re-endorsed the original measure in July of 2021, and we
intend to submit the re-evaluated measure to the CBE for endorsement in
the fall of 2024. Additionally, the MAP Rural Health Advisory Group
reviewed this re-evaluated measure on December 8, 2021, and agreed that
the measure was suitable for use with rural providers given that there
would be no undue consequences for rural hospitals.\234\ We also note
while conducting internal analyses, orthopedic surgeons and clinical
coding experts vetted the additional 26 mechanical complication ICD-10
codes and agreed they should be included.
---------------------------------------------------------------------------
\234\ Centers for Medicare & Medicaid Services. (2022) MAP 2021-
2022 Considerations for Implementing Measures Final Report--
Clinicians, Hospitals, and PAC-LTC. Available at: https://mmshub.cms.gov/sites/default/files/map_2021-2022_considerations_for_implementing_measures_in_federal_programs_final_report.pdf.
---------------------------------------------------------------------------
Comment: A commenter recommended suppressing one set of measure
results from public reporting to reduce potential confusion, while
another commenter recommended reviewing the changes to makes sure
reliability and validity of the measure were not impacted. Additional
recommendations included allowing hospitals to have the ability to see
the performance metrics to have a better understanding of the impacts
of the modifications and publicly reporting the risk-adjusted, one-year
mortality and revision rates on the Care Compare website.
Response: We thank the commenters for their feedback on the re-
evaluated THA/TKA measure. We will work to clearly identify the version
of the measure when publicly reporting the re-evaluated THA/TKA
Complications measure and help address any potential confusion. Data
for this measure will continue to be posted to the Care Compare
website.
Comment: A few commenters made recommendations about including
adjustments around socioeconomic and SDOH considerations, including
expanding the claims lines from 25 to a number that allows for the
capture of mechanical complication codes along with SDOH diagnosis
codes that could also impact the outcome of an elective THA or TKA, and
creating a socioeconomic status risk-adjustment that stratifies by dual
eligibility populations. A few commenters stated that they believe
hospitals taking care of the most complex patients may be unfairly
penalized and recommend exploring an alternative risk adjustment.
Response: We are committed to measuring and improving health equity
and addressing social risk factors in quality measurement. During the
last CBE endorsement maintenance submission for the THA/TKA
Complication measure prior to 2022, comprehensive testing was completed
which included an assessment of the impact of social risk as captured
by dual eligibility and the AHRQ SES Index. The AHRQ SES index score
considers aspects of socioeconomic status and is computed using US
census data and considers factors including median household income,
percentage of persons below the Federal poverty line, unemployment,
education, property value, and percentage of persons in crowded
households at the 9-digit zip
[[Page 59070]]
code level.\235\ We found wide variation in the prevalence of the two
social risk factors we examined, with a large proportion of hospitals
treating zero patients with these risk factors. We also found that both
had some association with complication risk. However, adjustment for
these factors did not have a material impact on hospital
RSCRs.236 237 Our decisions about which risk factors should
be included in each measure's risk-adjustment model are based on
whether inclusion of such variables is likely to make the measures more
successful at illuminating quality differences and motivating quality
improvement. Given these empiric findings and program considerations,
we chose not to include these two social risk factors in the final risk
model. In presenting these results and interpretation, the CBE re-
endorsed the original measure (CBE #1550) in June of 2021 without
adjustment for patient-level social risk factors.\238\ We acknowledge
the importance of balancing these competing considerations and we plan
to continue to reevaluate the risk adjustment model and available risk
factors on an ongoing basis as part of routine measure maintenance,
with the goal of producing the most accurate and fair risk adjustment
models for assessing provider performance. Further details related to
social risk testing for this measure can be found from downloading the
measure specifications from the National Quality Forum (NQF)'s Surgery
Fall Cycle 2020 project here: https://nqfappservicesstorage.blob.core.windows.net/proddocs/22/Fall/2020/measures/1550/shared/1550.zip.
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\235\ Bonito A, Bann C, Eicheldinger C, Carpenter L. Creation of
new race-ethnicity codes and socioeconomic status (SES) indicators
for Medicare beneficiaries. Final Report, Sub-Task. 2008;2.
\236\ National Quality Forum. Surgery Fall Cycle 2020. Measure
Testing (subcriteria 2a2, 2b1-2b6) Document. November 3, 2020.
Available at: https://nqfappservicesstorage.blob.core.windows.net/proddocs/22/Fall/2020/measures/1550/shared/1550.zip.
\237\ Health and Human Services. (2016) 2016 Procedure-Specific
Measure Updates and Specifications Report Hospital-Level Risk-
Standardized Complication Measure. Available at: https://www.hhs.gov/guidance/sites/default/files/hhs-guidance-documents/elective%20primary%20tha%20and-or%20tka%20complications%20measure%20specifications_0.pdf.
\238\ National Quality Forum. Consensus Standards Approval
Committee--Measure Evaluation Web Meeting, June 2021. Available at:
https://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=95862.
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After consideration of the public comments we received, we are
finalizing our policy as proposed.
3. New Measure for the Hospital VBP Program Set
We consider measures for adoption based on the statutory
requirements, including specification under the Hospital IQR Program,
posting dates on the Care Compare website, and our priorities for
quality improvement as outlined in the CMS National Quality Strategy,
available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Value-Based-Programs/CMS-Quality-Strategy. We
also refer readers to the FY 2019 IPPS/LTCH PPS final rule (83 FR 41147
through 41148), in which we describe the Meaningful Measures Framework,
our objectives under this Framework for quality measurement, and the
quality topics that we have identified as high-impact measurement areas
that are relevant and meaningful to both patients and providers. Due to
the time necessary to adopt measures, we often adopt policies for the
Hospital VBP Program well in advance of the program year for which they
will be applicable.
a. New Measure Adoption Beginning With the FY 2026 Program Year: Severe
Sepsis and Septic Shock: Management Bundle (CBE #0500)
(1) Background
Sepsis, severe sepsis, and septic shock can arise from simple
infections, such as a pneumonia or urinary tract infection. Although it
can affect anyone at any age, sepsis is more common in infants, the
elderly, and patients with chronic health conditions such as diabetes
and immunosuppressive disorders.\239\ A 2021 report by the Healthcare
Cost and Utilization Project on the most frequent principal diagnoses
among non-maternal, non-neonatal inpatient stays using the 2018
National Inpatient Sample revealed septicemia as the most frequent
principal diagnosis with over 2.2 million hospital stays.\240\ The CDC
estimates there are approximately 1.7 million adults diagnosed with
sepsis annually with approximately 270,000 resulting deaths. An
analysis of over 2.5 million patients with sepsis discharged from
January 1, 2010, to September 30, 2016, revealed average mortality
rates of 14.9 percent for patients with severe sepsis and 34.3 percent
for patients with septic shock.\241\ Another analysis using CMS claims
data for services provided to approximately 6.9 million patients
admitted to inpatient with sepsis from January 1, 2012, to December 31,
2018, showed that while the number of patients admitted to the hospital
with sepsis increased over this time period, mortality rates decreased,
however they remained high with mortality rates at one week post
discharge of approximately 15 percent for severe sepsis and
approximately 40 percent for patients with septic shock. For this same
population mortality rates increased at six months post discharge to
approximately 36 percent for severe sepsis and 60 percent for septic
shock.\242\
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\239\ National Institute of General Medical Sciences. (2021).
Bethesda, MD: U.S. Department of Health and Human Services.
Available at: https://nigms.nih.gov/education/fact-sheets/Pages/sepsis.aspx.
\240\ McDermott KW, Roemer M. (2021) Most Frequent Principal
Diagnoses for Inpatient Stays in U.S. Hospitals, 2018. Healthcare
Cost and Utilization Project (HCUP) Statistical Brief #277.
Available at: https://www.hcup-us.ahrq.gov/reports/statbriefs/sb277-Top-Reasons-Hospital-Stays-2018.pdf.
\241\ Paoli CJ, Reynolds MA, Sinha M, Gitlin M, Crouser E.
(2018). Epidemiology and Costs of Sepsis in the United States--An
Analysis Based on Timing of Diagnosis and Severity Level. Critical
Care Medicine.46(12):1889-1897.-doi: 10.1097/CCM.0000000000003342.
\242\ Buchman TG, Simpson SQ, Sciarretta KL, et al. (2020).
Sepsis Among Medicare Beneficiaries: 1. The Burdens of Sepsis, 2012-
2018. Crit Care Med. 48(3):276-288. doi: 10.1097/
CCM.0000000000004224. PMID: 32058366; PMCID: PMC7017943.
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In a 2001 study by Rivers et al.,\243\ it was shown that an
absolute and relative reduction in mortality from sepsis can be reduced
16 percent and 30 percent, respectively, when aggressive care is
provided within six hours of hospital arrival. In a more recent study
that utilized chart-abstracted data for the Severe Sepsis and Septic
Shock: Management Bundle measure (CBE #0500) from October 1, 2015, to
March 31, 2017, submitted to CMS for over 1.3 million patients,
Townsend et al. found that compliance with the measure was associated
with a reduction in 30-day mortality.\244\
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\243\ Rivers E, Nguyen B, Havstad S et al. (2001) Early goal
directed therapy in the treatment of severe sepsis and septic shock.
N Engl J Med. 345: 1368-77.
\244\ Townsend SR, Phillips GS, Duseja R, et al. (2021) Effects
of compliance with the early management bundle (SEP-1) on mortality
changes among Medicare beneficiaries with sepsis: a propensity score
matched cohort study. Chest. doi:10.1016/j.chest.2021.07.2167.
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(2) Overview of Measure and MAP Feedback
We previously adopted the Severe Sepsis and Septic Shock:
Management Bundle measure (CBE #0500) into the Hospital IQR Program
beginning with the FY 2017 payment determination in the FY 2015 IPPS/
LTCH PPS final rule (79 FR 50236 through 50241). Hospital submission of
patient level data for reporting on the measure began with qualifying
patient discharges starting
[[Page 59071]]
October 1, 2015. We began public reporting of the Severe Sepsis and
Septic Shock: Management Bundle measure (CBE #0500) performance results
on the Care Compare website with the July 2018 refresh at which time
the national average performance for the measure was 49 percent.
Performance rates have increased with each subsequent Care Compare
refresh reaching 60 percent for results reported from October 1, 2019,
through September 30, 2020. During the COVID-19 public health emergency
(PHE), performance rates decreased slightly to 57 percent for the
results reported from January 1, 2021, through December 31, 2021.
Performance rates for the top 10 percent of hospitals have averaged 80
percent since we began public reporting with performance data from
October 1, 2017, through September 30, 2018. We believe that additional
incentives will support continued improvement in measure performance.
The Severe Sepsis and Septic Shock: Management Bundle measure (CBE
#0500) was initially endorsed by the CBE in 2008 for the hospital/acute
care facility setting, and underwent maintenance review and endorsement
renewal in June 2013, November 2014, July 2017, and December 2021.
The Severe Sepsis and Septic Shock: Management Bundle measure
supports the efficient, effective, and timely delivery of high-quality
sepsis care. The Severe Sepsis and Septic Shock: Management Bundle
provides a standard operating procedure for the early risk
stratification and management of a patient with severe infection. When
the care interventions in the Severe Sepsis and Septic Shock:
Management Bundle measure are provided as a composite, there have been
significant reductions observed in hospital length of stay, re-
admission rates and mortality.245 246 Additional information
about this measure is available on the CMS Measures Inventory Tool
(CMIT) website.\247\
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\245\ Levy MM, Gesten FC, Phillips GS, et al. (2018). Mortality
Changes Associated with Mandated Public Reporting for Sepsis. The
Results of the New York State Initiative. Am J Respir Crit Care Med.
198(11):1406-1412. doi: 10.1164/rccm.201712-2545OC. PMID: 30189749;
PMCID: PMC6290949.
\246\ Bauer SR, Han X, Wang XF, Blonsky H, Reddy AJ. (2020)
Association Between Compliance With the Sepsis Quality Measure (SEP-
1) and Hospital Readmission. Chest. 158(2):608-611. doi: 10.1016/
j.chest.2020.02.042. Epub 2020 Mar 10. PMID: 32169628.
\247\ Severe Sepsis and Septic Shock: Management Bundle
(Composite Measure) https://cmit.cms.gov/cmit/#/MeasureView?variantId=778§ionNumber=1.
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We believe that the adoption of this measure aligns with the core
principles outlined in the HHS National Healthcare System Action
Alliance to Advance Patient Safety, including the focus on
demonstrating and fostering commitments to safety as a core value and
the promotion of the development of safety cultures.\248\ We also
believe that the adoption of the Sepsis and Septic Shock: Management
Bundle measure will contribute toward CMS' goal of advancing health
equity, as outlined in the CMS National Quality Strategy.\249\ Research
on in-hospital sepsis mortality between 2004-2013 showed that there is
a higher rate of sepsis mortality for Black and Hispanic patients,
compared with White patients.\250\ Further, this research showed that
disparities in outcomes disappeared when results were adjusted for
hospital characteristics which highlights the need for improved septic
management in hospitals that are treating a high proportion of Black
and Hispanic patients.\251\ Another study of 249 academic medical
centers found that for patients with a diagnosis of sepsis, Black
patients exhibited lower adjusted sepsis mortality than White
patients.\252\ While the results of research in the field are varied,
we believe that this measure, which outlines standardized protocols,
could mitigate potential biases held by individuals and systems that
lead to such variation in outcomes.
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\248\ The National Healthcare System Action Alliance To Advance
Patient Safety. HHS. Available at: ahrq.gov/cpi/about/otherwebsites/action-alliance.html.
\249\ Centers for Medicare & Medicaid Services. (2022) CMS
National Quality Strategy. Available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Value-Based-Programs/CMS/Quality-Strategy.
\250\ Jones JM, Fingar KR, Miller MA, et al. (2017). Racial
Disparities in Sepsis-Related In-Hospital Mortality: Using a Broad
Case Capture Method and Multivariate Controls for Clinical and
Hospital Variables, 2004-2013. Crit Care Med. 45(12):e1209-e1217.
doi: 10.1097/CCM.0000000000002699. PMID: 28906287.
\251\ Ibid.
\252\ Chaudhary N, Donnelly, J, Wang H (2018). Critical Care
Medicine 46(6):p 878-883, June 2018. [verbar] DOI: 10.1097/
CCM.0000000000003020.
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The measure was submitted to the MAP for the Hospital VBP Program
for the 2022-2023 pre-rulemaking cycle and received conditional support
for rulemaking pending the measure developer providing clarity about
the differences between the measure specifications submitted to the MUC
list in May 2022 and reviewed by MAP and the current measure
specifications published in December 2022 which include abstraction
guidance updates related to crystalloid fluid administration volumes.
During the public comment period for the MUC list, we received comments
that were both supportive and not supportive of the inclusion of the
measure in the Hospital VBP Program. Public comments supportive of
including the measure in the Hospital VBP Program noted the measure is
CBE endorsed and that it encourages hospitals to follow published
international guidelines for the early identification and management of
severe sepsis and septic shock.
Public comments not supportive of including the measure in the
Hospital VBP Program centered around two main themes. The first group
of commenters were concerned that the adoption of the Severe Sepsis and
Septic Shock: Management Bundle measure could result in the overuse of
antibiotics, more specifically, that adherence to the Severe Sepsis and
Septic Shock: Management Bundle measure includes administering
antibiotic therapy to all patients with possible sepsis, regardless of
severity-of-illness, which commenters believed could risk excessive and
unwarranted antibiotic administration. The antibiotic requirements and
timing for the measure are consistent with antimicrobial
recommendations Surviving Sepsis Campaign: International Guidelines for
Management of Severe Sepsis and Septic Shock: 2021.\253\ We believe
that there is enough flexibility to incorporate clinician judgment in
the measure as there are several opportunities for abstractors to
disregard Systemic Inflammatory Response Syndrome (SIRS) criteria or
signs of organ dysfunction if there is physician, advance practice
nurse, or physician assistant documentation that SIRS criteria or signs
of organ dysfunction are due to a chronic condition, medication, or a
non-infectious source.
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\253\ Evans L, Rhodes A, Alhazzani W, et al. (2021) Surviving
Sepsis Campaign: International Guidelines for Management of Sepsis
and Septic Shock 2021. Crit Care Med. 49(11):e1063-e1143. doi:
10.1097/CCM.0000000000005337. PMID: 34605781.
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Second, some commenters had concerns around the burden associated
with the data abstraction of the measure and staying up to date with
changes to the data abstraction. We note that adding the measure to the
Hospital VBP Program will not create a new burden for hospitals because
they are already required to report data on the measure under the
Hospital IQR Program. With regard to concerns about the overall burden
of collecting these data in the Hospital IQR Program, we note that we
are currently developing a sepsis outcome electronic clinical quality
measure (eCQM) that, if adopted for that program, would not be as
burdensome
[[Page 59072]]
for hospitals to report. However, in light of our high priority to
address patient safety, in the FY 2024 IPPS/LTCH PPS proposed rule, we
proceeded with the proposal to adopt the Severe Sepsis and Septic
Shock: Management Bundle measure (88 FR 27027 through 27029). The
specifications for the proposed measure are listed in v5.14 of the CMS
Specifications Manual for National Hospital Inpatient Quality Measures,
and those specifications apply to patients discharged from July 1,
2023, through December 31, 2023.\254\ The proposed measure
specifications for v5.14 include minor technical updates to the data
abstraction guidance and review for consistency with recent published
literature. The minor technical updates were made to address hospital
abstractor and clinician feedback received via the QualityNet Question
and Answer Tool from hospital medical record abstractors and clinicians
about the documentation required for fluid resuscitation within three
hours of tissue hypoperfusion presentation. We routinely make these
minor, technical updates based on feedback we receive from abstractors
and clinicians to improve the data abstraction of the measure. The
measure is in alignment with the Surviving Sepsis Campaign:
International Guidelines for Management of Severe Sepsis and Septic
Shock: 2021 which suggest administering at least 30 mL/kg of
intravenous (IV) crystalloid fluids within the first three hours of
resuscitation noting that timely, effective fluid resuscitation is
critical to stabilize patients with sepsis-induced tissue
hypoperfusion. The guidelines noted that there are no prospective
interventional studies comparing various crystalloid fluid volumes for
initial resuscitation but reference observational studies and a
retrospective study that demonstrated not administering 30 mL/kg of
crystalloid fluids within three hours of sepsis identification was
associated with higher mortality regardless of comorbidities such as
end-stage renal disease and heart failure. With this in mind, the
guidelines suggest that fluid administration should be guided by
careful assessment of responsiveness to avoid over- and under-
resuscitation. The measure requires starting crystalloid fluids within
three hours of recognition of tissue hypoperfusion but does not require
fluids for resuscitation be completely infused within three hours. This
is in part due to recognition of various factors that can contribute to
complete fluid infusion potentially taking longer. The measure
establishes 30 mL/kg of crystalloid fluids as the default volume for
fluid resuscitation but does allow for lesser volumes ordered by a
clinician and accompanied by documentation of a reason for
administering a lesser volume in recognition that some patients may not
tolerate 30 mL/kg and that others may respond adequately to a lesser
volume.
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\254\ Hospital IQR Program, Inpatient Specifications Manual
v5.14. https://qualitynet.cms.gov/files/6391eabf76962e0016ad91ba?filename=HIQR_SpecsMan_v5.14.zip.
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We have made technical updates to the measure specifications since
we adopted this measure in the Hospital IQR Program, and we proposed to
adopt the measure, as updated, for the Hospital VBP Program. The data
submission requirements, Specifications Manual, and submission
deadlines are posted on the QualityNet website at: https://qualitynet.cms.gov (or other successor CMS designated websites).
(3) Overview of the Measure Specifications
a. Numerator
Patients who received all of the following interventions for which
they qualify:
[GRAPHIC] [TIFF OMITTED] TR28AU23.256
[[Page 59073]]
b. Denominator
The denominator is patients 18 years of age and older with an ICD-
10-CM Principal or Other Diagnosis Code for sepsis, severe sepsis
without septic shock, or severe sepsis with septic shock, and without
an ICD-10-CM Principal or Other Diagnosis Code of U07.1 (COVID-19).
Patients who are admitted as a transfer from an inpatient,
outpatient, or emergency/observation department of another hospital or
an ambulatory surgical center, or who are enrolled in a clinical trial
associated with treatment of patients with sepsis, are excluded from
the denominator. The denominator is further refined as the number of
patients confirmed with severe sepsis or septic shock through medical
record review for the presence of a suspected infection, two or more
SIRS criteria, and a sign of organ dysfunction that are all documented
within 6 hours of each other. Additional exclusions are for patients:
With advanced directives for comfort care or palliative
care;
Who or for whom a surrogate decision maker declines or is
unwilling to consent to interventions required to meet the numerator;
With severe sepsis or septic shock who are discharged
within six hours of presentation; or
Who received IV antibiotics for more than 24 hours prior
to severe sepsis presentation.
We proposed to adopt the Severe Sepsis and Septic Shock: Management
Bundle measure in the Hospital VBP Program under the Safety Domain
beginning with the FY 2026 program year. The proposed measure fulfills
all the statutory requirements for the Hospital VBP Program based on
our adoption of the measure in the Hospital IQR Program. We refer
readers to section V.K.4.c of the preamble of this final rule where we
discussed our proposed baseline periods and performance periods for
this measure if adopted for the Hospital VBP Program.
We invited public comment on this proposal.
Comment: Many commenters supported the Severe Sepsis and Septic
Shock Management Bundle measure proposal, agreeing that the severity of
the diagnoses warrants the implementation of the measure, that the
measure will not create additional burden, and that the measure is in
alignment with the Surviving Sepsis Campaign International Guidelines
for Management of Severe Sepsis and Septic Shock. A commenter supported
that the measure is kept up to date by incorporating Version 5.14 and
that the review period includes updates between May 2022 and December
2022. A commenter supported the measure proposal but recommended
delaying implementation until streamlining and standardization of the
severe sepsis and septic shock definition is completed by the Federal
Sepsis Task Force.
