[Federal Register Volume 89, Number 86 (Thursday, May 2, 2024)]
[Proposed Rules]
[Pages 35934-36649]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-07567]
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Vol. 89
Thursday,
No. 86
May 2, 2024
Part II
Department of Health and Human Services
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Centers for Medicare & Medicaid Services
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42 CFR Parts 412, 413, 431, et al.
Medicare and Medicaid Programs and the Children's Health Insurance
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 2025 Rates; Quality Programs
Requirements; and Other Policy Changes; Proposed Rule
Federal Register / Vol. 89, No. 86 / Thursday, May 2, 2024 / Proposed
Rules
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Parts 412, 413, 431, 482, 485, 495, and 512
[CMS-1808-P]
RIN 0938-AV34
Medicare and Medicaid Programs and the Children's Health
Insurance 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 2025 Rates; Quality
Programs Requirements; and Other Policy Changes
AGENCY: Centers for Medicare & Medicaid Services (CMS), Department of
Health and Human Services (HHS).
ACTION: Proposed rule.
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SUMMARY: This proposed rule would revise the Medicare hospital
inpatient prospective payment systems (IPPS) for operating and capital-
related costs of acute care hospitals; make changes relating to
Medicare graduate medical education (GME) for teaching hospitals;
update the payment policies and the annual payment rates for the
Medicare prospective payment system (PPS) for inpatient hospital
services provided by long-term care hospitals (LTCHs); and make other
policy-related changes.
DATES: To be assured consideration, comments must be received at one of
the addresses provided in the ADDRESSES section, no later than 5 p.m.
EDT on June 10, 2024.
ADDRESSES: In commenting, please refer to file code CMS-1808-P. Because
of staff and resource limitations, we cannot accept comments by
facsimile (FAX) transmission. Comments, including mass comment
submissions, must be submitted in one of the following three ways
(please choose only one of the ways listed):
1. Electronically. You may (and we encourage you to) submit
electronic comments on this regulation to https://www.regulations.gov.
Follow the instructions under the ``submit a comment'' tab.
2. By regular mail. You may mail written comments to the following
address ONLY: Centers for Medicare & Medicaid Services, Department of
Health and Human Services, Attention: CMS-1808-P, P.O. Box 8013,
Baltimore, MD 21244-8013.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By express or overnight mail. You may send written comments via
express or overnight mail to the following address ONLY: Centers for
Medicare & Medicaid Services, Department of Health and Human Services,
Attention: CMS-1808-P, Mail Stop C4-26-05, 7500 Security Boulevard,
Baltimore, MD 21244-1850.
For information on viewing public comments, we refer readers to the
beginning of the SUPPLEMENTARY INFORMATION section.
FOR FURTHER INFORMATION CONTACT: Donald Thompson, 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.
Lily Yuan, [email protected], New Technology Add-On Payments
Issues.
Mady Hue, [email protected], and Andrea Hazeley,
[email protected], MS-DRG Classifications Issues.
Siddhartha Mazumdar, siddhartha.mazumdar @cms.hhs.gov, 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.
Lorraine Wickiser, [email protected], Long-Term Care
Hospital Quality Reporting Program--Administration Issues.
Jessica Warren, [email protected], and Elizabeth Holland,
[email protected], Medicare Promoting Interoperability
Program.
Bridget Dickensheets, [email protected] and Mollie
Knight, [email protected], LTCH Market Basket Rebasing.
Benjamin Cohen, [email protected], Provider Reimbursement
Review Board.
[email protected] and [email protected],
Payment Error Rate Measurement Program.
[email protected], Transforming Episode Accountability Model
(TEAM).
The Clinical Standards Group, [email protected],
Obstetrical Services Request for Information (RFI).
SUPPLEMENTARY INFORMATION: Inspection of Public Comments: All comments
received before the close of the comment period are available for
viewing by the public, including any personally identifiable or
confidential business information that is included in a comment. We
post all comments received before the close of the comment period on
the following website as soon as possible after they have been
received: http://www.regulations.gov. Follow the search instructions on
that website to view
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public comments. CMS will not post on Regulations.gov public comments
that make threats to individuals or institutions or suggest that the
commenter will take actions to harm an individual. CMS continues to
encourage individuals not to submit duplicative comments. We will post
acceptable comments from multiple unique commenters even if the content
is identical or nearly identical to other comments.
Plain Language Summary: In accordance with 5 U.S.C. 553(b)(4), a
plain language summary of this rule may be found at https://www.regulations.gov/.
Tables Available on the CMS Website
The IPPS tables for this fiscal year (FY) 2025 proposed 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 2025 IPPS Proposed rule Home
Page'' or ``Acute Inpatient--Files for Download.'' The LTCH PPS tables
for this FY 2025 proposed 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-1808-P. For further details on the contents of the tables
referenced in this proposed rule, we refer readers to section VI. of
the Addendum to this FY 2025 IPPS/LTCH PPS proposed rule.
Readers who experience any problems accessing any of the tables
that are posted on the CMS websites, as previously identified, should
contact Michael Treitel, [email protected].
I. Executive Summary and Background
A. Executive Summary
1. Purpose and Legal Authority
This FY 2025 IPPS/LTCH PPS proposed rule would make 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 would make payment and policy changes for
inpatient hospital services provided by long-term care hospitals
(LTCHs) under the long-term care hospital prospective payment system
(LTCH PPS). This proposed rule also would make policy changes to
programs associated with Medicare IPPS hospitals, IPPS-excluded
hospitals, and LTCHs. In this FY 2025 proposed rule, we are proposing
to continue policies to address wage index disparities impacting low
wage index hospitals. We are also proposing changes relating to
Medicare graduate medical education (GME) for teaching hospitals and
new technology add-on payments.
We are proposing a separate IPPS payment for establishing and
maintaining access to essential medicines.
In the Hospital Value-Based Purchasing (VBP) Program, we are
proposing to modify scoring of the Person and Community Engagement
Domain for the FY 2027 through FY 2029 program years to only score six
unchanged dimensions of the Hospital Consumer Assessment of Healthcare
Providers and Systems (HCAHPS) Survey, and we are proposing to adopt
the updated HCAHPS Survey in the Hospital VBP Program beginning with
the FY 2030 program year after the updated survey would have been
publicly reported under the Hospital Inpatient Quality Reporting (IQR)
Program for 1 year. We are also proposing to modify scoring on the
HCAHPS Survey beginning with the FY 2030 program year to incorporate
the updated HCAHPS Survey measure into nine survey dimensions. Lastly,
we are providing previously and newly established performance standards
for the FY 2027 through FY 2030 program years for the Hospital VBP
Program.
In the Hospital IQR Program, we are proposing to add seven new
measures, modify two existing measures including the HCAHPS Survey
measure, and remove five measures. We are also proposing changes to the
reporting and submission requirements for electronic clinical quality
measures (eCQMs) and the validation process for the Hospital IQR
Program data.
In the PPS-Exempt Cancer Hospital Quality Reporting Program
(PCHQR), we are proposing to adopt the Patient Safety Structural
measure beginning with the CY 2025 reporting period/FY 2027 program
year. We are also proposing to modify the HCAHPS Survey measure and to
move up the start date for publicly displaying hospital performance on
the Hospital Commitment to Health Equity measure.
In the LTCH QRP, we are proposing to add four items to the LTCH
Continuity Assessment Record and Evaluation (CARE) Data Set (LCDS) and
modify one item on the LCDS beginning with the FY 2028 LTCH QRP.
Additionally, we are proposing to extend the admission assessment
window for the LCDS beginning with the FY 2028 LTCH QRP. Finally, we
are seeking information on future measure concepts for the LTCH QRP and
a future LTCH Star Rating system.
In the Medicare Promoting Interoperability Program, we are
proposing to separate the Antimicrobial Use and Resistance (AUR)
Surveillance measure into two measures, an Antimicrobial Use (AU)
Surveillance measure and an Antimicrobial Resistance (AR) Surveillance
measure, beginning with the electronic health record (EHR) reporting
period in CY 2025. We are proposing to increase the performance-based
scoring threshold from 60 to 80 points beginning with the EHR reporting
period in CY 2025. We are proposing to adopt two new eCQMs and modify
one eCQM, in alignment with the Hospital IQR Program. Finally, we are
proposing changes to the reporting and submission requirements for
eCQMs, in alignment with the Hospital IQR Program.
The Transforming Episode Accountability Model (TEAM) proposes the
creation and testing of a new mandatory alternative payment model. The
intent of TEAM is to improve beneficiary care through financial
accountability for episodes categories that begin with one of the
following procedures: coronary artery bypass graft (CABG), lower
extremity joint replacement (LEJR), major bowel procedure, surgical
hip/femur fracture treatment (SHFFT), and spinal fusion. TEAM would
test whether financial accountability for these episode categories
reduces Medicare expenditures while preserving or enhancing the quality
of care for Medicare beneficiaries. We anticipate that TEAM would
benefit Medicare beneficiaries through improving the coordination of
items and services paid for through Medicare fee-for-service (FFS)
payments, encouraging provider investment in health care infrastructure
and redesigned care processes, and incentivizing higher value care
across the inpatient and post-acute care settings for the episode. We
propose to test TEAM for a 5-year model performance period, beginning
January 1, 2026, and ending December 31, 2030. Under the Quality
Payment Program (QPP), we anticipate that TEAM would be an Advanced
Alternative Payment Model (APM)for Track 2 and Track 3 and a Merit-
based Incentive Payment System (MIPS) APM for all participation tracks.
Under various statutory authorities, we either discuss continued
program implementation or propose to make changes to the Medicare IPPS,
the LTCH PPS, other related payment methodologies and programs for FY
2025 and subsequent fiscal years, and
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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 period 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 adjustment 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 based on their performance on measures 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 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 if subsection (r) did not apply (``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 2 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 on
quality measures 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, which provides for the
establishment of standardized data reporting for certain
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post-acute care providers, including LTCHs.
Section 1115A of the Act authorizes the testing of
innovative payment and service delivery models that preserve or enhance
the quality of care furnished to Medicare, Medicaid, and Children's
Health Insurance Program (CHIP) beneficiaries while reducing program
expenditures.
2. Summary of the Major Provisions
The following is a summary of the major provisions in this proposed
rule. In general, these major provisions are being proposed as part of
the annual update to the payment policies and payment rates, consistent
with the applicable statutory provisions. A general summary of the
changes in this proposed rule is presented in section I.D. of the
preamble of this proposed rule.
a. Proposed 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 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.5. of the preamble of this proposed rule,
while we are using the FY 2021 cost report data for the FY 2025 wage
index, we are unable to comprehensively evaluate the effect, if any,
the low wage index hospital policy had on hospitals' wage increases
during the years the COVID-19 public health emergency (PHE) was in
effect. We believe it is necessary to wait until we have useable data
from fiscal years after the PHE before reaching any conclusions about
the efficacy of the policy. Therefore, we are proposing that the low
wage index hospital policy and the related budget neutrality adjustment
would be effective for at least three more years, beginning in FY 2025.
b. Proposed Separate IPPS Payment for Establishing and Maintaining
Access to Essential Medicines
As discussed in section V.J. of the preamble of this proposed rule,
the Biden-Harris administration has made it a priority to strengthen
the resilience of medical supply chains and support reliable access to
products for public health, including through prevention and mitigation
of medical product shortages. As a first step in this initiative, we
are proposing to establish a separate payment for small, independent
hospitals for the IPPS shares of the additional resource costs to
voluntarily establish and maintain a 6-month buffer stock of one or
more of 86 essential medicines, either directly or through contractual
arrangements with a pharmaceutical manufacturer, distributor, or
intermediary. For the purposes of this policy, we define small,
independent hospitals as hospitals with 100 beds or fewer that are not
part of a chain organization. We are proposing to make this separate
payment in a non-budget neutral manner under section 1886(d)(5)(I) of
the Act. We are proposing that the payment adjustments would commence
for cost reporting periods beginning on or after October 1, 2024.
c. DSH Payment Adjustment, Additional Payment for Uncompensated Care,
and Supplemental Payment
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 would have
been paid as Medicare DSH payments under section 1886(d)(5)(F) of the
Act if subsection (r) did not apply, is paid as additional payments
after the amount is reduced for changes in the percentage of
individuals that are uninsured. Each Medicare DSH that has
uncompensated care 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. This additional payment is known as the
uncompensated care payment.
In this proposed rule, we are proposing to update our estimates of
the three factors used to determine uncompensated care payments for FY
2025. We are also proposing to continue to use uninsured estimates
produced by CMS' Office of the Actuary (OACT) as part of the
development of the National Health Expenditure Accounts (NHEA) in
conjunction with more recently available data in the calculation of
Factor 2. Consistent with the regulation at Sec.
412.106(g)(1)(iii)(C)(11), which was adopted in the FY 2023 IPPS/LTCH
PPS final rule, for FY 2025, we will use the 3 most recent years of
audited data on uncompensated care costs from Worksheet S-10 of the FY
2019, FY 2020, and FY 2021 cost reports to calculate Factor 3 in the
uncompensated care payment methodology for all eligible hospitals.
Beginning with FY 2023 (87 FR 49047 through 49051), we also
established a supplemental payment for IHS and Tribal hospitals and
hospitals located in Puerto Rico. In section IV.D of the preamble of
this proposed rule, we summarize the ongoing methodology for
supplemental payments.
In this proposed rule, we are also proposing, for FY 2025 and
subsequent fiscal years, to calculate the per-discharge amount for
interim uncompensated care payments using the average of the most
recent 3 years of discharge data. Accordingly, for FY 2025, we propose
to use an average of discharge data from FY 2021, FY 2022, and FY 2023.
We believe that our proposed approach will likely result in a better
estimate of the number of discharges during FY 2025 and subsequent
years for purposes of the interim uncompensated care payment
calculation. We propose to codify this proposed approach in new Sec.
412.106(i)(1).
d. Proposed Adoption of the Patient Safety Structural Measure in the
Hospital IQR Program and PCHQR Program
The proposed Patient Safety Structural measure is an attestation-
based measure that assesses whether hospitals have a structure and
culture that prioritizes safety as demonstrated by the following five
domains: (1) leadership commitment to eliminating preventable harm; (2)
strategic planning and organizational policy; (3) culture of safety and
learning health system; (4) accountability and transparency; and (5)
patient and family engagement. Hospitals would attest to whether they
engage in specific evidence-based best practices within each of these
domains to achieve a score from zero to five out of five points. We are
proposing that hospitals would be required to report this measure
beginning with the CY 2025 reporting period/FY 2027 program year for
the PCHQR Program and for the CY 2025 reporting period/FY 2027 payment
determination for the Hospital IQR Program.
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e. Proposed Updated Hospital Consumer Assessment of Healthcare
Providers and Systems (HCAHPS) Survey Measure in the Hospital IQR
Program, Hospital VBP Program, and PCHQR Program
The proposal to use the updated version of the HCAHPS Survey
measure aligns with the National Quality Strategy goal to bring patient
voices to the forefront by incorporating feedback from patients and
caregivers. The proposed updated HCAHPS Survey measure would be adopted
for the Hospital IQR and PCHQR Programs beginning with the CY 2025
reporting period/FY 2027 payment determination and the CY 2025
reporting period/FY 2027 program year, respectively. For the Hospital
VBP Program, we are proposing to modify scoring on the Person and
Community Engagement Domain for the FY 2027 through FY 2029 program
years to only score six unchanged dimensions of the HCAHPS Survey. We
are proposing to adopt the updated HCAHPS Survey measure beginning with
the FY 2030 program year, which would result in nine HCAHPS Survey
dimensions for the Person and Community Engagement Domain. We are also
proposing to modify scoring of the Person and Community Engagement
Domain beginning with the FY 2030 program year to account for the
proposed updates to the HCAHPS Survey.
f. Hospital Value-Based Purchasing (VBP) Program
Section 1886(o) of the Act requires the Secretary to establish a
Hospital VBP Program under which value-based incentive payments are
made in a fiscal year to hospitals based on their performance on
measures established for a performance period for such fiscal year. In
this proposed rule, we are proposing to modify scoring on the Person
and Community Engagement Domain for the FY 2027 through FY 2029 program
years while the updated HCAHPS Survey measure would be publicly
reported under the Hospital IQR Program. In addition, we are proposing
to adopt the updated HCAHPS Survey measure beginning with the FY 2030
program year and modify scoring beginning with the FY 2030 program year
to account for the updated HCAHPS Survey.
g. 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 2025 IPPS/LTCH PPS proposed rule, we are
proposing several changes to the Hospital IQR Program. We are proposing
the adoption of seven new measures: (1) Patient Safety Structural
measure beginning with the CY 2025 reporting period/FY 2027 payment
determination; (2) Age Friendly Hospital measure beginning with the CY
2025 reporting period/FY 2027 payment determination; (3) Catheter-
Associated Urinary Tract Infection (CAUTI) Standardized Infection Ratio
Stratified for Oncology Locations beginning with the CY 2026 reporting
period/FY 2028 payment determination; (4) Central Line-Associated
Bloodstream Infection (CLABSI) Standardized Infection Ratio Stratified
for Oncology Locations beginning with the CY 2026 reporting period/FY
2028 reporting period; (5) Hospital Harm--Falls with Injury eCQM
beginning with the CY 2026 reporting period/FY 2028 payment
determination; (6) Hospital Harm--Postoperative Respiratory Failure
eCQM beginning with the CY 2026 reporting period/FY 2028 payment
determination; and (7) Thirty-day Risk-Standardized Death Rate among
Surgical Inpatients with Complications (Failure-to-Rescue) measure
beginning with the July 1, 2023-June 30, 2025 reporting period/FY 2027
payment determination. We are also proposing refinements to two
measures currently in the Hospital IQR Program measure set: (1) Global
Malnutrition Composite Score (GMCS) eCQM, beginning with the CY 2026
reporting period/FY 2028 payment determination; and (2) the HCAHPS
Survey beginning with the CY 2025 reporting period/FY 2027 payment
determination. We are also proposing the removal of five measures: (1)
Death Among Surgical Inpatients with Serious Treatable Complications
(CMS PSI 04) measure beginning with the July 1, 2023-June 30, 2025
reporting period/FY 27 payment determination ; (2) Hospital-level,
Risk-Standardized Payment Associated with a 30-Day Episode-of-Care for
Acute Myocardial Infarction (AMI) measure beginning with the July 1,
2021-June 30, 2024 reporting period/FY 2026 payment determination; (3)
Hospital-level, Risk-Standardized Payment Associated with a 30-Day
Episode-of-Care for Heart Failure (HF) measure beginning with the July
1, 2021-June 30, 2024 reporting period/FY 2026 payment determination;
(4) Hospital-level, Risk-Standardized Payment Associated with a 30-Day
Episode-of-Care for Pneumonia (PN) measure beginning with July 1, 2021-
June 30, 2024 reporting period/FY 2026 payment determination and (5)
Hospital-level, Risk-Standardized Payment Associated with a 30-Day
Episode-of-Care for Elective Primary Total Hip Arthroplasty (THA) and/
or Total Knee Arthroplasty (TKA) measure beginning with the April 1,
2021-March 31, 2024 reporting period/FY 2026 payment determination.