Several commenters supported the Severe Sepsis and Septic Shock:
Management Bundle proposal because they believed that it will benefit
clinicians and patients, including allowing flexibilities for clinician
judgment in prescribing therapies and driving enhanced quality of care
for the Medicare patient population. A commenter noted the clinician
benefit of initial and serial procalcitonin monitoring that complements
and enhances compliance with Severe Sepsis and Septic Shock: Management
Bundle. A commenter recommended future modifications to better tailor
individual patients' care.
Response: We thank the commenters for their support of our proposal
to adopt the Severe Sepsis and Septic Shock: Management Bundle (CBE
#0500) measure for the Hospital VBP Program beginning with the FY 2026
program year. We appreciate the commenters' recognition that the
measure is in alignment with the most recent Surviving Sepsis Campaign
International Guidelines for Management of Severe Sepsis and Septic
Shock. We recognize the importance of making sure the measure is
maintained and consistent with the most recent guidelines and best
practice published evidence. We understand and respect the need to
harmonize with sepsis definitions and measures used by other Federal
agencies, such as the Centers for Disease Control and Prevention (CDC)
Adult Sepsis Event (ASE) definition.\255\ We will apply the severe
sepsis and septic shock screening criteria that the measure currently
uses because those criteria are consistent with previous iterations of
the measure and are an established, tested method for early
identification of sepsis. We will reevaluate this as newer methods and
definitions are finalized.
---------------------------------------------------------------------------
\255\ Centers for Disease Control and Prevention. (2018)
Hospital Toolkit for Adult Sepsis Surveillance. Available at:
https://www.cdc.gov/sepsis/pdfs/sepsis-surveillance-toolkit-mar-2018_508.pdf.
---------------------------------------------------------------------------
We believe that recent updates to the measure that incorporate
options that acknowledge clinician judgment and enable greater
assessment and prescribing flexibility consistent with clinical
practice guidelines and recent literature will be beneficial. We thank
commenters for their feedback on the use of serial procalcitonin and
recommendation for future modifications to better account for
individual patient care needs. We will take these into consideration
for future program years.
Comment: Several commenters supported the Severe Sepsis and Septic
Shock: Management Bundle proposal in the Hospital VBP Program because
they believed that it incentivizes hospitals to increase the quality
and timeliness of care which result in better patient outcomes.
A few commenters supported the Severe Sepsis and Septic Shock:
Management Bundle measure proposal and commended CMS for taking steps
to improve sepsis outcomes, particularly through the development of an
eCQM in the future that could replace the Severe Sepsis and Septic
Shock: Management Bundle in a less burdensome manner.
A commenter supported the Severe Sepsis and Septic Shock:
Management Bundle measure proposal because they believed in the
importance of evidence-based correlation to outcomes. A commenter also
supported the Severe Sepsis and Septic Shock: Management Bundle measure
proposal because it promotes health equity.
Response: We agree that additional incentivization will lead to
continued improvements in the quality and timeliness of care leading to
better patient outcomes. We thank commenters for their support of our
proposal to adopt the Severe Sepsis and Septic Shock: Management Bundle
measure for the Hospital VBP Program and continue to strive to develop
measures that support improving outcomes for patients with severe
sepsis and septic while minimizing reporting burden. We also continue
to take updated published guidelines and evidence-based literature that
demonstrates correlations between processes of care and improved
outcomes into consideration for measures.
We agree that efforts to support equity in the provision of health
care are important to improving outcomes for all patients with severe
sepsis and septic shock. As noted in the FY 2024 IPPS/LTCH PPS proposed
rule (88 FR 27028), and in section V.K.3(2) of this final rule, we
believe that the adoption of the Sepsis and Septic Shock: Management
Bundle measure will contribute toward CMS' goal of advancing health
equity, as outlined in the CMS National Quality
[[Page 59074]]
Strategy.\256\ Research on in-hospital sepsis mortality between 2004-
2013 showed that there is a higher rate of sepsis mortality for Black
and Hispanic patients, compared with White patients.\257\ Further, this
research showed that disparities in outcomes disappeared when results
were adjusted for hospital characteristics which highlights the need
for improved septic management in hospitals that are treating a high
proportion of Black and Hispanic patients.\258\ Another study of 249
academic medical centers found that for patients with a diagnosis of
sepsis, Black patients exhibited lower adjusted sepsis mortality than
White patients.\259\ While the results of research in the field are
varied, we believe that this measure, which outlines standardized
protocols, could mitigate potential biases held by individuals and
systems that lead to such variation in outcomes.
---------------------------------------------------------------------------
\256\ Centers for Medicare & Medicaid Services. (2022) CMS
National Quality Strategy. Available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Value-Based-Programs/CMS-Quality-Strategy.
\257\ Jones JM, Fingar KR, Miller MA, et al. (2017). Racial
Disparities in Sepsis-Related In-Hospital Mortality: Using a Broad
Case Capture Method and Multivariate Controls for Clinical and
Hospital Variables, 2004-2013. Crit Care Med. 45(12):e1209-e1217.
doi: 10.1097/CCM.0000000000002699. PMID: 28906287.
\258\ Ibid.
\259\ Chaudhary N, Donnelly, J, Wang H (2018). Critical Care
Medicine 46(6):p 878-883, June 2018. [verbar] DOI: 10.1097/
CCM.0000000000003020.
---------------------------------------------------------------------------
Comment: Many commenters did not support Severe Sepsis and Septic
Shock: Management Bundle measure because they believed that there are
unrealistic documentation and data collection expectations that burden
providers. A few commenters cited that the measure is time consuming,
and many hospitals have difficulty meeting the measure requirements and
implementing the measure. A commenter expressed concerns that the
documentation requirements place a heavy burden on rural hospitals. A
commenter noted that limitations of documentation tools make it
difficult to measure compliance fairly. A commenter expressed concern
that a piece of the documentation is missing for the IV fluid
documentation requirements.
Response: We acknowledge the commenters' concerns. However, the
Severe Sepsis and Septic Shock: Management Bundle measure has been in
the Hospital IQR Program since October 1, 2015, and eligible hospitals,
including community and rural hospitals have successfully reported data
on the measure. Additionally, the Rural Health Advisory Group expressed
the importance of the measure for rural health.\260\ As we noted in the
FY 2024 IPPS/LTCH PPS proposed rule (88 FR 27028), adopting the measure
into the Hospital VBP Program will not result in a change to measure
data collection requirements and burden because hospitals are already
required to report data on the measure under the Hospital IQR Program.
We acknowledge that this measure has been subject to updates in
response to changes in the published evidence and feedback from medical
record abstractors and clinicians; however, we believe these are minor
technical updates. Additionally, the level of documentation required
for this measure is commensurate with the complexity of sepsis and
septic shock and with the severity of the consequences for patients if
sepsis and septic shock are not detected and managed in a timely
manner. We have also initiated an effort in collaboration with the CDC
to develop a sepsis outcome eCQM that is a less burdensome and could
potentially replace the Severe Sepsis and Septic Shock: Management
Bundle measure in the future. However, until that measure is fully
developed and available for use in our programs, the severity of the
diagnoses and the significant impact on patients warrants using the
Severe Sepsis and Septic Shock: Management Bundle measure. CMS
continues to work in collaboration with CDC and stakeholders and
welcomes public comment and engagement in improving sepsis outcomes and
mortality.
---------------------------------------------------------------------------
\260\ Centers for Medicare & Medicaid Services. (2022) Measure
Applications Partnership (MAP) Hospital Workgroup Preliminary
Analyses. Available at: https://mmshub.cms.gov/sites/default/files/2022-preliminary-analysis-hospital-workgroup.pdf .
---------------------------------------------------------------------------
With regard to the commenter's concern about the documentation
requirements for IV fluids, the Crystalloid Fluid Administration data
elements provide guidance with examples for abstractors to determine
the volume of fluid ordered, the start time, end time, and volume of
fluid administered based upon various scenarios provided by
abstractors. At a minimum, there must be an order for the crystalloid
fluids that includes the type of fluid, volume of fluid, and a rate or
time over which the fluids are to be given. There must also be clear
documentation in the medical record of the date and time the
crystalloid fluids were started. We note that often the fluid
administration end time is not clearly documented and the manual
provides guidance to help abstractors determine the end time based upon
a combination of the start time, fluid volume and infusion rate. If
there is not sufficient documentation in the medical record to
determine the volume ordered, the start, end time, and volume
administered, then the case will not meet the requirements for the
Crystalloid Fluid Administration data elements.
Comment: Many commenters did not support the adoption of the Severe
Sepsis and Septic Shock: Management Bundle measure because they
believed that there will continue to be frequent updates to the measure
that make it more difficult to implement the measure and educate staff.
A few commenters cited concerns around the baseline periods noting that
given the frequent updates, it is unclear how CMS will establish
accurate baselines for evaluating hospitals' performance over time and
that the comparison of the baseline period to the performance period
would not be equal because of the measure updates every 6 months. A few
commenters expressed that the continual shifts in the measure
specifications have led to inconsistent interpretation across
facilities. A commenter expressed concern that the measure is still not
stable if it is undergoing changes with each manual release every 6
months. A commenter noted that frequent updates to the measure leads to
increased documentation burden.
Response: We acknowledge the commenters' concerns that the Severe
Sepsis and Septic Shock: Management Bundle measure has been subject to
frequent updates in response to changes in the published evidence and
feedback from medical record abstractors and clinicians. However, we
respectfully disagree that the updates will impact performance. We wish
to emphasize that, as noted in the FY 2024 IPPS/LTCH PPS proposed rule
(88 FR 27028), the updates made to Severe Sepsis and Septic Shock:
Management Bundle are minor technical updates that are incorporated for
consistency with recent published literature and to address hospital
abstractor and clinician feedback received via the QualityNet Question
and Answer Tool from hospital medical record abstractors and clinicians
that do not impact performance. For example, in v5.13 of the Hospital
IQR measure specifications manual, we added guidance about the use of
documentation of severe sepsis and septic shock with a footnote in the
EHR identifying the time based on question and comments from
abstractors. We also added examples to the Crystalloid Fluid
Administration data element based upon documentation scenarios provided
by abstractors, and
[[Page 59075]]
we added guidance in the Initial Hypotension data element to clarify
the time frame for abstraction of hypotension to count toward this data
element which ends when the ordered crystalloid fluid volume is
completely given. In v5.14 of the Hospital IQR measure specifications
manual, we added guidance to allow documentation that no fluids were
ordered because the patient was not volume or fluid responsive by
clinical evidence. This is based upon newer technology that is becoming
more widely used to assess a patient's fluid responsiveness. This
noninvasive technology allows clinicians to identify whether a patient
responds positively to crystalloid fluids without administering fluids
or with administration of only a nominal amount. The guidance requires
documentation that invasive or noninvasive measurements of cardiac
output (CO), cardiac index (CI), stroke volume (SV), or stroke volume
index (SVI) were used to determine the patient was not volume or fluid
responsive. This impacts a small proportion of patients with sepsis-
induced hypotension and takes into consideration shifts in the
availability and use of new technology. These minor technical updates
to the measure ensure the measure is up to data and providing the most
accurate data. The updates also help hospitals drive local quality
improvement in patient care. We, therefore, believe that the baseline
and performance periods are appropriate as proposed because the updates
to the measure specifications are not substantive.
Comment: Many commenters did not support the Severe Sepsis and
Septic Shock: Management Bundle measure because they believed that the
measure creates incentives to increase antibiotic use and potentially
overuse antibiotics with a few commenters expressing their belief that
overuse will be magnified if the Severe Sepsis and Septic Shock:
Management Bundle measure shifts to pay-for-performance. A few
commenters noted that the measure requires all patients to receive
antibiotics within one hour of presentation but that not all patients
with sepsis or septic shock need antibiotics. A few commenters noted
that the measure does not allow exceptions for providers to treat
patients in the manner they feel is clinically appropriate, which leads
to non-discriminatory antibiotic administration. A commenter did not
support the Severe Sepsis and Septic Shock: Management Bundle measure
because of the requirement of parenteral antibacterial medications
given that are not necessary for the management of some patients with
sepsis and oral therapy is quicker. A few commenters recommended
minimizing the potential for antibiotic overuse. A commenter
recommended excluding patients with unconfirmed sepsis who do not have
shock from the bundle, as the data supporting immediate antibiotics are
weak, and a commenter recommended that Severe Sepsis and Septic Shock:
Management Bundle be modified so that there is additional time
permitted to confirm an infection prior to providing antibiotics.
Response: We appreciate the commenters' concern and will continue
to monitor the literature for signs of antibiotic overuse associated
with the measure. While we agree with the importance of antimicrobial
stewardship, we are not aware of published literature that demonstrates
an association between the implementation of the measure and antibiotic
overutilization. In the largest study to address sepsis and antibiotic
use to date which includes 701,055 patients, Anderson et al. found that
among the subgroup of ten hospitals with complete microbiology data and
specifically assessing patients with suspected sepsis (31,013
patients), antibiotic utilization was unchanged during the 12 months
prior to measure implementation on October 1, 2015, and declined one
percent each month during the 12 months after implementation of the
measure in the Hospital IQR Program period from November 1, 2015,
through October 31, 2016.\261\ We are not aware of any published
information that reports a non-discriminatory increase in antibiotic
administration associated with implementation of the Severe Sepsis and
Septic Shock: Management Bundle measure. The measure screening criteria
and construct focuses on patients with a high likelihood for sepsis or
septic shock which is consistent with the Surviving Sepsis Campaign:
International Guidelines for Management of Sepsis and Septic Shock 2021
recommendation for the immediate administration of antibiotics to
patients with septic shock or a high likelihood for sepsis. We wish to
clarify that the Severe Sepsis and Septic Shock: Management Bundle
measure does not require that patients receive antibiotics within one
hour of presentation. The measure requirements are for antibiotic
administration within three hours of severe sepsis presentation time.
We are not aware of any evidence that oral antimicrobial therapy is
quicker or more effective than parenteral therapy. We refer to the
Surviving Sepsis Campaign: International Guidelines for Management of
Sepsis and Septic Shock 2021 recommendations for further information on
recommendations for the delivery of antibiotics. We also wish to
clarify that the measure does allow for exclusion of patients if there
is clinician documentation indicating the patient does not have severe
sepsis or an infection within six hours following clinical criteria
being met thereby preserving clinical judgement and clinical decision
making. In addition, patients presenting with sepsis of a viral
etiology are excluded from the measure because antibiotics are
typically not warranted. We also wish to note that the measure is meant
to complement clinical judgement in the best interest of the patient.
---------------------------------------------------------------------------
\261\ Anderson DJ, Moehring RW, Parish A, et al. (2022) The
Impact of Centers for Medicare & Medicaid Services SEP-1 Core
Measure Implementation on Antibacterial Utilization: A Retrospective
Multicenter Longitudinal Cohort Study With Interrupted Time-Series
Analysis. Clin Infect Dis.75(3):503-511. doi: 10.1093/cid/ciab937.
PMID: 34739080.
---------------------------------------------------------------------------
Comment: Several commenters did not support the Severe Sepsis and
Septic Shock: Management Bundle measure because of the level of detail
required of the measure, noting that the measure is too nuanced which
makes it challenging to determine whether a hospital is providing
quality care because the measure is all-or-nothing. A few commenters
also noted that the Severe Sepsis and Septic Shock: Management Bundle
measure is very complex in terms of data elements, calculations, and
measurements.
Response: We appreciate the commenters' concern about the
complexity of the measure. However, the complexity of this measure is
commensurate with the complexity of sepsis and septic shock and with
the severity of the consequences for patients if sepsis and septic
shock are not detected and managed in a timely manner. All components
of this measure ensure that timely and optimal care is delivered for
patients with sepsis and septic shock. We are assuming that by ``all-
or-nothing'' the commenter is referring to the fact that hospitals do
not get partial credit for completing some of the protocols laid out in
the Severe Sepsis and Septic Shock Management Bundle measure. In
regards to the commenter's concern that the all-or-nothing nature of
the measure makes it challenging to determine whether a hospital is
providing quality care, we note that performance data for the Severe
Sepsis and Septic Shock: Management Bundle measure is reported at a
more granular level on a CMS-designated website, currently Care
[[Page 59076]]
Compare, at the national, state, and hospital level for measure
performance overall and by the four measure bundles, severe sepsis 3-
hour, severe sepsis 6-hour, septic shock 3-hour, and septic shock 6-
hour bundles at https://data.cms.gov/provider-data/search?fulltext=timely%20and%20effective%20care&theme=Hospitals. This
enables hospitals to view their performance for each bundle as well as
their results overall and compare them to other hospitals, their state,
and national average and top performing hospital results. We will take
these comments into consideration as we evaluate updates for future
program years.
Comment: Many commenters did not support the adoption of Severe
Sepsis and Septic Shock: Management Bundle measure due to concerns
around the burden of chart abstraction, citing that the measure is time
and resource intensive and that the value of the measure is not worth
the challenges. A few commenters noted that chart abstraction is labor
intensive, given that determining eligibility for the measure can take
upwards of 45 minutes, which they did not believe is in line with the
CMS Burden Reduction efforts, and that even highly experienced teams
spend 1-4 hours reviewing each sepsis core measure chart which is
challenging and costly. A few commenters believed that adding a manual
chart abstracted measure is not in line with CMS' focus on
transitioning to digital quality measures. A few commenters noted that
the nuances of the measure make it challenging to develop a standard
approach to abstraction, and that the complicated abstraction guidance
leads to incorrect measure outcomes which affects performance. Many
commenters recommended delaying adoption of a sepsis measure in the
Hospital VBP Program until the development of sepsis outcome eCQM is
available because they believed that an outcome eCQM measure is in
alignment with the focus to reduce reporting burden, promotes unity in
Federal measures, and emphasizes outcome measures. A commenter believed
that the measure does not measure quality of care but rather quality of
documentation. A commenter also recommended developing a risk
standardized sepsis mortality measure, and another commenter
recommended that the development of an eCQM include removing the SIRS
criteria and diagnosis codes to simplify implementation and decrease
variability between hospitals.
Response: We respectfully disagree with commenters who believe the
burden of the Severe Sepsis and Septic Shock: Management Bundle measure
outweighs the benefits. We believe that the impact of this measure on
patient care and improved outcomes for patients with severe sepsis and
septic shock outweighs the abstraction burden. In a recent study that
used chart-abstracted data for the Severe Sepsis and Septic Shock:
Management Bundle measure submitted to CMS for over 1.3 million
patients, Townsend et al. found that compliance with the measure was
associated with a reduction in 30-day mortality.\262\ In that same
study, Townsend et al. note that based on published average medical
record abstraction times of 30 to 120 minutes per case and assuming
that a hospital had 300 sepsis cases per quarter, less than one-quarter
of a full-time employee would be required to perform medical record
abstraction. In a study by Buchman et al., the costs of sepsis
inpatient admissions and subsequent skilled nursing facility care to
Medicare were estimated to exceed $41.5 billion annually with 6-month
mortality rates for Medicare fee-for service beneficiaries of
approximately 60 percent for septic shock and 36 percent for severe
sepsis.\263\ Adding the measure to the Hospital VBP Program will not
create a new burden for hospitals because they are already required to
report data on the measure under the Hospital IQR Program. We will
continue with plans for transitioning to digital quality measures and
are currently developing a sepsis outcome eCQM that will reduce
unnecessary burden for hospitals to report. However, until that measure
is fully developed, we remain committed to patient safety as a high
priority and believe that the adoption of the Severe Sepsis and Septic
Shock: Management Bundle measure aligns with the core principles
outlined in the HHS National Healthcare System Action Alliance to
Advance Patient Safety and is consistent with this commitment.
---------------------------------------------------------------------------
\262\ Townsend SR, Phillips GS, Duseja R, et al. (2021) Effects
of compliance with the early management bundle (SEP-1) on mortality
changes among Medicare beneficiaries with sepsis: a propensity score
matched cohort study. Chest. doi:10.1016/j.chest.2021.07.2167.
\263\ Buchman TG, Simpson SQ, Sciarretta KL, et al. (2020).
Sepsis Among Medicare Beneficiaries: 1. The Burdens of Sepsis, 2012-
2018. Crit Care Med. 48(3):276-288. doi: 10.1097/
CCM.0000000000004224. PMID: 32058366; PMCID: PMC7017943.
---------------------------------------------------------------------------
Comment: Several commenters did not support the adoption of Severe
Sepsis and Septic Shock: Management Bundle because of concerns that the
measure will interfere with physicians' judgment, feeling pressure to
meet the measure specifications as opposed to using clinician
discretion. A few commenters believed that the measure disadvantages
facilities that have large subsets of patients where elements of the
Severe Sepsis and Septic Shock: Management Bundle measure may be
contraindicated but are not excluded. A commenter stated that the
measure does not allow exceptions for providers to treat patients using
their discretion specifically regarding crystalloid fluids and
vasopressors. A commenter noted that the bundled nature of the measure
does not help hospitals target specific areas for improvement.
Response: The measure includes flexibility for clinician judgment
by providing multiple opportunities for exclusion of patients from the
measure based on clinician documentation such as notations within six
hours following clinical criteria being met that severe sepsis or an
infection is not present or that SIRS criteria or signs of organ
dysfunction are due to a chronic condition, medication, or a non-
infectious source. This measure is meant to complement clinical
judgement in the best interest of the patient. We wish to clarify that
the measure does include allowances for fluid volumes less than 30 mL/
kg with documentation of a reason for a lesser volume. We appreciate
the commenter's concern about the bundled nature of the measure. With
respect to the concern that the bundled nature of the measure does not
help hospitals target specific areas for improvement, we note that
performance data for the Severe Sepsis and Septic Shock: Management
Bundle measure is reported at a more granular level on a CMS-designated
website, currently Care Compare, at the national, state, and hospital
level for measure performance overall and by the four measure bundles,
severe sepsis 3-hour, severe sepsis 6-hour, septic shock 3-hour, and
septic shock 6-hour bundles at https://data.cms.gov/provider-data/search?fulltext=timely%20and%20effective%20care&theme=Hospitals. This
enables hospitals to view their performance for each bundle as well as
their results overall, identify areas for improvement, and compare them
to other hospitals, their state, and national average and top
performing hospital results. Additionally, there are categories by
bundle that providers can use for quality improvement information
beyond seeing their performance rates.
Comment: Many commenters did not support the adoption of the Severe
Sepsis and Septic Shock: Management Bundle measure because they
believed that the measure lacks evidence for improving patient outcomes
and does
[[Page 59077]]
not provide any benefit to patient care. Several commenters cited that
compliance with the measure does not reflect the care provided to
sepsis patients. Several commenters noted that survival rates were not
significantly improved, and sepsis mortality rates have not lowered
under the measure. A few commenters believed that the measure
incorrectly assumes all patients have similar characteristics and does
not consider significant clinical variation. A few commenters cited
potential harms and worsened outcomes in patients from the measure and
noted that the risks of the measure outweigh the benefits. A few
commenters recommended that CMS focus on evidence-based measures that
improve outcomes for patients with sepsis. A commenter expressed
concern that the measure may create unintended threats to the health of
those with sepsis or other conditions that can mimic sepsis. A
commenter believed that the measure lumps together septic shock and
non-shock patients and it may not be appropriate for all patients to
receive each of the bundle elements. A commenter noted that the
requirement of universal blood cultures prior to antimicrobial therapy
worsens outcomes by adding to episode cost and length of stay.
Response: As referenced in the FY 2024 IPPS/LTCH PPS proposed rule
(88 FR 27028), there is evidence of an association between the elements
of the Severe Sepsis and Septic Shock: Management Bundle measure and
improved patient outcomes. A study by Townsend et al of over 1.3
million patients that used chart-abstracted data for the Severe Sepsis
and Septic Shock: Management Bundle measure found that compliance with
the measure was associated with a reduction in 30-day mortality.\264\
The Severe Sepsis and Septic Shock: Management Bundle measure was
designed based on evidence based relevant literature and clinical
practice guidelines and is intended to measure appropriate care as it
applies to the majority of the patient population represented in the
measure. As noted in the FY 2024 IPPS/LTCH PPS proposed rule (88 FR
27027 through 27029), the measure is CBE-endorsed and follows published
international guidelines for the early identification and management of
severe sepsis and septic shock, which reflects that the measure is
evidence-based and has undergone rigorous processes in measure
development and maintenance. We appreciate and recognize that some
patients may present with clinical characteristics and response to care
that varies from the majority of patients with the same condition. We
agree that in some cases the best outcome for the patient may be
dependent upon clinician judgement that varies from guideline
recommendations for care. We wish to emphasize that the measure is not
intended to replace clinician judgement or to treat every patient
identically; rather, complement clinical judgement in the best interest
of the individual patient. With this in mind, we do not expect 100
percent performance for the measure with every patient. Recent data
indicates that mean performance on this measure is less than 60% and
thus there is still substantial room for improvement on sepsis care.
Measure design and recent updates to the measure allow for some
variations in care by allowing flexibility in crystalloid fluid
administration volumes and exclusions for some groups of patients based
on clinician documentation. We are not aware of published literature
that makes an association between the measure and patient harm. We
agree that all patients will not qualify for all of the bundle elements
in the measure. While the measure performance results are reported as
an overall score, the measure incorporates exclusion criteria for those
patients who do qualify for specific elements of care. As referenced in
the FY 2024 IPPS/LTCH PPS proposed rule (88 FR 27027 through 27029),
there is evidence of an association between the elements of the Severe
Sepsis and Septic Shock: Management Bundle measure and improved patient
outcomes. A 2022 study by Townsend et al. of over 1.3 million patients
that used chart-abstracted data for the Severe Sepsis and Septic Shock:
Management Bundle measure found that compliance with the measure was
associated with a reduction in 30-day mortality.\265\ In 2019, Kahn et
al. published the results of a study of over 325,786 sepsis admissions
to 163 hospitals in New York State and the impact that mandated public
reporting of sepsis had on mortality.\266\ The requirement for
protocolized sepsis care, consistent with the Severe Sepsis and Septic
Shock: Management Bundle measure, was associated with a statistically
significant reduction in risk-adjusted mortality. To address concerns
about potential unintended consequences of protocol administration the
authors also studied intensive care unit (ICU) admission rates, as an
indicator of intensity of health care; hospital length of stay, as a
reflection of resource utilization; central venous catheter use, to
measure impact on invasive monitoring; and Clostridium difficile
infection rates, as sign of potential antibiotic overuse. The study
found no change in ICU admission, minimal impact on length of stay, a
trend toward lower use of central venous catheters and a significant
reduction in Clostridium difficile infection rates. With regard to the
commenter's concern about other conditions that can mimic sepsis, the
Surviving Sepsis Campaign: International Guidelines for Management of
Sepsis and Septic Shock 2021 recommends that clinicians perform a rapid
assessment for the possibility of infectious versus non-infectious
causes and recommend this assessment be completed, whenever possible,
within three hours of symptom presentation to expedite clinical
decision making. The Severe Sepsis and Septic Shock: Management Bundle
measure requirements are consistent with these guideline
recommendations in that the time frame for antibiotic administration is
within three hours of severe sepsis presentation. The guidelines note
that it is best practice to continually reassess patients to determine
whether diagnoses other than sepsis are possible to facilitate
treatment adjustments as needed. The measure allows for exclusion of
patients from the measure if there is clinician documentation
indicating that severe sepsis or septic shock is not present within six
hours after severe sepsis or septic shock presentation. Additionally,
in regard to the commenter's concern about universal blood cultures, we
are not aware of any published information demonstrating a significant
increase in costs or hospital length of stay directly associated with
obtaining blood cultures. The measure's requirement for obtaining blood
cultures prior to antibiotic administration is consistent with the
guideline recommendation to obtain routine microbiologic cultures
(including blood) before starting antibiotic treatment in patients with
[[Page 59078]]
suspected sepsis and septic shock. Blood cultures are important to help
optimize antibiotic coverage and assist with antibiotic de-escalation.
---------------------------------------------------------------------------
\264\ Townsend SR, Phillips GS, Duseja R, et al. (2021) Effects
of compliance with the early management bundle (SEP-1) on mortality
changes among Medicare beneficiaries with sepsis: a propensity score
matched cohort study. Chest. doi:10.1016/j.chest.2021.07.2167.
\265\ Townsend SR, Phillips GS, Duseja R, et al. (2021) Effects
of compliance with the early management bundle (SEP-1) on mortality
changes among Medicare beneficiaries with sepsis: a propensity score
matched cohort study. Chest. doi:10.1016/j.chest.2021.07.2167.
\266\ Kahn JM, Davis BS, Yabes JG, et al. (2019) Association
Between State-Mandated Protocolized Sepsis Care and In-hospital
Mortality Among Adults With Sepsis. JAMA. 322(3):240-250. doi:
10.1001/jama.2019.9021. PMID: 31310298; PMCID: PMC6635905.
---------------------------------------------------------------------------
Comment: A few commenters did not support the adoption of Severe
Sepsis and Septic Shock: Management Bundle measure because the measure
does not include any risk stratification or stratification by race or
other patient risk factors. A commenter noted that stratification would
help advance health equity and is more appropriate for a claims-based
measure.
Response: We appreciate the commenters' feedback and
recommendations regarding risk stratification and stratification by
race or other patient factors. The Severe Sepsis and Septic Shock:
Management Bundle measure provides a standard operating procedure for
early risk stratification and management of a patient with severe
infection by identifying patient risk levels relating to sepsis care
needs. As we take these recommendations into consideration, we will
carefully weigh the potential extra burden that collection of
additional clinical information necessary for risk stratification of
chart abstracted measures may impose upon hospitals. We are in the
process of developing a methodology for stratifying measures by sex,
race, ethnicity, and other social determinants of health.
Comment: Several commenters did not support the adoption of this
measure because they believed the difficulty of capturing a diagnostic
start time creates challenges for all components of the bundle and
creates challenges for clinicians. A few commenters noted that the
criteria in the sepsis bundle are different from care teams' diagnostic
criteria. A commenter believed that the complexity of the current time
zero definition contributes to variability in abstraction and
undermines the measure. A commenter believed that the measure is flawed
because it is based on discharge diagnoses and retrospectively
identifies a start time based on abnormal vital signs. A commenter
recommended defining the inconsistent definition of time zero. A
commenter noted that the Severe Sepsis and Septic Shock: Management
Bundle measure's focus is only on the initial 6 hours of care which the
commenter believed oversimplifies the complexity of comprehensive
sepsis care.
Response: We appreciate the commenters' concerns about the
challenges with identifying the severe sepsis presentation time and
will take this under consideration as future methods and tools for
early identification of severe sepsis and septic shock become available
and are tested. We recognize there is variation in screening tools and
criteria used at the bedside for identification of severe sepsis and
septic shock and wish to clarify that the measure does not dictate nor
limit the severe sepsis and septic shock screening criteria that
clinicians use at the bedside. While the measure uses ICD-10-CM
diagnosis codes to identify the initial patient population, clinical
criteria are used to confirm the presence of severe sepsis and septic
shock and allow for exclusion of patients who do not meet the clinical
criteria. The intent of the measure is to confirm care and
interventions provided upon early identification of the presence of
severe sepsis and septic shock. The clinical criteria used by the
measure provides a well-established common set of criteria, identified
by Waligora et al. as having high sensitivity for early identification
of sepsis (72%-94.5%), that abstractors from all hospitals across the
U.S. use to determine which patients from their initial populations
remain in the measure.\267\ We agree that focusing on early therapies
is not the only strategy important for sepsis care and improved
outcomes but suggest that it is the predominate opportunity in the
largest number of cases. The Surviving Sepsis Campaign: International
Guidelines for Management of Sepsis and Septic Shock 2021, note that
early identification of sepsis and timely appropriate management in the
initial hours is associated with improved outcomes. The guidelines
specifically note early administration of antibiotics as is one of the
most effective interventions associated with reducing mortality and
that fluid therapy is a crucial part of sepsis and septic shock
resuscitation.
---------------------------------------------------------------------------
\267\ Waligora G, Gaddis G, Church A, Mills L (2020). Rapid
Systematic Review: The Appropriate Use of Quick Sequential Organ
Failure Assessment (qSOFA) in the Emergency Department. J Emerg Med.
59(6):977-983. doi: 10.1016/j.jemermed.2020.06.043. Epub 2020 Aug
20. PMID: 32829969.
---------------------------------------------------------------------------
Comment: Many commenters did not support the adoption of this
measure because of concerns around tying the Severe Sepsis and Septic
Shock: Management Bundle measure to hospital performance and payment
given that high performance is not related to improving sepsis outcomes
and bundle scoring makes it difficult for hospitals to achieve high
scores. A few commenters expressed concern that there will be a
disproportionate impact to safety-net healthcare systems if the measure
is included in a pay-for-performance program and that financially
strapped organizations will struggle to implement the full-scale
interventions of the Severe Sepsis and Septic Shock: Management Bundle
measure. A commenter conducted their own calculations that showed that
66% of the hospitals that were scored on improvement under the Severe
Sepsis and Septic Shock: Management Bundle measure had a score of zero,
meaning that the hospital did not improve or improved minimally.
Response: We appreciate the commenters' concern regarding the
association between measure performance and patient outcomes. In a
study by Townsend et al of over 1.3 million patients that used chart-
abstracted data for the Severe Sepsis and Septic Shock: Management
Bundle measure the authors found that compliance with the measure was
associated with a reduction in 30-day mortality. We recognize that
achieving high scores on a bundled measure is challenging since all
bundle elements for which a patient is eligible must be met for the
patient case to meet the measure. However, we believe that all the
bundle elements are needed because the complete bundle impacts patient
outcomes. As we noted in the proposed rule, performance rates for the
top 10 percent of hospitals have averaged 80 percent since we began
public reporting with performance data from October 1, 2017, through
September 30, 2018. We wish to emphasize that under the Hospital VBP
Program's scoring methodology, the highest performing hospitals will
receive achievement points, even if the highest performing hospitals
are not performing at 100%. Additionally, we note that this measure
will be added to the Safety domain which currently has 5 other measures
and is weighted at 25% of the TPS.
We acknowledge commenters' concern about potential impact on
safety-net healthcare systems. We note eligible hospitals have
successfully reported on the measure in the Hospital IQR Program since
October 1, 2015, including smaller community and rural hospitals.
Additionally, we wish to note that smaller hospitals have performed
better than large hospitals, on average, for the Severe Sepsis and
Septic Shock: Management Bundle measure. Regarding a commenter's
concern about sampling, sampling is a statistically valid method to
estimate a hospital's performance, and we have allowed sampling for
many chart-abstracted measures including the Severe Sepsis and Septic
Shock: Management Bundle measure to help reduce the abstraction burden.
We refer commenters to the Population and Sampling Specifications
[[Page 59079]]
in the Hospital Inpatient Specifications Manual located on QualityNet
at https://qualitynet.cms.gov/inpatient/specifications-manuals for more
information about case sampling for this measure.
Comment: Several commenters did not support the adoption of this
measure over concerns that the Severe Sepsis and Septic Shock:
Management Bundle measure is not aligned with other standards and
reimbursement criteria, which they believed results in confusion around
definitions and inconsistency in diagnosing sepsis. A few commenters
noted that because many commercial payers endorse SEP-3 definitions,
organizations have difficulty determining which criteria to adopt and
that some Medicare managed care organizations do not recognize or
reimburse for Severe Sepsis and Septic Shock: Management Bundle. A few
commenters believed that the measure does not align with the Surviving
Sepsis Campaign or SEP-3. A commenter believed that sepsis management
is misaligned with value-based purchasing but should be encouraged in
other quality programs. A few commenters recommended that CMS ensure
that the measure aligns with national standards for sepsis care. A
commenter noted that the Severe Sepsis and Septic Shock: Management
Bundle measure has not kept up with the shifting evidence of which
interventions are most effective. A commenter recommended that the
measure finalization be postponed until aspects of the Severe Sepsis
and Septic Shock: Management Bundle measure are brought into alignment
with scientific literature.
Response: The measure does not dictate or limit the severe sepsis
and septic shock screening criteria that clinicians use at the bedside.
In Waligora et al., the clinical criteria used by the measure were
identified as having a high sensitivity for early identification of
sepsis (72%-94.5%) and as providing abstractors with a standard tool
for confirmation of the presence of severe sepsis and septic
shock.\268\ This aligns with the measure intent of early identification
of patients with severe sepsis and septic shock and helps ensure the
same criteria are used for all hospitals to determine which patients
remain in the measure and which ones are excluded. We recognize there
is variation in screening tools and criteria used at the bedside for
identification of severe sepsis and septic shock and for other
purposes.
---------------------------------------------------------------------------
\268\ Waligora G, Gaddis G, Church A, Mills L (2020). Rapid
Systematic Review: The Appropriate Use of Quick Sequential Organ
Failure Assessment (qSOFA) in the Emergency Department. J Emerg Med.
59(6):977-983. doi: 10.1016/j.jemermed.2020.06.043. Epub 2020 Aug
20. PMID: 32829969.
---------------------------------------------------------------------------
We emphasize the Severe Sepsis and Septic Shock: Management Bundle
measure is in alignment with the Surviving Sepsis Campaign:
International Guidelines for Management of Sepsis and Septic Shock 2021
that recommended against using quick sequential organ failure
assessment (qSOFA) compared with SIRS or other screening tools.\269\ In
addition, antibiotic requirements and timing, measurement of lactate,
administration of crystalloid fluids, monitoring response to fluid
administration, and use of vasopressors for the measure are consistent
with recommendations in the guidelines. We will continue to monitor the
evidence and standards for sepsis care as they evolve and consider
revisions as warranted for future program years. We also wish to
clarify the concerns around the SEP-3 definitions. The SEP-3
definition, introduced in The Third International Consensus Definitions
for Sepsis and Septic Shock (Sepsis-3) published in February 2016, uses
the Sequential Organ Failure Assessment (SOFA), which has been well-
validated association with mortality risk and the simplified quick SOFA
(qSOFA).\270\ The SIRS based criteria used in the Severe Sepsis and
Septic Shock: Management Bundle measure, were identified in a
structured literature review by Waligora et al. as having a high
sensitivity for early identification of sepsis (72%-94.5%) compared to
the qSOFA (32%-58.3%).\271\ Use of the SIRS-based criteria aligns with
the measure intent of early identification of patients with severe
sepsis and septic shock. We wish to note that the criteria used by the
measure is intended to provide abstractors with a standard tool for
confirmation of the presence of severe sepsis and septic shock to help
ensure the same criteria are used for all hospitals to determine which
patients remain in the measure and which ones are excluded. The measure
does not dictate nor limit the severe sepsis and septic shock screening
criteria that clinicians use at the bedside.
---------------------------------------------------------------------------
\269\ Evans L, Rhodes A, Alhazzani W, et al. (2021). Surviving
Sepsis Campaign: International Guidelines for Management of Sepsis
and Septic Shock 2021. Crit Care Med. 49(11):e1063-e1143. doi:
10.1097/CCM.0000000000005337. PMID: 34605781.
\270\ Singer M, Deutschman CS, Seymour CW, et al. The Third
International Consensus Definitions for Sepsis and Septic Shock
(Sepsis-3). JAMA. 2016;315(8):801-810. doi:10.1001/jama.2016.0287.
\271\ Waligora G, Gaddis G, Church A, Mills L (2020). Rapid
Systematic Review: The Appropriate Use of Quick Sequential Organ
Failure Assessment (qSOFA) in the Emergency Department. J Emerg Med.
2020 Dec;59(6):977-983. doi: 10.1016/j.jemermed.2020.06.043. Epub
2020 Aug 20. PMID: 32829969.
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Comment: A few commenters did not support the adoption of this
measure because of concerns around the sampling methodology. A
commenter noted that the results in a data set might not be
representative of the sepsis population and therefore not compliant
with valid statistical analysis. A commenter stated that the burden of
abstraction will make hospitals reevaluate increasing their sampling
size because the Severe Sepsis and Septic Shock: Management Bundle
measure casts a wide population net with the initial population, then
uses chart abstraction to determine if the patient has severe sepsis or
septic shock. A commenter stated that because many cases are ultimately
excluded for not meeting the criteria for severe sepsis, most hospitals
end up oversampling to ensure they present a more accurate
representation of their compliance with the measure. A commenter
believed that because hospitals are allowed to sample the measure, it
does not represent a complete picture of the hospital's performance.
Response: Sampling is a statistically valid method to estimate a
hospital's performance and we have allowed sampling for many chart-
abstracted measures including the Severe Sepsis and Septic Shock:
Management Bundle measure to help reduce the abstraction burden. We
refer commenters to the Population and Sampling Specifications in the
Hospital Inpatient Specifications Manual located on QualityNet at
https://qualitynet.cms.gov/inpatient/specifications-manuals for more
information about case sampling for this measure. The Severe Sepsis and
Septic Shock: Management Bundle measure has been in the Hospital IQR
Program since October 1, 2015, and eligible hospitals, including
smaller community and rural hospitals, have successfully reported on
the measure. We are aware that many hospitals already choose to
oversample due to the relatively high case exclusion rate associated
with the measure. Sepsis is associated with patient deaths, hospital
readmissions, and increased length of hospital stays. This measure
fills an important measure gap and will positively impact patient care.
We believe that these benefits outweigh data collection burdens. We
also do not believe this measure will be more burdensome than other
measures for hospitals, because the measure data may be collected
concurrently, retrospectively, or a combination of both. As we noted in
the proposed rule,
[[Page 59080]]
adopting the measure into the Hospital VBP Program does not result in a
change to measure data collection requirements and burden since
hospitals are already required to report data on the measure under the
Hospital IQR Program.
Comment: Several commenters recommended changes to the
documentation requirements associated with the Severe Sepsis and Septic
Shock: Management Bundle measure, including a commenter who recommended
removing some of the documentation rules because they believed that it
would make the measure less cumbersome, and a commenter who recommended
making changes to allow providers to document rationale for why fluid
bolus was not indicated.
Response: We note the measure specifications do allow providers to
document rationale for why fluid bolus was not indicated; specifically,
recent updates to crystalloid fluid administration guidance allow for
the administration of fluid volumes of less than 30 mL/kg, and in
specific situations, no fluid administration with supporting
documentation. We will take other recommendations regarding
documentation into consideration for refinements to the measure.
Comment: Several commenters recommended focusing solely on septic
shock. A few commenters believed that focusing on septic shock would
simplify data abstraction and a few commenters cited evidence
supporting the benefits of immediate intervention with the subset of
patients experiencing septic shock. A commenter believed that focusing
on septic shock would minimize antibiotic overuse and eliminate bundle
elements that do not contribute to improved patient outcomes. A
commenter expressed concern that the measure is not supported by
compelling evidence.
Response: We respectfully disagree with the commenters'
recommendations regarding focusing the measure only on septic shock.
Early identification and treatment of patients with severe sepsis is
essential and, in many cases, can prevent further clinical progression
to septic shock. The Surviving Sepsis Campaign: International
Guidelines for Management of Sepsis and Septic Shock 2021 includes a
strong recommendation for the immediate administration of antibiotics
to patients with septic shock or a high likelihood for sepsis. The
measure is consistent with these guidelines since the measure screening
criteria focus on patients with a high likelihood for sepsis or septic
shock. We are not aware of published literature that demonstrates an
association between the implementation of the measure and antibiotic
overutilization. We appreciate the commenter's concerns about measure
alignment with published evidence; however, we disagree. The Severe
Sepsis and Septic Shock: Management Bundle measure is in alignment with
the Surviving Sepsis Campaign: International Guidelines for Management
of Sepsis and Septic Shock 2021 recommendations about use of screening
tools, antibiotic requirements and timing, measurement of lactate,
administration of crystalloid fluids, monitoring response to fluid
administration, and use of vasopressors. We will continue to monitor
the evidence and standards for sepsis care as the evolve and consider
revisions as warranted for future program years.