We are proposing to modify eCQM data reporting and submission
requirements by proposing a progressive increase in the number of
mandatory eCQMs a hospital would be required to report on beginning
with the CY 2026 reporting period/FY 2028 payment determination. We are
also proposing two changes to current policies related to validation of
hospital data: (1) to implement eCQM validation scoring based on the
accuracy of eCQM data beginning with the validation of CY 2025 eCQM
data affecting the FY 2028 payment determination; and (2) modification
of the data validation reconsideration request requirements to make
medical records submission optional for reconsideration requests
beginning with CY 2023 discharges/FY 2026 payment determination.
h. PPS-Exempt Cancer Hospital Quality Reporting (PCHQR) 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. In the FY 2025 IPPS/LTCH PPS proposed
rule, we are proposing to adopt the Patient Safety Structural measure
beginning with the CY 2025 reporting period/FY 2027 program year. We
are also proposing to modify the HCAHPS Survey measure beginning with
the CY 2025 reporting period/FY 2027 program year. We are also
proposing to move up the start date for publicly displaying hospital
performance on the Hospital Commitment to Health Equity measure from
July 2026 to January 2026 or as soon as feasible thereafter.
i. Long-Term Care Hospital Quality Reporting Program (LTCH QRP)
We are proposing the following changes to the LTCH QRP: (1) add
four items to the LCDS beginning with the FY 2028 LTCH QRP; (2) modify
one item on the LCDS beginning with the FY 2028 LTCH QRP; and (3)
extend the admission assessment window for the LCDS beginning with the
FY 2028 LTCH QRP. We are also seeking information on future measure
concepts for the
[[Page 35939]]
LTCH QRP and a future LTCH Star Rating system.
j. Medicare Promoting Interoperability Program
In section X.F. of the preamble of this proposed rule, we are
proposing several changes to the Medicare Promoting Interoperability
Program. Specifically, we are proposing: (1) to separate the
Antimicrobial Use and Resistance (AUR) Surveillance measure into two
measures, an Antimicrobial Use (AU) Surveillance measure and an
Antimicrobial Resistance (AR) Surveillance measure, beginning with the
EHR reporting period in CY 2025; to add a new exclusion for eligible
hospitals or critical access hospitals (CAHs) that do not have a data
source containing the minimal discrete data elements that are required
for AU or AR Surveillance reporting; to modify the applicability of the
existing exclusions to either the AU or AR Surveillance measures,
respectively; and to treat the AU and AR Surveillance measures as new
measures with respect to active engagement beginning with the EHR
reporting period in CY 2025; (2) to increase the performance-based
scoring threshold for eligible hospitals and CAHs reporting under the
Medicare Promoting Interoperability Program from 60 points to 80 points
beginning with the EHR reporting period in CY 2025; (3) to adopt two
new eCQMs that hospitals can select as one of their three self-selected
eCQMs beginning with the CY 2026 reporting period: the Hospital Harm--
Falls with Injury eCQM and the Hospital Harm--Postoperative Respiratory
Failure eCQM; (4) beginning with the CY 2026 reporting period, to
modify one eCQM, the Global Malnutrition Composite Score eCQM; and (5)
to modify eCQM data reporting and submission requirements by proposing
a progressive increase in the number of mandatory eCQMs eligible
hospitals and CAHs would be required to report on beginning with the CY
2026 reporting period.
k. Proposed Distribution of Additional Residency Positions Under the
Provisions of Section 4122 of Subtitle C of the Consolidated
Appropriations Act, 2023 (CAA, 2023)
In this proposed rule, we are including a proposal to implement
section 4122 of the CAA, 2023. Section 4122(a) of the CAA, 2023,
amended section 1886(h) of the Act by adding a new section 1886(h)(10)
of the Act requiring the distribution of additional residency positions
(also referred to as slots) to hospitals. We refer readers to section
V.F.2. of the preamble of this proposed rule for a summary of the
provisions of section 4122 of the CAA, 2023 that we are proposing to
implement in this proposed rule.
l. Extension of the Medicare-Dependent, Small Rural Hospital (MDH)
Program and the Temporary Changes to the Low-Volume Hospital Payment
Adjustment
The Consolidated Appropriations Act, 2024 (CAA, 2024) (Pub. L. 118-
42), enacted on March 9, 2024, extended the MDH program and the
temporary changes to the low-volume hospital qualifying criteria and
payment adjustment under the IPPS for a portion of FY 2025.
Specifically, section 306 of the CAA, 2024 further extended the
modified definition of low-volume hospital and the methodology for
calculating the payment adjustment for low-volume hospitals under
section 1886(d)(12) of the Act through December 31, 2024. Section 307
of the CAA, 2024 extended the MDH program under section 1886(d)(5)(G)
of the Act through December 31, 2024. Prior to enactment of the CAA,
2024, the low-volume hospital qualifying criteria and payment
adjustment were set revert to the statutory requirements that were in
effect prior to FY 2011 at the end of FY 2024 and beginning October 1,
2024, the MDH program would have no longer been in effect.
We recognize the importance of these extensions with respect to the
goal of advancing health equity by addressing the health disparities
that underlie the health system is one of CMS' strategic pillars \1\
and a Biden-Harris Administration priority.\2\ These provisions are
projected to increase payments to IPPS hospitals by approximately $137
million in FY 2025.
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\1\ https://www.cms.gov/about-cms/what-we-do/cms-strategic-plan.
\2\ https://www.whitehouse.gov/priorities/.
m. Transforming Episode Accountability Model (TEAM)
In section X.A. of the preamble of this proposed rule, we propose
the Transforming Episode Accountability Model (TEAM). TEAM would be a
5-year mandatory model tested under the authority of section 1115A of
the Act, beginning on January 1, 2026, and ending on December 31, 2030.
The intent of TEAM is to improve beneficiary care through financial
accountability for episodes categories that begin with one of the
following procedures: coronary artery bypass (CABG), lower extremity
joint replacement (LEJR), major bowel procedure, surgical hip/femur
fracture treatment (SHFFT), and spinal fusion. TEAM would test whether
financial accountability for these episode categories reduces Medicare
expenditures while preserving or enhancing the quality of care for
Medicare beneficiaries.
Under Traditional Medicare, Medicare makes separate payments to
providers and suppliers for the items and services furnished to a
beneficiary over the course of an episode of care. Because providers
and suppliers are paid for each individual item or service delivered,
providers may not be incentivized to invest in quality improvement and
care coordination activities. As a result, care may be fragmented,
unnecessary, or duplicative. By holding hospitals accountable for all
items and services provided during an episode, providers would be
better incentivized to coordinate patient care, avoid duplicative or
unnecessary services, and improve the beneficiary care experience
during care transitions.
Under the TEAM proposals, all acute care hospitals, with limited
exceptions, located within the Core-Based Statistical Areas that CMS
selects for model implementation would be required to participate in
TEAM. As proposed, TEAM would have a 1-year glide path opportunity that
would allow TEAM participants to ease into full financial risk as well
as different participation tracks to accommodate different levels of
financial risk and reward. Episodes would include non-excluded Medicare
Parts A and B items and services and would begin with an anchor
hospitalization or anchor procedure and would end 30 days after
hospital discharge. We are proposing that the following episode
categories, when furnished by a TEAM participant, would initiate a TEAM
Episode: lower extremity joint replacement, surgical hip femur fracture
treatment, spinal fusion, coronary artery bypass graft, and major bowel
procedure.
TEAM participants would continue to bill Medicare FFS as usual but
would receive target prices for episodes prior to each performance
year. Target prices would be based on 3 years of baseline data,
prospectively trended forward to the relevant performance year, and
calculated at the level of MS-DRG/HCPCS episode type and region. Target
prices would also include a discount factor, normalization factor, and
a risk-adjustment. Performance in the model would be assessed by
comparing TEAM participants' actual Medicare FFS spending during a
performance year to their reconciliation target price as well as by
assessing performance on three quality measures. TEAM participants
would earn a payment from CMS, subject to a quality performance
[[Page 35940]]
adjustment, if their spending is below the reconciliation target price.
TEAM participants would owe CMS a repayment amount, subject to a
quality performance adjustment, if their spending was above the
reconciliation target price.
n. Maternity Care Request for Information (RFI)
In alignment with our commitment to addressing the maternal health
crisis, this RFI seeks to gather information on differences between
hospital resources required to provide inpatient pregnancy and
childbirth services to Medicare patients as compared to non-Medicare
patients. To the extent that the resources required differ between
patient populations, we also wish to gather information on the extent
to which non-Medicare payers, or other commercial insurers may be using
the IPPS as a basis for determining their payment rates for inpatient
pregnancy and childbirth services and the effect, if any, that the use
of the IPPS as a basis for determining payment by those payers may have
on maternal health outcomes.
o. Obstetrical Services RFI
As a result of ongoing concerns about the provision of maternity
care in Medicare and Medicaid certified hospitals, CAHS, and REHs, this
proposed rule includes a request for information regarding our intent
to propose baseline health and safety standards for obstetrical
services in future rulemaking. Public comments on the FY 2023 IPPS/LTCH
PPS proposed rule maternal health request for information recommended
that CMS explore options to establish an Obstetrical Services condition
of participation (CoP) for participating hospitals in collaboration
with relevant stakeholders. With this RFI, we hope to further explore
such options as we develop a proposal for a targeted Obstetrical
Services CoP. We are seeking public comment on multiple detailed
questions, ultimately seeking potential solutions that can be
implemented through the hospital CoPs to address well-documented
concerns regarding maternal morbidity, mortality, and access in the
United States. The goal is to ensure that any policy changes improve
maternal health care outcomes, addresses unjust disparities in care,
and do not exacerbate access to care issues.
p. Conditions of Participation Requirements for Hospitals and Critical
Access Hospitals To Report Acute Respiratory Illnesses
In section X.F. of the preamble of this proposed rule, we are
proposing to update the hospital and CAH infection prevention and
control and antibiotic stewardship programs conditions of participation
(CoPs) to extend a limited subset of the current COVID-19 and influenza
data reporting requirements. These proposed reporting requirements
ensure that hospitals and CAHs have appropriate insight related to
evolving infection control needs. Specifically, CMS is proposing to
replace the COVID-19 and Seasonal Influenza reporting standards for
hospitals and CAHs with a new standard addressing acute respiratory
illnesses to require that, beginning on October 1, 2024, hospitals and
CAHs would have to electronically report information about COVID-19,
influenza, and RSV. CMS is proposing that outside of a public health
emergency (PHE), hospitals and CAHs would have to report these data on
a weekly basis.
q. Proposed Changes to the Severity Level Designation for Z Codes
Describing Inadequate Housing and Housing Instability
As discussed in section II.C. of the preamble of this proposed
rule, we are proposing to change the severity level designation for the
social determinants of health (SDOH) diagnosis codes describing
inadequate housing and housing instability from non-complication or
comorbidity (NonCC) to complication or comorbidity (CC) for FY 2025.
Consistent with our annual updates to account for changes in resource
consumption, treatment patterns, and the clinical characteristics of
patients, CMS is recognizing inadequate housing and housing instability
as indicators 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
further 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 provisions described in section
I.A.2. of the preamble of this proposed rule.
BILLING CODE 4120-01-P
[[Page 35941]]
[GRAPHIC] [TIFF OMITTED] TP02MY24.000
[[Page 35942]]
[GRAPHIC] [TIFF OMITTED] TP02MY24.001
[[Page 35943]]
BILLING CODE 4120-01-C
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.
With the recent enactment of section 307 of the CAA, 2024, under
current law, the Medicare-dependent, small rural hospital (MDH) program
is effective through December 31, 2024. For discharges occurring on or
after October 1, 2007, but before January 1, 2025, an MDH receives the
higher of the Federal rate or the Federal rate plus 75 percent of the
amount by which the Federal rate is exceeded by the highest of its FY
1982, FY 1987, or FY 2002 hospital-specific rate. MDHs are a major
source of care for Medicare beneficiaries in their areas. Section
1886(d)(5)(G)(iv) of the Act defines an MDH as a hospital that is
located in a rural area (or, as amended by the Bipartisan Budget Act of
2018, a hospital located in a State with no rural area that meets
certain statutory criteria), has not more than 100 beds, is not an SCH,
and has a high percentage of Medicare discharges (not less than 60
percent of its inpatient days or discharges in its cost reporting year
beginning in FY 1987 or in two of its three most recently settled
Medicare cost reporting years). As section 307 of the CAA, 2024
extended the MDH program through the first quarter of FY 2025 only,
beginning on January 1, 2025, the MDH program will no longer be in
effect absent a change in law. Because the MDH program is not
authorized by statute beyond December 31, 2024, beginning January 1,
2025, all hospitals that previously qualified for MDH status under
section 1886(d)(5)(G) of the Act will no longer have MDH status and
will be paid based on the IPPS Federal rate.
Section 1886(g) of the Act requires the Secretary to pay for the
capital-related costs of inpatient hospital services in accordance with
a prospective payment system established by the Secretary. The basic
methodology for determining capital prospective payments is set forth
in our regulations at 42 CFR 412.308 and 412.312. Under the capital
IPPS, payments are adjusted by the same DRG for the case as they are
under the operating IPPS. Capital IPPS payments are also adjusted for
IME and DSH, similar to the adjustments made under the operating IPPS.
In addition, hospitals may receive outlier payments for those cases
that have unusually high costs.
The existing regulations governing payments to hospitals under the
IPPS are located in 42 CFR part 412, subparts A through M.
2. Hospitals and Hospital Units Excluded From the IPPS
Under section 1886(d)(1)(B) of the Act, as amended, certain
hospitals and hospital units are excluded from the IPPS. These
hospitals and units are: Inpatient rehabilitation facility (IRF)
hospitals and units; long-term care hospitals (LTCHs); psychiatric
hospitals and units; children's hospitals; cancer hospitals; extended
neoplastic disease care hospitals, and hospitals located outside the 50
States, the District of Columbia, and Puerto Rico (that is, hospitals
located in the U.S. Virgin
[[Page 35944]]
Islands, Guam, the Northern Mariana Islands, and American Samoa).
Religious nonmedical health care institutions (RNHCIs) are also
excluded from the IPPS. Various sections of the Balanced Budget Act of
1997 (BBA) (Pub. L. 105-33), the Medicare, Medicaid and SCHIP [State
Children's Health Insurance Program] Balanced Budget Refinement Act of
1999 (BBRA, Pub. L. 106-113), and the Medicare, Medicaid, and SCHIP
Benefits Improvement and Protection Act of 2000 (BIPA, Pub. L. 106-554)
provide for the implementation of PPSs for IRF hospitals and units,
LTCHs, and psychiatric hospitals and units (referred to as inpatient
psychiatric facilities (IPFs)). (We note that the annual updates to the
LTCH PPS are included along with the IPPS annual update in this
document. Updates to the IRF PPS and IPF PPS are issued as separate
documents.) Children's hospitals, cancer hospitals, hospitals located
outside the 50 States, the District of Columbia, and Puerto Rico (that
is, hospitals located in the U.S. Virgin Islands, Guam, the Northern
Mariana Islands, and American Samoa), and RNHCIs continue to be paid
solely under a reasonable cost-based system, subject to a rate-of-
increase ceiling on inpatient operating costs. Similarly, extended
neoplastic disease care hospitals are paid on a reasonable cost basis,
subject to a rate-of-increase ceiling on inpatient operating costs.
The existing regulations governing payments to excluded hospitals
and hospital units are located in 42 CFR parts 412 and 413.
3. Long-Term Care Hospital Prospective Payment System (LTCH PPS)
The Medicare prospective payment system (PPS) for LTCHs applies to
hospitals described in section 1886(d)(1)(B)(iv) of the Act, effective
for cost reporting periods beginning on or after October 1, 2002. The
LTCH PPS was established under the authority of sections 123 of the
BBRA and section 307(b) of the BIPA (as codified under section
1886(m)(1) of the Act). Section 1206(a) of the Pathway for SGR Reform
Act of 2013 (Pub. L. 113-67) established the site neutral payment rate
under the LTCH PPS, which made the LTCH PPS a dual rate payment system
beginning in FY 2016. Under this statute, effective for LTCH's cost
reporting periods beginning in FY 2016 cost reporting period, LTCHs are
generally paid for discharges at the site neutral payment rate unless
the discharge meets the patient criteria for payment at the LTCH PPS
standard Federal payment rate. The existing regulations governing
payment under the LTCH PPS are located in 42 CFR part 412, subpart O.
Beginning October 1, 2009, we issue the annual updates to the LTCH PPS
in the same documents that update the IPPS.
4. Critical Access Hospitals (CAHs)
Under sections 1814(l), 1820, and 1834(g) of the Act, payments made
to critical access hospitals (CAHs) (that is, rural hospitals or
facilities that meet certain statutory requirements) for inpatient and
outpatient services are generally based on 101 percent of reasonable
cost. Reasonable cost is determined under the provisions of section
1861(v) of the Act and existing regulations under 42 CFR part 413.
5. Payments for Graduate Medical Education (GME)
Under section 1886(a)(4) of the Act, costs of approved educational
activities are excluded from the operating costs of inpatient hospital
services. Hospitals with approved graduate medical education (GME)
programs are paid for the direct costs of GME in accordance with
section 1886(h) of the Act. The amount of payment for direct GME costs
for a cost reporting period is based on the hospital's number of
residents in that period and the hospital's costs per resident in a
base year. The existing regulations governing payments to the various
types of hospitals are located in 42 CFR part 413. 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 Would Be
Implemented in This Proposed Rule
1. The Consolidated Appropriations Act, 2023 (CAA 2023; Pub. L. 117-
328)
Section 4122 of the CAA, 2023, amended section 1886(h) of the Act
by adding a new section 1886(h)(10) of the Act requiring the
distribution of additional residency positions (also referred to as
slots) to hospitals. Section 1886(h)(10)(A) of the Act requires that
for FY 2026, the Secretary shall initiate an application round to
distribute 200 residency positions. At least 100 of the positions made
available under section 1886(h)(10)(A) of the Act shall be distributed
for psychiatry or psychiatry subspecialty residency training programs.
The Secretary is required, subject to certain provisions in the law, to
increase the otherwise applicable resident limit for each qualifying
hospital that submits a timely application by the number of positions
that may be approved by the Secretary for that hospital. The Secretary
is required to notify hospitals of the number of positions distributed
to them by January 31, 2026, and the increase is effective beginning
July 1, 2026.
In determining the qualifying hospitals for which an increase is
provided, section 1886(h)(10)(B)(i) of the Act requires the Secretary
to take into account the ``demonstrated likelihood'' of the hospital
filling the positions made available within the first 5 training years
beginning after the date the increase would be effective, as determined
by the Secretary.
Section 1886(h)(10)(B)(ii) of the Act requires a minimum
distribution for certain categories of hospitals. Specifically, the
Secretary is required to distribute at least 10 percent of the
aggregate number of total residency positions available to each of four
categories of hospitals. Stated briefly, and discussed in greater
detail later in this proposed rule, the categories are as follows: (1)
hospitals located in rural areas or that are treated as being located
in a rural area (pursuant to sections 1886(d)(2)(D) and 1886(d)(8)(E)
of the Act); (2) hospitals in which the reference resident level of the
hospital is greater than the otherwise applicable resident limit; (3)
hospitals in States with new medical schools or additional locations
and branches of existing medical schools; and (4) hospitals that serve
areas designated as Health Professional Shortage Areas (HPSAs). Section
1886(h)(10)(F)(iii) of the Act defines a qualifying hospital as a
hospital in one of these four categories.
Section 1886(h)(10)(B)(iii) of the Act further requires that each
qualifying hospital that submits a timely application receive at least
1 (or a fraction of 1) of the residency positions made available under
section 1886(h)(10) of the Act before any qualifying hospital receives
more than 1 residency position.
Section 1886(h)(10)(C) of the Act places certain limitations on the
distribution of the residency positions.
[[Page 35945]]
First, a hospital may not receive more than 10 additional full-time
equivalent (FTE) residency positions. Second, no increase in the
otherwise applicable resident limit of a hospital may be made unless
the hospital agrees to increase the total number of FTE residency
positions under the approved medical residency training program of the
hospital by the number of positions made available to that hospital.
Third, if a hospital that receives an increase to its otherwise
applicable resident limit under section 1886(h)(10) of the Act is
eligible for an increase to its otherwise applicable resident limit
under 42 CFR 413.79(e)(3) (or any successor regulation), that hospital
must ensure that residency positions received under section 1886(h)(10)
of the Act are used to expand an existing residency training program
and not for participation in a new residency training program.
2. The Consolidated Appropriations Act, 2024 (CAA, 2024; Pub. L. 118-
42)
Section 306 of the CAA, 2024 extended through the first 3 months of
FY 2025 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 2024. Specifically, under
section 1886(d)(12)(C)(i) of the Act, as amended, for FYs 2019 through
2024 and the portion of FY 2025 occurring before January 1, 2025, 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 December 31, 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 307 of the CAA, 2024 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 the first 3 months of FY 2025 (that is, through
December 31, 2024).
D. Summary of the Proposed Provisions
In this proposed rule, we set forth proposed payment and policy
changes to the Medicare IPPS for FY 2025 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 2025.
The following is a general summary of the changes that we are
proposing to make in this proposed rule.