Comment: Several commenters recommended that the focus should be on
improving patient outcomes with a commenter recommending elimination of
bundle elements that do not contribute to improved patient outcomes,
such as lactate testing. A few commenters expressed concern that the
time-zero definition does not reflect excellent care and that the focus
on the initial hours of care takes away incentive to optimize
subsequent care for patients. A commenter expressed their belief that
shifting to this measure amidst clinical disagreement on measure
specifications and abstraction issues will bring no additional benefit
to patients.
Response: We appreciate the commenters' recommendations regarding
measure focus. We note that providing patients with evidence-based care
such as that included in the Severe Sepsis and Septic Shock: Management
Bundle measure has been associated with improved outcomes. We refer
commenters to the results of the study of over 1.3 million patients by
Townsend et al that utilized chart-abstracted data for the Severe
Sepsis and Septic Shock: Management Bundle measure from October 1,
2015, to March 31, 2017, in which the authors found that compliance
with the measure was associated with a reduction in 30-day
mortality.\272\ We recognize that some elements of care may have a
greater impact on outcomes and will take the commenter's
recommendations into consideration for future program years. We also
wish to note that while focusing on early therapies is not the only
area of opportunity for sepsis care improvement, it is the predominate
opportunity in the majority of cases as subsequent care needs are often
dependent on the early care that is provided. We also emphasize that
the measure is in alignment with the Surviving Sepsis Campaign:
International Guidelines for Management of Sepsis and Septic Shock 2021
recommendations about use of screening tools, antibiotic requirements
and timing, measurement of lactate, administration of crystalloid
fluids, monitoring response to fluid administration, and use of
vasopressors. The guidelines note that the presence of an elevated
lactate level in patients with suspected sepsis is associated with an
increased likelihood of a final diagnosis of sepsis and that there is a
well-established association between lactate levels and mortality in
patients with suspected infection and sepsis. In a recent study that
used chart-abstracted data for the Severe Sepsis and Septic Shock:
Management Bundle measure submitted to CMS for over 1.3 million
patients, Townsend et al. found that compliance with obtaining an
initial lactate level was associated with decreased adjusted
mortality.\273\
---------------------------------------------------------------------------
\272\ Townsend SR, Phillips GS, Duseja R, et al. (2021). Effects
of compliance with the early management bundle (SEP-1) on mortality
changes among Medicare beneficiaries with sepsis: a propensity score
matched cohort study. Chest. doi:10.1016/j.chest.2021.07.2167.
\273\ Ibid.
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Comment: Several commenters expressed concerns about the
flexibility of the measure or recommended that the measure be made more
flexible. A commenter cited the challenge of a one-size-fits-all
measure given the continuously evolving definition and best practices
of sepsis. A commenter recommended that physicians should be able to
opt out of blood cultures and parenteral therapy. A commenter also
expressed concern that the all-or-nothing measure does not allow credit
for timely and appropriate resuscitation efforts. A commenter
recommended that the measure provide flexibility in a way that
hospitals can receive support from CMS for quality improvement efforts
to improve performance on the measure.
Response: The measure includes flexibility for clinician judgment
by providing multiple opportunities for exclusion of patients from the
measure based on clinician documentation such as notations within six
hours following clinical criteria being met that severe sepsis or an
infection is not present or that SIRS criteria or signs of organ
dysfunction are due to a chronic condition, medication, or a non-
infectious source. The measure also includes allowances for fluid
volumes less than 30 mL/kg with documentation of a reason for a lesser
volume. The measure is in alignment with the Surviving Sepsis Campaign:
International Guidelines for
[[Page 59081]]
Management of Sepsis and Septic Shock 2021 recommendations about use of
screening tools, antibiotic requirements and timing, measurement of
lactate, administration of crystalloid fluids, monitoring response to
fluid administration, and use of vasopressors. We appreciate the
commenter's recommendations about opting out of blood cultures and
parenteral therapy. The Surviving Sepsis Campaign guidelines upon which
this measure is based recommend as a best practice obtaining routine
microbiologic cultures (including blood) before starting antimicrobial
therapy in patients with suspected sepsis and septic shock if it does
not result in a substantial delay to starting the antimicrobials. The
measure includes allowances for obtaining blood cultures after starting
antimicrobials in specific situations such as when there is clear
documentation that obtaining the culture prior to starting antibiotics
will result in a delay that will be detrimental to the patient. We
appreciate the commenter's concern about the bundled nature of the
measure and recommendation for additional flexibility. We will take
these recommendations into consideration for future refinements of the
measure.
Comment: A commenter expressed concern that the achievement
threshold and benchmark should be reversed.
Response: We thank the commenters for the notice and note that the
achievement threshold and benchmark have been correctly updated in
Table V.K-09 of this final rule.
Comment: A commenter did not support converting the Severe Sepsis
and Septic Shock: Management Bundle measure to an eCQM in the future.
Response: We thank the commenter for their feedback and note that
the sepsis eCQM we are currently developing in collaboration with the
CDC is an outcome measure and not a direct conversion of the current
measure to an eCQM.
Comment: A commenter recommended removing the exclusion of COVID-19
from the Severe Sepsis and Septic Shock: Management Bundle measure as
done in the measurement and reporting of other respiratory diseases.
Response: We interpret the commenter's recommendation as suggesting
to remove the exclusion of patients with suspected or confirmed COVID-
19 from the measure. We added this exclusion because COVID-19 is viral,
and the measure excludes cases of severe sepsis and septic shock with a
viral etiology since antibiotics are generally not required unless
there is also an underlying bacterial infection. In addition, early
evidence suggested a conservative fluid resuscitation approach for
patients with COVID-19 associated septic shock. As a result, patients
with COVID-19 will have a higher likelihood of not meeting the measure
numerator requirements.
Comment: A few commenters recommended that CMS obtain input and
support from all interested parties for intended changes and
recommended that CMS work with interested parties to develop digital
quality measurement that is outcome-based and a true metric of sepsis
care.
Response: We appreciate the commenters' recommendations. We
consider input from multiple interested parties and resources when
determining whether to implement measure updates and will continue to
do so. For example, we have previously collaborated with clinician
representatives from organizations such as the California Maternal
Quality Care Collaborative (CMQCC), Infectious Disease Society of
America (IDSA), and Society for Healthcare Epidemiology of America
(SHEA), and from clinical specialties such as emergency medicine,
critical care medicine, internal medicine, and infectious disease. We
also convene an Expert Work Group (EWG) with critical care medicine,
emergency care medicine, infectious disease, pharmacy, performance
improvement and patient representation as needed to provide feedback on
the clinical aspects of measure maintenance. We also wish to note that
the Sepsis Technical Expert Panel (TEP) which provides guidance on the
development of the sepsis outcome electronic clinical quality measure
(eCQM) includes clinicians representing emergency medicine, critical
care medicine, internal medicine, infectious disease, as well as
patients and caregivers.
Comment: A commenter did not support including year three of the
COVID-19 public health emergency as baseline data because of concerns
about the use of data from the COVID-19 public health emergency.
Response: We thank the commenter for their concern regarding the
use of CY 2022 data for the baseline period. This baseline period is in
alignment with the previously finalized baseline periods for the
Safety, Patient and Community Engagement, and Cost and Efficiency
Domains for the FY 2026 program year (87 FR 49114). As discussed in the
FY 2023 IPPS/LTCH PPS final rule we believe that using CY 2022 data is
appropriate given the widespread availability of COVID-19 vaccines in
CY 2022 and subsequent years (87 FR 49105 through 49106).
Comment: A few commenters recommended providing additional clarity
on how CMS will establish an appropriate baseline and account for
changes in measurement between the baseline and performance periods
given frequent updates to the measure.
Response: We thank the commenters for their feedback. As we noted
in the FY 2024 IPPS/LTCH PPS proposed rule (88 FR 27028), the updates
made to Severe Sepsis and Septic Shock: Management Bundle measure, as
reflected in the specification's manual, are minor technical updates
that do not impact performance. We, therefore, believe that the
baseline and performance periods are appropriate as proposed because
the updates to the measure specifications are not substantive and
therefore do not require modifications to the baseline and performance
periods.
After consideration of the public comments we received, we are
finalizing our proposal as proposed.
b. Summary of Previously Adopted Measures for the FY 2024 and FY 2025
Program Years, and Previously Adopted Measures and Newly Adopted
Measures Beginning With the FY 2026 Program Year
We refer readers to the FY 2022 IPPS/LTCH PPS final rule (86 FR
45281 through 45284) for summaries of previously adopted measures for
the FY 2024 and FY 2025 program years, and to the FY 2023 IPPS/LTCH PPS
final rule (87 FR 49110 through 49111) for summaries of previously
adopted measures for the FY 2024, FY 2025, and FY 2026 program years.
In the FY 2024 IPPS/LTCH PPS proposed rule, we did not propose any
changes to the FY 2024 and FY 2025 measure sets (88 FR 27029 through
27030). The Hospital VBP Program measure set for the FY 2024 and FY
2025 years will contain the following measures:
[[Page 59082]]
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In the FY 2024 IPPS/LTCH PPS proposed rule, we proposed substantive
measure updates to the MSPB and THA/TKA Complication measures (88 FR
27030 through 27031). We also proposed to adopt the Severe Sepsis and
Septic Shock: Management Bundle. Table V.K.-02 summarizes the
previously adopted and newly adopted Hospital VBP Program measures for
the FY 2026 through FY 2030 program years:
[[Page 59083]]
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c. Updates to the Data Collection and Submission Requirements for the
HCAHPS Survey Measure (CBE #0166) Beginning With the FY 2027 Program
Year
We refer readers to section IX.C.10.h of this final rule where the
Hospital IQR Program proposed to make updates to the administration and
submission requirements of the HCAHPS Survey measure beginning with the
FY 2027 payment determination. We also proposed to make the same
updates to the form and manner of the administration of the HCAHPS
Survey measure under the Hospital VBP Program. These changes are--
Adding three new modes of survey administration (Web-Mail
mode, Web-Phone mode, and Web-Mail-Phone mode) in addition to the
current Mail Only, Telephone Only, and Mail-Phone modes, beginning with
January 2025 discharges, because in the 2021 HCAHPS mode experiment,
adding an initial web component to the three current HCAHPS modes of
survey administration resulted in increased response rates;
Removing the requirement that only the patient may respond
to the survey to thus allow a patient's proxy to
[[Page 59084]]
respond to the survey, beginning with January 2025 discharges;
Extending the data collection period for the HCAHPS Survey
from 42 to 49 days, beginning with January 2025 discharges;
Limiting the number of supplemental items to 12 to align
with other CMS CAHPS surveys;
Requiring hospitals to collect information about the
language that the patient speaks while in the hospital (whether
English, Spanish, or another language) and requiring the official CMS
Spanish translation of the HCAHPS Survey be administered to all
patients who prefer Spanish, beginning with January 2025 discharges;
and
Removing two currently available options for
administration of the HCAHPS Survey that are not used by participating
hospitals, beginning in January 2025:
++ The Active Interactive Voice Response (IVR) survey mode, also
known as touch-tone IVR, which has not been employed by any hospital
since 2016 and has never been widely used for the HCAHPS Survey, and
++ The ``Hospitals Administering HCAHPS for Multiple Sites'' option
for HCAHPS Survey administration which has not been utilized by any
hospitals since 2019 and has never been widely used.
We stated in the proposed rule that data collection and
administration of the HCAHPS Survey measure would remain the same,
except for the proposed changes described in section V.K.3.c of this
final rule. We also stated that there would be no changes to the HCAHPS
Survey measure patient eligibility or exclusion criteria. We noted that
adopting these changes in the Hospital VBP Program would not create a
new burden for hospitals because they are already required to report
the measure under the Hospital VBP Program. Therefore, we stated that
this proposal to adopt technical changes would not require hospitals to
submit any additional information.
Detailed information on the HCAHPS Survey measure data collection
protocols can be found in the current HCAHPS Quality Assurance
Guidelines, located at: https://www.hcahpsonline.org/en/quality-assurance/.
We invited public comment on this proposal.
Comment: Many commenters stated their support of the proposed
HCAHPS changes because they increase response rates, modernize and
improve accessibility of the survey, advance health equity, and improve
representation of different populations. A commenter recommended
testing the impact on performance measures derived from HCAHPS data
before publicly reporting results or using results for payment
purposes.
Response: We thank the commenters for their support. We refer the
commenter who recommended testing changes to the Hospital IQR Program's
section of the FY 2024 IPPS/LTCH PPS proposed rule, where we discussed
a large-scale mode experiment that we conducted to test adding the web
mode and other updates to the form, manner, and timing of HCAHPS Survey
data collection and reporting (88 FR 27112 through 27113). We also note
that because these changes are only being made to the form and manner
of the administration of the survey, we do not believe that there will
be substantive impacts to hospitals' performance.
Comment: Many commenters supported allowing the survey to be
administered in Spanish because they believed that it will improve
response rates and advance health equity by ensuring that language does
not hinder the quality or experience of care. A few commenters made
recommendations to expand the requirement to other languages in the
future, specifically the seven other languages that the survey is
available in.
Response: We appreciate the commenters support and agree that these
changes will encourage improved response rates from a wider pool of
patients in HCAHPS responses. We thank the commenters for their
recommendations regarding future translations of HCAHPS for the seven
other languages that the survey is available in (Chinese, Russian,
Vietnamese, Portuguese, German, Tagalog, and Arabic) and further
validation of existing translated versions, and we will take these
recommendations into consideration for future program years. We also
believe that the removing the requirement that only the patient may
respond to the survey will improve response rates and address language
barriers.
Comment: Many commenters supported the expansion to electronic
modes of administration because they will improve the volume and
timeliness of survey response rates, particularly from the younger
patient population, they are easier to administer, and they align with
the Modernizing the HCAHPS Survey report.
Response: We thank the commenters for their support and agree that
the addition of these new modes of survey implementation will likely
increase response rates and modernize the survey. We also agree that
these new modes of survey implementation have the potential to reduce
the burden of administering the survey.
Comment: Several commenters supported removing the requirement that
only the patient may respond to the survey because they believed that
it improves the inclusivity of the survey, and it is a positive way for
family and caregivers to contribute to patient-centered care.
Response: We thank the commenters for their support and agree that
removing the prohibition of proxy respondents will likely inclusivity
and engage a more diverse pool of respondents.
Comment: Several commenters supported the extension of the data
collection period to 49 days. A commenter also recommends not exceeding
the 49-day period because a longer extension may risk compromising the
reliability and validity of the data.
Response: We thank the commenters for their support of the extended
collection period. We will also take the recommendation to not exceed
the 49-day period into consideration for future program years.
Comment: A commenter recommended using a separate patient
experience survey that addresses psychiatric care rather than the
traditional HCAHPS survey.
Response: We thank the commenter for the recommendation and we
refer the commenter to the FY 2024 IPPS/LTCH PPS (88 FR 27114) proposed
rule in which the Hospital IQR Program solicited feedback on the
potential addition of patients with a primary psychiatric diagnosis to
the HCAHPS Survey measure.
After consideration of the public comments we received, we are
finalizing this policy as proposed.
4. Previously Adopted and Newly Adopted Baseline and Performance
Periods
a. Background
Section 1886(o)(4) of the Act requires the Secretary to establish a
performance period for the Hospital VBP Program that begins and ends
prior to the beginning of such fiscal year. We refer readers to the FY
2017 IPPS/LTCH PPS final rule (81 FR 56998 through 57003) for a
previously finalized schedule for all future baseline and performance
periods for previously adopted measures. We refer readers to the FY
2018 IPPS/LTCH PPS final rule (82 FR 38256 through 38261), the FY 2019
IPPS/LTCH PPS final rule (83 FR 41466 through 41469), the FY 2020 IPPS/
LTCH
[[Page 59085]]
PPS final rule (84 FR 42393 through 42395), the FY 2021 IPPS/LTCH PPS
final rule (85 FR 58850 through 58854), the FY 2022 IPPS/LTCH PPS final
rule (86 FR 45284 through 45290), and the FY 2023 IPPS/LTCH PPS final
rule (87 FR 49111 through 49115) for additional previously adopted
baseline and performance periods for the FY 2025 and subsequent program
years.
b. Baseline and Performance Period for the Severe Sepsis and Septic
Shock: Management Bundle Beginning With the FY 2026 Program Year
As discussed in section V.K.3.a of this final rule, we are
finalizing the Severe and Septic Shock: Management Bundle measure
beginning with the FY 2026 program year. In the FY 2024 IPPS/LTCH PPS
proposed rule (88 FR 27032), we proposed to adopt a 12-month baseline
period and a 12-month performance period for that measure. Therefore,
for the FY 2026 program year, we proposed to adopt a 12-month
performance period that runs from January 1, 2024 to December 31, 2024
and a baseline period that runs from January 1, 2022 to December 31,
2022. We also proposed to use 12-month baseline and performance periods
in subsequent program years, beginning with January 1st and ending with
December 31st of a given year. Section V.K.3.a of this final rule
describes the comments we received regarding the baseline and
performance periods and our responses. We display these finalized
baseline and performance periods in Table V.K.-04.
c. Summary of Previously Adopted Baseline and Performance Periods for
the FY 2025 Program Year and Previously Adopted and Newly Adopted
Baseline and Performance Periods Beginning With the FY 2026 Program
Year
Tables V.K.-03, V.K.-04, V.K.-05, V.K.-06, and V.K.-07 summarize
the baseline and performance periods that we have previously adopted
and those that we are newly adopting in this final rule.
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[[Page 59088]]
5. Performance Standards for the Hospital VBP Program
a. Background
We refer readers to sections 1886(o)(3)(A) through 1886(o)(3)(D) of
the Act for the statutory provisions governing performance standards
under the Hospital VBP Program. We refer readers to the Hospital
Inpatient VBP Program final rule (76 FR 26511 through 26513) for
further discussion of achievement and improvement standards under the
Hospital VBP Program. We refer readers to the FY 2013 IPPS/LTCH PPS
final rule, the FY 2014 IPPS/LTCH PPS final rule, and the FY 2015 IPPS/
LTCH PPS final rule (77 FR 53599 through 53605; 78 FR 50694 through
50699; and 79 FR 50077 through 50081, respectively) for a more detailed
discussion of the general scoring methodology used in the Hospital VBP
Program.
We refer readers to the FY 2022 IPPS/LTCH PPS final rule (86 FR
45290 through 45292) for previously established performance standards
for the FY 2024 program year. We also refer readers to the FY 2023
IPPS/LTCH PPS final rule (87 FR 49115 through 49118) for the previously
established performance standards for the FY 2025 program year. We
refer readers to the FY 2021 IPPS/LTCH PPS final rule for further
discussion on performance standards for which the measures are
calculated with lower values representing better performance (85 FR
58855).
b. Technical Corrections
(1) Background
After publication of the FY 2023 IPPS/LTCH PPS final rule, we
determined there was a display error in the performance standards for
the FY 2025 program year and an incorrectly labeled title for the FY
2028 program year. In the FY 2024 IPPS/LTCH PPS proposed rule, (88 FR
27035 through 27036), we announced technical corrections in accordance
with 42 CFR 412.160 of our regulations that allows for updates to a
performance standard if making a single correction for calculation
errors or other problems that would significantly change the
performance standards. Technical corrections were issued for these
performance standards tables to ensure that hospitals have the correct
performance standards for the applicable performance periods. The
corrected performance standards are displayed in sections V.K.5.b.(2)
and V.K.5.b.(3) of this final rule.
(2) Technical Correction to the Performance Standards for the FY 2025
Program Year
In the FY 2023 IPPS/LTCH PPS final rule (87 FR 49115 through
49116), we established performance standards for the measures in the FY
2025 program year in Table V.I.-09. In the FY 2024 IPPS/LTCH PPS
proposed rule (88 FR 27035), we issued a correction to display the
correct performance standards for the Safety domain measures using CY
2019 data for the FY 2025 program year. The previously established and
newly corrected performance standards for the measures in the FY 2025
program year have been updated and are set out in Table V.K-08. All
other performance standards for the FY 2025 program year, including the
HCAHPS Performance Standards for the Person and Community Engagement
domain, were correctly displayed in the FY 2023 IPPS/LTCH PPS final
rule (87 FR 49115 through 49117).
[GRAPHIC] [TIFF OMITTED] TR28AU23.264
[[Page 59089]]
(3) Technical Correction to the Performance Standards for Certain
Measures for the FY 2028 Program Year
In the FY 2023 IPPS/LTCH PPS final rule (87 FR 49118), we
established the performance standards for certain measures for the FY
2028 program in Table V.I.-13. The title of Table V.I.-13 incorrectly
labeled the program year as FY 2027. In the FY 2024 IPPS/LTCH PPS
proposed rule (88 FR 27036), we issued a correction to display the
title of the table as, Newly Established Performance Standards for the
FY 2028 Program Year. The performance standards for the measures in the
FY 2028 program year were correctly displayed and remain as finalized
in the FY 2023 IPPS/LTCH PPS final rule and are set out in section
V.K.5.e and Table V.K.-12 of this final rule.
c. Previously and Newly Established Performance Standards for the FY
2026 Program Year
In the FY 2021 IPPS/LTCH PPS final rule (84 FR 42398 through
42399), we established performance standards for the FY 2026 program
year for the Clinical Outcomes domain measures (MORT-30-AMI, MORT-30-
HF, MORT-30-PN (updated cohort), MORT-30-COPD, MORT-30-CABG, and COMP-
HIP-KNEE) and for the Efficiency and Cost Reduction domain measure
(MSPB Hospital). We note that the performance standards for the MSPB
Hospital measure are based on performance period data. Therefore, we
are unable to provide numerical equivalents for the standards at this
time. As discussed in section V.K.3.a of this final rule, we are
finalizing the Severe and Septic Shock: Management Bundle measure
beginning with the FY 2026 program year. The previously established and
newly established performance standards for the measures in the FY 2026
program year are set out in Tables V.K.-09 and V.K.-10.