1. Proposed Changes to MS-DRG Classifications and Recalibrations of
Relative Weights
In section II. of the preamble of this proposed rule, we include
the following:
Proposed changes to MS-DRG classifications based on our
yearly review for FY 2025.
Proposed recalibration of the MS-DRG relative weights.
A discussion of the proposed FY 2025 status of new
technologies approved for add-on payments for FY 2024, a presentation
of our evaluation and analysis of the FY 2025 applicants for add-on
payments for high-cost new medical services and technologies (including
public input, as directed by the Medicare Prescription Drug,
Improvement, and Modernization Act of 2003 (MMA) 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
2025 new technology applicants under the alternative pathways for
certain medical devices and certain antimicrobial products.
A proposal to change the April 1 cutoff to October 1 for
determining whether a technology would be within its 2- to 3-year
newness period when considering eligibility for new technology add-on
payments, beginning in FY 2026, effective for those technologies that
are approved for new technology add-on payments starting in FY 2025 or
a subsequent years (as discussed in II.E.7. of the preamble of this
proposed rule).
A proposal that, beginning with new technology add-on
payment applications for FY 2026, we will no longer consider a hold
status to be an inactive status for the purposes of eligibility for the
new technology add-on payment (as discussed in section II.E.8. of the
preamble of this proposed rule).
A proposal that, subject to our review of the new
technology add-on payment eligibility criteria, for certain gene
therapies approved for new technology add-on payments in the FY 2025
IPPS/LTCH final rule for the treatment of sickle cell disease (SCD),
effective with discharges on or after October 1, 2024, and concluding
at the end of the 2- to 3-year newness period for such therapy, we will
temporarily increase the new technology add-on payment percentage to 75
percent (as discussed in section II.E.9. of the preamble of this
proposed rule).
2. Proposed Changes to the Hospital Wage Index for Acute Care Hospitals
In section III. of the preamble of this proposed rule, we propose
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:
Proposed changes in CBSAs as a result of new OMB labor
market area delineations and proposed policies related to the proposed
changes in CBSAs.
The proposed FY 2025 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 2025 based on the 2022 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 2025 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 FY 2025 wage index.
3. Payment Adjustment for Medicare Disproportionate Share Hospitals
(DSHs) for FY 2025
In section IV. of the preamble of this 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 Factor 3
of the uncompensated care payment for FY 2025, which is the same
methodology that was used for FY 2024.
Proposed methodological approach for determining the
amount of interim uncompensated care payments using the average of the
most recent 3 years of discharge data.
[[Page 35946]]
4. Other Decisions and Proposed Changes to the IPPS for Operating Costs
In section V. of the preamble of this proposed rule, we discuss
proposed changes or clarifications of a number of the provisions of the
regulations in 42 CFR parts 412 and 413, including the following:
Proposed inpatient hospital update for FY 2025.
Proposed updated national and regional case-mix values and
discharges for purposes of determining RRC status and clarification of
the qualification under the discharge criterion for osteopathic
hospitals.
Proposed implementation of the statutory extension of the
temporary changes to the low-volume hospital payment adjustment through
December 31, 2024, the statutory expiration beginning January 1, 2025,
and the proposed payment adjustments for low-volume hospitals for FY
2025.
Proposed implementation of the statutory extension of the
MDH program through December 31, 2024, and the statutory expiration
beginning January 1, 2025.
A proposal to implement a provision of the Consolidated
Appropriations Act relating to payments to hospitals for GME and IME
costs, proposed direct graduate medical education (GME) and indirect
medical education (IME) policy modifications to the criteria for new
residency programs; technical fixes to the DGME regulations; a notice
of closure of two teaching hospitals and opportunities to apply for
available slots and a reminder of core-based statistical area (CBSA)
changes and application to GME policies;.
Proposed nursing and allied health education program
Medicare Advantage (MA) add-on rates and direct GME MA percent
reductions for CY 2023.
Proposed update to the payment adjustment for certain
clinical trial and expanded access use immunotherapy cases.
Proposed separate IPPS payment for establishing and maintaining
access to essential medicines.
Updating the proposed estimate of the financial impacts
for the FY 2025 Hospital Readmissions Reduction Program.
Proposed modifications to the scoring of the Person and
Community Engagement Domain in the Hospital VBP Program.
++ For the FY 2027 through FY 2029 program years to only score on
six unchanged dimensions of the HCAHPS Survey.
++ Beginning with the FY 2030 program year to account for the
proposed updated HCAHPS Survey.
Updating the proposed estimate of the financial impacts
for the FY 2025 Hospital-Acquired Conditions Reduction Program.
Discussion of and proposed changes relating to the
implementation of the Rural Community Hospital Demonstration Program in
FY 2025.
5. Proposed FY 2025 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 2025.
6. 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 2025.
Proposed continued implementation of the Frontier
Community Health Integration Project (FCHIP) Demonstration.
7. Proposed Changes to the LTCH PPS
In section VIII. of the preamble of the proposed rule, we propose
to rebase and revise the LTCH market basket to reflect a 2022 base
year, which includes a proposed update to the LTCH PPS labor-related
share. 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 2025. We are
also proposing a technical clarification to the regulations for
hospitals seeking to be classified as an LTCH.
8. Proposed Changes Relating to Quality Data Reporting for Specific
Providers and Suppliers
In section IX. of the preamble of the proposed rule, we addressed
the following:
Solicitation of comment on adopting measures across the
hospital quality reporting and value-based purchasing programs which
capture more forms of unplanned post-acute care and encourage hospitals
to improve discharge processes.
Proposed changes to the requirements for the Hospital IQR
Program.
Proposed changes to the requirements for the PCHQR
Program.
Proposed adoption of the Patient Safety Structural measure
in the Hospital IQR Program and the PCHQR Program.
Proposed updated HCAHPS Survey measure in the Hospital IQR
Program, PCHQR Program, and Hospital VBP Program.
Proposed changes to the requirements for the Long-Term
Care Hospital Quality Reporting Program (LTCH QRP), and request for
information on future measure concepts for the LTCH QRP and a star
rating system for the LTCH QRP.
Proposed changes to requirements pertaining to eligible
hospitals and CAHs participating in the Medicare Promoting
Interoperability Program.
9. Other Proposals and Comment Solicitations Included in the Proposed
Rule
Section X. of the preamble of the proposed rule includes the
following:
Proposed implementation of TEAM that would test whether an
episode-based pricing methodology linked with accountability for
quality measure performance for select acute care hospitals reduces
Medicare program expenditures while preserving or improving the quality
of care for Medicare beneficiaries.
Proposed changes to permit a Provider Reimbursement Review
Board (PRRB) member to serve up to 3 consecutive terms (9 consecutive
years total), and up to 4 consecutive terms (12 consecutive years
total) in cases where a PRRB Member who, in their second or third
consecutive term, is designated as Chairperson, to continue serving as
Chairperson in the fourth consecutive term.
Solicitation of comments to gather information on
differences between hospital resources required to provide inpatient
pregnancy and childbirth services to Medicare patients as compared to
non-Medicare patients.
Solicitation of comments to gather information on
potential solutions that can be implemented through the hospital CoPs
to address well-documented concerns regarding maternal morbidity,
mortality, disparities, and maternity care access in the United States.
Proposal to remove the exclusion of Puerto Rico from the
Payment Error Rate Measurement (PERM) program found at 42 CFR
431.954(b)(3).
Proposal for a new hospital CoP to replace the COVID-19
and Seasonal Influenza reporting standards for hospitals and CAHs that
were created during PHE.
10. Other Provisions of the Proposed Rule
Section XI.A. of the preamble of the proposed rule includes our
discussion of the MedPAC Recommendations.
[[Page 35947]]
Section XI.B. of the preamble of the proposed rule includes a
descriptive listing of the public use files associated with this
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.
11. 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 2025 prospective payment rates for operating costs and
capital-related costs for acute care hospitals. We are proposing 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 2025 for certain hospitals
excluded from the IPPS.
12. 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 2025 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
2025. We are proposing to establish the adjustments for the wage index
(including proposed changes to the LTCH PPS labor market area
delineations based on the new OMB delineations), 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.
13. 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.
14. Recommendation of Update Factors for Operating Cost Rates of
Payment for Hospital Inpatient Services
In Appendix B of the proposed rule, as required by sections
1886(e)(4) and (e)(5) of the Act, we provide our recommendations of the
appropriate percentage changes for FY 2025 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.
15. Discussion of Medicare Payment Advisory Commission Recommendations
Under section 1805(b) of the Act, MedPAC is required to submit a
report to Congress, no later than March 15 of each year, in which
MedPAC reviews and makes recommendations on Medicare payment policies.
MedPAC's March 2024 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 2024
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.
II. Proposed Changes to Medicare Severity Diagnosis-Related Group (MS-
DRG) Classifications and Relative Weights
A. Background
Section 1886(d) of the Act specifies that the Secretary shall
establish a classification system (referred to as diagnosis-related
groups (DRGs)) for inpatient discharges and adjust payments under the
IPPS based on appropriate weighting factors assigned to each DRG.
Therefore, under the IPPS, Medicare pays for inpatient hospital
services on a rate per discharge basis that varies according to the DRG
to which a beneficiary's stay is assigned. The formula used to
calculate payment for a specific case multiplies an individual
hospital's payment rate per case by the weight of the DRG to which the
case is assigned. Each DRG weight represents the average resources
required to care for cases in that particular DRG, relative to the
average resources used to treat cases in all DRGs.
Section 1886(d)(4)(C) of the Act requires that the Secretary adjust
the DRG classifications and relative weights at least annually to
account for changes in resource consumption. These adjustments are made
to reflect changes in treatment patterns, technology, and any other
factors that may change the relative use of hospital resources.
B. Adoption of the MS-DRGs and MS-DRG Reclassifications
For information on the adoption of the MS-DRGs in FY 2008, we refer
readers to the FY 2008 IPPS final rule with comment period (72 FR 47140
through 47189).
For general information about the MS-DRG system, including yearly
reviews and changes to the MS-DRGs, we refer readers to the previous
discussions in the FY 2010 IPPS/RY 2010 LTCH PPS final rule (74 FR
43764 through 43766) and the FYs 2011 through 2024 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; 87 FR 48800 through 48891; and 88 FR 58654 through 58787,
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).
C. Proposed Changes to Specific MS-DRG Classifications
1. Discussion of Changes to Coding System and Basis for Proposed FY
2025 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
[[Page 35948]]
System (ICD-10-PCS) for inpatient hospital procedure coding, as well as
the ICD-10-CM and ICD-10-PCS Official Guidelines for Coding and
Reporting. For a detailed discussion of the conversion of the MS-DRGs
to ICD-10, we refer readers to the FY 2017 IPPS/LTCH PPS final rule (81
FR 56787 through 56789).
b. Basis for Proposed FY 2025 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 SystemTM
(MEARISTM), accessed at https://mearis.cms.gov. We stated
that effective with FY 2024 MS-DRG classification change requests, CMS
will only accept requests submitted via MEARISTM and will no
longer consider requests sent via email. Additionally, we noted that
within MEARISTM, 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 MEARISTM site.
Questions regarding the MEARISTM system can be submitted to
CMS using the form available under ``Contact'', also at the bottom of
the MEARISTM site. Accordingly, interested parties had to
submit MS-DRG classification change requests for FY 2025 by October 20,
2023.
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 OMB control number 0938-1431 and has an
expiration date of 09/30/2025.
Interested parties should submit any MS-DRG classification change
requests, including any comments and suggestions for FY 2026
consideration by October 20, 2024 via MEARISTM at: https://mearis.cms.gov/public/home.
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.
We received four requests to modify the GROUPER logic in a number
of cardiac MS-DRGs under Major Diagnostic Category (MDC) 05 (Diseases
and Disorders of the Circulatory System). Specifically, we received
requests to--
Modify the GROUPER logic of new MS-DRG 212 (Concomitant
Aortic and Mitral Valve Procedures) to be defined by cases reporting
procedure codes describing a single open mitral or aortic valve
replacement/repair (MVR or AVR) procedure, plus an open coronary artery
bypass graft procedure (CABG) or open surgical ablation or cardiac
catheterization procedure plus a second concomitant procedure.
Modify the GROUPER logic of new MS-DRG 212 by redefining
the procedure code list that describes the performance of a cardiac
catheterization by either removing the ICD-10-PCS codes that describe
plain radiography of coronary artery codes from the logic list or
adding ICD-10-PCS procedure codes that involve computed tomography (CT)
or magnetic resonance imaging (MRI) scanning using contrast to the
list. This requestor also suggested that CMS add ICD-10-PCS procedures
codes that describe endovascular valve replacement or repair procedures
into the GROUPER logic of MS-DRG 212.
Modify the GROUPER logic of new MS-DRGs 323, 324 and 325
(Coronary Intravascular Lithotripsy with Intraluminal Device with MCC,
without MCC, and without Intraluminal Device, respectively). In two
separate but related requests, the requestors suggested that we add
procedure codes that describe additional percutaneous coronary
intervention (PCI) procedures such as percutaneous coronary rotational,
laser, and orbital atherectomy to the GROUPER logic of new MS-DRGs 323,
324, and 325.
We appreciate the submissions and related analyses provided by the
requestors for our consideration as we review MS-DRG classification
change requests for FY 2025; however, we note the complexity of the
GROUPER logic for these MS-DRGs in connection with these requests
requires more extensive analyses to identify and evaluate all of the
data relevant to assessing these potential modifications. Specifically,
we note the list of procedure codes that describe the performance of a
cardiac catheterization is in the definition of multiple MS-DRGs in MDC
05. Analyzing the impact of revising this list necessitates evaluating
the impact across numerous other MS-DRGs in MDC 05 that also include
this list in their definition, in addition to new MS-DRG 212. Secondly,
as discussed further in section II.C.4.c of this proposed rule, our
analysis continues to indicate that, when performed, open cardiac valve
replacement and supplement procedures are clinically different from
endovascular cardiac valve replacement and supplement procedures in
terms of technical complexity and hospital resource use. Lastly, as we
have stated in prior rule making (88 FR 58708), atherectomy is distinct
from coronary lithotripsy in that each of these procedures are defined
by clinically distinct definitions and objectives. Additional analysis
to assess for unintended consequences across the classification is
needed as we have made a distinction between the root operations used
to describe atherectomy (Extirpation) and the root operation used to
describe lithotripsy (Fragmentation) in evaluating other requests in
rulemaking. We will need to consider the application of these two root
operations in other scenarios where we have also specifically stated
that Extirpation is not the same as Fragmentation and do not warrant
similar MS-DRG assignment (85 FR 58572 through 58573). Furthermore, as
MS-DRG 212 and MS-DRGs 323, 324 and 325 recently became effective on
October 1, 2023 (FY 2024), we believe additional time is needed to
review and evaluate extensive modifications to the structure of these
MS-DRGs.
We will continue to monitor the data as we consider these issues in
connection with future rulemaking. As we continue the analysis of the
claims data with respect to MS-DRGs in MDC 05, we welcome public
comments and feedback on other factors that should be considered in the
potential restructuring of these MS-DRGs. Feedback and other
suggestions may be directed to MEARISTM at: https://mearis.cms.gov/public/home. As noted, interested parties should submit
any MS-DRG classification change requests, including any comments and
suggestions for FY 2026 consideration by October 20, 2024 via
MEARISTM at: https://mearis.cms.gov/public/home.
As we did for the FY 2024 IPPS/LTCH PPS proposed rule, for this FY
2025
[[Page 35949]]
IPPS/LTCH PPS proposed rule we are providing a test version of the ICD-
10 MS-DRG GROUPER Software, Version 42, so that the public can better
analyze and understand the impact of the proposals included in this
proposed rule. We note that this test software reflects the proposed
GROUPER logic for FY 2025. Therefore, it includes the new diagnosis and
procedure codes that are effective for FY 2025 as reflected in Table
6A.--New Diagnosis Codes--FY 2025 and Table 6B.--New Procedure Codes--
FY 2025 associated with this proposed rule and does not include the
diagnosis codes that are invalid beginning in FY 2025 as reflected in
Table 6C.--Invalid Diagnosis Codes--FY 2025, and Table 6D.--Invalid
Procedure Codes--FY 2025 associated with this proposed rule. These
tables are not published in the Addendum to this 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 this proposed rule. Because the
diagnosis codes no longer valid for FY 2025 are not reflected in the
test software, we are making available a supplemental file in Table
6P.1a and 6P.1b that includes the mapped Version 42 FY 2025 ICD-10-CM
and ICD-10-PCS codes and the deleted Version 41 FY 2024 ICD-10-CM codes
and V41.1 ICD-10-PCS codes that should be used for testing purposes
with users' available claims data. Therefore, users will have access to
the test software allowing them to build case examples that reflect the
proposals included in this proposed rule. In addition, users will be
able to view the draft version of the ICD-10 MS-DRG Definitions Manual,
Version 42.
We also note that in the FY 2024 IPPS/LTCH PPS final rule (88 FR
58764), we stated 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 Medicare Code Editor (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 encouraged 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 the instructions provided in
that proposed rule.
In the CY 2024 OPPS/ASC final rule (88 FR 82121 through 82124),
after consideration of the public comments we received, we finalized
the proposal to remove discussion of the MCE from the annual IPPS
rulemakings, beginning with FY 2025 rulemaking, and to generally
address future changes or updates to the MCE through instruction to the
MACs. Beginning with FY 2025, in association with the annual proposed
rule, we are making available a draft version of the Definitions of
Medicare Code Edits (MCE) Manual to provide the public with an
opportunity to review any changes that will become effective October 1
for the upcoming fiscal year. In addition, as a result of new and
modified code updates approved after the annual spring ICD-10
Coordination and Maintenance Committee meeting, any further changes to
the MCE will be reflected in the finalized Definitions of Medicare Code
Edits (MCE) Manual, made available in association with the annual final
rule. We are making available the draft FY 2025 ICD-10 MCE Version 42
Manual file on the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/ms-drg-classifications-and-software.
The MCE manual is comprised of two chapters: Chapter 1: Edit code
lists provides a listing of each edit, an explanation of each edit, and
as applicable, the diagnosis and/or procedure codes for each edit, and
Chapter 2: Code list changes summarizes the changes in the edit code
lists (for example, additions and deletions) from the prior release of
the MCE software. The public may submit any questions, comments,
concerns, or recommendations regarding the MCE to the CMS mailbox at
[email protected] for our review and consideration.
The test version of the ICD-10 MS-DRG GROUPER Software, Version 42,
the draft version of the ICD-10 MS-DRG Definitions Manual, Version 42,
the draft version of the Definitions of Medicare Code Edits Manual,
Version 42, and the supplemental mapping files in Table 6P.1a and 6P.1b
of the FY 2024 and FY 2025 ICD-10-CM diagnosis and ICD-10-PCS procedure
codes are available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/MS-DRG-Classifications-and-Software.
Following are the changes that we are proposing to the MS-DRGs for
FY 2025. We are inviting public comments on each of the MS-DRG
classification proposed changes, as well as our proposals to maintain
certain existing MS-DRG classifications discussed in this proposed
rule. In some cases, we are proposing changes to the MS-DRG
classifications based on our analysis of claims data and clinical
appropriateness. In other cases, we are proposing to maintain the
existing MS-DRG classifications based on our analysis of claims data
and clinical appropriateness. For this FY 2025 IPPS/LTCH PPS proposed
rule, our MS-DRG analysis was based on ICD-10 claims data from the
September 2023 update of the FY 2023 MedPAR file, which contains
hospital bills received from October 1, 2022 through September 30,
2023. In our discussion of the proposed MS-DRG reclassification
changes, we refer to these claims data as the ``September 2023 update
of the FY 2023 MedPAR file.''
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
[[Page 35950]]
or comorbidity (MCC) subgroup within a base MS-DRG. Specifically, we
finalized the expansion of the criteria to include the NonCC subgroup
for a three-way severity level split. We stated we believed that
applying these criteria to the NonCC subgroup would better reflect
resource stratification as well as promote stability in the relative
weights by avoiding low volume counts for the NonCC level MS-DRGs. We
noted that in our analysis of MS-DRG classification requests for FY
2021 that were received by November 1, 2019, as well as any additional
analyses that were conducted in connection with those requests, we
applied these criteria to each of the MCC, CC, and NonCC subgroups. We
also noted that the application of the NonCC subgroup criteria going
forward may result in modifications to certain MS-DRGs that are
currently split into three severity levels and result in MS-DRGs that
are split into two severity levels. We stated that any proposed
modifications to the MS-DRGs would be addressed in future rulemaking
consistent with our annual process and reflected in Table 5--Proposed
List of Medicare Severity Diagnosis Related Groups (MS-DRGs), Relative
Weighting Factors, and Geometric and Arithmetic Mean Length of Stay for
the applicable fiscal year.