[GRAPHIC] [TIFF OMITTED] TR28AU23.265
The HCAHPS Base Score is calculated using the eight dimensions of
the HCAHPS measure. For each of the eight dimensions, Achievement
Points (0-10 points) and Improvement Points (0-9 points) are
calculated, the larger of which is then summed across the eight
dimensions to create the HCAHPS Base Score (0-80 points). Each of the
eight dimensions is of equal weight; therefore, the HCAHPS Base Score
ranges from 0 to 80 points. HCAHPS Consistency Points are then
calculated, which range from 0 to 20 points. The Consistency Points
take into consideration the scores of all eight Person and Community
Engagement dimensions. The final element of the scoring formula is the
summation of the HCAHPS Base Score and the HCAHPS Consistency Points,
which results in the Person and Community Engagement domain score that
ranges from 0 to 100 points.
[[Page 59090]]
[GRAPHIC] [TIFF OMITTED] TR28AU23.266
d. Previously Established Performance Standards for Certain Measures
for the FY 2027 Program Year
We have adopted certain measures for the Safety domain, Clinical
Outcomes domain, and the Efficiency and Cost Reduction domain for
future program years to ensure that we can adopt baseline and
performance periods of sufficient length for performance scoring
purposes. In the FY 2022 IPPS/LTCH PPS final rule (86 FR 45294 through
45295), we established performance standards for the FY 2027 program
year for the Clinical Outcomes domain measures (MORT-30-AMI, MORT-30-
HF, MORT-30-PN (updated cohort), MORT-30-COPD, MORT-30- CABG, and COMP-
HIP-KNEE) and the Efficiency and Cost Reduction domain measure (MSPB).
We note that the performance standards for the MSPB measure are based
on performance period data. Therefore, we are unable to provide
numerical equivalents for the standards at this time. We also note that
the performance standard calculation methodology for the substantive
updates to the MSPB Hospital measure, discussed in section XXX of this
final rule, will not change with the adoption of the substantive
measure updates. The updated performance standards for the substantive
measure updates to the MSPB measure are not yet available for FY 2028.
The previously established performance standards for these measures are
set out in Table V.K.-11.
[GRAPHIC] [TIFF OMITTED] TR28AU23.267
e. Previously Established Performance Standards for Certain Measures
for the FY 2028 Program Year
We have adopted certain measures for the Safety domain, Clinical
Outcomes domain, and the Efficiency and Cost Reduction domain for
future program years to ensure that we can adopt baseline and
performance periods of sufficient length for performance scoring
purposes. In the FY 2023 IPPS/LTCH PPS final rule (86 FR 49118), we
established performance standards for the FY 2028 program year for the
Clinical Outcomes domain measures (MORT-30-AMI, MORT-30-HF, MORT-30-PN
(updated cohort), MORT-30-COPD, MORT-30- CABG, and COMP-HIP-KNEE) and
the Efficiency and Cost Reduction domain measure (MSPB Hospital). As
discussed in section V.K.5.b.(3) of this final rule, in the FY 2024
IPPS/LTCH PPS proposed rule (88 FR 27038), we issued a technical
correction with respect to the title of Table V.I.-13 in the FY 2023
IPPS/LTCH PPS final rule. We note that the performance standards for
the MSPB Hospital measure are based on performance period data.
Therefore, we are unable to provide numerical equivalents for the
standards at this time. The previously established performance
standards for these measures are set out in Table V.K.-12.
[[Page 59091]]
[GRAPHIC] [TIFF OMITTED] TR28AU23.268
f. Newly Established Performance Standards for Certain Measures for the
FY 2029 Program Year
As discussed previously, we have adopted certain measures for the
Clinical Outcomes domain (MORT-30- AMI, MORT-30-HF, MORT-30-PN (updated
cohort), MORT-30-COPD, MORT-30-CABG, and COMP-HIP- KNEE) and the
Efficiency and Cost Reduction domain (MSPB Hospital) for future program
years to ensure that we can adopt baseline and performance periods of
sufficient length for performance scoring purposes. In accordance with
our methodology for calculating performance standards discussed more
fully in the Hospital Inpatient VBP Program final rule (76 FR 26511
through 26513), which is codified at 42 CFR 412.160, we are
establishing the following performance standards for the FY 2029
program year for the Clinical Outcomes domain and the Efficiency and
Cost Reduction domain. We note that the performance standards for the
MSPB Hospital measure are based on performance period data. Therefore,
we are unable to provide numerical equivalents for the standards at
this time. The newly established performance standards for these
measures are set out in Table V.K.-13.
[[Page 59092]]
[GRAPHIC] [TIFF OMITTED] TR28AU23.269
6. Change to the Scoring Methodology
a. Background
In the Hospital Inpatient VBP Program final rule, we adopted a
methodology for scoring clinical process of care, patient experience of
care, and outcome measures (76 FR 26513 through 26531). We also refer
readers to our codified requirements for performance scoring under the
Hospital VBP Program at 42 CFR 412.165. In the FY 2024 IPPS/LTCH PPS
proposed rule, we proposed modifications to the existing scoring
methodology to reward excellent care in underserved populations.
b. Revision of the Hospital VBP Program Scoring Methodology To Add a
New Adjustment That Rewards Hospitals Based on Their Performance and
the Proportion of Their Patients Who Are Dually Eligible for Medicare
and Medicaid
(1) Background and Overview
Healthcare disparities exist among patients throughout the United
States, and certain patient characteristics such as socioeconomic
status are associated with worse health outcomes.274 275
Research shows that patients experiencing worse health outcomes often
face barriers to accessing health care services and have access to
fewer healthcare providers.276 277 In leveraging our VBP
programs to improve the quality of care and access to that care, we are
interested in utilizing health equity-focused scoring modifications to
create better health outcomes for all populations in these programs.
The Office of the Assistant Secretary for Planning and Education's
(ASPE) March 2020 Report to Congress: Social Risk Factors and
Performance in Medicare's Value-Based Purchasing Program, provides
insight into whether and how value-based programs should account for
social risk factors such as income, housing, transportation, and
nutrition, that might adversely affect access to health care services
or health outcomes.\278\ A key finding was that dual enrollment status
(that is, enrollment in both Medicare and Medicaid) is a strong
predictor of poorer healthcare outcomes in Medicare's VBP programs,
even when accounting for other social and functional risk factors. Dual
enrollment status, an indicator at the individual level, also
represents one way to capture common socioeconomic challenges that
could affect an individual's ability to access care.
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\274\ Hill, L., Artiga, S., and Haldar, S. (2022) Key Facts on
Health and Health Care by Race and Ethnicity. Kaiser Family
Foundation. Available at: https://www.kff.org/report-section/key-
facts-on-health-and-health-care-by-race-and-ethnicity-health-status-
outcomes-and-behaviors/
#:~:text=Health%20Status%2C%20Outcomes%2C%20and%20Behaviors%20Black%2
0people%20fared,than%20White%20people%20for%20most%20examined%20healt
h%20measures.
\275\ National Academies of Sciences, Engineering, and Medicine.
(2017) Accounting for Social Risk Factors in Medicare Payment,
Washington, DC: National Academies Press. 47-84. Available at:
https://nap.nationalacademies.org/21858.
\276\ Kaiser Family Foundation. (2020) Disparities in Health and
Health Care: Five Key Questions and Answers. Available at: https://files.kff.org/attachment/Issue-Brief-Disparities-in-Health-and-Health-Care-Five-Key-Questions-and-Answers.
\277\ Thompson, T., McQueen, A., Croston, M., Luke, A., Caito,
N., Quinn, K., Funaro, J., & Kreuter, MW (2019). Social needs and
health-related outcomes among Medicaid beneficiaries. Health
Education & Behavior: The Official Publication of the Society for
Public Health Education, 46(3), 436-444. https://doi.org/10.1177/1090198118822724.
\278\ U.S. Department of Health & Human Services. (2020)
Executive Summary Report to Congress: Social Risk Factors and
Performance in Medicare's Value-Based Purchasing Program. Office of
the Assistant Secretary for Planning and Evaluation. Available at:
https://aspe.hhs.gov/sites/default/files/migrated_legacy_files//195046/Social-Risk-in-Medicare%E2%80%99s-VBP-2nd-Report-Executive-Summary.pdf.
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In the 2016 Report to Congress on Social Risk Factors and
Performance in Medicare's Value-Based Purchasing Program, ASPE reported
that beneficiaries with social risk factors, including dual enrollment
in Medicare and Medicaid as a marker for low income, residence in a
low-income area, Black race, Hispanic ethnicity, disability, and
residence in a rural area, had worse outcomes and were more likely to
be cared for by lower quality providers.\279\ Patients with dual
[[Page 59093]]
eligibility status (DES), those who qualify for both Medicare and
Medicaid coverage, are particularly vulnerable and experience
significant disparities. Patients with DES are more likely to be
disabled or functionally impaired, more likely to be medically complex,
and have greater social needs compared to other beneficiaries.\280\
Patients with DES are one of the most vulnerable
populations.281 282 Despite the multitude of indicators
available for assessing vulnerability and health risks, dual
eligibility remains the strongest predictor of negative health
outcomes.\283\
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\279\ Office of the Assistant Secretary for Planning and
Evaluation, U.S. Department of Health & Human Services. First Report
to Congress on Social Risk Factors and Performance in Medicare's
Value-Based Purchasing Program. 2016. Available at: https://aspe.hhs.gov/sites/default/files/migrated_legacy_files/171041/ASPESESRTCfull.pdf.
\280\ Johnston, KJ, & Joynt Maddox, KE (2019). The Role of
Social, Cognitive, and Functional Risk Factors In Medicare Spending
for Dual and Nondual Enrollees. Health Affairs (Project Hope),
38(4), 569-576. https://doi.org/10.1377/hlthaff.2018.05032.
\281\ Johnston, KJ, & Joynt Maddox, KE (2019). The Role of
Social, Cognitive, and Functional Risk Factors in Medicare Spending
for Dual and Nondual Enrollees. Health Affairs (Project Hope),
38(4), 569-576. https://doi.org/10.1377/hlthaff.2018.05032.
\282\ Wadhera, RK, Wang, Y., Figueroa, JF, Dominici, F., Yeh,
R.W., & Joynt Maddox, KE (2020). Mortality and Hospitalizations for
Dually Enrolled and Nondually Enrolled Medicare Beneficiaries Aged
65 Years or Older, 2004 to 2017. JAMA, 323(10), 961-969. https://doi.org/10.1001/jama.2020.1021.
\283\ Office of the Assistant Secretary for Planning and
Evaluation, U.S. Department of Health & Human Services. Second
Report to Congress on Social Risk Factors and Performance in
Medicare's Value-Based Purchasing Program. 2020. Available at:
https://aspe.hhs.gov/reports/second-report-congress-social-risk-medicares-value-based-purchasing-programs.
---------------------------------------------------------------------------
Executive Order 13985 of January 20, 2021 on Advancing Racial
Equity and Support for Underserved Communities Through the Federal
Government, defines ``equity'' as the consistent and systematic fair,
just, and impartial treatment of all individuals, including individuals
who belong to underserved communities that have been denied such
treatment, such as Black, Latino, and Indigenous and Native American
persons, Asian Americans and Pacific Islanders and other persons of
color; members of religious minorities; lesbian, gay, bisexual,
transgender, and queer (LGBTQ[I]A+) \284\ persons; persons with
disabilities; persons who live in rural areas; and persons otherwise
adversely affected by persistent poverty or inequality) (86 FR 7009).
---------------------------------------------------------------------------
\284\ We note that the original, cited definition only
stipulates, ``LGBTQ+'', however, HHS and the White House now
recognize individuals who are intersex/have intersex traits.
Therefore, we have updated the term to reflect these changes.
---------------------------------------------------------------------------
CMS defines ``health equity'' as the attainment of the highest
level of health for all people, where everyone has a fair and just
opportunity to attain their optimal health regardless of race,
ethnicity, disability, sexual orientation, gender identity,
socioeconomic status, geography, preferred language, or other factors
that affect access to care and health outcomes.\285\ To achieve this
vision, we are working to advance health equity by designing,
implementing, and operationalizing policies and programs that support
health for all individuals served by our programs, reducing avoidable
differences in health outcomes experienced by people who are
disadvantaged or underserved, and providing the care and support that
our enrollees need to thrive.
---------------------------------------------------------------------------
\285\ Health Equity Strategic Pillar. Centers for Medicare &
Medicaid Services. https://www.cms.gov/pillar/health-equity.
---------------------------------------------------------------------------
Achieving health equity, addressing health disparities, and closing
the performance gap in the quality of care provided to populations that
have been disadvantaged, marginalized, and/or underserved by the
healthcare system continue to be priorities for CMS as outlined in the
CMS National Quality Strategy.\286\ The Hospital IQR Program adopted
three new health-equity focused quality measures in the FY 2023 IPPS/
LTCH PPS final rule (87 FR 49191 through 49220). To further align with
our goals to achieve health equity, address health disparities, and
close the performance gap on the quality of care, in the FY 2024 IPPS/
LTCH PPS proposed rule, we proposed to add Health Equity Adjustment
bonus points to a hospital's Total Performance Score (TPS) that will be
calculated using a methodology that incorporates a hospital's
performance across all four domains for the program year and its
proportion of patients with DES (88 FR 27039 through 27049).
---------------------------------------------------------------------------
\286\ Centers for Medicare & Medicaid Services. (2022) CMS
National Quality Strategy. Available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Value-Based-Programs/CMS-Quality-Strategy.
---------------------------------------------------------------------------
We proposed to define the points that a hospital can earn based on
its performance and proportion of patients with DES as the Health
Equity Adjustment (HEA) bonus points. We believe that the awarding of
these HEA bonus points is consistent with our strategy to advance
health equity and will incentivize high-quality care across all
hospitals.\287\
---------------------------------------------------------------------------
\287\ Centers for Medicare & Medicaid Services. (2022) CMS
Outlines Strategy to Advance Health Equity, Challenges Industry
Leaders to Address Systemic Inequities. Available at: https://
www.cms.gov/newsroom/press-releases/cms-outlines-strategy-advance-
health-equity-challenges-industry-leaders-address-systemic-
inequities#:~:text=In%20effort%20to%20address%20systemic%20inequities
%20across%20the,Medicare%2C%20Medicaid%20or%20Marketplace%20coverage%
2C%20need%20to%20thrive.
---------------------------------------------------------------------------
We proposed to define the term ``measure performance scaler'' as
the sum of the points awarded to a hospital for each domain based on
the hospital's performance on the measures in that domain. The number
of points that we award to a hospital for each domain will be 4, 2, or
0, based on whether the hospital's performance is in the top third,
middle third, and bottom third of performance, respectively, of all
hospitals for the domain. Specifically, a hospital will receive 4
points if its performance falls in the top third, 2 points if its
performance falls in the middle third, or 0 points if its performance
falls in the bottom third of performance of all hospitals for the
domain. Hospitals could thus receive a maximum of 16 measure
performance scaler points for being a top performer across all four
domains.
We proposed to define the term ``underserved multiplier'' as the
number of inpatient stays for patients with DES out of the total number
of inpatient Medicare stays during the calendar year two years before
the start of the respective program year. For example, for the FY 2026
program year, we will use the total number of inpatient stays from
January 1, 2024 through December 31, 2024. A logistic exchange function
will be then applied to the number of patients with DES. Data on DES is
sourced from the State Medicare Modernization Act (MMA) file of dual
eligible beneficiaries, which each of the 50 States and the District of
Columbia submit to CMS at least monthly. This file is utilized to deem
individuals with DES automatically eligible for the Medicare Part D Low
Income Subsidy, as well as other CMS program needs and thus can be
considered the gold standard for determining DES. We note that this is
the same file used for determining DES in the Hospital Readmissions
Reduction Program. More detail on this file can be found on the CMS
website at https://www.cms.gov/Medicare-Medicaid-Coordination/Medicare-and-Medicaid-Coordination/Medicare-Medicaid-Coordination-Office/DataStatisticalResources/StateMMAFile and at the Research Data
Assistance Center website at https://resdac.org/cms-data/variables/monthly-medicare-medicaid-dual-eligibility-code-january.
We proposed that the HEA bonus points will be calculated as the
product of the measure performance scaler and the underserved
multiplier. The HEA bonus points are designed to award higher points
for hospitals that (1) serve
[[Page 59094]]
greater percentages of underserved populations, which are defined here
for the purpose of this proposal as hospital patients with DES who
receive inpatient services, and (2) have higher quality performance.
The methodology for the calculation of the HEA bonus points is
described in sections V.K.6.b.(3) and V.K.6.b.(4) of this final rule.
By providing HEA bonus points to hospitals that serve higher
proportions of patients with DES and perform well on quality measures,
we believe that we can begin to bridge performance gaps and better
address the social needs of patients, in alignment with our National
Quality Strategy.\288\ We are committed to achieving health equity for
hospitalized patients by supporting hospitals in quality improvement
activities to reduce health disparities, enabling patients and their
family members and caregivers to make more informed decisions, and
promoting provider accountability for health care disparities. We
believe that this scoring methodology update will continue encouraging
high quality performance and provide an incentive for hospitals to
provide high quality care to all of the populations they serve. We also
believe the scoring methodology update aligns with the broader CMS
health equity goals to close gaps in health care quality and promote
the highest quality outcomes for all people.\289\
---------------------------------------------------------------------------
\288\ Centers for Medicare & Medicaid Services. (2022) What is
the CMS National Quality Strategy? Available at: https://
www.cms.gov/medicare/quality-initiatives-patient-assessment-
instruments/value-based-programs/cms-quality-strategy.
\289\ Centers for Medicare & Medicaid Services. (2022) CMS
Outlines Strategy to Advance Health Equity, Challenges Industry
Leaders to Address Systemic Inequities. Available at: https://
www.cms.gov/newsroom/press-releases/cms-outlines-strategy-advance-
health-equity-challenges-industry-leaders-address-systemic-
inequities#:~:text=CMS%20Health%20Equity%20Strategy%3A%20CMS%20Admini
strator%20Chiquita%20Brooks-
LaSure,access%20to%20care.%20They%20include%20the%20following%20actio
ns%3A.
---------------------------------------------------------------------------
We proposed to adopt this adjustment to the Hospital VBP Program
scoring methodology beginning with the FY 2026 program year.
We note that the Shared Savings Program recently adopted a health
equity adjustment for Accountable Care Organizations that report all-
payer electronic clinical quality measures (eCQMs)/Merit-based
Incentive Payment System CQMs, are high-performing on quality, and
serve a large proportion of underserved beneficiaries, as defined by
dual-eligibility, enrollment in the Medicare Part D low income subsidy
(LIS) (meaning the individual is enrolled in a Part D plan and receives
LIS) and an Area Deprivation Index (ADI) score of 85 or above, as
detailed in the CY 2023 Physician Fee Schedule final rule (87 FR 69838
through 69857). The proposed definitions and calculations in this final
rule are similar to the health equity adjustment finalized in the
Shared Savings Program. Additionally, a similar health equity
adjustment was proposed in the FY 2024 Skilled Nursing Facility (SNF)
Prospective Payment System (PPS) proposed rule for the SNF Value-Based
Purchasing (VBP) Program (88 FR 21383 through 21393).
(2) Determining the Underserved Multiplier and Measure Performance
Scaler
At this time, for purposes of the Hospital VBP Program's health
equity adjustment policy, we are unable to obtain patients'
neighborhood-level data necessary to incorporate the ADI under all of
the Hospital VBP Program measures as currently specified. We note that
the use of both the LIS designation and DES could be preferable to
using DES alone, as doing so reduces variability because of the
differences in Medicaid eligibility across States; however, given that
the DES data are readily available and already used in the Hospital
Readmissions Reduction Program, we proposed to only use DES data at
this time. As DES is a strong indicator of poorer healthcare outcomes
in Medicare's VBP programs,\290\ we believe that it can serve as an
appropriate underserved multiplier on its own in the Hospital VBP
Program. We will continue to consider whether to incorporate the LIS,
ADI, and other indicators for underserved populations in future health
equity adjustment proposals for the Hospital VBP Program. We sought
comment on the use of these additional indicators in the FY 2024 IPPS/
LTCH PPS proposed rule (88 FR 27049) and summarized the comments we
received in section V.K.6.b.(7) of this final rule.
---------------------------------------------------------------------------
\290\ Assistant Secretary for Planning and Evaluation. (2020)
Social Risk and Performance in Medicare's Value-Based Purchasing
Programs. Available at: https://aspe.hhs.gov/sites/default/files/
migrated_legacy_files//195036/Social-Risk-in-Medicare%E2%80%99s-VBP-
2nd-Report-3-
Pager.pdf#:~:text=After%20accounting%20for%20additional%20social%20an
d%20functional%20risk,and%20resource%20use%20measures%20in%20Medicare
%E2%80%99s%20VBP%20programs.
---------------------------------------------------------------------------
The measure performance scaler points will be available to all
hospitals that exhibit high quality care across the entire patient
population. Each domain will be assessed independently such that a
hospital that performs in the top or middle third of performance for
one domain will be eligible for measure performance scaler points even
if it does not perform in the top or middle third of performance for
any other domain. Similarly, if a hospital performs in the top third of
performance for all domains, they will receive measure performance
scaler points for all domains. Alternatively, a hospital which is in
the bottom third of performance for all four domains will not receive
any performance scaler points. A hospital's performance is relative to
the performance of all other hospitals in the Hospital VBP Program, and
this measure performance scaler methodology is further defined in
section V.K.6.b.(3). of this final rule.