In 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 public health emergency
(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 association with our discussion of application of the NonCC
subgroup criteria in the FY 2024 IPPS/LTCH PPS proposed rule (88 FR
26673 through 26676), we provided an alternate test version of the ICD-
10 MS-DRG GROUPER Software, Version 41.A, reflecting the proposed
GROUPER logic for FY 2024 as modified by the application of the NonCC
subgroup criteria to existing MS-DRGs with a three-way severity level
split, available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/MS-DRG-Classifications-and-Software.
Therefore, users had access to the alternate test software allowing
them to build case examples that reflect the proposals included in the
proposed rule with application of the NonCC subgroup criteria. We also
provided additional files including 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 FY 2024 IPPS/LTCH PPS proposed rule on the CMS website at:
https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps.
We stated that the alternate test software and additional files
were made available 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 refer readers to the FY 2024 IPPS/
LTCH PPS proposed rule (88 FR 26673 through 26676) for further
discussion of the alternate test software and additional files that
were made available.
In the FY 2024 IPPS/LTCH PPS final rule (88 FR 58655 through
58661), we finalized to delay the application of the NonCC subgroup
criteria to existing MS-DRGs with a three-way severity level split for
FY 2024. We stated that we would continue to review and consider the
feedback we had received in response to the additional information we
made available in association with the FY 2024 IPPS/LTCH PPS proposed
rule for our development of the FY 2025 proposed rule.
We note that the IPPS Payment Impact File made available in
connection with our annual IPPS rulemakings includes information used
to categorize hospitals by various geographic and special payment
consideration groups, including geographic location (urban or rural),
teaching hospital status (that is, whether or not a hospital has GME
residency programs and receives an IME adjustment), DSH hospital status
(that is, whether or not a hospital receives Medicare DSH payments),
special payment groups (that is, SCHs, MDHs, and RRCs) and other
categories reflected in the impact analysis generally shown in Appendix
A of the annual IPPS rulemakings. The IPPS Payment Impact File
associated with the FY 2024 IPPS/LTCH PPS final rule can be found on
the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/fy-2024-ipps-final-rule-home-page#Data.
We are proposing to continue to delay application of the NonCC
subgroup criteria to existing MS-DRGs with a three-way severity level
split for FY 2025, as we continue to consider the public comments
received in response to the FY 2024 rulemaking. We encourage interested
parties to review the impacts and other information made available with
the alternate test software (V41.A) and other additional files provided
in connection with the FY 2024 IPPS/LTCH PPS proposed rule, as
previously discussed, and we continue to welcome feedback for
consideration for future rulemaking.
As discussed in the FY 2024 IPPS/LTCH PPS final rule (88 FR 58661),
we 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. Accordingly, in
our analysis of the MS-DRG classification requests for FY 2025 that we
received by October 20, 2023, 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 this FY 2025 IPPS/LTCH PPS proposed rule, our
MS-DRG analysis was based on ICD-10 claims data from the September 2023
update of the FY 2023 MedPAR file. However, in our evaluation of
requests to split an existing base MS-DRG into severity levels, as
noted in prior rulemaking (80 FR 49368), we typically analyze the most
recent 2 years of data. This analysis includes 2 years of MedPAR claims
data to compare the data results from one year to the next to avoid
making determinations about whether additional severity levels are
warranted based on an isolated year's data fluctuation and also, to
validate that the established severity levels within a base MS-DRG are
supported. 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.
2. Pre-MDC MS-DRG 018 Chimeric Antigen Receptor (CAR) T-cell and Other
Immunotherapies
We received a request to revise the title of Pre-MDC MS-DRG 018
(Chimeric Antigen Receptor (CAR) T-cell and Other Immunotherapies) in
connection with an ICD-10-PCS procedure code request that was submitted
via MEARISTM by the December 1, 2023 deadline for
consideration as an agenda topic to be discussed at the March 19-20,
2024 ICD-10 Coordination and Maintenance Committee meeting. The
procedure code request involves the application of an autologous
genetically engineered cell-based gene therapy, prademagene zamikeracel
(PZ), that is indicated in the treatment of recessive dystrophic
epidermolysis bullosa (RDEB), an extremely rare genetic disease of the
skin that leads to large chronic wounds. The proposal was presented and
discussed at the March 19-20, 2024 ICD-10 Coordination and Maintenance
Committee meeting. We refer the reader to the CMS website at https://www.cms.gov/medicare/coding-billing/icd-10-codes/icd-10-coordination-maintenance-committee-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 are due by April 19, 2024. The requestor suggested that if
finalized, a new procedure code to identify the application of PZ
should be assigned to Pre-MDC MS-DRG 018 and that the title for Pre-MDC
MS-DRG 018 be revised to reflect ``Chimeric Antigen Receptor (CAR) T
and Other Autologous Gene and Cell Therapies''.
Because the diagnosis and procedure code proposals that are
presented at the March ICD-10-CM Coordination and Maintenance Committee
meeting for an October 1 implementation (upcoming FY) are not finalized
in time to include in Table 6A.--New Diagnosis Codes and Table 6B.--New
Procedure Codes in association with the proposed rule, as we have noted
in prior rulemaking, 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
[[Page 35952]]
that may be relevant to the MS-DRG assignment, including the severity
of illness, treatment difficulty, complexity of service and the
resources utilized in the diagnosis and/or treatment of the condition.
We have noted in prior rulemaking that this process does not
automatically result in the new procedure code being assigned to the
same MS-DRG or to have the same designation (O.R. versus Non-O.R.) as
the predecessor code. Under this established process, the MS-DRG
assignment for the upcoming fiscal year for any new diagnosis or
procedure codes finalized after the March meeting would be reflected in
Table 6A.--New Diagnosis Codes and Table 6B.--New Procedure Codes
associated with the final rule for that fiscal year. Accordingly, the
MS-DRG assignment for any new procedure codes describing PZ, if
finalized following the March meeting, would be reflected in Table
6B.--New Procedure Codes associated with the final rule for FY 2025. As
noted in prior rulemaking (87 FR 28135), the codes that are finalized
after the March meeting are specifically identified with a footnote in
Table 6A.--New Diagnosis Codes and Table 6B.--New Procedure Codes that
are made publicly available in association with the final rule on the
CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps. The public may provide feedback on
these finalized assignments, which is then taken into consideration for
the following fiscal year.
We do not agree with the request to revise the title for Pre-MDC
MS-DRG 018 for FY 2025 as requested because the logic for Pre-MDC MS-
DRG 018 is intended to include other immunotherapies and is not
restricted to CAR T-cell and autologous gene and cell therapies. As
discussed in the FY 2022 IPPS/LTCH PPS final rule (86 FR 44798 through
44806), we finalized our proposal to revise the title of Pre-MDC MS-DRG
018 to include ``Other Immunotherapies'' to better reflect the cases
reporting the administration of non-CAR T-cell therapies and other
immunotherapies that would also be assigned to this MS-DRG, in addition
to CAR T-cell therapies. We noted that the term ``Other
Immunotherapies'' is intended to encompass the group of therapies that
are currently available and being utilized today (for which codes have
been created for reporting in response to industry requests or are
being considered for implementation), and to enable appropriate MS-DRG
assignment for any future therapies that may also fit into this
category and are not specifically identified as a CAR T-cell product,
that may become available (for example receive marketing authorization
or a newly established procedure code in the ICD-10-PCS
classification).
We also note, as discussed in prior rulemaking, that this category
of therapies continues to evolve, and we are in the process of
carefully considering the feedback we have previously received about
ways in which we can continue to appropriately reflect resource
utilization while maintaining clinical coherence and stability in the
relative weights under the IPPS MS-DRGs. We appreciate the
recommendations and suggestions for consideration we have received and
will continue to examine these complex issues in connection with future
rulemaking. We acknowledge that there may be distinctions to account
for as we continue to gain more experience in the use of these
therapies and have additional claims data to analyze. Therefore, we are
not proposing to revise the title for Pre-MDC MS-DRG 018 to reflect
``Chimeric Antigen Receptor (CAR) T and Other Autologous Gene and Cell
Therapies'' at this time and are proposing to maintain the existing
title to Pre-MDC MS-DRG 018, ``Chimeric Antigen Receptor (CAR) T-cell
and Other Immunotherapies'' for FY 2025.
3. MDC 01 (Diseases and Disorders of the Nervous System)
a. Logic for MS-DRGs 023 Through 027
In the FY 2024 IPPS/LTCH PPS final rule (88 FR 58661 through
58667), 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 (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) 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.
We stated 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 was 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 believed
that MS-DRG 021 was the most logical fit in terms of average costs and
clinical coherence for reassignment 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.
We noted that while our data findings demonstrated the average
costs are higher for the cases with a principal diagnosis of epilepsy
with a 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 represented 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
believed additional time was needed to evaluate these cases as part of
our ongoing examination of the case logic to the MS-DRGs for craniotomy
and endovascular procedures, which are MS-DRG 023, 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).
As discussed in the FY 2023 IPPS/LTCH PPS final rule (87 FR 48808
through 48820), in connection with our analysis of cases reporting
laser interstitial thermal therapy (LITT) procedures performed on the
brain or brain stem in MDC 01, we stated 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. We stated
that specifically, we were 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
[[Page 35953]]
(where a hole approximately the size of a pencil is drilled) to obtain
access to the brain in the performance of a procedure. We stated we
were also reviewing the indications for these procedures, for example,
malignant neoplasms versus epilepsy to consider if there may be merit
in considering restructuring the current MS-DRGs to better recognize
the clinical distinctions of these patient populations in the MS-DRGs.
As part of this evaluation, as discussed in the FY 2024 IPPS/LTCH
PPS final rule, we have begun to analyze the ICD-10 coded claims data
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 referred the reader to Tables 6P.2b through
6P.2f associated with the FY 2024 IPPS/LTCH PPS proposed rule
(available on the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps) for data analysis
findings of cases assigned to MS-DRGs 023 through 027 from the
September 2022 update of the FY 2022 MedPAR file as we continue to look
for patterns of complexity and resource intensity.
In summary, we stated that while we agreed that 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. Therefore, for the reasons discussed, we finalized 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 for FY 2024.
In the FY 2024 IPPS/LTCH PPS final rule, we stated 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 stated we would continue to explore mechanisms to
ensure clinical coherence between these cases and the other cases with
which they may potentially be grouped. We stated that the data analysis
as displayed in Tables 6P.2b through 6P.2f associated with the FY 2024
IPPS/LTCH PPS 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 welcomed 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. We also stated 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.
In response to this discussion in the FY 2024 IPPS/LTCH PPS final
rule, we received two comments by the October 20, 2023 deadline. A
commenter recommended that CMS not use surgical approach (for example,
open versus percutaneous) as a factor to reclassify MS-DRGs 023 through
027. The commenter stated whether the opening is created via a drill
into the skull percutaneously or through a larger incision in the skull
for a craniotomy, both approaches involve the risk of intracranial
bleeding, infection, and brain swelling. The commenter further stated
they do not support a consideration of the reassignment of the ICD-10-
PCS procedure codes describing LITT, currently assigned to MS-DRGs 025
through 027, based on the diagnosis being treated. The commenter stated
that the LITT procedure requires the same steps, time, and clinical
resources when performed for brain cancer or epilepsy. In the
requestor's view, differences in the disease causing the tumors or
lesions do not affect the resources used for performing the procedure
or the post-operative care for the patient. Lastly, the commenter
stated they support the current structure of MS-DRGs 023 and 024 based
on an acute complicated principal diagnosis, or chemotherapy implant,
or epilepsy with neurostimulator. The commenter stated these diagnoses
represent severe complex conditions that require immediate and urgent
intervention.
Another commenter stated that the current logic for MS-DRGs 023
through 027 is sufficient and supports the clinical and resource
similarities of the procedures reflected in these MS-DRGs. The
commenter performed its own analysis and stated they found that
realignment based on surgical approach or root operation could create
significant new inequities. The commenter recommended that CMS maintain
the current logic for MS-DRGs 025 through 027, as making changes could
be disruptive to hospitals and create challenges for Medicare
beneficiary access to life-saving technologies. The commenter stated
they strongly believe that maintaining the current structure provides
payment stability and integrity of these procedures over time.
CMS appreciates the comments submitted in response to the request
for feedback in the FY 2024 IPPS/LTCH PPS final rule. As we continue
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 stated in prior rulemaking, 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 41.1 (available on the CMS website
at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/ms-drg-classifications-and-software) for complete
documentation of the GROUPER logic for MS-DRGs 023 through 027.
Feedback and other suggestions may continue to be directed to
MEARISTM, discussed in section II.C.1.b. of the preamble of
this proposed rule at: https://mearis.cms.gov/public/home.
b. Intraoperative Radiation Therapy (IORT)
We received a request to add ICD-10-PCS procedure codes D0Y0CZZ
(Intraoperative radiation therapy (IORT) of brain) and D0Y1CZZ
(Intraoperative radiation therapy (IORT) of brain stem), to the
Chemotherapy Implant logic list in MS-DRG 023 (Craniotomy with Major
Device Implant or Acute Complex CNS Principal Diagnosis with MCC or
Chemotherapy Implant or Epilepsy with Neurostimulator). According to
the requestor, intraoperative radiation therapy (IORT) for the brain is
always performed as part of the surgery to remove a brain tumor during
the same operative episode. The requestor stated that once maximal safe
tumor resection is achieved, the tumor cavity is examined for active
egress of cerebrospinal fluid or bleeding. Next,
[[Page 35954]]
intraoperative measurements are made using neuro-navigation or
intraoperative imaging such as magnetic resonance imaging (MRI) or
computed tomography (CT) to ensure safe distance to organs or tissues
at risk, aid in appropriate dose calculation, and selection of proper
applicator size. The applicator is then implanted into the tumor cavity
and the radiation dose is delivered. The requestor stated that delivery
time can be up to 40 minutes and upon completion of the treatment, the
source is removed, and the cavity is re-inspected for active egress of
cerebrospinal fluid and bleeding.
The requestor stated that currently the ICD-10-PCS procedure codes
for excision of a brain tumor, 00B00ZZ (Excision of brain, open
approach) and 00B70ZZ (Excision of cerebral hemisphere, open approach)
map to both sets of craniotomy MS-DRGs. Specifically, MS-DRG 023
(Craniotomy with Major Device Implant or Acute Complex CNS Principal
Diagnosis with MCC or Chemotherapy Implant or Epilepsy with
Neurostimulator) and 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). However, the requestor
also stated that the procedure codes describing IORT (D0Y0CZZ or
D0Y1CZZ) are not listed in the GROUPER logic and do not affect MS-DRG
assignment. Therefore, cases reporting a procedure code describing
excision of a brain tumor (00B00ZZ or 00B70ZZ) with IORT currently map
to MS-DRGs 025, 026, and 027. The requestor suggested that cases
reporting a procedure code describing excision of a brain tumor
(00B00ZZ or 00B70ZZ) with IORT (D0Y0CZZ or D0Y1CZZ) should map to MS-
DRG 023 because of the higher costs associated with the addition of
IORT to the excision of brain tumor surgery. According to the
requestor, MS-DRG 023 includes complicated craniotomy cases involving
the placement of radiological sources and chemotherapy implants. The
requestor stated that because IORT involves a full course of radiation
therapy delivered directly to the tumor bed via an applicator that is
implanted into the tumor cavity during the same surgical session and is
clinically similar to two other procedures listed in the Chemotherapy
Implant logic list, it should also be included in the Chemotherapy
Implant logic list. Specifically, the requestor stated procedure code
00H004Z (Insertion of radioactive element, cesium-131 collagen implant
into brain, open approach) and procedure code 3E0Q305 (Introduction of
other antineoplastic into cranial cavity and brain, percutaneous
approach) also involve the delivery of either radiation or chemotherapy
directly after tumor resection. According to the requestor, the
resources involved in placing the delivery device are similar for all
three procedures and the distinction is that the procedures described
by codes 00H004Z and 3E0Q305 involve the insertion of devices that
deliver radiation or chemotherapy over a period of time, whereas IORT
delivers the entire dose of radiation during the operative session. As
such, the requestor asserted that IORT is clinically aligned with the
other procedures from a therapeutic and resource utilization
perspective.
The requestor performed its own analysis using the FY 2022 MedPAR
file that was made available in association with the FY 2024 IPPS/LTCH
PPS final rule and stated it found fewer than 11 cases reporting IORT
in MS-DRGs 025, 026, and 027, with the majority of those cases mapping
to MS-DRG 025. According to the requestor, the volume of claims
reporting IORT is anticipated to increase as appropriate use of the
technology is adopted.
The requestor is correct that currently, the logic for case
assignment to MS-DRG 023 includes a Chemotherapy Implant logic list and
the procedure codes that identify IORT (D0Y0CZZ and D0Y1CZZ) are not
listed in the GROUPER logic and do not affect MS-DRG assignment as the
procedures are designated as non-O.R. procedures. The requestor is also
correct that cases reporting a procedure code describing excision of a
brain tumor (00B00ZZ or 00B70ZZ) with IORT currently map to MS-DRGs
025, 026, and 027. We refer the reader to the ICD-10 MS-DRG Definitions
Manual Version 41.1 (available on the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/ms-drg-classifications-and-software) for complete
documentation of the GROUPER logic.
In review of this request, we analyzed claims data from the
September 2023 update of the FY 2023 MedPAR file for MS-DRGs 023, 024,
025, 026, and 027 and for cases reporting excision of brain tumor and
IORT. We identified claims reporting excision of brain tumor with
procedure code 00B00ZZ or 00B70ZZ and identified claims reporting IORT
with procedure code D0Y0CZZ or D0Y1CZZ. The findings from our analysis
are shown in the following table. We note that there were no cases
found to report IORT of brain (D0Y0CZZ) or brain stem (D0Y1CZZ) with
excision of brain (00B00ZZ) or excision of cerebral hemisphere
(00B70ZZ).
BILLING CODE 4120-01-P
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[GRAPHIC] [TIFF OMITTED] TP02MY24.004
BILLING CODE 4120-01-C
As the data show, there were no cases found to report the use of
IORT in the performance of a brain tumor excision; therefore, we are
unable to evaluate whether the use of IORT directly impacts resource
utilization. For this reason, we are proposing to maintain the current
structure of MS-DRGs 023, 024, 025, 026, and 027 for FY 2025. We will
continue to monitor the claims data in consideration of any future
modifications to the MS-DRGs for which IORT may be reported.
4. MDC 05 (Diseases and Disorders of the Circulatory System)
a. Concomitant Left Atrial Appendage Closure and Cardiac Ablation
We received a request to create a new MS-DRG to better accommodate
the costs of concomitant left atrial appendage closure and cardiac
ablation for atrial fibrillation in MDC 05 (Diseases and Disorders of
the Circulatory System). Atrial fibrillation (AF) is an irregular and
often rapid heart rate that occurs when the two upper chambers of the
heart experience chaotic electrical signals. AF presents as either
paroxysmal (lasting <7 days), persistent (lasting >7 day, but less than
1 year), or long standing persistent (chronic) (lasting >1 year) based
on time duration and can increase the risk for stroke, heart failure,
and mortality. Management of AF has two primary goals: optimizing
cardiac output through rhythm or rate control and decreasing the risk
of cerebral and systemic thromboembolism. Among patients with AF,
thrombus in the left atrial appendage (LAA) is a primary source for
thromboembolism. Left Atrial Appendage Closure (LAAC) is a surgical or
minimally invasive procedure to seal off the LAA to reduce the risk of
embolic stroke.
According to the requestor, the manufacturer of the
WATCHMANTM Left Atrial Appendage Closure (LAAC) device,
patients who are indicated for a LAAC device can also have symptomatic
AF. For these patients, performing a cardiac ablation and LAAC
procedure at the same time is ideal. Cardiac ablation is a procedure
that works by burning or freezing tissue on the inside of the heart to
disrupt faulty electrical signals causing the arrhythmia, which can
help the heart maintain a normal heart rhythm. The requestor
highlighted a recent study (Piccini et al. Left atrial appendage
occlusion with the WATCHMANTM FLX and concomitant catheter
ablation procedures. Heart Rhythm Society Meeting 2023, May 19, 2023;
New Orleans, LA.). According to the requestor, the results of this
study indicate that when LAAC is performed concomitantly with cardiac
ablation, the outcomes are comparable to patients who have undergone
these procedures separately.
[[Page 35957]]
The requestor identified the following potential procedure code
combination that would comprise a concomitant left atrial appendage
closure and cardiac ablation procedure: ICD-10-PCS procedure code
02L73DK (Occlusion of left atrial appendage with intraluminal device,
percutaneous approach), that identifies the WATCHMANTM
device, in combination with 02583ZZ (Destruction of conduction
mechanism, percutaneous approach). The requestor performed its own
analysis of this procedure code combination and stated that it found
the average costs of cases reporting concomitant left atrial appendage
closure and cardiac ablation procedures were consistently higher
compared to the average costs of other cases within their respective
MS-DRG, which it asserted could limit beneficiary access to these
procedures. The requestor asserted that improved Medicare payment for
providers who perform these procedures concomitantly would help
Medicare patients to gain better access to these lifesaving and
quality-improving services and decrease the risk of future readmissions
and the need for future procedures.
We reviewed this request and noted concerns regarding making
proposed MS-DRG changes based on a specific, single technology (the
WATCHMANTM Left Atrial Appendage Closure (LAAC) device)
identified by only one unique procedure code versus considering
proposed changes based on a group of related procedure codes that can
be reported to describe the same type or class of technology, which is
more consistent with the intent of the MS-DRGs. Therefore, in reviewing
this request, we identified eight additional ICD-10-PCS procedure codes
that describe LAAC procedures and included these codes in our analysis.
The nine codes we identified are listed in the following table.
[GRAPHIC] [TIFF OMITTED] TP02MY24.005
Similarly, as noted previously, the requestor identified code
02583ZZ (Destruction of conduction mechanism, percutaneous approach) to
describe cardiac ablation. In our review of the ICD-10-PCS
classification, we identified 26 additional ICD-10-PCS codes that
describe cardiac ablation that we also examined. The 27 codes we
included in our analysis are listed in the following table.
[GRAPHIC] [TIFF OMITTED] TP02MY24.006
[[Page 35958]]
In the ICD-10 MS-DRGs Definitions Manual Version 41.1, for
concomitant left atrial appendage closure and cardiac ablation
procedures, the GROUPER logic assigns MS-DRGs 273 and 274 (Percutaneous
and Other Intracardiac Procedures with and without MCC, respectively)
depending on the presence of any additional MCC secondary diagnoses. We
examined claims data from the September 2023 update of the FY 2023
MedPAR file for all cases in MS-DRGs 273 and 274 and compared the
results to cases reporting procedure codes describing concomitant left
atrial appendage closure and cardiac ablation. Our findings are shown
in the following table.
[GRAPHIC] [TIFF OMITTED] TP02MY24.007
As shown in the table, in MS-DRG 273, we identified a total of
7,250 cases with an average length of stay of 5.4 days and average
costs of $35,197. Of those 7,250 cases, there were 80 cases reporting
procedure codes describing concomitant left atrial appendage closure
and cardiac ablation with average costs higher than the average costs
in the FY 2023 MedPAR file for MS-DRG 273 ($70,447 compared to $35,197)
and a slightly longer average length of stay (5.8 days compared to 5.4
days). In MS-DRG 274, we identified a total of 47,801 cases with an
average length of stay of 1.4 days and average costs of $29,209. Of
those 47,801 cases, there were 781 cases reporting procedure codes
describing concomitant left atrial appendage closure and cardiac
ablation, with average costs higher than the average costs in the FY
2023 MedPAR file for MS-DRG 274 ($66,277 compared to $29,209) and a
slightly longer average length of stay (1.5 days compared to 1.4 days).
We reviewed these data and note, clinically, the management of AF
by performing concomitant left atrial appendage closure and cardiac
ablation can improve symptoms, prevent stroke, and reduce the risk of
bleeding compared with oral anticoagulants. The data analysis clearly
shows that cases reporting concomitant left atrial appendage closure
and cardiac ablation procedures have higher average costs and slightly
longer lengths of stay compared to all the cases in their assigned MS-
DRG. For these reasons, we are proposing to create a new MS-DRG for
cases reporting a LAAC procedure and a cardiac ablation procedure.
To compare and analyze the impact of our suggested modifications,
we ran a simulation using the claims data from the September 2023
update of the FY 2023 MedPAR file. The following table illustrates our
findings for all 1,723 cases reporting procedure codes describing
concomitant left atrial appendage closure and cardiac ablation. We
believe the resulting proposed MS-DRG assignment is more clinically
homogeneous, coherent and better reflects hospital resource use.
[GRAPHIC] [TIFF OMITTED] TP02MY24.008
We applied the criteria to create subgroups in a base MS-DRG as
discussed in section II.C.1.b. of this FY 2025 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 ``with
MCC'' split, there were only 268 cases in the subgroup.
[GRAPHIC] [TIFF OMITTED] TP02MY24.009
We then applied the criteria for a two-way split for the ``with CC/
MCC'' and ``without CC/MCC'' subgroups and found that the criterion
that there be at least a 20% difference in average cost between
subgroups could not be met. The following table illustrates our
findings.
[GRAPHIC] [TIFF OMITTED] TP02MY24.010
[[Page 35959]]
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 criterion that there be at least a 20% difference in
average costs between the subgroups also was not met. The following
table illustrates our findings.
[GRAPHIC] [TIFF OMITTED] TP02MY24.011
Therefore, for FY 2025, we are not proposing to subdivide the
proposed new MS-DRG for cases reporting procedure codes describing
concomitant left atrial appendage closure and cardiac ablation into
severity levels.
In summary, for FY 2025, taking into consideration that it
clinically requires greater resources to perform concomitant left
atrial appendage closure and cardiac ablation procedures, we are
proposing to create a new base MS-DRG for cases reporting a LAAC
procedure and a cardiac ablation procedure in MDC 05. The proposed new
MS-DRG is proposed new MS-DRG 317 (Concomitant Left Atrial Appendage
Closure and Cardiac Ablation). We are also proposing to include the
nine ICD-10-PCS procedure codes that describe LAAC procedures and 27
ICD-10-PCS procedure codes that describe cardiac ablation listed
previously in the logic for assignment of cases reporting a LAAC
procedure and a cardiac ablation procedure for the proposed new MS-DRG.
We note that discussion of the surgical hierarchy for the proposed
modification is discussed in section II.C.15. of this proposed rule.
b. Neuromodulation Device Implant for Heart Failure
(BarostimTM Baroreflex Activation Therapy)
The BAROSTIMTM system is the first neuromodulation
device system designed to trigger the body's main cardiovascular reflex
to target symptoms of heart failure. The system consists of an
implantable pulse generator (IPG) that is implanted subcutaneously in
the upper chest below the clavicle, a stimulation lead that is sutured
to either the right or left carotid sinus to activate the baroreceptors
in the wall of the carotid artery, and a wireless programmer system
that is used to non-invasively program and adjust BAROSTIMTM
therapy via telemetry. The BAROSTIMTM system is indicated
for the improvement of symptoms of heart failure in a subset of
patients with symptomatic New York Heart Association (NYHA) Class III
or Class II (who had a recent history of Class III) heart failure, with
a low left ventricular ejection fraction, who also do not benefit from
guideline directed pharmacologic therapy or qualify for Cardiac
Resynchronization Therapy (CRT). The BAROSTIMTM system was
approved for new technology add-on payments for FY 2021 (85 FR 58716
through 58717) and FY 2022 (86 FR 44974). The new technology add-on
payment was subsequently discontinued effective FY 2023 (87 FR 48916).
In the FY 2023 IPPS/LTCH PPS final rule (87 FR 48837 through
48843), we discussed a request we received to reassign the ICD-10-PCS
procedure codes that describe the implantation of the
BAROSTIMTM system from MS-DRGs 252, 253, and 254 (Other
Vascular Procedures with MCC, with CC, and without MCC respectively) to
MS-DRGs 222, 223, 224, 225, 226, and 227 (Cardiac Defibrillator Implant
with and without Cardiac Catheterization with and without AMI/HF/Shock
with and without MCC, respectively). The requestor stated that the
subset of patients that have an indication for the implantation of a
BAROSTIMTM system also have indications for the implantation
of Implantable Cardioverter Defibrillators (ICD), Cardiac
Resynchronization Therapy Defibrillators (CRT-D) and/or Cardiac
Contractility Modulation (CCM) devices, all of which also require the
permanent implantation of a programmable, electrical pulse generator
and at least one electrical lead. The requestor further stated that the
average resource utilization required to implant the
BAROSTIMTM system demonstrates a significant disparity
compared to all procedures within MS-DRGs 252, 253, and 254.
In the FY 2023 IPPS/LTCH PPS final rule, we stated that the results
of the claims analysis demonstrated we did not have sufficient claims
data on which to base and evaluate any proposed changes to the current
MS-DRG assignment. We also expressed concern in equating the
implantation of a BAROSTIMTM system to the placement of ICD,
CRT-D, and CCM devices as these devices all differ in terms of
technical complexity and anatomical placement of the electrical
lead(s). We noted there is no intravascular component or vascular
puncture involved when implanting a BAROSTIMTM system. In
contrast, the placement of ICD, CRT-D, and CCM devices generally
involve a lead being affixed to the myocardium, being threaded through
the coronary sinus or crossing a heart valve and are procedures that
involve a greater level of complexity than affixing the stimulator lead
to either the right or left carotid sinus when implanting a
BAROSTIMTM system. We stated that we believed that as the
number of cases reporting procedure codes describing the implantation
of neuromodulation devices for heart failure increases, a better view
of the associated costs and lengths of stay on average will be
reflected in the data for purposes of assessing any reassignment of
these cases. Therefore, after consideration of the public comments we
received, and for the reasons stated earlier, we finalized our proposal
to maintain the assignment of cases reporting procedure codes that
describe the implantation of a neuromodulation device in MS-DRGs 252,
253, and 254 for FY 2023.
In the FY 2024 IPPS/LTCH PPS final rule (88 FR 58712 through
58720), we discussed a request we received to add ICD-10-CM diagnosis
code R57.0 (Cardiogenic shock) to the list of ``secondary diagnoses''
that grouped to 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). During our
review of the issue, we noted that the results of our claims analysis
showed that in procedures involving a cardiac defibrillator implant,
the average costs and length of stay were generally similar without
regard to the presence of diagnosis codes describing AMI, HF, or shock.
We stated we believed that it may no longer be necessary to subdivide
MS-DRGs 222, 223, 224, 225, 226, and 227 based on the diagnosis codes
reported. After consideration of the public comments we received, and
for the reasons stated in the rule, we finalized our proposal to delete
MS-
[[Page 35960]]
DRGs 222, 223, 224, 225, 226, and 227. We also finalized 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 for FY 2024.
For this FY 2025 IPPS/LTCH PPS proposed rule, we received a similar
request to again review the MS-DRG assignment of the ICD-10-PCS
procedure codes that describe the implantation of the
BAROSTIMTM system. Specifically, the requestor recommended
that CMS consider reassigning the ICD-10-PCS procedure codes that
describe the implantation of the BAROSTIMTM system from MS-
DRGs 252, 253, and 254 (Other Vascular Procedures with MCC, with CC,
and without MCC respectively) to MS-DRGs 275 (Cardiac Defibrillator
Implant with Cardiac Catheterization and MCC), MS-DRG 276, and 277
(Cardiac Defibrillator Implant with MCC and without MCC respectively);
or to other more clinically coherent MS-DRGs for implantable device
procedures indicated for Class III heart failure patients. The
requestor stated in their analysis the number of claims reporting
procedure codes that describe the implantation of the
BAROSTIMTM system has been consistently growing over the
past few years. The requestor acknowledged that the implantation of the
BAROSTIMTM system is predominantly performed in the
outpatient setting but noted that a significant number of severely sick
patients with multiple comorbidities (such as chronic kidney disease,
end stage renal disease (ESRD), chronic obstructive pulmonary disease
(COPD), and AF) are treated in an inpatient setting. The requestor
stated in their experience, hospitals that have performed
BAROSTIMTM procedures have stopped allowing patients to
receive the device in the inpatient setting due to the high losses for
each Medicare claim. The requestor asserted it is critically important
to allow very sick and fragile patients access to the
BAROSTIMTM procedure in an inpatient setting and stated
these patients should not be denied access by hospitals due to the
perceived gross underpayment of the current MS-DRG.
The requestor stated the BAROSTIMTM procedure is not
clinically coherent with other procedures assigned to MS-DRGs 252, 253,
and 254 (Other Vascular Procedures) as the majority of the ICD-10-PCS
codes assigned to MS-DRGs 252, 253, and 254 describe procedures to
identify, diagnose, clear and restructure veins and arteries, excluding
those that require implantable devices. Furthermore, the requestor
stated the costs of the implantable medical devices used for the
BAROSTIMTM system (that is, the electrical pulse generator
and electrical lead) alone far exceed the average costs of other cases
assigned to MS-DRGs 252, 253, and 254.
The following ICD-10-PCS procedure codes uniquely identify the
implantation of the BAROSTIMTM system: 0JH60MZ (Insertion of
stimulator generator into chest subcutaneous tissue and fascia, open
approach) in combination with 03HK3MZ (Insertion of stimulator lead
into right internal carotid artery, percutaneous approach) or 03HL3MZ
(Insertion of stimulator lead into left internal carotid artery,
percutaneous approach).
To analyze this request, we first examined claims data from the
September 2023 update of the FY 2023 MedPAR file for MS-DRGs 252, 253,
and 254 to identify cases reporting procedure codes describing the
implantation of the BAROSTIMTM system with or without a
procedure code describing the performance of a cardiac catheterization
as MS-DRG 275 is defined by the performance of cardiac catheterization
and a secondary diagnosis of MCC. Our findings are shown in the
following table.
[GRAPHIC] [TIFF OMITTED] TP02MY24.012
As shown in the table, in MS-DRG 252, we identified a total of
18,964 cases with an average length of stay of 8 days and average costs
of $30,456. Of those 18,964 cases, there was one case reporting
procedure codes describing
[[Page 35961]]
the implantation of the BAROSTIMTM system with a procedure
code describing the performance of a cardiac catheterization with costs
higher than the average costs in the FY 2023 MedPAR file for MS-DRG 252
($110,928 compared to $30,456) and a longer length of stay (9 days
compared to 8 days). There were 12 cases reporting procedure codes
describing the implantation of the BAROSTIMTM system without
a procedure code describing the performance of a cardiac
catheterization, with average costs higher than the average costs in
the FY 2023 MedPAR file for MS-DRG 252 ($66,291 compared to $30,456)
and a slighter shorter average length of stay (7.8 days compared to 8
days). In MS-DRG 253, we identified a total of 15,551 cases with an
average length of stay of 5.2 days and average costs of $22,870. Of
those 15,551 cases, there were seven cases reporting procedure codes
describing the implantation of the BAROSTIMTM system without
a procedure code describing the performance of a cardiac
catheterization, with average costs higher than the average costs in
the FY 2023 MedPAR file for MS-DRG 253 ($52,788 compared to $22,870)
and a shorter average length of stay (4 days compared to 5.2 days). We
found zero cases in MS-DRG 253 reporting procedure codes describing the
implantation of a BAROSTIMTM system with a procedure code
describing the performance of a cardiac catheterization. In MS-DRG 254,
we identified a total of 5,973 cases with an average length of stay of
2.3 days and average costs of $15,778. Of those 5,973 cases, there were
three cases reporting procedure codes describing the implantation of
the BAROSTIMTM system without a procedure code describing
the performance of a cardiac catheterization, with average costs higher
than the average costs in the FY 2023 MedPAR file for MS-DRG 254
($29,740 compared to $15,778) and a shorter average length of stay (1.3
days compared to 2.3 days). We found zero cases in MS-DRG 254 reporting
procedure codes describing the implantation of a BAROSTIMTM
system with a procedure code describing the performance of a cardiac
catheterization.
We then examined claims data from the September 2023 update of the
FY 2023 MedPAR file for MS-DRGs 275, 276, and 277. Our findings are
shown in the following table.
[GRAPHIC] [TIFF OMITTED] TP02MY24.013
As the table shows, for MS-DRG 275, there were a total of 3,358
cases with an average length of stay of 10.3 days and average costs of
$63,181. For MS-DRG 276, there were a total of 3,264 cases with an
average length of stay of 8.2 days and average costs of $54,993. For
MS-DRG 277, there were a total of 3,840 cases with an average length of
stay of 4.2 days and average costs of $42,111.
In exploring mechanisms to address this request, we noted in total,
there were only 23 cases reporting procedure codes describing the
implantation of a BAROSTIMTM system in MS-DRGs 252, 253, and
254 (13, 7, and 3, respectively). We reviewed these data, and while we
recognize that the average costs of the 23 cases reporting procedure
codes describing the implantation of a BAROSTIMTM are
greater when compared to the average costs of all cases in MS-DRGs 252,
253, and 254, the number of cases continues to be too small to warrant
the creation of a new MS-DRG for these cases.
We further note, that of the 23 cases reporting procedure codes
describing the implantation of a BAROSTIMTM system
identified in MS-DRGs 252, 253, and 254, only one case reported the
performance of cardiac catheterization. As discussed in the FY 2024
IPPS/LTCH PPS final rule, when reviewing the consumption of hospital
resources for the cases reporting a cardiac defibrillator implant with
cardiac catheterization during a hospital stay, the claims data clearly
showed that the cases reporting secondary diagnoses designated as MCCs
were more resource intensive as compared to other cases reporting
cardiac defibrillator implant. Therefore, we finalized the creation of
MS-DRG 275 for cases reporting a cardiac defibrillator implant with
cardiac catheterization and a secondary diagnosis designated as an MCC.
Of the 23 cases reporting procedure codes describing the implantation
of a BAROSTIMTM system, there was only one case reporting a
procedure code describing the performance of cardiac catheterization
and a secondary diagnosis designated as an MCC, and we note that there
may have been other factors contributing to the higher costs of this
one case. The results of the claims analysis demonstrate we do not have
sufficient claims data on which to base and propose a change to the
current MS-DRG assignment of cases reporting procedure codes describing
the implantation of a BAROSTIMTM system from MS-DRGs 252,
253, and 254 to MS-DRG 275.
Further analysis of the claims data demonstrates that the 23 cases
reporting procedure codes describing the implantation of a
BAROSTIMTM system had an average length of stay of 5.8 days
and average costs of $59,355, as compared to the 3,264 cases in MS-DRG
276 that had an average length of stay of 8.2 days and average costs of
$54,993. While the cases reporting procedure codes describing the
implantation of a BAROSTIMTM system had average costs that
were $4,362 higher than the average costs of all cases in MS-DRG 276,
as noted, there were only a total of 23 cases, and there may have been
other factors contributing to the higher costs. We noted, however,
reassigning all cases reporting procedure codes describing the
implantation of a BAROSTIMTM system to MS-DRG 276, even if
there is not a MCC present, the cases would receive higher payment and
better account for the differences in resource utilization of these
cases than in their respective MS-DRG.
We reviewed the clinical issues and the claims data, and while we
continue to note that there is no intravascular component or vascular
puncture involved when implanting a BAROSTIMTM system, and
that the implantation of a BAROSTIMTM system is
distinguishable from the placement of ICD, CRT-D, and CCM devices, as
these devices all differ in terms of technical complexity and
anatomical placement of the electrical lead(s), as discussed in the FY
2023 IPPS/LTCH PPS final rule (87 FR 48837 through 48843), we agree
that ICD, CRT-D, and CCM devices and the BAROSTIMTM system
are clinically coherent in that they share an indication of heart
failure, a major cause of morbidity and mortality in the United States,
and that these cases demonstrate comparable resource utilization. Based
on our review of the clinical issues and
[[Page 35962]]
the claims data, and to better account for the resources required, we
are proposing to reassign the cases reporting procedure codes
describing the implantation of a BAROSTIMTM system to MS-DRG
276, even if there is no MCC reported, to better reflect the clinical
severity and resource use involved in these cases.