The underserved multiplier will be calculated using a similar
approach as the Hospital Readmissions Reduction Program's dual
proportion calculation, which identifies patients with DES based on the
dual-eligibility codes in the Medicare Beneficiary Summary File.\291\
These data will provide us with the number of inpatient stays for
patients with DES out of the total number of inpatient Medicare stays,
which is all Medicare FFS and Medicare Advantage stays. A stay is
identified as being dually eligible if it is for a patient with
Medicare and full Medicaid benefits for the month the patient was
discharged from the hospital, unless the patient died in the month of
discharge, in which case DES is determined using the previous month. We
proposed that the dual proportion is calculated with stays that
occurred during the calendar year two years before the start of the
respective program year. A logistic exchange function will then be
applied to this dual proportion. We will then multiply this underserved
multiplier by the aforementioned measure performance scaler to
determine the hospital's HEA bonus points. This methodology is
described further in section V.K.6.b.(3) of this final rule. Unlike the
Shared Savings Program's policy, we note that we did not propose a
minimum percent of patients with DES that a hospital must treat, such
that a hospital serving one percent of patients with DES and a hospital
serving 80 percent of patients with DES are both eligible for HEA bonus
points to give every hospital an opportunity to participate in this
final scoring change.
---------------------------------------------------------------------------
\291\ Research Data Assistance Center. (2023) Medicare-Medicaid
Dual Eligibility Code--January. Available at: https://resdac.org/cms-data/variables/medicare-medicaid-dual-eligibility-code-january.
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Through the availability of HEA bonus points, we seek to improve
outcomes by providing incentives to hospitals to strive for high
performance
[[Page 59095]]
across the domains as well as to care for a high proportion of
underserved populations, as defined by dual eligibility status for the
purposes of this final rule. While we recognize and discuss in this
final rule that there are many different indicators that could be used
to measure underserved populations, we note that we are referring to
patients with DES when we use the term ``underserved population''
throughout this final rule. As noted in section V.K.6.b.(1), DES is a
good indicator of socioeconomic disadvantage, as dual eligibility is
associated with a patient's inability to access care.\292\
---------------------------------------------------------------------------
\292\ U.S. Department of Health & Human Services. (2020)
Executive Summary: Report to Congress: Social Risk Factors and
Performance in Medicare's Value-Based Purchasing Program. Available
at: https://aspe.hhs.gov/sites/default/files/migrated_legacy_files//195046/Social-Risk-in-Medicare%E2%80%99s-VBP/2nd-Report-Executive-Summary.pdf.
---------------------------------------------------------------------------
The HEA bonus point calculation is purposefully designed to not
reward poor quality. Likewise, if the underserved population represents
only a small proportion of a hospital's total population, such as a
hospital only serving five percent of patients with DES, then the
health equity adjustment will be lower because the bonus points are not
designed to reward hospitals that serve a low number of underserved
patients. Instead, the health equity adjustment is intended to
incentivize hospitals to improve their overall quality of care across
the entire hospital's population by bridging performance gaps and
improving overall health outcomes for patients while reducing the
unintended risk of decreased access to care for underserved patients.
As described more fully in this section of this final rule, the
combination of the measure performance scaler and the underserved
multiplier will result in a range of possible HEA bonus points that is
designed to give the highest rewards to hospitals caring for a larger
percentage of underserved individuals and delivering high quality care.
We also proposed to codify at 42 CFR 412.160 of our regulations the
definitions of these new scoring methodology terms, and we proposed to
codify at 42 CFR 412.165(b) of our regulations the updates to the steps
for performance scoring with the incorporated health equity scoring
adjustments.
(3) Application of Health Equity Adjustment
After considering how to modify the existing quality performance
scoring in the Hospital VBP Program to more fully assess the quality of
care provided by hospitals that serve a high proportion of underserved
patients, we proposed to adjust the sum of an individual hospital's
domain scores based on their overall performance within each domain,
with a maximum potential of 16 measure performance scaler points across
the four domains. For hospitals that only get three domain scores
because they do not meet measure minimums for all four domains, the
maximum number of measure performance scaler points that a hospital
could earn will be 12.
We proposed to calculate a hospital's HEA bonus points by
multiplying the measure performance scaler by the hospital's
underserved multiplier. As explained more fully in this section, the
number of HEA bonus points that could then be added to a hospital's TPS
for a program year will be capped at 10. We believe that capping the
total number of potential HEA bonus points at 10 recognizes the effort
hospitals put forth to serve large populations of patients with DES,
while not overly inflating TPSs. We believe that limiting the number of
HEA bonus points that a hospital is eligible to receive to a maximum of
10 points creates a balanced incentive that increases a hospital's TPS
without dominating the score and creating unintended incentives.
Additionally, the maximum of 10 HEA bonus points aligns with the
magnitude of points we award for a given measure in the existing
Hospital VBP Program's scoring methodology. Therefore, the maximum
number of HEA bonus points that could be added to the TPS would be 10
points. In the FY 2024 IPPS/LTCH PPS proposed rule, we proposed that no
hospital could earn more than a 110 maximum final TPS that includes the
HEA bonus points (88 FR 27049). We refer readers to section V.K.6.b.(6)
of this final rule where we have finalized this proposal as proposed
and our newly-adopted regulations at 42 CFR 412.160 where we modify the
TPS maximum to 110. This final maximum at 110 will ensure that the
application of the health equity adjustment allows for a hospital that
receives the maximum number of points in weighted domain scores to
still have the opportunity to receive the additional 10 HEA bonus
points.
(4) Calculation Steps and Examples
In this section and in the FY 2024 IPPS/LTCH PPS proposed rule (88
FR 27042 through 27045), we outline the calculation steps and provide
examples of the determination of health equity adjustment bonus points
and the application of these bonus points to a hospital's TPS. These
example calculations illustrate possible health equity adjustment bonus
points resulting from the proposed approach, which accounts for both a
hospital's quality performance and a logistic exchange function applied
to its proportion of patients with DES. For each hospital, the bonus
will be calculated according to the following formula:
Health Equity Adjustment (HEA) bonus points = measure performance
scaler x underserved multiplier
The proposed calculation of the HEA bonus points will be as
follows:
Step One--Calculate the Number of Measure Performance Scaler Points for
Each Hospital
We proposed to first assign a measure performance scaler to each
domain based on a hospital's domain level scores. We will assign point
values to hospitals for each domain based on their performance on the
measures in that domain. A hospital will receive 4, 2, or 0 points for
top third, middle third, or bottom third of performance, respectively,
on each domain such that a hospital could receive a maximum of 16
measure performance scaler points for being in the top third of
performance for all of the four domains, as depicted in this sample
equation and in Table V.K.-13. We note that if a hospital performs in
the bottom third of performance in all four domains, that hospital
would receive a total of 0 out of 16 measure performance scaler points.
Additionally, hospitals that can be scored in only three domains could
receive a maximum of 12 measure performance scaler points for being in
the top third of performance for each domain.
Hospital 1 (High Performance):
4 pts in Clinical Domain + 4 pts in Cost & Efficiency Domain + 4
pts Safety Domain + 4 pts in Person and Community Engagement = 16 total
performance scaler points for Hospital 1
Hospital 2 (Medium Performance):
4 pts in Clinical Domain + 2 pts in Cost & Efficiency Domain + 2
pts in Safety Domain + 0 in Person & Community Engagement Domain = 8
total performance scaler points for Hospital 2
Hospital 3 (Low Performance):
0 pts in Clinical Domain + 0 pts in Cost & Efficiency Domain + 2
pts in Safety Domain + 0 pts in Person & Community Engagement Domain =
2 total performance scaler points for Hospital 3
[[Page 59096]]
Table V.K.-13 displays the measure performance scaler that three
example hospitals will receive for each domain based on their
performance.
[GRAPHIC] [TIFF OMITTED] TR28AU23.270
Step Two--Calculate the Underserved Multiplier
Second, we proposed to calculate an underserved multiplier for each
hospital, which we proposed to define as the logistic function applied
to the proportion of inpatient stays for patients with DES during the
calendar year two years before the applicable program year divided by
the total number of inpatient Medicare stays, which is all Medicare FFS
and Medicare Advantage stays, at each hospital. For example, for the FY
2026 program year, we will use the total number of inpatient stays from
January 1, 2024, through December 31, 2024. The primary goal of the
underserved multiplier is to appropriately reward hospitals that are
able to overcome the challenges of caring for high proportions of
patients with DES. By utilizing a logistic exchange function to
calculate the underserved multiplier, hospitals who care for the
highest proportions of patients with DES will have the opportunity for
the most HEA bonus points. Thus, we proposed to utilize a logistic
exchange function to calculate the underserved multiplier for scoring
hospitals such that there will be a lower rate of increase at the
beginning and the end of the curve.
The underserved multiplier calculation will thus be:
Underserved Multiplier = Logistic Function (Number of Inpatient Stays
for Patients with DES/Total Medicare Inpatient Stays)
[GRAPHIC] [TIFF OMITTED] TR28AU23.271
To determine the proportion of the number of inpatient stays for
patients with DES, we proposed to use patient level data on the
proportion of all Medicare FFS and Medicare Advantage inpatient stays
in a hospital in which the patient was dually eligible for Medicare and
full Medicaid benefits. For the HEA adjustment, the dual proportion is
calculated with stays that occurred during the calendar year two years
before the applicable the program year, and then a logistic exchange
function is applied to that proportion. For example, for the FY 2026
program year, the dual proportion data will be calculated using stays
from January 1, 2024, through December 31, 2024. In alignment with the
Hospital Readmissions Reduction Program approach to determine the dual
proportion, a stay is identified as being dually eligible if it is for
a patient with Medicare and full Medicaid benefits for the month the
patient was discharged from the hospital, unless the patient died in
the month of discharge, in which case DES is determined using the
previous month. Using the proportion of DES patients calculated among
both Medicare FFS and Medicare Advantage patients more accurately
represents the proportion of patients with DES served by the hospital
compared to only using the proportion of Medicare FFS stays as well as
that DES data for Medicare Advantage patients are readily available.
This is the approach finalized by the Hospital Readmissions Reduction
Program to determine the dual proportion in the FY 2018 IPPS/LTCH PPS
final rule (82 FR 38228 through 38229).
We proposed to utilize a logistic exchange function to calculate
the underserved multiplier for scoring hospitals such that there will
be a lower rate of increase at the beginning and the end of the curve.
A logistic exchange function assumes a large difference between
hospitals treating the most and fewest patients with DES and produces a
large score difference between the groups, but less difference within
the groups. This will ensure that there will be very few differences in
the points awarded between hospitals with similar proportions of
patients served. For example, there will be little difference in the
points awarded to a hospital serving 59 percent of individuals with DES
and a hospital serving 61 percent of individuals with DES. Utilizing a
logistic function allows for hospitals in the middle third of
performance to have a strong association between an increase in HEA
bonus points based on proportion of patients with DES served. We note
that there is no minimum or maximum threshold on the percentage of
individuals with DES that a hospital serves for the calculation of HEA
bonus
[[Page 59097]]
points. We believe that this gives all hospitals an opportunity and
incentive to serve a percentage of patients with DES. We also
considered linear and actual scoring alternatives to calculate the
underserved multiplier, as displayed in Figure V.K.-01, but we believe
that the logistic function scoring applied to the proportion of
patients with DES (dotted line in Figure V.K.-01) provides the best
opportunity for hospitals serving large proportions of patients with
DES to receive HEA bonus points. We note that a scoring approach using
actual proportion of patients with DES, as depicted by the dashed line
in Figure V.K.-01, assumes that the hospitals' treatment of patients
with DES is reflected simply in their actual share in the patient
population. A linear scoring approach, as depicted by the solid line in
Figure V.K.-01, assumes that a hospital's treatment of patients with
DES is correlated by rank.
[GRAPHIC] [TIFF OMITTED] TR28AU23.272
Step Three--Calculate the Health Equity Adjustment Bonus Points
We proposed to calculate the HEA bonus points that apply to a
hospital for a program year by multiplying the measure performance
scaler total by the underserved multiplier. We believe that combining
the measure performance scaler and the underserved multiplier to
calculate the HEA bonus points allows for us to reward those hospitals
with high quality performance across the four domains that are also
serving high populations of patients with DES. This approach also
incentivizes other hospitals to improve their performance (by a higher
measure performance scaler) and serve more patients with DES (by a
higher underserved multiplier) to earn greater HEA bonus points. The
product of the measure performance scaler points and the underserved
multiplier proportion results is the HEA bonus point total capped at 10
points. Table V.K.-14 displays the HEA bonus points that six example
hospitals would receive based on their measure performance scaler and
underserved multiplier, with the cap of 10 total possible HEA bonus
points. For example, Hospital 1 in Table V.K.-14 that has performed in
the top third of performance in all four of the domains and whose
population of patients with DES is 80 percent after applying the
logistic function will earn 16 measure performance scaler points, which
will then be multiplied by an underserved multiplier of 0.8, resulting
in 12.8 HEA bonus points that would then be reduced to 10 HEA bonus
points per the 10 HEA bonus point cap.
[[Page 59098]]
Step Four--Add Health Equity Adjustment Bonus Points to the Total of
the Weighted Domain Scores To Calculate the TPS
Health Equity Adjustment (HEA) bonus points = Performance Scaler x
Underserved Multiplier
[GRAPHIC] [TIFF OMITTED] TR28AU23.273
Finally, we proposed that we will add a hospital's HEA bonus points
as calculated in Step Three of this section to the total of the four
weighted domain scores that we sum to calculate the hospital's TPS. The
sum of the weighted domain scores, which will remain as outlined in our
regulations at 42 CFR 412.165(b)(4), and the HEA bonus points will be
the hospital's TPS for the program year. We did not propose to revise
the process for converting the TPS into the incentive payment
adjustment percentage. As established in our regulations at 42 CFR
412.162(b)(3), the value-based incentive payment percentage is
calculated as the product of: the applicable percent as defined in 42
CFR 412.160, the hospital's TPS, and the linear exchange function
slope. We proposed to modify the definition of TPS in our regulations
at 42 CFR 412.160 to align with the proposal to modify the TPS range to
be 0-110 beginning with the FY 2026 program year as discussed in
section V.K.6.b.5 of this final rule. Table V.K.-15 displays the HEA
bonus points and TPSs awarded to the six example hospitals from Table
V.K.-14.
Health equity adjustment bonus points + Total of Weighted Domain Scores
= Total Performance Score
[GRAPHIC] [TIFF OMITTED] TR28AU23.274
By adding these HEA bonus points to the total of each hospital's
weighted domain scores, hospitals can be rewarded for delivering
excellent care to large proportions of underserved populations. We
believe that a scoring adjustment designed to advance health equity
through the Hospital VBP Program is consistent with CMS's goal to
advance health equity by providing an incentive for hospitals to care
for underserved populations and to provide high quality care to all of
the populations they serve.
We invited public comment on this scoring change, which we also
proposed to codify in our regulations at 42 CFR 412.160 and 412.165(b).
Comment: Many commenters supported the adoption of a Health Equity
Adjustment for the Hospital VBP Program. Many commenters supported the
Health Equity Adjustment because they believed that it would promote
high quality care for underserved populations and incentivize hospitals
to focus on reducing disparities. A commenter believed that it would
encourage hospitals to reach additional underserved patients in the
healthcare system. Many commenters supported the Health Equity
Adjustment because they believed that the scoring would in turn support
providers treating greater proportions of patients in underserved
communities with higher payments. A
[[Page 59099]]
commenter stated that the scoring revision would account for the
additional challenges hospitals overcome to achieve high standards for
all their patients. Several commenters supported the Health Equity
Adjustment because they believed that the revision aligns with goals,
initiatives, and programs across CMS, such as the goal to advance
health equity and CMS's Health Equity Strategy and Roadmap. A few
commenters stated how the proposal creates similarities in health
equity adjustment policies across payment programs of CMS. A few
commenters also supported the Health Equity Adjustment because it
aligns with the health equity goals of their programs. A few commenters
believed that this would allow for hospitals that care for patients
from underserved communities with fewer resources to be fairly assessed
and not heavily penalized. A few commenters supported the Health Equity
Adjustment because it recognizes challenges that patients face and
factors beyond a hospital's control that may impact performance. In
addition to the support, a few commenters recommended improvements to
the methodology such as considering alternative approaches to
identifying hospitals that disproportionately serve marginalized
patient populations.
Response: We thank the commenters for their support of our proposal
to adopt a Health Equity Adjustment. We agree that this adjustment will
promote high quality care for underserved populations, incentivize
addressing disparities, and recognize challenges hospitals overcome to
achieve high standards for all their patients. We also agree that the
adjustment recognizes structural challenges that patients with DES face
and hospitals have to overcome to provide excellent care. We will take
into consideration for future years the recommendations of assessing
alternative approaches to identifying hospitals that disproportionately
serve marginalized patient populations.
Comment: Several commenters supported the initial use of DES with a
few commenters noting the alignment with the Hospital Readmissions
Reduction Program. A few commenters recommended considering alternate
indicators and sources of social risk factor data in the future as
Medicaid eligibility varies by state.
Response: We thank commenters for their support of the initial use
of DES and their recommendations to consider alternate approaches for
capturing social risk. We will take this into consideration in future
years. We also refer readers to section V.K.6.b.(7) of this final rule
where we summarized additional comments we received in response to a
request for information on additional indicators besides DES for the
health equity adjustment. We remain committed to refining this health
equity scoring methodology, as determined appropriate, in the future.
Comment: A few commenters supported the use of the logistic
exchange function for calculating the underserved multiplier.
Response: We thank commenters for their support of using the
logistic exchange function for calculating the underserved multiplier.
Comment: A few commenters supported structuring the Health Equity
Adjustment as a form of bonus points as opposed to an addition to the
base TPS because the financial incentive would help offset costs
associated with addressing the social needs of underserved patient
populations. A few commenters supported that the bonus points from the
Health Equity Adjustment would be available to those in the top two
thirds of each domain performance rather than only those in the top
third. A commenter also supported the threshold methodology of three
levels because it is consistent with health equity calculations in
other payment programs.
Response: We thank the commenters for their support of the
threshold methodology and how the Health Equity Adjustment is available
as bonus points to the top two thirds of each domain performance.
Comment: A commenter supported beginning the adjustment in the FY
2026 program year to allow for an evaluation and adjustment period
before it impacts hospital payments.
Response: We appreciate the commenter's support. We note that for
the FY 2026 program year, the dual proportion data will be calculated
using stays from January 1, 2024, through December 31, 2024. We also
refer readers to Table V.K.-04 in section V.K.4.c of this final rule
that displays the baseline and performance periods for the FY 2026
program year. We anticipate hospitals will receive their confidential
Percentage Payment Summary Reports with their FY 2026 program year
results to review by no later than August 1, 2025.
Comment: A commenter did not support the alternate methodology in
which hospitals must be in the top third of all performers in the
measure domain to receive bonus points because it would create
performance cliffs.
Response: We appreciate the commenter's feedback and agree that
awarding measure performance scaler points to the top two thirds of all
performers instead of the top third of all performers for each domain
would lessen the potential impact of performance cliffs. We are
finalizing the proposed methodology as opposed to the alternate
methodology.
Comment: Several commenters did not support the use of DES as an
indicator for the Health Equity Adjustment. Several commenters
expressed concern around the challenges of using DES because dual
eligible beneficiary percentages vary across states and that the
proportion of patients with DES varies over time within a hospital. A
few commenters believed that DES provides an incomplete picture of
health equity. A commenter recommended replacing the underserved
multiplier with direct billing for case management. A few commenters
did not support the use of ADI because they believe it is highly
correlated across domains which may lead to the overstating of aspects
of social risk, and it is incapable of accurately reflecting
neighborhood deprivation in high-cost areas. A commenter also did not
support the use of Part D LIS alone because it is not a reasonable
proxy for social risk. A commenter also expressed concern over the
inconsistent definition of ``underserved'' across CMS programs. The
commenter cited the Medicare Shared Savings Program (MSSP), which uses
DES along with ADI and the Part D LIS, and the Center for Medicare &
Medicaid Innovation (CMMI) ACO REACH model, which uses DES and ADI.
Response: We appreciate the commenters' concern regarding the use
of DES and agree that by itself DES does not capture all aspects of
social risk for health inequities. However, we believe that use of DES
data is an important first step to introducing a health equity
adjustment in the Hospital VBP Program, as well as being a readily
available data source. As ASPE noted in its 2020 report to Congress,
DES is a strong indicator of poorer healthcare
[[Page 59100]]
outcomes in Medicare's VBP programs.\293\ Regarding its availability,
as mentioned in the FY 2024 IPPS/LTCH PPS proposed rule, we are able to
capture the proportion of patients with DES served by a hospital by
using patient level data on the proportion of Medicare FFS and Medicare
Advantage stays within the defined performance period of two years
prior to the program year (88 FR 27043). We will consider alternative
approaches in future years and will take the concerns around the ADI
into consideration at that time. We appreciate the feedback on the use
of the ADI, and we note that we did not propose using ADI at this time.
We also refer readers to section V.K.6.b.(7) of this final rule where
we summarized additional comments we received in response to a request
for information on additional indicators besides DES for the health
equity adjustment.
---------------------------------------------------------------------------
\293\ Assistant Secretary for Planning and Evaluation. (2020)
Social Risk and Performance in Medicare's Value-Based Purchasing
Programs. Available at: https://aspe.hhs.gov/sites/default/files/
migrated_legacy_files//195036/Social-Risk-in-Medicare%E2%80%99s-VBP-
2nd-Report-3-
Pager.pdf#:~:text=After%20accounting%20for%20additional%20social%20an
d%20functional%20risk,and%20resource%20use%20measures%20in%20Medicare
%E2%80%99s%20VBP%20programs.
---------------------------------------------------------------------------
With regard to our use of the term ``underserved'' across CMS
programs, we reference Executive Order 13985 of January 20, 2021 on
Advancing Racial Equity and Support for Underserved Communities Through
the Federal Government, which provides examples of individuals who
belong to underserved communities, such as Black, Latino, and
Indigenous and Native American persons, Asian Americans and Pacific
Islanders and other persons of color; members of religious minorities;
lesbian, gay, bisexual, transgender, and queer (LGBTQ[I]A+ ) \294\
persons; persons with disabilities; persons who live in rural areas;
and persons otherwise adversely affected by persistent poverty or
inequality (86 FR 7009). We believe that our definition of underserved,
as defined by patients with DES for the purposes of this health equity
adjustment, is in line with this definition, particularly with regards
to persons otherwise adversely affected by persistent poverty or
inequality. Additionally, we specified in the FY 2024 IPPS/LTCH PPS
proposed rule that the term ``underserved'' for purposes of discussing
the health equity adjustment in the Hospital VBP Program refers to
hospital patients with DES who receive inpatient services (88 FR
27040).