Therefore, for FY 2025, we are proposing to reassign all cases with
one of the following ICD-10-PCS code combinations capturing cases
reporting procedure codes describing the implantation of a
BAROSTIMTM system, to MS-DRG 276, even if there is no MCC
reported:
0JH60MZ (Insertion of stimulator generator into chest
subcutaneous tissue and fascia, open approach) in combination with
03HK3MZ (Insertion of stimulator lead into right internal carotid
artery, percutaneous approach); and
0JH60MZ (Insertion of stimulator generator into chest
subcutaneous tissue and fascia, open approach) in combination with
03HL3MZ (Insertion of stimulator lead into left internal carotid
artery, percutaneous approach).
We also are proposing to change the title of MS-DRG 276 from
``Cardiac Defibrillator Implant with MCC'' to ``Cardiac Defibrillator
Implant with MCC or Carotid Sinus Neurostimulator'' to reflect the
proposed modifications to MS-DRG assignments. We note that discussion
of the surgical hierarchy for this proposed modification is discussed
in section II.C.15. of this proposed rule.
c. Endovascular Cardiac Valve Procedures
The human heart contains four major valves--the aortic, mitral,
pulmonary, and tricuspid valves. These valves function to keep blood
flowing through the heart. When conditions such as stenosis or
insufficiency/regurgitation occur in one or more of these valves,
valvular heart disease may result. Intervention options, including
surgical aortic valve replacement or transcatheter aortic valve
replacement can be performed to treat diseased or damaged aortic heart
valves. Surgical aortic valve replacement (SAVR) is a traditional,
open-chest surgery where an incision is made to access the heart. The
damaged valve is replaced, and the chest is surgically closed. Since
SAVR is a major surgery that involves an incision, recovery time tends
to be longer. Transcatheter aortic valve replacement (TAVR) is a
minimally invasive procedure that involves a catheter being inserted
into an artery, without an incision for most cases, and then guided to
the heart. The catheter delivers the new valve without the need for the
chest or heart to be surgically opened. Since TAVR is a non-surgical
procedure, it is generally associated with a much shorter recovery
time.
In the FY 2015 IPPS/LTCH PPS final rule (79 FR 49892 through
49893), we discussed a request we received to create a new MS-DRG that
would only include the various types of cardiac valve replacements
performed by an endovascular or transcatheter technique. We reviewed
the claims data and stated the data analysis showed that cardiac valve
replacements performed by an endovascular or transcatheter technique
had a shorter average length of stay and higher average costs in
comparison to all of the cases in their assigned MS-DRGs, which were
MS-DRGs 216, 217, 218, 219, 220, and 221 (Cardiac Valve & Other Major
Cardiothoracic Procedure with and without Cardiac Catheterization, with
MCC, with CC, and without CC/MCC, respectively). In the FY 2015 IPPS/
LTCH PPS final rule we stated that patients receiving endovascular
cardiac valve replacements were significantly different from those
patients who undergo an open chest cardiac valve replacement and noted
that patients receiving endovascular cardiac valve replacements are not
eligible for open chest cardiac valve procedures because of a variety
of health constraints, which we said highlights the fact that peri-
operative complications and post-operative morbidity have significantly
different profiles for open chest procedures compared with endovascular
interventions. We further noted that separately grouping these
endovascular valve replacement procedures provides greater clinical
cohesion for this subset of high-risk patients. Therefore, we finalized
our proposal to create MS-DRGs 266 and 267 (Endovascular Cardiac Valve
Replacement, with MCC and without MCC, respectively) for FY 2015.
In the FY 2020 IPPS/LTCH PPS final rule (84 FR 42080 through
42089), we discussed a request we received to modify the MS-DRG
assignment for transcatheter mitral valve repair (TMVR) with implant
procedures. We reviewed the claims data and stated based on our data
analysis, transcatheter cardiac valve repair procedures and
transcatheter (endovascular) cardiac valve replacement procedures are
more clinically coherent in that they describe endovascular cardiac
valve interventions with implants, and were similar in terms of average
length of stay and average costs to cases in MS-DRGs 266 and 267 when
compared to other procedures in their current MS-DRG assignment. For
the reasons described in the rule and after consideration of the public
comments we received, we finalized our proposal to modify the structure
of MS-DRGs 266 and 267 by reassigning the procedure codes that describe
transcatheter cardiac valve repair (supplement) procedures, to revise
the title of MS-DRG 266 from ``Endovascular Cardiac Valve Replacement
with MCC'' to ``Endovascular Cardiac Valve Replacement and Supplement
Procedures with MCC'' and to revise the title of MS-DRG 267 from
``Endovascular Cardiac Valve Replacement without MCC'' to
``Endovascular Cardiac Valve Replacement and Supplement Procedures
without MCC'', to reflect the finalized restructuring.
For this FY 2025 IPPS/LTCH PPS proposed rule, we received a request
to delete MS-DRGs 266 and 267 and to move the cases reporting
transcatheter aortic valve replacement or repair (supplement)
procedures currently assigned to those MS-DRGs into MS-DRGs 216, 217,
218, 219, 220, and 221. The requestor asserted that under the current
IPPS payment methodology, TAVR procedures are not profitable to
hospitals and when patients are clinically eligible for both a TAVR and
SAVR procedures, factors beyond clinical appropriateness can drive
treatment decisions. According to the requestor (the manufacturer of
the SAPIENTM family of transcatheter heart valves) sharing a
single set of MS-DRGs would eliminate the current disincentives
hospitals face and create financial neutrality between the two
lifesaving treatment options. The requestor stated the current
disincentives are increasingly problematic because they contribute to
treatment disparities among certain racial, socioeconomic, and
geographic groups.
The requestor noted that currently surgical cardiac valve
replacement and supplement procedures, such as SAVR, are assigned to
MS-DRGs 216, 217, 218, 219, 220, and 221, and endovascular cardiac
valve replacement and supplement procedures, such as TAVR, are assigned
to MS-DRGs 266 and 267. The requestor stated that both sets of MS-DRGs
address valve disease and include valve repair or replacement
procedures for any of the four heart valves. According to the
requestor, while the sets of MS-DRGs involve clinically similar cases
their payment rates differ which may be unintentionally influencing
clinical decision-making by incentivizing hospitals to choose more
invasive SAVR
[[Page 35963]]
procedures over less-invasive TAVR procedures.
As mentioned earlier, the requestor recommended that CMS delete MS-
DRGs 266 and 267 and move the cases reporting transcatheter aortic
valve replacement or repair (supplement) procedures currently assigned
to those MS-DRGs into MS-DRGs 216, 217, 218, 219, 220, and 221. The
requestor performed their own analysis and stated that their models of
this suggested solution indicated the change would result in moderate
differences in per case payments by case type and would not increase
overall Medicare spending. The requestor noted that while their
requested solution would potentially decrease payment to cases
currently assigned to MS-DRGs 216, 217, 218, 219, 220, and 221, while
at the same time increasing the payment to cases reporting endovascular
cardiac valve replacement and supplement procedures, the results of
their claim analysis demonstrated that the net difference in total
payments across all cases would increase by approximately $6.5 million.
The requestor stated that they anticipate that their proposed solution
could increase Medicare patients' access to innovative endovascular
cardiac valve procedures by establishing payment neutrality between
SAVR and TAVR procedures.
We reviewed this request and note the requestor is correct that in
Version 41.1 cases reporting procedure codes that describe endovascular
cardiac valve replacement and supplement procedures, including TAVR,
group to MS-DRGs 266 and 267. The requestor is also correct that cases
reporting procedure codes that describe surgical cardiac valve
replacement and supplement procedures, including SAVR, group to MS-DRGs
216, 217, 218, 219, 220, and 221. We refer the reader to the ICD-10 MS-
DRG Definitions Manual Version 41.1 (available on the CMS website at:
https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/ms-drg-classifications-and-software) for complete
documentation of the GROUPER logic for MS-DRGs 216, 217, 218, 219, 220,
221, 266 and 267.
To begin our analysis, we identified the ICD-10-PCS procedure codes
that describe endovascular (transcatheter) cardiac valve replacement
and supplement procedures and the ICD-10-PCS procedure codes that
describe surgical cardiac valve replacement and supplement procedures.
We also identified the ICD-10-PCS codes that describe cardiac
catheterization, as 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) are defined by the
performance of cardiac catheterization. We refer the reader to Table
6P.2a, Table 6P.2b, and Table 6P.2c, respectively, associated with this
proposed rule (and available at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps) for the lists of the
ICD-10-PCS procedure codes that we identified that describe
endovascular cardiac valve replacement and supplement procedures,
surgical cardiac valve replacement and supplement procedures, and
cardiac catheterization procedures.
We then examined the claims data from the September 2023 update of
the FY 2023 MedPAR file for all cases in MS-DRGs 216, 217, 218, 219,
220, and 221 and compared the results to cases reporting surgical
cardiac valve replacement and supplement procedures in MS-DRG 216, 217,
218, 219, 220, and 221. The following table shows our findings:
[GRAPHIC] [TIFF OMITTED] TP02MY24.014
As shown in the table, in MS-DRG 216, we identified a total of
5,033 cases with an average length of stay of 13.9 days and average
costs of $84,176. Of those 5,033 cases, there were 2,973 cases
reporting surgical cardiac valve replacement and supplement procedures,
with average costs higher than the average costs in the FY 2023 MedPAR
file for MS-DRG 216 ($87,497 compared to $84,176) and a longer average
length of stay (16.8 days
[[Page 35964]]
compared to 13.9 days). In MS-DRG 217, we identified a total of 1,635
cases with an average length of stay of 7.2 days and average costs of
$58,381. Of those 1,635 cases, there were 867 cases reporting surgical
cardiac valve replacement and supplement procedures, with average costs
lower than the average costs in the FY 2023 MedPAR file for MS-DRG 217
($56,829 compared to $58,381) and a longer average length of stay (9.5
days compared to 7.2 days). In MS-DRG 218, we identified a total of 275
cases with an average length of stay of 3.4 days and average costs of
$54,624. Of those 275 cases, there were 60 cases reporting surgical
cardiac valve replacement and supplement procedures, with average costs
lower than the average costs in the FY 2023 MedPAR file for MS-DRG 218
($45,096 compared to $54,624) and a longer average length of stay (6.7
days compared to 3.4 days). In MS-DRG 219, we identified a total of
12,458 cases with an average length of stay of 10.5 days and average
costs of $67,228. Of those 12,458 cases, there were 9,780 cases
reporting surgical cardiac valve replacement and supplement procedures,
with average costs lower than the average costs in the FY 2023 MedPAR
file for MS-DRG 219 ($64,954 compared to $67,228), and a slightly
shorter average length of stay (10.3 days compared to 10.5 days). In
MS-DRG 220, we identified a total of 9,829 cases with an average length
of stay of 6.3 days and average costs of $47,242. Of those 9,829 cases,
there were 7,841 cases reporting surgical cardiac valve replacement and
supplement procedures, with average costs lower than the average costs
in the FY 2023 MedPAR file for MS-DRG 220 ($46,245 compared to $47,242)
and a slightly longer average length of stay (6.4 days compared to 6.3
days). In MS-DRG 221, we identified a total of 1,242 cases with an
average length of stay of 3.8 days and average costs of $41,539. Of
those 1,242 cases, there were 627 cases reporting surgical cardiac
valve replacement and supplement procedures, with average costs lower
than the average costs in the FY 2023 MedPAR file for MS-DRG 221
($39,081 compared to $41,539) and a longer average length of stay (4.9
days compared to 3.8 days).
Next, we examined claims data from the September 2023 update of the
FY 2023 MedPAR file for MS-DRGs 266 and 267. Our findings are shown in
the following table.
[GRAPHIC] [TIFF OMITTED] TP02MY24.015
Because there is a two-way split within MS-DRGs 266 and 267 and
there is a three-way split within MS-DRGs 216, 217, and 218, and MS-
DRGs 219, 220, and 221 (Cardiac Valve and Other Major Cardiothoracic
Procedures without Cardiac Catheterization with MCC, with CC, and
without CC/MCC, respectively), we also analyzed the cases reporting a
code describing an endovascular cardiac valve replacement and
supplement procedure with a procedure code describing the performance
of a cardiac catheterization for the presence or absence of a secondary
diagnosis designated as a complication or comorbidity (CC) or a major
complication or comorbidity (MCC). We also analyzed the cases reporting
a code describing an endovascular cardiac valve replacement and
supplement procedure without a procedure code describing the
performance of a cardiac catheterization for the presence or absence of
a secondary diagnosis designated as a CC or an MCC.
[GRAPHIC] [TIFF OMITTED] TP02MY24.016
As shown in the table, the data analysis performed indicates that
the 5,443 cases in MS-DRG 266 reporting endovascular cardiac valve
replacement and supplement procedures with a procedure code describing
the
[[Page 35965]]
performance of a cardiac catheterization, and with a secondary
diagnosis code designated as an MCC have an average length of stay that
is shorter than the average length of stay (7.9 days versus 16.8 days)
and lower average costs ($63,128 versus $87,497) when compared to the
cases in MS-DRG 216 reporting surgical cardiac valve replacement and
supplement procedures with a procedure code describing the performance
of a cardiac catheterization, and with a secondary diagnosis code
designated as an MCC. The 4,761 cases in MS-DRG 267 reporting
endovascular cardiac valve replacement and supplement procedures with a
procedure code describing the performance of a cardiac catheterization,
and with a secondary diagnosis code designated as a CC have an average
length of stay that is shorter than the average length of stay (2 days
versus 9.5 days) and lower average costs ($42,163 versus $56,829) when
compared to the cases in MS-DRG 217 reporting surgical cardiac valve
replacement and supplement procedures with a procedure code describing
the performance of a cardiac catheterization, and with a secondary
diagnosis code designated as an CC. The 1,386 cases in MS-DRG 267
reporting endovascular cardiac valve replacement and supplement
procedures with a procedure code describing the performance of a
cardiac catheterization, and without a secondary diagnosis code
designated as a CC or MCC have an average length of stay that is
shorter than the average length of stay (1.3 days versus 6.7 days) and
lower average costs ($39,709 versus $45,096) when compared to the cases
in MS-DRG 218 reporting surgical cardiac valve replacement and
supplement procedures with a procedure code describing the performance
of a cardiac catheterization, without a secondary diagnosis code
designated as a CC or MCC.
The 14,493 cases in MS-DRG 266 reporting endovascular cardiac valve
replacement and supplement procedures without a procedure code
describing the performance of a cardiac catheterization, and with a
secondary diagnosis code designated as an MCC have an average length of
stay that is shorter than the average length of stay (3.5 days versus
10.3 days) and lower average costs ($50,831 versus $64,954) when
compared to the cases in MS-DRG 219 reporting surgical cardiac valve
replacement and supplement procedures without a procedure code
describing the performance of a cardiac catheterization, and with a
secondary diagnosis code designated as an MCC. The 22,996 cases in MS-
DRG 267 reporting endovascular cardiac valve replacement and supplement
procedures without a procedure code describing the performance of a
cardiac catheterization, and with a secondary diagnosis code designated
as a CC have an average length of stay that is shorter than the average
length of stay (1.5 days versus 6.4 days) and lower average costs
($43,637 versus $46,245) when compared to the cases in MS-DRG 220
reporting surgical cardiac valve replacement and supplement procedures
without a procedure code describing the performance of a cardiac
catheterization, and with a secondary diagnosis code designated as an
CC. The 7,522 cases in MS-DRG 267 reporting endovascular cardiac valve
replacement and supplement procedures without a procedure code
describing the performance of a cardiac catheterization, and without a
secondary diagnosis code designated as a CC or MCC have an average
length of stay that is shorter than the average length of stay (1.2
days versus 4.9 days) and higher average costs ($42,472 versus $39,081)
when compared to the cases in MS-DRG 221 reporting surgical cardiac
valve replacement and supplement procedures without a procedure code
describing the performance of a cardiac catheterization, without a
secondary diagnosis code designated as a CC or MCC.
This data analysis shows the cases in MS-DRG 266 and 267 reporting
endovascular cardiac valve replacement and supplement procedures with a
procedure code describing the performance of a cardiac catheterization
when distributed based on the presence or absence of a secondary
diagnosis designated as a CC or a MCC have average costs lower than the
average costs of cases reporting surgical cardiac valve replacement and
supplement procedures with a procedure code describing the performance
of a cardiac catheterization in the FY 2023 MedPAR file for MS-DRGs
216, 217, and 218 respectively, and the average lengths of stay are
shorter. Similarly, the cases in MS-DRG 266 and 267 reporting
endovascular cardiac valve replacement and supplement procedures
without a procedure code describing the performance of a cardiac
catheterization when distributed based on the presence or absence of a
secondary diagnosis designated as a CC or a MCC generally have average
costs lower than the average costs of cases reporting surgical cardiac
valve replacement and supplement procedures without a procedure code
describing the performance of a cardiac catheterization in the FY 2023
MedPAR file for MS-DRGs 219, 220, and 221 respectively, and the average
lengths of stay are shorter.
For patients with an indication for cardiac valve replacement,
clinical and anatomic factors must be considered when decision-making
between procedures such as TAVR and SAVR. We note that SAVR is not a
treatment option for patients with extreme surgical risk (that is, high
probability of death or serious irreversible complication), severe
atheromatous plaques of the ascending aorta such that aortic cross-
clamping is not feasible, or with other conditions that would make
operation through sternotomy or thoracotomy prohibitively hazardous. We
agree that the endovascular or transcatheter technique presents a
viable option for high-risk patients who are not candidates for the
traditional open surgical approach, however we also note that TAVR is
not indicated for every patient. TAVR is contraindicated in patients
who cannot tolerate an anticoagulation/antiplatelet regimen, or who
have active bacterial endocarditis or other active infections, or who
have significant annuloplasty ring dehiscence.
We have concern with the assertion that clinicians perform more
invasive surgical procedures, such as SAVR procedures, only to increase
payment to their facility where minimally invasive TAVR procedures are
also viable option. The choice of SAVR versus TAVR should not be based
on potential facility payment. Instead, the decision on the procedural
approach to be utilized should be based upon an individualized risk-
benefit assessment that includes reviewing factors such as the
patient's age, surgical risk, frailty, valve morphology, and presence
of concomitant valve disease or coronary artery disease. As we have
stated in prior rulemaking (83 FR 41201), it is not appropriate for
facilities to deny treatment to beneficiaries needing a specific type
of therapy or treatment that involves increased costs. Conversely, it
is not appropriate for facilities to recommend a specific type of
therapy or treatment strictly because it may involve higher payment to
the facility.
Also, we have concern with the requestor's assertion that sharing a
single set of MS-DRGs could eliminate any perceived disincentives
hospitals may face and create financial neutrality between the two
lifesaving treatment options. Data analysis shows that cases reporting
surgical cardiac valve
[[Page 35966]]
replacement and supplement procedures have higher costs and longer
lengths of stay. If clinical decision-making is being driven by
financial motivations, as suggested by the requestor, in circumstances
where the decision on which approach is best (for example, TAVR or
SAVR) is left to the providers' discretion, it is unclear how reducing
payment for surgical cardiac valve replacement and supplement
procedures would eliminate possible disincentives, or not have the
opposite effect, and instead incentivize endovascular cardiac valve
replacement and supplement procedures.