---------------------------------------------------------------------------
\294\ We note that the original, cited definition only
stipulates, ``LGBTQ+'', however, HHS and the White House now
recognize individuals who are intersex/have intersex traits.
Therefore, we have updated the term to reflect these changes.
---------------------------------------------------------------------------
Comment: A few commenters recommended focusing exclusively on
rewards as opposed to rewards and penalties. A commenter recommended
guaranteeing that non-participation or poor performance does not result
in negative repercussions.
Response: We wish to clarify that the program is statutorily
structured to withhold 2% from all hospitals and then distribute value-
based incentive payments based on performance. However, all hospitals
are still eligible to earn HEA bonus points. As noted in the FY 2024
IPPS/LTCH PPS proposed rule (88 FR 27045 through 27046), under the
health equity adjustment, even if a hospital receives a penalty, that
hospital can still gain from the health equity adjustment, if the
penalty is smaller after the health equity adjustment. The health
equity adjustment thus offers every hospital an opportunity to earn HEA
bonus points regardless of whether they receive a bonus or penalty
under the Hospital VBP Program. In addition, we reiterate the budget
neutral structure of the Hospital Value-Based Purchasing (HVBP)
Program, as the HEA bonus points are added before the TPS is
calculated. This would only result in changes to the hospital's
relative position to other hospitals as opposed to the distribution of
bonuses and penalties. With regard to the concern of non-participation,
we note that subsection (d) hospitals cannot opt-out of this program.
Comment: Several commenters recommended working with the hospital
community to fine-tune the methodology for identifying underserved
populations and to determine how they may impact hospitals across a
diverse set of marginalized communities. A few commenters recommended
working with relevant interested parties to create a standard framework
and to implement consistent methodologies and risk factors for health
equity adjustments across programs. A few commenters recommended that
the HEA be utilized as a pilot before full implementation as it would
allow for understanding potential impacts and identifying potential
issues or challenges before going into full effect. A commenter
recommended continuing to work to further optimize the use of reporting
requirements and incentives to promote health equity.
Response: We thank commenters for their feedback. We note that the
Hospital VBP Program's proposed methodology is similar to the Shared
Savings Program's health equity adjustment and to the SNF VBP Program's
health equity adjustment proposal. While some differences exist between
these programs' methodologies due to the data available to each program
and the structure of each program as dictated by their respective
statutes, across all of these programs we have aimed to apply the same
conceptual framework of rewarding excellent care in underserved
populations, with an upside-only incentive approach to the greatest
extent feasible for the applicable program, be it in terms of bonus
points like the Hospital VBP Program or both bonus points and
additional payments like the Shared Savings Program and proposal for
the SNF VBP Program.
In regards to comments suggesting the health equity adjustment be
implemented as a pilot, we refer readers to the FY 2024 IPPS/LTCH PPS
proposed rule (88 FR 27045 through 27046) and section V.K.6.b.(5) of
this final rule, where we presented the results of an impact analysis
that simulated the proposed scoring methodology and provided an
understanding of how hospitals will be impacted by the scoring change,
as well as to show that the scoring change is feasible to implement
across all hospitals participating in the Hospital VBP Program.
Additionally, as noted in the proposed rule, this is a first step, and
we expect the early years of this policy to effectively serve the
purpose of piloting future health equity efforts in the program. We
also note that we will monitor the impact of the adjustment and may, as
necessary, consider modifications to the design of the adjustment
through future notice and comment rulemaking. We agree with the
commenter who recommended continuing to leverage reporting requirements
and incentives to promote health equity. For example, in the FY 2023
IPPS/LTCH PPS final rule, we adopted the Screening for Social Drivers
of Health measure in the Hospital IQR Program (87 FR 49202 through
49215). We welcome continued engagement with all interested parties on
these efforts.
Comment: A commenter recommended focusing on a specific population
for the performance evaluation in the future because evaluating
performance only across dual eligible beneficiaries ensures that
improvement efforts are focused on the population with the greatest
risk factors.
Response: We thank the commenter for the feedback and will consider
additional indicators for the underserved population in the future.
[[Page 59101]]
We believe that as a first step to incorporating a health equity
adjustment in the Hospital VBP Program, the underserved multiplier
adequately accounts for the patients with DES while the measure
performance scaler accounts for overall quality such that if a large
proportion of a hospital's patients with DES population is receiving
low quality of care, then the health equity adjustment bonus points
will appropriately decrease. The health equity adjustment was
purposefully designed to not reward poor quality. Likewise, if the
quality of care received by a hospital's underserved population is
high, but the patients with DES represent only a small proportion of a
hospital's total population, then the health equity adjustment will be
lower.
Comment: A commenter recommended incentivizing primary care or
ambulatory services as an equity lever as they believed that those
settings would be better for prevention and management of chronic
conditions.
Response: We agree on the importance of incentivizing health equity
in not only the acute care setting, but also primary care and other
ambulatory care settings. For example, the Shared Savings Program's
Accountable Care Organizations are groups of doctors, hospitals, and
other health care providers who collaborate to give coordinated high-
quality care to people with Medicare. The Shared Savings Program
recently adopted a health equity adjustment for Accountable Care
Organizations that report all-payer electronic clinical quality
measures (eCQMs)/Merit-based Incentive Payment System CQMs, are high-
performing on quality, and serve a large proportion of underserved
beneficiaries, as defined by dual-eligibility, enrollment in the
Medicare Part D low income subsidy (LIS) (meaning the individual is
enrolled in a Part D plan and receives LIS) and an ADI score of 85 or
above, as detailed in the CY 2023 Physician Fee Schedule final rule (87
FR 69838 through 69857). In addition, in the CY 2023 Physician Fee
Schedule final rule, the Merit-Based Incentive Payment System (MIPS)
included four new health equity-related improvement activities (87 FR
70059 through 70060), expanded the definition of ``high priority
measure'' in the Quality category to include health equity measures (87
FR 70047 through 70048), and added a new Quality measure called
Screening for Social Drivers of Health (87 FR 70054 through 70055). We
note that as outlined in section 1886(o)(1)(C)(i) of the Act, the
Hospital VBP Program only applies to acute care hospitals that are paid
under the IPPS.
Comment: A few commenters expressed concern around potential
negative impacts including that a commenter believed that the proposed
logistic multiplier will inadvertently negatively affect safety net and
rural hospitals while inadvertently rewarding urban and non-safety net
hospitals that were not receiving an incentive prior to the adjustment.
A commenter expressed concern that the HEA may result in harm through
reduced incentive payments to high-performing hospitals that do not
serve high proportions of underserved patient populations.
Response: We do not believe that the logistic multiplier will
negatively affect safety-net and rural hospitals given the results of
the simulated impact analyses in the FY 2024 IPPS/LTCH PPS proposed
rule (88 FR 27045 through 27046) and in this final rule, which
demonstrates that the increase in the number of hospitals receiving a
bonus occurs primarily among safety net hospitals compared to non-
safety net and resulted in the greatest gains among safety net
hospitals and rural hospitals. Lastly, we do not believe that the
scoring adjustment will result in harm to high-performing hospitals.
The intent of the HEA is to incentivize high quality care among all
patients in the hospital and to recognize the additional resources
required to care for patients with DES.
Comment: A commenter expressed concern with utilizing overly
complex scoring methods because they have been a challenge in getting
hospitals to embrace data quality measurements in the past.
Response: We recognize that there is some inherent complexity in
developing a new health equity scoring adjustment, however, we believe
that hospitals will have time to adapt to the methodology given that
the scoring change will not go into effect until the FY 2026 program
year. As stated in the FY 2024 IPPS/LTCH PPS proposed rule (88 FR 27042
through 27045) and this final rule, if a hospital, relative to other
hospitals, is in the top or middle third of performance for any domain,
they are eligible for measure performance scaler points. Additionally,
if a hospital serves any proportion of patients with DES, they are
eligible for the underserved multiplier. The HEA bonus points are then
the product of the measure performance scaler and the underserved
multiplier. The HEA bonus points are added to the total of hospital's
four weighted domain scores before the TPS is calculated. A hospital
that knows that they provide care for high proportions of patients with
DES and performs well on any domains may anticipate a higher adjustment
due to this addition to the program. We also reiterate that the HEA is
intended to reward high quality performance and not solely adjust for a
greater underserved patient population, which may leave lower
performing hospitals with high proportions of patients with DES without
any HEA bonus points. We do not intend to reward lower quality
performance, and we believe that the current HEA incentivizes lower
performing facilities to improve their quality scores. We will continue
to provide regular outreach and education on the QualityNet website
about this scoring methodology.
Comment: A commenter expressed concern that the Health Equity
Adjustment points will not be true bonus points as they will be added
to the existing points and contribute to how the pool is distributed.
Response: We disagree that the HEA points are not a true bonus
because, as noted in the FY 2024 IPPS/LTCH PPS proposed rule (88 FR
27045) and this final rule, we proposed to add the HEA bonus points
before the TPS is calculated. Therefore, the bonus points can change
the relative position of the hospital compared to other hospitals.
Comment: A commenter did not support the proposed HEA as they
believed that it may result in having to calculate a new linear
exchange function to determine the minimum TPS at which a hospital
begins to earn a bonus. A few commenters requested clarification around
the linear exchange function slope and whether it would be adjusted by
the HEA bonus points. A commenter expressed concern that the program
would no longer be budget neutral.
Response: As noted in the FY 2024 IPPS/LTCH PPS proposed rule (88
FR 27045) and this final rule, we proposed to add the HEA bonus points
before the TPS is calculated. Therefore, the linear exchange function
slope remains unchanged and the Hospital VBP Program remains budget
neutral because the bonus points are added to the total of the four
weighted domain scores that we then sum to calculate the hospital's
TPS.
Comment: Many commenters provided recommendations around the
scoring methodology. Many commenters recommended sharing information on
potential new indicators, such as geographic or socioeconomic
indicators, and moving away from DES. A commenter recommended exploring
the interaction between DES, ADI, and LIS variables as CMS continues to
refine the HEA. Several commenters
[[Page 59102]]
recommended that CMS provide the logistic exchange function for the
underserved multiplier. Several commenters recommended that CMS convene
a technical expert panel from the hospital community to fine-tune the
health equity adjustment methodology.
Response: We thank commenters for their recommendation. At this
time, we believe that using DES data is an important first step for the
health equity adjustment in the Hospital VBP Program, but we will
consider these alternative indicators in future years. We have added
the logistic exchange function used for calculating the underserved
multiplier to this final rule in section V.K.6.b.(4). We appreciate
this feedback from commenters, and we will explore convening a
technical expert panel in future years.
Comment: Several commenters recommended that CMS provide additional
information such as detailed specifications for proposed HEA bonus
points, how payments will be redistributed once the HEA is accounted
for, and how hospitals would perform on the HEA through confidential
reports.
Response: We thank the commenters for their recommendations. We
wish to clarify that the methodology for distributing payments will
remain the same. As noted in the FY 2024 IPPS/LTCH PPS proposed rule
(88 FR 27045) and in this final rule, the HEA bonus points will be
added before the TPS is calculated, and the linear exchange function
slope remains unchanged.
Comment: A commenter recommended that the HEA be applied across the
care delivery spectrum to ensure continuity of high-quality care. A
commenter also recommended being consistent in the application of the
HEA term and methodology, particularly for the use of indicators for
underserved.
Response: We thank the commenters for their feedback, and we will
explore avenues to increase consistency across programs in future
years. We also wish to note that the Hospital VBP Program's proposed
methodology is similar to the Shared Savings Program's health equity
adjustment and to the SNF VBP Program's health equity adjustment
proposal. The differences that exist between these programs'
methodologies are due to the data available to each program and the
structure of each program, which prevents further consistency across
programs at this time.
Comment: A few commenters recommended accounting for differences
that hospitals experience such as in budget and location, considering
the realities that smaller health systems in rural areas face. A
commenter expressed concern that the HEA may result in harm to high
performing hospitals that do not serve a high proportion of the
underserved patient population.
Response: We thank commenters for their recommendations. We
reiterate that, on average, the HEA would not negatively impact safety
net and rural hospitals. As discussed in the FY 2024 IPPS/LTCH PPS
proposed rule (88 FR 27045 through 27046) and in this final rule, the
impact analysis demonstrates that the increase in the number of
hospitals receiving a bonus occurs primarily among safety net hospitals
compared to non-safety net and that the greatest gains resulted among
safety net hospitals and rural hospitals. We will consider additional
ways to support smaller hospitals in rural areas, but we believe that
this policy is a crucial first step in providing more opportunities to
smaller and rural hospitals. With regard to high performance, on
average, the HEA would similarly not negatively impact high-performing
hospitals. The intent of the HEA is to incentivize high quality care
among all patients in the hospital and to recognize the additional
resources required to care for patients with DES. Additionally,
hospitals that are high performing have other opportunities to be
rewarded for their quality care under the Hospital VBP Program's
existing scoring methodology.
Comment: A commenter also recommended that CMS consider a peer
grouping approach with regards to impacts on payments for providers
with different shares of DES patients.
Response: We will take a peer grouping approach into consideration
in future program years.
Comment: A commenter recommended that the measure performance
scaler should exclude the Cost and Effectiveness Domain since the
domain is further removed from quality of care.
Response: In our impact analyses, we assessed the impact of
excluding the Cost and Effectiveness Domain, however, the results were
negligible. While the impact is negligible for excluding the Cost and
Effectiveness Domain as the domain exists at this time with the one
MSPB Hospital measure, we will take the commenter's suggestion into
consideration with regard to any future potential changes to the HEA
methodology.
Comment: A few commenters recommended that CMS require standard
practices for collecting and analyzing patient demographic data.
Response: We thank commenters for their response. We may consider
the requirement of standard practices for demographic data collection
and analysis in future program years. We would like to note ongoing
effort to develop the United States Core Data for Interoperability
(USCDI) and we look to align with developed electronic standards in the
future.
After consideration of the public comments we received, we are
finalizing this proposal as proposed with minor technical modifications
to regulation text at 42 CFR 412.160 and 412.165(b).
(5) Impact Analysis of Scoring Methodology Change
In the FY 2024 IPPS/LTCH PPS proposed rule, we included a
discussion of the analyses we conducted to simulate the proposed
scoring methodology change for HEA bonus points in the Hospital VBP
Program to assess the potential impact on hospitals and payments using
FY 2023 program year data (88 FR 27045 through 27049). We also compared
these impacts to the impacts of the existing scoring methodology, as
well as a similar alternative that simulates only awarding 4 measure
performance scaler points to the hospitals in the top third of
performance for each domain, while hospitals in the middle and bottom
third of performance received 0 measure performance scaler points. We
modeled this alternative methodology to contextualize the request for
additional information in section V.K.6.b.(7) of this final rule. The
proposal and alternative method both included HEA bonus points
comprised of the measure performance scaler and the underserved
multiplier based on the hospital's proportion of patients who are
dually eligible and their performance on existing Hospital VBP Program
measures. For purposes of this simulation, we used the dual proportion
data that were calculated using Medicare inpatient stays for the
Hospital Readmissions Reduction Program FY 2023 performance period
which included stays between June 1, 2018, to December 1, 2019, and
July 1, 2020, to June 30, 2021.\295\ A logistic
[[Page 59103]]
exchange function was then applied to the dual proportion. This
analysis also used one-year base operating DRG payments for FY 2021
from October 1, 2020, to September 30, 2021, to calculate the bonus
payments and penalties. Additionally, the TPS and quality domain scores
data used in this analysis were calculated for the FY 2023 Hospital VBP
Program. The proposal and alternative method both include a cap of 10
possible HEA bonus points. We note that while this simulation uses
multi-year Hospital Readmissions Reduction Program data for the
calculation of the dual proportion, we proposed to use dual proportion
data from the calendar year two years ahead of the program year, as
discussed in section V.K.6.b(2) of this final rule. The results of
these analyses are outlined in this section and described further in
Tables V.K.-16 and V.K.-17. Based on this initial modeling, the average
TPS will increase with the addition of the HEA bonus points.
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\295\ We note that this calculation excludes Q1 and Q2 2020 data
based on the ECE granted in response to the COVID-19 PHE and the
policies finalized in the September 2, 2020 interim final rule with
comment titled ``Medicare and Medicaid Programs, Clinical Laboratory
Improvement Amendments (CLIA), and Patient Protection and Affordable
Care Act; Additional Policy and Regulatory Revisions in Response to
the COVID-19 Public Health Emergency'' (85 FR 54820), we will
exclude qualifying claims data from measure calculations for the
following quarters: January 1, 2020, through March 31, 2020 (Q1
2020), and April 1, 2020, through June 30, 2020 (Q2 2020), that was
voluntarily submitted for scoring purposes under the Hospital VBP
Program.
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Our analysis finds that both the proposed and alternative HEA
scoring options increase the number of hospitals getting a bonus
compared to the existing scoring methodology. We note that these
analyses show the percentage of hospitals gaining from the proposed
health equity scoring change. Through these analyses, we found that the
hospital-weighted average payment adjustment is positive even though
the Hospital VBP Program remains budget neutral. The increase in the
number of hospitals receiving a bonus occurs primarily among safety net
hospitals compared to non-safety net. A hospital was considered a
safety net hospital if it was in the top Disproportionate Share
Hospital (DSH) quintile.
Table V.K.-16 provides the number of hospitals that received a
bonus or penalty, respectively, along with the size of these bonuses
and penalties. The third column in Table V.K.-16 shows the estimated
impact of our proposed scoring methodology changes. Based on the
analyses, the proposed methodology resulted in the greatest gains among
safety net hospitals and rural hospitals, on average. The proposed
methodology resulted in the largest percent of hospitals gaining from
the HEA bonus overall, where gains are indicated by both greater bonus
payments and smaller penalty payments, compared to the existing
methodology. The mean payment adjustment was 0.20 percent compared to
0.18 percent.
The fourth column in Table V.K.-16 shows the estimated impact of an
alternative method in which we only award 4 measure performance scaler
points to the hospitals in the top third of performance for each
domain, while hospitals in the middle and bottom third of performance
received 0 measure performance scaler points. This produced the
smallest number of hospitals gaining from the alternative health equity
scoring adjustment among rural hospitals and among safety net
hospitals. This produced a smaller number of hospitals gaining from the
alternative health equity scoring adjustment among rural hospitals,
among large hospitals, and among safety net hospitals relative to the
proposed approach. This alternative method resulted in a similar mean
payment adjustment of 0.20 percent as the proposed approach, while the
program remains revenue neutral. For both the proposed and alternative
approaches, the mean payment adjustment, as shown in Table V.K.-16, is
larger than the mean payment adjustment for the existing scoring
methodology.
Table V.K.-17 shows the percentage of hospitals who gained under
the proposed and alternative methodologies. For purposes of discussion
in this final rule and Table V.K.-17, ``Gaining'' is defined as
receiving a larger bonus or smaller penalty under the proposed health
equity adjustment compared to their bonus or penalty under the original
methodology. In Table V.K.-17, we note that the percentage of hospitals
that gain may be different than the percentage of hospitals that
receive a bonus. This is because hospitals, even if they receive a
penalty, can still gain from the health equity adjustment, if the
penalty is smaller after the health equity adjustment.
We sought feedback on the alternative scoring method in section
V.K.6.b.(7) of this final rule for future consideration.
[[Page 59104]]
[GRAPHIC] [TIFF OMITTED] TR28AU23.285
[GRAPHIC] [TIFF OMITTED] TR28AU23.286
Based on the results of these analyses, we proposed to change the
scoring methodology to award HEA bonus points (with a measure
performance scaler of 0, 2, and 4 points) because this option allows
more hospitals treating a large share of patients with DES to gain from
the HEA bonus, particularly safety net hospitals. We believe that these
bonuses offer an important first step in addressing health equity
within the Hospital VBP Program. Safety net hospitals serve large
proportions of patients with DES, and patients living in rural areas
tend to experience worse health outcomes.296 297 Therefore,
we believe that our proposal ensures that we are addressing performance
gaps and incentivizing high-quality care in underserved populations
compared to the existing scoring methodology.
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\296\ Sarkar, R.R., Courtney, P.T., Bachand, K., et al. (2020)
Quality of care at safety-net hospitals and the impact on pay-for-
performance reimbursement. Cancer. 126(20):4584-4592. doi: 10.1002/
cncr.33137. PMID: 32780469.
\297\ Health Resources and Services Administration. (2020) Rural
Health Disparities. Available at: https://www.hrsa.gov/sites/default/files/hrsa/advisory-committees/graduate-medical-edu/publications/cogme-rural-health-policy-brief.pdf.
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In developing this scoring methodology change, we also explored
alternative indicators for the underserved variable, such as an Area
Deprivation Index (ADI) of 85 or greater, and enrollment in LIS.
Identifying and prioritizing social risk or demographic variables to
consider for measuring equity can be challenging. This is due to the
high number of variables that have been identified in the literature as
risk factors for poorer health outcomes and the limited availability of
much of
[[Page 59105]]
this data. Each source of data has advantages and disadvantages for
identifying the most vulnerable populations to assess disparities.