The MS-DRGs are a classification system intended to group together
diagnoses and procedures with similar clinical characteristics and
utilization of resources and are not intended to be utilized as a tool
to incentivize the performance of certain procedures. When performed,
surgical cardiac valve replacement and supplement procedures are
clinically different from endovascular cardiac valve replacement and
supplement procedures in terms of technical complexity and hospital
resource use. In the FY 2015 IPPS/LTCH PPS final rule, we stated that
separately grouping endovascular valve replacement procedures provides
greater clinical cohesion for this subset of high-risk patients. Our
claims analysis for this FY 2025 IPPS/LTCH PPS proposed rule
demonstrates that this continues to be substantiated by the difference
in average costs and average lengths of stay demonstrated by the two
cohorts. We continue to believe that endovascular cardiac valve
replacement and supplement procedures are clinically coherent in their
currently assigned MS-DRGs. Therefore, we are proposing to maintain the
structure of MS-DRGs 266 and 267 for FY 2025.
d. MS-DRG Logic for MS-DRG 215
We received a request to review the GROUPER logic for MS-DRG 215
(Other Heart Assist System Implant) in MDC 05 (Diseases and Disorders
of the Circulatory System). The requestor stated that when the
procedure code describing the revision of malfunctioning devices within
the heart via an open approach is assigned, the encounter groups to MS-
DRG 215. The requestor stated that, in their observation, ICD-10-PCS
code 02WA0JZ (Revision of synthetic substitute in heart, open approach)
can only be assigned if a more specific anatomical site is not
documented in the operative note. The requestor further stated they
interpreted this to mean that an ICD-10-PCS procedure code describing
the open revision of a synthetic substitute in the heart can only apply
to the ventricular wall or left atrial appendage and excludes the
atrial or ventricular septum or any valve to qualify for MS-DRG 215 and
recommended that CMS consider the expansion of the open revision of
heart structures to include the atrial or ventricular septum and heart
valves.
To begin our analysis, we reviewed the GROUPER logic. The requestor
is correct that ICD-10-PCS procedure code 02WA0JZ is currently one of
the listed procedure codes in the GROUPER logic for MS-DRG 215. While
the requestor stated that when procedures codes describing the
revisions of malfunctioning devices within the heart via an open
approach are assigned, the encounter groups to MS-DRG 215, we wish to
clarify that the revision codes listed in the GROUPER logic for MS-DRG
215 specifically describe procedures to correct, to the extent
possible, a portion of a malfunctioning heart assist device or the
position of a displaced heart assist device. Further, it is unclear
what is meant by the requestor's statement that ICD-10-PCS code 02WA0JZ
can only be assigned if more specific anatomical site is not documented
in the operative note, as ICD-10-PCS code 02WA0JZ is used to describe
the open revision of artificial heart systems. Total artificial hearts
are pulsating bi-ventricular devices that are implanted into the chest
to replace a patient's left and right ventricles and can provide a
bridge to heart transplantation for patients who have no other
reasonable medical or surgical treatment options. We refer the reader
to the ICD-10 MS-DRG Definitions Manual Version 41.1 (available on the
CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/ms-drg-classifications-and-software) for complete documentation of the GROUPER logic for MS-DRG
215. We encourage the requestor and any providers that have cases
involving heart assist devices for which they need ICD-10 coding
assistance and clarification on the usage of the codes, to submit their
questions to the American Hospital Association's Central Office on ICD-
10 at https://www.codingclinicadvisor.com/.
As previously noted, the requestor recommended that we consider
expansion of the open revision of heart structures to include the
atrial or ventricular septum and heart valves. The requestor did not
provide a specific list of procedure codes involving the open revision
of heart structures. While not explicitly stated, we understood this
request to be for our consideration of the reassignment of the
procedure codes describing the open revision of devices in the heart
valves, atrial septum, or ventricular septum to MS-DRG 215, therefore,
we reviewed the ICD-10-PCS classification and identified the following
18 procedure codes. These 18 codes are all assigned to MS-DRGs 228 and
229 (Other Cardiothoracic Procedures with and without MCC,
respectively) in MDC 05 in Version 41.1.
[[Page 35967]]
[GRAPHIC] [TIFF OMITTED] TP02MY24.017
Next, we examined claims data from the September 2023 update of the
FY 2023 MedPAR file for MS-DRG 228 and 229 to identify cases reporting
one of the 18 codes listed previously that describe the open revision
of devices in the heart valves, atrial septum, or ventricular septum.
Our findings are shown in the following table:
[GRAPHIC] [TIFF OMITTED] TP02MY24.018
As shown in the table, in MS-DRG 228, we identified a total of
4,391 cases with an average length of stay of 8.7 days and average
costs of $44,565. Of those 4,391 cases, there were 12 cases reporting a
procedure code describing the open revision of devices in the heart
valves, atrial septum, or ventricular septum, with average costs higher
than the average costs in the FY 2023 MedPAR file for MS-DRG 228
($51,549 compared to $44,565) and a longer average length of stay (15.7
days compared to 8.7 days). In MS-DRG 229, we identified a total of
5,712 cases with an average length of stay of 3.3 days and average
costs of $28,987. Of those 5,712 cases, there was one case reporting a
procedure code describing the open revision of devices in the heart
valves, atrial septum, or ventricular septum with costs lower than the
average costs in the FY 2023 MedPAR file for MS-DRG 229 ($11,322
compared to $28,987) and a shorter length of stay (1 day compared to
3.3 days).
We then examined claims data from the September 2023 update of the
FY 2023 MedPAR for MS-DRG 215. Our findings are shown in the following
table.
[GRAPHIC] [TIFF OMITTED] TP02MY24.019
Our analysis indicates that the cases assigned to MS-DRG 215 have
much higher average costs than the cases reporting a procedure code
describing the open revision of devices in the heart valves, atrial
septum, or ventricular septum currently assigned to MS-DRGs 228 and
229. Instead, the average costs and average length of stay for case
reporting a procedure code describing the open revision of devices in
the heart valves, atrial septum, or ventricular septum appear to be
generally more aligned with the average costs and average length of
stay for all cases in MS-DRGs 228 and 229, where they are currently
assigned.
In addition, based on our review of the clinical considerations, we
do not believe the procedure codes describing the open revision of
devices in the heart valves, atrial septum, or ventricular septum are
clinically coherent with the procedure codes currently assigned to MS-
DRG 215. Heart assist devices, such as ventricular assist devices and
artificial heart systems, provide circulatory support by taking over
most of the workload of the left ventricle. Blood enters the pump
through an
[[Page 35968]]
inflow conduit connected to the left ventricle and is ejected through
an outflow conduit into the body's arterial system. Heart assist
devices can provide temporary left, right, or biventricular support for
patients whose hearts have failed and can also be used as a bridge for
patients who are awaiting a heart transplant. Devices placed in the
heart valves, atrial septum, or ventricular septum do not serve the
same purpose as heart assist devices and we do not believe the
procedure codes describing the revision of these devices should be
assigned to MS-DRG 215. Further, the various indications for devices
placed in the heart valves, atrial septum or ventricular septum are not
aligned with the indications for heart assist devices. We believe that
patients with indications for heart assist devices tend to be more
severely ill and these inpatient admissions are associated with greater
resource utilization. Therefore, for the reasons stated previously, we
are proposing to maintain the GROUPER logic for MS-DRG 215 for FY 2025.
5. MDC 06 (Diseases and Disorders of the Digestive System): Excision of
Intestinal Body Parts
We identified a replication issue from the ICD-9 based MS-DRGs to
the ICD-10 based MS-DRGs regarding the assignment of eight ICD-10-PCS
codes that describe the excision of intestinal body parts by open,
percutaneous, or percutaneous endoscopic approach. Under the Version 32
ICD-9 based MS-DRGs, ICD-9-CM procedure code 45.33 (Local excision of
lesion or tissue of small intestine, except duodenum) was designated as
an O.R. procedure and was assigned to MDC 06 (Diseases and Disorders of
the Digestive System) in MS-DRGs 347, 348, and 349 (Anal and Stomal
Procedures with MCC, with CC, and without CC/MCC, respectively).
There are eight ICD-10-PCS code translations that provide more
detailed and specific information for ICD-9-CM code 45.33 that also
currently group to MS-DRGs 347, 348, and 349 in the ICD-10 MS-DRGs
Version 41.1. These eight procedure codes are shown in the following
table:
[GRAPHIC] [TIFF OMITTED] TP02MY24.020
We noted during our review of this issue that under ICD-9-CM,
procedure code 45.33 did not differentiate the specific type of
approach used to perform the procedure. This is in contrast to the
eight comparable ICD-10-PCS code translations listed in the previous
table that do differentiate among various approaches (open,
percutaneous, and percutaneous endoscopic). We also noted that there
are four additional ICD-10-PCS code translations that provide more
detailed and specific information for ICD-9-CM code 45.33, however
these four codes currently group to MS-DRGs 329, 330, and 331 (Major
Small and Large Bowel Procedures with MCC, with CC, and without CC/MCC,
respectively), and not MS-DRGs 347, 348, and 349, in the ICD-10 MS-DRGs
Version 41.1. These four procedure codes are shown in the following
table:
[GRAPHIC] [TIFF OMITTED] TP02MY24.021
We refer the reader to the ICD-10 MS-DRG Definitions Manual Version
41.1 (available on the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/ms-drg-classifications-and-software) for complete documentation of the GROUPER
logic for MS-DRGs 329, 330, 331, 347, 348, and 349.
Next, we examined claims data from the September 2023 update of the
FY 2023 MedPAR file for MS-DRG 347, 348, and 349 to identify cases
reporting one of the eight codes listed previously that describe
excision of intestinal body parts by an open, percutaneous, or
percutaneous endoscopic approach. Our findings are shown in the
following table:
[[Page 35969]]
[GRAPHIC] [TIFF OMITTED] TP02MY24.022
As shown in the table, in MS-DRG 347, we identified a total of 752
cases with an average length of stay of 7.6 days and average costs of
$21,462. Of those 752 cases, there were 66 cases reporting one of eight
procedure codes describing the excision of intestinal body parts by an
open, percutaneous, or percutaneous endoscopic approach, with average
costs higher than the average costs in the FY 2023 MedPAR file for MS-
DRG 347 ($27,081 compared to $21,462) and a longer average length of
stay (8.5 days compared to 7.6 days). In MS-DRG 348, we identified a
total of 1,580 cases with an average length of stay of 4.2 days and
average costs of $12,020. Of those 1,580 cases, there were 192 cases
reporting one of eight procedure codes describing the excision of
intestinal body parts by an open, percutaneous, or percutaneous
endoscopic approach, with average costs higher than the average costs
in the FY 2023 MedPAR file for MS-DRG 348 ($17,063 compared to $12,020)
and a longer average length of stay (4.9 days compared to 4.2 days). In
MS-DRG 349, we identified a total of 644 cases with an average length
of stay of 2.2 days and average costs of $9,095. Of those 644 cases,
there were 117 cases reporting one of eight procedure codes describing
the excision of intestinal body parts by an open, percutaneous, or
percutaneous endoscopic approach, with average costs higher than the
average costs in the FY 2023 MedPAR file for MS-DRG 349 ($14,612
compared to $9,095), and a longer average length of stay (3 days
compared to 2.2 days).
We then examined claims data from the September 2023 update of the
FY 2023 MedPAR for MS-DRGs 329, 330, and 331. Our findings are shown in
the following table.
[GRAPHIC] [TIFF OMITTED] TP02MY24.023
While the average costs for all cases in MS-DRGs 329, 330, and 331
are higher than the average costs of the cases reporting one of eight
procedure codes describing the excision of intestinal body parts by an
open, percutaneous, or percutaneous endoscopic approach, the data
suggest that overall, cases reporting one of eight procedure codes
describing the excision of intestinal body parts by an open,
percutaneous, or percutaneous endoscopic approach may be more
appropriately aligned with the average costs of the cases in MS-DRGs
329, 330, and 331 in comparison to MS-DRGs 347, 348, and 349, even
though the average lengths of stay are shorter.
We reviewed this grouping issue, and our analysis indicates that
the eight procedure codes describing the excision of intestinal body
parts by an open, percutaneous, or percutaneous endoscopic approach
were initially assigned to the list of procedures in the GROUPER logic
for MS-DRGs 347, 348, and 349 as a result of replication in the
transition from ICD-9 to ICD-10 based MS-DRGs. We also note that
procedure codes 0DB83ZZ, 0DBA3ZZ, 0DBA4ZZ, 0DBB3ZZ, 0DBB4ZZ, 0DBC0ZZ,
0DBC3ZZ, and 0DBC4ZZ do not describe procedures on a stoma, which is an
artificial opening on the abdomen that can be connected to either the
digestive or urinary system to allow waste to be diverted out of the
body, or the anus. We support the reassignment of codes 0DB83ZZ,
0DBA3ZZ, 0DBA4ZZ, 0DBB3ZZ, 0DBB4ZZ, 0DBC0ZZ, 0DBC3ZZ, and 0DBC4ZZ for
clinical coherence and believe these eight procedure codes should be
appropriately grouped along with the four other procedure codes that
describe excision of intestinal body parts by an open, or percutaneous
endoscopic approach currently assigned to MS-DRGs 329, 330, and 331.
Accordingly, because the procedures described by the eight
procedure codes that describe excision of intestinal body parts by an
open, percutaneous, or percutaneous endoscopic approach are not
clinically consistent with procedures on the anus or stoma, and it is
clinically appropriate to reassign these procedures to be consistent
with the four other procedure codes that describe excision of
intestinal body parts by an open, or percutaneous endoscopic approach
in MS-DRGs 329, 330, and 331, we are proposing the reassignment of
procedure codes 0DB83ZZ, 0DBA3ZZ, 0DBA4ZZ, 0DBB3ZZ, 0DBB4ZZ, 0DBC0ZZ,
0DBC3ZZ, and 0DBC4ZZ from MS-DRGs 347, 348, and 349 (Anal and Stomal
Procedures with MCC, with CC, and without CC/MCC, respectively) to MS-
DRGs 329, 330, and 331 (Major Small and Large Bowel Procedures with
MCC, with CC, and without CC/MCC, respectively) in MDC 06, effective FY
2025.
[[Page 35970]]
6. MDC 08 (Diseases and Disorders of the Musculoskeletal System and
Connective Tissue)
a. MS-DRG Logic for MS-DRGs 456, 457, and 458
We identified an inconsistency in the GROUPER logic for 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) related to ICD-10-CM diagnosis codes
describing deforming dorsopathies. The logic for case assignment to MS-
DRGs 456, 457, and 458 as displayed in the ICD-10 MS-DRG Definitions
Manual Version 41.1 (which is available on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/MS-DRG-Classifications-and-Software) is comprised of
four logic lists. The first logic list is entitled ``Spinal Fusion
Except Cervical'' and is defined by a list of procedure codes
designated as O.R. procedures that describe spinal fusion procedures of
the thoracic, thoracolumbar, lumbar, lumbosacral, sacrococcygeal,
coccygeal, and sacroiliac joint. The second logic list is entitled
``Spinal Curvature/Malignancy/Infection'' and is defined by a list of
diagnosis codes describing spinal curvature, spinal malignancy, and
spinal infection that are used to define the logic for case assignment
when any one of the listed diagnosis codes is reported as the principal
diagnosis. The third logic list is entitled ``OR Secondary Diagnosis''
and is defined by a list of diagnosis codes describing curvature of the
spine that are used to define the logic for case assignment when any
one of the listed codes is reported as a secondary diagnosis. The
fourth logic list is entitled ``Extensive Fusions'' and is defined by a
list of procedure codes designated as O.R. procedures that describe
extensive spinal fusion procedures. We refer the reader to the ICD-10
MS-DRG Definitions Manual Version 41.1, (available on the CMS website
at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/ms-drg-classifications-and-software) for complete
documentation of the GROUPER logic for MS-DRGs 456, 457, and 458.
In the second logic list entitled ``Spinal Curvature/Malignancy/
Infection'' there are a subset of six diagnosis codes describing other
specified deforming dorsopathies as shown in the following table.
[GRAPHIC] [TIFF OMITTED] TP02MY24.024
In the third logic list entitled ``OR Secondary Diagnosis'' there
are currently 14 diagnosis codes listed, one of which is diagnosis code
M43.8X9 (Other specified deforming dorsopathies, site unspecified) as
shown in the following table.
[GRAPHIC] [TIFF OMITTED] TP02MY24.025
We recognized that the five diagnosis codes describing deforming
dorsopathies of specific anatomic sites that are listed in the second
logic list entitled ``Spinal Curvature/Malignancy/Infection'' are not
listed in the third logic list entitled ``OR Secondary Diagnosis'',
rather, only diagnosis code M43.8X9 (Other specified deforming
dorsopathies, site unspecified) appears in both logic lists. Therefore,
we considered if it was clinically appropriate to add the five
diagnosis codes describing deforming dorsopathies of specific anatomic
sites that are listed in the second logic list entitled ``Spinal
Curvature/Malignancy/Infection'' to the third logic list entitled ``OR
Secondary Diagnosis''.
A deforming dorsopathy is characterized by abnormal bending or
flexion in the vertebral column. All spinal deformities involve
problems with curve or rotation of the spine, regardless of site
specificity. We believe the five diagnosis codes describing deforming
dorsopathies of specific anatomic sites to be clinically aligned with
the diagnosis codes currently
[[Page 35971]]
included in the ``OR Secondary Diagnosis'' logic list. Therefore, for
clinical consistency we are proposing to add diagnosis codes M43.8X4,
M43.8X5, M43.8X6, M43.8X7, and M43.8X8 to the ``OR Secondary
Diagnosis'' logic list for MS-DRGs 456, 457, and 458, effective October
1, 2024 for FY 2025.
b. Interbody Spinal Fusion Procedures
In the FY 2024 IPPS/LTCH PPS proposed rule (88 FR 26726 through
26729) and final rule (88 FR 58731 through 58735, as corrected in the
FY 2024 final rule correction notice at 88 FR 77211), we discussed a
request we received to reassign cases reporting spinal fusion
procedures using 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 refer the reader to the ICD-10 MS-DRG
Definitions Manual Version 41.1 (available on the CMS website at:
https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/ms-drg-classifications-and-software) for complete
documentation of the GROUPER logic.
We also noted that the aprevoTM Intervertebral Body
Fusion Device technology was approved for new technology add-on
payments for FY 2022 (86 FR 45127 through 45133). We further 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 the FY 2024 IPPS/
LTCH PPS final rule (88 FR 58802), we finalized the continuation of new
technology add-on payments for the transforaminal lumbar interbody
fusion (TLIF) indication for aprevoTM for FY 2024, and the
discontinuation of the new technology add-on payments for the anterior
lumbar interbody fusion (ALIF) and lateral lumbar interbody fusion
(LLIF) indications for FY 2024. We refer the reader to section II.E.
for discussion of the FY 2025 status of technologies receiving new
technology add-on payments for FY 2024, including the status for the
aprevoTM technology.
As also discussed in the FY 2024 IPPS/LTCH PPS proposed rule (88 FR
26726 through 26729) and final rule (88 FR 58731 through 58735),
effective October 1, 2021 (FY 2022), we implemented 12 new ICD-10-PCS
procedure codes to identify and describe spinal fusion procedures using
the aprevoTM customized interbody fusion device. In the
proposed rule we noted that the manufacturer expressed concerns that
there may be unintentional miscoded claims from providers with whom
they do not have an explicit relationship and 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, it submitted a code proposal requesting a revision to the title
of the procedure codes that were finalized effective FY 2022. As
discussed in the FY 2024 IPPS/LTCH PPS final rule, a proposal to revise
the code title for the procedure codes that identify and describe
spinal fusion procedures using the aprevoTM customized
interbody fusion device was presented and discussed as an Addenda item
at the March 7-8, 2023 ICD-10 Coordination and Maintenance Committee
meeting and subsequently finalized.
The code title changes for the 12 ICD-10-PCS procedure codes to
identify and describe spinal fusion procedures using the
aprevoTM customized interbody fusion device were reflected
in the FY 2024 ICD-10-PCS Code Update files available via the CMS
website at: https://www.cms.gov/medicare/coding-billing/icd-10-codes/2024-icd-10-pcs, as well as in Table 6F.--Revised Procedure Code
Titles--FY 2024 associated with the FY 2024 IPPS/LTCH PPS final rule
and available via the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps. We note that
only the code titles were revised and the code numbers themselves did
not change.