Income-based indicators are the most frequently used measures of
vulnerability, but other indicators such as neighborhood level
indicators can also provide important insights and are becoming more
common in quality programs. There is research to support that
geographic, neighborhood-level factors are associated with worse health
outcomes for affected residents. The ADI is a demonstrated tool for
assessing socioeconomic conditions based on geographic, neighborhood-
level disadvantage.298 299 Specifically, living in an area
with an ADI score of 85 or above is shown to be a predictor of 30-day
readmission rates, lower rates of cancer survival, poor end-of-life
care for patients with heart failure, and longer lengths of stay and
fewer home discharges post-knee surgery even after accounting for
individual social and economic risk
factors.300 301 302 303 304 Many rural areas also have
relatively high levels of neighborhood disadvantage and high ADI
levels. We believe that dual Medicare and Medicaid eligibility and ADI
scores are both good indicators of patients with high needs. Dual
eligibility, an indicator at the beneficiary level, is intended to
capture socioeconomic challenges that could affect a patient's ability
to access care, while ADI, a neighborhood-level indicator, is intended
to capture local socioeconomic factors correlated with medical
disparities and underservice. However, the ADI data are updated
infrequently.\305\ Additionally, to date, the ADI has not been
extensively studied or widely used in value-based purchasing programs,
and we do not collect patient level demographic level data for all
measures that would allow us to use a neighborhood-level factors such
as ADI in the Hospital VBP Program. However, we are considering using
the ADI in the Hospital VBP Program in future years as data becomes
more readily available through new measures in the Program to better
align with other CMS programs such as the Shared Savings Program. ASPE
recently conducted an environmental scan and concluded that while area-
level indices can be beneficial, none of the existing area-level
indices are ideal and should only be implemented in very specific
circumstances.\306\ Finally, as compared to DES, use of the proportion
of patients that receive LIS under the Medicare Part D prescription
drug program may capture a more consistent group of low-income patients
as the eligibility criteria for LIS do not vary by state. However, we
note that the Part D LIS has certain limitations as well. For example,
individuals with DES or who receive Supplemental Security Income (SSI)
automatically receive the LIS designation in CMS data systems. LIS
designation means that the individual is enrolled in a Medicare Part D
plan and receives the low-income subsidy. Individuals without DES or
SSI status, but whose income is lower than 150 percent of the Federal
poverty level and whose resources are limited, can qualify for LIS, but
must apply. Additionally, LIS is not available in the U.S. territories.
Most Medicare beneficiaries with the LIS designation are those who
automatically receive this designation, rather than those who applied
for the benefit and were approved. Nonetheless, despite this
limitation, we agree that the use of the LIS designation, in addition
to DES, is preferable to using DES alone, as doing so reduces
variability across States. However, LIS is not available in the U.S.
territories. Ultimately, we believe that using DES data is an important
first step to introducing health equity adjustment bonus points in the
Hospital VBP Program and will consider other indicators for the
underserved multiplier in the future.
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\298\ Center for Health Disparities Research University of
Wisconsin. (2022). Neighborhood Atlas. Available at: https://www.neighborhoodatlas.medicine.wisc.edu/.
\299\ Maroko, A.R., Doan, T.M., Arno, P.S., Hubel, M., Yi, S.,
Viola, D. Integrating Social Determinants of Health With Treatment
and Prevention: A New Tool to Assess Local Area Deprivation. Prev
Chronic Dis 2016;13:160221. DOI: https://dx.doi.org/10.5888/pcd13.160221.
\300\ Kind, A.J., Jenks, S., Brock, J., et al. (2014).
Neighborhood socioeconomic disadvantage and 30-day
rehospitalization: a retrospective cohort study. Annals of Internal
Medicine. No. 161(11), pp 765-74, doi: 10.7326/M13-2946. Available
at: https://www.acpjournals.org/doi/epdf/10.7326/M13-2946.
\301\ Jencks, S.F., Schuster, A., Dougherty, G.B., et al.
(2019). Safety-Net Hospitals, Neighborhood Disadvantage, and
Readmissions Under Maryland's All-Payer Program. Annals of Internal
Medicine. No. 171, pp 91-98, doi:10.7326/M16-2671. Available at:
https://www.acpjournals.org/doi/epdf/10.7326/M16-2671.
\302\ Cheng, E., Soulos, P.R., Irwin, M.L., et al. (2021).
Neighborhood and Individual Socioeconomic Disadvantage and Survival
Among Patients With Nonmetastatic Common Cancers.JAMA Network Open
Oncology. No. 4(12), pp 1-17, doi: 10.1001/
jamanetworkopen.2021.39593 Available at: https://jamanetwork.com/journals/jamanetworkopen/fullarticle/2787244.
\303\ Hutchinson, R.N., Han, P.K.J, Lucas, F.L., Black, A.,
Sawyer, D., and Fairfield, K. (2022). Rural disparities in end-of-
life care for patients with heart failure: Are they due to geography
or socioeconomic disparity? The Journal of Rural Health. No. 38, pp
457-463, doi: 10.1111/jrh.12597 Available at: https://onlinelibrary.wiley.com/doi/epdf/10.1111/jrh.12597.
\304\ Khlopas, A., Grits, D., Sax, O., et al. (2022).
Neighborhood Socioeconomic Disadvantages Associated With Prolonged
Lengths of Stay, Nonhome Discharges, and 90-Day Readmissions After
Total Knee Arthroplasty. The Journal of Arthroplasty. No. 37(6), pp
S37-S43, doi: 10.1016/j.arth.2022.01.032 Available at: https://www.sciencedirect.com/science/article/pii/S0883540322000493.
\305\ Office of the Assistant Secretary for Planning and
Evaluation, U.S. Department of Health & Human Services. First Report
to Congress on Social Risk Factors and Performance in Medicare's
Value-Based Purchasing Program. 2016. https://aspe.hhs.gov/sites/default/files/migrated_legacy_files/171041/ASPESESRTCfull.pdf.
\306\ ASPE. (2022) Addressing Social Drivers of Health:
Evaluating Area-level indices. Available at: https://aspe.hhs.gov/sites/default/files/documents/474a62378abf941f20b3eaa74ca5721c/Area-level-Indices-ASPE-Reflections.pdf.
---------------------------------------------------------------------------
Comment: A commenter expressed concern that the impact analysis
does not make a compelling case to indicate that the alternative
methodology would be superior to what is proposed and recommended
finalizing a methodology that is not overly complex and allows
hospitals to have every opportunity to receive the maximum number of
points.
Response: We thank the commenter for the feedback. We will not be
finalizing the alternative methodology, and we believe that the
proposed methodology that we are finalizing allows every hospital an
opportunity to receive HEA bonus points. We recognize a level
complexity with the methodology being adopted in this final rule and we
will address this with education and outreach.
Comment: A commenter recommended that the average bonus under the
proposed methodology should be higher than the stated amount because it
is lower than the average under the existing methodology.
Response: We appreciate the commenter's concern. As noted in the FY
2024 IPPS/LTCH PPS proposed rule (88 FR 27045 through 27048), the
proposed methodology that we are finalizing resulted in the largest
percent of hospitals gaining from the HEA bonus overall, where gains
are indicated by both greater bonus payments and smaller penalty
payments, compared to the existing methodology. We wish to clarify that
although the percent of hospitals gaining is higher under the proposed
methodology, the average bonus under the proposed methodology is lower
than the average under the existing methodology because the hospitals
that are not benefitting from the bonus are larger and are fewer in
number, and thus have a greater impact on the average payments. The
change in average bonuses and penalties is based on the changes in how
many hospitals receive a bonus or penalty, the size of the bonus or
penalty, and the size of the hospital. The impact analysis showed that
the proposed methodology spreads
[[Page 59106]]
the bonuses among more hospitals, with the largest hospitals having the
lowest proportion of gaining compared to medium- and smaller-sized
hospitals. The result is thus a lower average bonus under the proposed
methodology despite that the percent of hospitals gaining is higher.
(6) Modification of the Total Performance Score (TPS) Maximum
The Hospital Inpatient VBP Program final rule finalized a
methodology for assessing the total performance of each hospital based
on its performance under the Hospital VBP Program with respect to a
fiscal year (76 FR 26493 through 26494). Additionally, section
1886(o)(5)(A) of the Act provides the Secretary with the discretion to
adopt a performance scoring methodology. Currently, the TPS is defined
in our regulations as a numeric score ranging from 0 to 100. In the FY
2024 IPPS/LTCH PPS proposed rule, we proposed to modify the Total
Performance Score (TPS) maximum to be 110, resulting in numeric score
range of 0 to 110, beginning with the FY 2026 program year (FR 88
27049). A TPS maximum of 110 will allow for hospitals that have
achieved top performance across all four domains to still be eligible
to earn HEA bonus points. For example, if a hospital obtains a summed
total of 100 weighted domain score points, that hospital could still
receive up to 10 HEA bonus points, resulting in a maximum TPS of 110.
We believe that modifying the TPS range will afford even top-performing
hospitals the opportunity to receive up to an additional 10 HEA bonus
points.
We also proposed to codify at 42 CFR 412.160, 412.162(b)(3), and
412.165(b)(6) of our regulations the new TPS numeric score range of 0
to 110. We believe that this policy will make it easier for interested
parties to find these updated policies.
We invited public comment on this proposal.
Comment: Several commenters expressed their support for the
proposal to modify the TPS numeric score range to be 0 to 110 because
it allows for high performing hospitals to be eligible to earn HEA
bonus points.
Response: We thank the commenters for their support and agree that
the modification of the TPS range will allow high performing hospitals
to be eligible to earn the HEA bonus points.
After consideration of the public comments we received, we are
finalizing our policy as proposed with minor technical modifications at
42 CFR 412.160, 412.162(b)(3), and 412.165(b)(6).
(7) Request for Information on Potential Additional Changes to the
Hospital VBP Program That Would Address Health Equity
As noted in the CMS National Quality Strategy, we are committed to
addressing the disparities that underlie our health system, both within
and across settings, to ensure equitable access and care for all.\307\
We believe that the proposed scoring methodology embodies this
commitment, but recognize it is only a first step.
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\307\ Centers for Medicare & Medicaid Services. (2022) CMS
National Quality Strategy. Available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Value-Based-Programs/CMS-Quality-Strategy.
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Therefore, we welcomed public comment on the following:
Should we consider using any of the previously detailed
variables, ADI of greater than or equal to 85 and Medicare Part D LIS,
in combination with or instead of DES? For example, should we use the
higher of a few selected factors based on a hospital's inpatient
population in a given program year, including: (1) the proportion of
the hospital's patient population residing in a census block group with
an ADI national percentile rank of at least 85 (or another threshold);
(2) the proportion of the hospital's patients that are dually eligible
for Medicare and Medicaid; or (3) the proportion of the hospital's
patients receiving LIS? Should we consider patients with partial-dual
eligibility in addition to full-dual eligibility? Are there additional
variables we should consider using to identify populations that have
been disadvantaged, marginalized, and/or underserved by the healthcare
system?
Should we consider other thresholds for scoring, such as
using a quintile-based scoring approach whereby hospitals are awarded
measure performance scaler points based on 5 levels of performance
rather than 3? This would include awarding 0, 1, 2, 3, and 4, measure
performance scaler points across the 5 levels from bottom to top
performance, respectively, to allow for more nuance in the distribution
of performance across each of the current four domains.
In the future, we are considering further refining this
scoring methodology change to only look at a hospital's quality
performance on patients in the focus population (for example, patients
with DES). We believe that this future potential refinement would more
specifically address disparities in performance, and in turn, close
equity gaps which would ultimately result in greater overall
improvement for the entire hospital patient population. At this time,
we collect patient-level data on the claims measures in the clinical
domain and the MSPB measure, but not on all other measures in the
Hospital VBP Program. Because we do not collect patient level
demographic level data for all measures, it is difficult to use
neighborhood-level indicators, such as the ADI, the measure level at
this time. Therefore, we are instead proposing to use performance on
existing measures for all eligible patients and thus welcome
stakeholder feedback on for the Hospital VBP Program to assess patient-
level data in the future.
Should we use a linear scoring function or actual scoring
for calculating the underserved multiplier instead of the proposed
logistic exchange function as depicted in Figure V.K.-01 instead?
Are there other approaches that the Hospital VBP Program
could propose to adopt to effectively address healthcare disparities
and advance health equity, such as the alternative methodology
simulated in the analysis displayed in Tables V.K.-16 and V.K.-17? For
example, should we only award measure performance scaler points to the
top third of performance whereby a hospital in the middle and bottom
thirds of performance would receive 0 performance scaler points, as
simulated in the analysis? Alternatively, should we only provide
measure performance scaler points to the Clinical, Safety, and Patient
and Community Engagement Domains, excluding the Cost and Effectiveness
Domain from performance scaler points?
We received many comments on this request for information, which
are summarized in this section of this document:
Comment: Many commenters provided feedback on alternative
underserved multiplier variables. Several commenters recommended
incorporating the ADI or LIS alongside the proposed use of patients
with DES because there are multiple ways to recognize the structural
challenges that patients and hospitals face and a combination of these
will be the most sensitive to capturing at-risk beneficiaries. A
commenter noted that the concerns of administrative complexity relating
to using more than one variable are outweighed by the potential to draw
on multiple sources of information. Another commenter also recommended
incorporating partial-dual eligible patients. Another commenter
recommended that CMS ensure that underserved variables are not double
counted and redundancies within social risk indices as the ADI are
[[Page 59107]]
accounted for. A commenter recommended considering the impact of
states' decisions for Medicaid expansion versus non-expansion because
states without expansion will have higher rates of uninsured
individuals, anticipated delays in access to care, and higher
healthcare costs over time.
A few commenters expressed concerns around the underserved
multiplier alternatives including concerns that ignoring race or
ethnicity underestimates adverse local factors and that only focusing
on DES is problematic because of the differential expansion of
Medicaid. A few commenters expressed concern around the ADI including
that it is unclear how CMS would ensure a patient residence on file is
accurate if incorporating the ADI into the calculation and that the ADI
is heavily weighted towards income and home values with little
contribution from other variables which masks inequities and
underestimates vulnerabilities of neighborhoods. A commenter expressed
concern that CMS is not considering other potential indices that would
be better indicators of social needs.
Several commenters recommended underserved multiplier variables
beyond ADI, DES, and LIS, including such alternatives as, a
socioeconomic index, a formal designation for essential hospitals that
could be applied to the HEA adjustment to more accurately identify
hospitals serving marginalized populations, a stratification by
patients' HRSN, an index using regression that is tuned for predictive
strength, the social screening measure results from IQR, and a more
tailored individual level health related social needs predictor that
assesses the availability of ICD-10 Z-codes and may document individual
social need factors. A commenter recommended that any social risk
indices be weighted appropriately given that social risk has varying
degrees of association with adverse events, and a commenter recommended
aligning SDOH data items across care settings when future health equity
quality measures are developed.
A few commenters also provided feedback on alternative thresholds
for scoring including a few commenters recommending using quartiles or
quintiles for performance scaler points to allow for greater diversity
in the bonus points awarded to facilities. A commenter recommended
considering whether institutions make improvement relative to where
they started rather than which quintile or quartile, they are in by
giving greater weight for improvement starting from a lower quintile
than a similar improvement starting from a higher quintile.
Many commenters offered recommendations for alternative scoring
methodologies. A commenter recommended excluding the Cost and
Effectiveness Domain from the measure performance scaler because the
data is not actionable. A few commenters made recommended
stratification including stratifying results and prioritizing
disparities in treatment rendered and stratifying results in a way that
reflects both ``within-provider'' and ``across-provider'' assessments
of the level of disparities in clinical processes and outcomes. Several
commenters made additional recommendations including measuring
performance of different measures within a domain as separate scores
rather than a composite score for the domain, incorporating measure
performance scaler points that incentivize hospitals to initiate
service connections when a patient screens positive for HRSN, assigning
greater weight to a local socioeconomic index and amount of
uncompensated care, capturing indicators among beneficiaries for which
there are currently limited person-level data available, and
considering the portion of behavioral health patients treated because
Medicare patients suffering from behavioral health issues represent
some of the most vulnerable beneficiaries.
Several commenters made recommendations around improving data
collection including creating a robust data collection system that
identifies the social risk factors faced by patient populations,
collecting demographic data, investing in strategies to improve more
robust self-reporting of race and ethnicity data at point of service,
working with the Office of the National Coordinator for Health
Information Technology (ONC) to establish data exchange policies and
infrastructure that allows access to electronic health record (EHR)
data because private sector EHRs are successfully collecting
demographic data with high volume and high levels of accuracy, and
leveraging race and ethnicity data collected by NHIS, MEPS, and the
2020 Census to address gaps in the current data pool.
Several commenters made other recommendations including adopting
health equity standards that could be used across medicine, aligning
with the Hospital IQR Program's health equity measure, working with
hospital stakeholders to better understand how hospitals are
identifying health inequities in their communities to better inform
agency's approach, prioritizing existing quality measures with
identified disparity in treatment or outcomes, providing more staff
education to increase awareness and understanding of social risk
factors including better documentation of Z-codes, and continuously
evaluating and adapting to reduce disparities and improve health
equity. Several commenters recommended other considerations such as
exploring if social risk factors should be added to the measures used
in HVBP, including public reporting of stratified measure alongside
overall measures in a meaningful and transparent way, considering
hospital characteristics for equity in hospital scoring, considering
various dimensions that influence inequities, and exploring new
incentives to encourage providers to work with non-traditional
healthcare workers to help address SDOH.
A few commenters made recommendations around the clarity of the
scoring calculations, recommending transparent and interpretable
definitions and algorithms with an opportunity for patients and
communities to understand how it is impacting their care.
Response: We appreciate the comments and suggestions we have
received. While we will not be responding to specific comments
submitted in response to this request for information, we believe that
this input is valuable in our efforts to continue to promote health
equity in the Hospital VBP Program. We may consider these suggestions
in future rulemaking.
c. Domain Weighting for Hospitals That Receive a Score on All Domains
In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38265 through
38266), we finalized our proposal to retain the equal weight of 25
percent for each of the four domains in the Hospital VBP Program for
the FY 2020 program year and subsequent years for hospitals that
receive a score in all domains.
In the FY 2024 IPPS/LTCH PPS proposed rule, we did not propose any
changes to these domain weights (88 FR 27050).
d. Domain Weighting for Hospitals Receiving Scores on Fewer Than Four
Domains
In the FY 2015 IPPS/LTCH PPS final rule (79 FR 50084 through
50085), we adopted a policy that hospitals must receive domain scores
on at least three of four quality domains to receive a TPS, for the FY
2017 program year and subsequent years. Hospitals with sufficient data
on only three domains will have their TPSs proportionately
[[Page 59108]]
reweighted (79 FR 50084 through 50085).
In the FY 2024 IPPS/LTCH PPS proposed rule, we did not propose any
changes to these domain weights (88 FR 27050).
e. Minimum Numbers of Measures for Hospital VBP Program Domains
We refer readers to the FY 2018 IPPS/LTCH PPS final rule (82 FR
38266) for our previously finalized requirements for the minimum
numbers of measures for hospitals to receive domain scores.
In the FY 2024 IPPS/LTCH PPS proposed rule, we did not propose any
changes to these policies (88 FR 27050).
f. Minimum Numbers of Cases for Hospital VBP Program Measures
(1) Background
Section 1886(o)(1)(C)(ii)(IV) of the Act requires the Secretary to
exclude for the fiscal year hospitals that do not report a minimum
number (as determined by the Secretary) of cases for the measures that
apply to the hospital for the performance period for the fiscal year.
For additional discussion of the previously finalized minimum numbers
of cases for measures under the Hospital VBP Program, we refer readers
to the Hospital Inpatient VBP Program final rule (76 FR 26527 through
26531); the CY 2012 OPPS/ASC final rule (76 FR 74532 through 74534);
the FY 2013 IPPS/LTCH PPS final rule (77 FR 53608 through 53610); the
FY 2015 IPPS/LTCH PPS final rule (79 FR 50085 through 50086); the FY
2016 IPPS/LTCH PPS final rule (80 FR 49570); and the FY 2018 IPPS/LTCH
PPS final rule (82 FR 38266 through 38267).
(2) Summary of Previously Adopted and Newly Established Minimum Numbers
of Cases
The previously adopted minimum numbers of cases for the Hospital
VBP Program measures are set forth in Table V.K.-18. Table V.K.-18 also
sets forth the proposed minimum number of cases for the proposed Severe
Sepsis and Septic Shock: Management Bundle measure beginning with the
FY 2026 program year. For the proposed updates to MSPB Hospital measure
and the proposed THA/TKA Complications measure, we proposed to maintain
the same minimum number of cases as the current measures.
We proposed to codify at 42 CFR 412.165(a)(1)(i) these minimum
numbers of cases. We believe that this proposal will make it easier for
interested parties to find these policies.
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We invited comment on these proposals.
We received no comments on this proposal and are finalizing this
provision without modification.
7. Extraordinary Circumstance Exception (ECE) Policy for the Hospital
VBP Program
We refer readers to the FY 2022 IPPS/LTCH PPS final rule (86 FR
45298 through 45299) and 42 CFR 412.165(c) for additional details
related to the Hospital VBP Program ECE policy.
In the FY 2024 IPPS/LTCH PPS proposed rule, we did not propose any
changes to the Hospital VBP Program ECE policy (88 FR 27051).
L. Hospital-Acquired Condition (HAC) Reduction Program
1. Regulatory Background
We refer readers to the FY 2014 IPPS/LTCH PPS final rule (78 FR
50707 through 50708) for a general overview of the HAC Reduction
Program and to the same final rule (78 FR 50708 through 50709) for a
detailed discussion of the statutory basis for the Program. For
additional descriptions of our previously finalized policies for the
HAC Reduction Program, we also refer readers to the following final
rules:
The FY 2014 IPPS/LTCH PPS final rule (78 FR 50707 through
50729).
The FY 2015 IPPS/LTCH PPS final rule (79 FR 50087 through
50104).
The FY 2016 IPPS/LTCH PPS final rule (80 FR 49570 through
49581).
The FY 2017 IPPS/LTCH PPS final rule (81 FR 57011 through
57026).
The FY 2018 IPPS/LTCH PPS final rule (82 FR 38269 through
38278).
The FY 2019 IPPS/LTCH PPS final rule (83 FR 41472 through
41492).
The FY 2020 IPPS/LTCH PPS final rule (84 FR 42402 through
42411).
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The FY 2021 IPPS/LTCH PPS final rule (85 FR 58860 through
58865).
The FY 2022 IPPS/LTCH PPS final rule (86 FR 45300 through
45310).