Accordingly, effective with discharges on and after October 1, 2023
(FY 2024), the 12 ICD-10-PCS procedure codes to identify and describe
spinal fusion procedures using the aprevoTM customized
interbody fusion device with their revised code titles are as follows:
[[Page 35972]]
[GRAPHIC] [TIFF OMITTED] TP02MY24.026
As discussed in the FY 2024 proposed and final rules, as part of
our analysis of the manufacturer's request to reassign cases involving
the aprevoTM device, we presented findings from our analysis
of claims 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 12 original procedure codes describing
utilization of an aprevoTM customized interbody spinal
fusion device. We stated that while we agreed that the findings from
our analysis appeared to indicate that cases reporting the performance
of a procedure using an aprevoTM customized interbody spinal
fusion device reflected a higher consumption of resources, due to the
concerns expressed with respect to suspected inaccuracies of the coding
and therefore, reliability of the claims data, we would continue to
monitor the claims data for resolution of the potential coding issues
identified by the requestor (the manufacturer). We stated that we
continued to believe additional review of claims data was warranted and
would be informative as we continued to consider cases involving this
technology for future rulemaking. Specifically, we stated we believed
it would be premature to propose any MS-DRG modifications for spinal
fusion procedures using an aprevoTM customized interbody
spinal fusion device for FY 2024 and finalized our proposal to maintain
the structure of MS-DRGs 453, 454, 455, 456, 457, 458, 459, and 460,
without modification, for FY 2024 (88 FR 58734 through 58735). As
discussed further in the FY 2024 final rule correction, in response to
the manufacturer's comment expressing concern about the reliability of
the Medicare claims data in the MedPAR file used for purposes of CMS's
claims data analysis, as compared to the manufacturer's analysis of its
own customer claims data, we stated that in order for us to consider
using non-MedPAR data, the non-MedPAR data must be independently
validated, meaning when an entity submits non-MedPAR data, we must be
able to independently review the medical records and verify that a
particular procedure was performed for each of the cases that
purportedly involved the procedure. We noted that, in this particular
circumstance, where external data for cases reporting the use of an
aprevoTM spinal fusion device was provided, we did not have
access to the medical records to conduct an independent review;
therefore, we were not able to validate or confirm the non-MedPAR data
submitted by the commenter for consideration in FY 2024. However, we
also noted that our work in this area was ongoing, and we would
continue to examine the data and consider these issues as we develop
potential future rulemaking proposals. We refer readers to the FY 2024
IPPS/LTCH PPS correction notice (88 FR 77211) for further discussion.
---------------------------------------------------------------------------
\3\ As noted earlier in the discussion, the code titles were
updated but the code numbers themselves did not change.
---------------------------------------------------------------------------
In advance of this FY 2025 IPPS/LTCH PPS proposed rule, the
manufacturer provided us with a list of the providers with which it
indicated it has an explicit relationship to assist in our ongoing
review of its request for reassignment of cases reporting spinal fusion
procedures using an aprevoTM interbody fusion device from
the lower severity spinal fusion MS-DRGs to the higher severity level
spinal fusion MS-DRGs.
To continue our analysis of cases reporting spinal fusion
procedures using an aprevoTM customized interbody fusion
device, we first analyzed claims data from the September 2023 update of
the FY 2023 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 the performance of a spinal fusion procedure using an
aprevoTM custom-made anatomically designed interbody fusion
device.\3\ Our findings are shown in the following tables.
[[Page 35973]]
[GRAPHIC] [TIFF OMITTED] TP02MY24.027
We identified the majority of cases reporting the performance of a
spinal fusion procedure using an aprevoTM custom-made
anatomically designed interbody fusion device in MS-DRGs 453, 454, and
455 with a total of 242 cases (26 + 129 + 87 = 242) with an average
length of stay of 4.6 days and average costs of $68,526. The 26 cases
found in MS-DRG 453 appear to have a comparable average length of stay
(9.8 days versus 9.5 days) and higher average costs ($99,162 versus
$80,420) compared to all the cases in MS-DRG 453, with a difference in
average costs of $18,742 for the cases reporting the performance of a
spinal fusion procedure using an aprevoTM custom-made
anatomically designed interbody fusion device. The 129 cases found in
MS-DRG 454 appear to have a comparable average length of stay (4.9 days
versus 4.3 days) and higher average costs ($71,527 versus $54,983)
compared to all the cases in MS-DRG 454, with a difference in average
costs of $16,544 for the cases reporting the performance of a spinal
fusion procedure using an aprevoTM custom-made anatomically
designed interbody fusion device. The 87 cases found in MS-DRG 455 have
an identical average length of stay of 2.6 days in comparison to all
the cases in MS-DRG 455, however, the difference in average costs is
$13,907 ($54,922-$41,015 = $13,907) for the cases reporting the
performance of a spinal fusion procedure using an
[[Page 35974]]
aprevoTM custom-made anatomically designed interbody fusion
device.
For MS-DRGs 456, 457, and 458, we found a total of 19 cases (2 + 11
+ 6 = 19) reporting the performance of a spinal fusion procedure using
an aprevoTM custom-made anatomically designed interbody
fusion device with an average length of stay of 4.7 days and average
costs of $51,384. The 2 cases found in MS-DRG 456 have a shorter
average length of stay (8.5 days versus 12.6 days) and lower average
costs ($69,009 versus $76,060) compared to all the cases in MS-DRG 456.
The 11 cases found in MS-DRG 457 also have a shorter average length of
stay (5.0 days versus 6.1 days) and lower average costs ($47,221 versus
$52,179). For MS-DRG 458, we found 6 cases reporting the performance of
a spinal fusion procedure using an aprevoTM custom-made
anatomically designed interbody fusion device with a comparable average
length of stay (3.0 days versus 3.1 days) and higher average costs
($53,140 versus $39,260) compared to the average costs of all the cases
in MS-DRG 458, with a difference in average costs of $13,880 ($53,140-
$39,260 = $13,880) for the cases reporting the performance of a spinal
fusion procedure using an aprevoTM custom-made anatomically
designed interbody fusion device.
For MS-DRGs 459 and 460, we found a total of 65 cases reporting the
performance of a spinal fusion procedure using an aprevoTM
custom-made anatomically designed interbody fusion device with an
average length of stay of 2.7 days and average costs of $57,128. The
single case found in MS-DRG 459 had a longer average length of stay (22
days versus 9.6 days) and higher average costs ($288,499 versus
$53,192) compared to the average costs of all the cases in MS-DRG 459.
For MS-DRG 460, the 64 cases reporting the performance of a spinal
fusion procedure using an aprevoTM custom-made anatomically
designed interbody fusion device had a shorter average length of stay
(2.4 days versus 3.4 days) and higher average cost ($53,513 versus
$32,586), compared to all the cases in MS-DRG 460, with a difference in
average costs of $20,927 ($53,513-$32,586 = $20,927) for the cases
reporting the performance of a spinal fusion procedure using an
aprevoTM custom-made anatomically designed interbody fusion
device.
As discussed in the FY 2024 final rule, the manufacturer expressed
concern that there may be unintentional miscoded claims from providers
with whom they do not have an explicit relationship and, as previously
discussed, subsequently provided the list of providers with which it
indicated it has an explicit relationship to assist in our ongoing
review. In connection with the list of providers submitted, the
manufacturer also resubmitted claims data from the Standard Analytical
File (SAF) that included FY 2022 claims and the first two quarters
(discharges beginning October 1, 2022 through March 31, 2023) of FY
2023 from these providers. We note that the list of providers the
manufacturer submitted to us was considered applicable for the dates of
service in connection with the resubmitted claims data. The
manufacturer stated that the list of providers with which it has an
explicit relationship is subject to change on a weekly basis as
additional providers begin to use the technology. The manufacturer also
clarified that the external customer data it had previously referenced
in connection with the FY 2024 rulemaking that was received directly
from the providers with which it has an explicit relationship is
Medicare data. We reviewed the September update of the FY 2022 MedPAR
file and compared it against the claims data file with the list of
providers submitted by the manufacturer for FY 2022. In this updated
analysis of the September update of the FY 2022 MedPAR claims data, we
were able to confirm that the majority of the cases for the providers
with which the manufacturer indicated it has an explicit relationship
matched the claims data in our FY 2022 MedPAR file. However, we
identified 3 claims that appeared in the manufacturer's file that were
not found in our FY 2022 MedPAR file and could not be validated. Next,
we reviewed the September update of the FY 2023 MedPAR file and
compared it against the claims data file with the list of providers
submitted by the manufacturer for the first two quarters of FY 2023. We
were able to confirm that the majority of the cases for the providers
with which the manufacturer indicated it has an explicit relationship
matched the claims data in our FY 2023 MedPAR file. However, we
identified 2 claims that appeared in the manufacturer's file that were
not found in our FY 2023 MedPAR file and also could not be validated.
In our analysis of the cases reporting the performance of a spinal
fusion procedure using an aprevoTM custom-made anatomically
designed interbody fusion device in MS-DRGs 453, 454, 455, 456, 457,
458, 459, and 460 from the September update of the FY 2023 MedPAR file,
we also reviewed the findings for cases identified based on the list of
providers with which the manufacturer indicated it has an explicit
relationship and cases based on other providers, (that is, those
providers not included on the manufacturer's list), and compared those
to the findings from all the cases we identified in the September
update of the FY 2023 MedPAR file reporting the performance of a spinal
fusion procedure using an aprevoTM custom-made anatomically
designed interbody fusion device in MS-DRGs 453, 454, 455, 456, 457,
458, 459, and 460. The findings from our analysis are shown in the
following table. We note that there were no cases found to report the
performance of a spinal fusion procedure using an aprevoTM
custom-made anatomically designed interbody fusion device based on the
list of providers submitted by the manufacturer in MS-DRG 456.
[[Page 35975]]
[GRAPHIC] [TIFF OMITTED] TP02MY24.028
For MS-DRG 453, the data show that of the 26 cases found to report
the performance of a spinal fusion procedure using an
aprevoTM custom-made anatomically designed interbody fusion
device from the FY 2023 MedPAR file, 10 cases were reported based on
the manufacturer's provider list, and 16 cases were reported based on
other providers. The average length of stay is longer (10.5 days versus
9.4 days), and the average costs are higher ($118,863 versus $86,849)
for the 10 cases reported based on the manufacturer's provider list
compared to the 16 cases that were reported based on other providers.
For MS-DRG 454, the data show that of the 129 cases found to report the
performance of a spinal fusion procedure using an aprevoTM
custom-made anatomically designed interbody fusion device from the FY
2023 MedPAR file, 48 cases were reported based on the manufacturer's
provider list, and 81 cases were reported based on other providers. The
average length of stay is longer (6.3 days versus 4.1 days), and the
average costs are higher ($81,680 versus $65,510) for the 48 cases
reported based on the manufacturer's provider list compared to the 81
cases that were reported based on other providers. For MS-DRG 455, the
data show that of the 87 cases found to report the performance of a
spinal fusion procedure using an aprevoTM custom-made
anatomically designed interbody fusion device from the FY 2023 MedPAR
file, 14 cases were reported based on the manufacturer's provider list,
and 73 cases were reported based on other providers. The average
[[Page 35976]]
length of stay is shorter (2.5 days versus 2.6 days), and the average
costs are higher ($61,637 versus $53,634) for the 14 cases reported
based on the manufacturer's provider list compared to the 73 cases that
were reported based on other providers.
For MS-DRG 456, the data show that of the 2 cases found to report
the performance of a spinal fusion procedure using an
aprevoTM custom-made anatomically designed interbody fusion
device from the FY 2023 MedPAR file, there were no cases reported based
on the manufacturer's provider list and the 2 cases reported were based
on other providers. For MS-DRG 457, the data show that of the 11 cases
found to report the performance of a spinal fusion procedure using an
aprevoTM custom-made anatomically designed interbody fusion
device from the FY 2023 MedPAR file, 2 cases were reported based on the
manufacturer's provider list, and 9 cases were reported based on other
providers. The average length of stay is shorter (4.5 days versus 5.1
days), and the average costs are higher ($53,113 versus $45,912) for
the 2 cases reported based on the manufacturer's provider list compared
to the 9 cases that were reported based on other providers. For MS-DRG
458, the data show that of the 6 cases found to report the performance
of a spinal fusion procedure using an aprevoTM custom-made
anatomically designed interbody fusion device from the FY 2023 MedPAR
file, 3 cases were reported based on the manufacturer's provider list,
and 3 cases were reported based on other providers. The average length
of stay is longer (3.3 days versus 2.7 days), and the average costs are
lower ($52,760 versus $53,520) for the 3 cases reported based on the
manufacturer's provider list compared to the 3 cases that were reported
for other providers.
For MS-DRG 459, the data show that the single case found to report
the performance of a spinal fusion procedure using an
aprevoTM custom-made anatomically designed interbody fusion
device from the FY 2023 MedPAR file was based on the manufacturer's
provider list. There were no cases reported based on other providers.
For MS-DRG 460, the data show that of the 64 cases found to report the
performance of a spinal fusion procedure using an aprevoTM
custom-made anatomically designed interbody fusion device from the FY
2023 MedPAR file, 13 cases were reported based on the manufacturer's
provider list, and 51 cases were reported based on other providers. The
average length of stay is comparable (2.6 days versus 2.3 days), and
the average costs are higher ($62,829 versus $51,138) for the 13 cases
reported based on the manufacturer's provider list compared to the 51
cases that were reported from other providers.
We considered these data findings with regard to the concerns
expressed by the manufacturer that there may be unintentional miscoded
claims reporting the performance of a spinal fusion procedure using an
aprevoTM custom-made anatomically designed interbody fusion
device from providers with whom the manufacturer does not have an
explicit relationship. Based on our review and analysis of the claims
data, we are unable to confirm that the claims from these providers
with whom the manufacturer indicated that it does not have an explicit
relationship are miscoded.
We note that, while a newly established ICD-10 code may be
associated with an application for new technology add-on payment, such
codes are not generally established to be product specific. If, after
consulting the official coding guidelines, a provider determines that
an ICD-10 code associated with a new technology add-on payment
describes the technology that they are billing, the hospital may report
the code and be eligible to receive the associated add-on payment.
Providers are responsible for ensuring that they are billing correctly
for the services they render. In addition, as we noted in the FY 2018
IPPS/LTCH PPS final rule (82 FR 38012), coding advice is issued
independently from payment policy. We also note that, historically, we
have not provided coding advice in rulemaking with respect to policy
(82 FR 38045). As one of the Cooperating Parties for ICD-10, we
collaborate with the American Hospital Association (AHA) through the
Coding Clinic for ICD-10-CM and ICD-10-PCS to promote proper coding. We
recommend that an entity seeking coding guidance submit any questions
pertaining to correct coding to the AHA.
Accordingly, after review of the list of providers and associated
claims data submitted by the manufacturer, and our analysis of the
MedPAR data, we believe these MedPAR data are appropriate for our FY
2025 analysis. Therefore, in assessing the request for reassignment of
cases reporting the performance of a spinal fusion procedure using an
aprevoTM custom-made anatomically designed interbody fusion
device from the lower severity MS-DRG 455 to the higher severity MS-DRG
453, from the lower severity MS-DRG 458 to the higher severity level
MS-DRG 456 when a diagnosis of malalignment is reported, and cases from
MS-DRGs 459 and 460 to MS-DRG 456 for FY 2025, we considered all the
claims data reporting the performance of a spinal fusion procedure,
including those spinal fusion procedures using an aprevoTM
custom-made anatomically designed interbody fusion device as identified
in the September update of the FY 2023 MedPAR file for these MS-DRGs.
Consequently, our analysis also included claims based on the list of
providers submitted by the manufacturer as well as other providers.
Based on the findings from our analysis and clinical review, we do
not believe the requested reassignments are supported. Specifically, it
would not be appropriate to propose to reassign the 87 cases reporting
the performance of a spinal fusion procedure using an
aprevoTM custom-made anatomically designed interbody fusion
device from the lower severity level MS-DRG 455 (without CC/MCC) with
an average length of stay of 2.6 days and average costs of $54,922 to
the higher severity level MS-DRG 453 (with MCC) with an average length
of stay of 9.5 days and average costs of $80,420. If we were to propose
to reassign the 87 cases from the lower severity MS-DRG 455 to the
higher severity MS-DRG 453, the MS-DRGs would no longer be clinically
coherent with regard to severity of illness of the patients, and the
cases would reflect a difference in resource utilization, as
demonstrated by the difference in average costs of approximately
$25,498 ($80,420-$54,922 = $25,498), as well as a difference in average
length of stay (2.6 days versus 9.5 days) compared to all the cases in
MS-DRG 453. Similarly, it would not be appropriate to propose to
reassign the 6 cases reporting the performance of a spinal fusion
procedure using an aprevoTM custom-made anatomically
designed interbody fusion device from the lower severity level MS-DRG
458 (without CC/MCC) with an average length of stay of 3.0 days and
average costs of $53,140 to the higher severity level MS-DRG 456 (with
MCC) with an average length of stay of 12.6 days and average costs of
$76,060. If we were to propose to reassign the 6 cases from the lower
severity MS-DRG 458 to the higher severity MS-DRG 456, the MS-DRGs
would no longer be clinically coherent with regard to severity of
illness of the patients and the cases would reflect a difference in
resource utilization, as demonstrated by the difference in average
costs of approximately $22,920 ($76,060-$53,140 = $22,920) as well as a
difference in average length of stay
[[Page 35977]]
(3.0 days versus 12.6 days) compared to all the cases in MS-DRG 456.
Finally, it would not be appropriate nor consistent with the definition
of the MS-DRGs to propose to reassign the 65 cases reporting the
performance of a spinal fusion procedure using an aprevoTM
custom-made anatomically designed interbody fusion device from MS-DRGs
459 and 460 with an average length of stay of 2.7 days and average
costs of $57,128 to MS-DRG 456. In addition to the cases reflecting a
difference in resource utilization as demonstrated by the difference in
average costs of approximately $18,932 ($76,060-$57,128 = $18,932) as
well as having a shorter average length of stay (2.7 days versus 12.6
days), we note that the logic for case assignment to MS-DRGs 456, 457,
and 458 is specifically defined by principal diagnosis logic. As such,
cases grouping to this set of MS-DRGs require a principal diagnosis of
spinal curvature, malignancy, or infection, or an extensive fusion
procedure. Therefore, it would not be clinically appropriate to propose
to reassign cases from MS-DRGs 459 and 460 that do not have a principal
diagnosis of spinal curvature, malignancy, or infection, or an
extensive fusion procedure, and are not consistent with the logic for
case assignment to MS-DRG 456.
In light of the higher average costs of the cases reporting the
performance of a spinal fusion procedure using an aprevoTM
custom-made anatomically designed interbody fusion device in MS-DRGs
453, 454, 455, 458, and 460, we further reviewed the claims data for
cases reporting the performance of a spinal fusion procedure using an
aprevoTM custom-made anatomically designed interbody fusion
device in these MS-DRGs and identified a wide range in the average
length of stay and average costs. For example, in MS-DRG 453, the
average length of stay for the 26 cases reporting the performance of a
spinal fusion procedure using an aprevoTM custom-made
anatomically designed interbody fusion device ranged from 3.0 days to
27 days and the average costs ranged from $28,054 to $177,919. In MS-
DRG 454, the average length of stay for the 129 cases reporting the
performance of a spinal fusion procedure using an aprevoTM
custom-made anatomically designed interbody fusion device ranged from
1.0 day to 16 days and the average costs ranged from $10,242 to
$316,780. In MS-DRG 455, the average length of stay for the 87 cases
reporting the performance of a spinal fusion procedure using an
aprevoTM custom-made anatomically designed interbody fusion
device ranged from 1.0 day to 9.0 days and the average costs ranged
from $7,961 to $216,200. In MS-DRG 456, the average length of stay for
the 2 cases reporting the performance of a spinal fusion procedure
using an aprevoTM custom-made anatomically designed
interbody fusion device were 8.0 days and 9.0 days, respectively, with
average costs of $107,457 and $30,560, respectively. In MS-DRG 457, the
average length of stay for the 11 cases reporting the performance of a
spinal fusion procedure using an aprevoTM custom-made
anatomically designed interbody fusion device ranged from 1.0 day to 17
days and the average costs ranged from $25,955 to $89,176. In MS-DRG
458, the average length of stay for the 6 cases reporting the
performance of a spinal fusion procedure using an aprevoTM
custom-made anatomically designed interbody fusion device ranged from
1.0 day to 5.0 days and the average costs ranged from $33,165 to
$78,720. In MS-DRG 459, the length of stay for the single case
reporting the performance of a spinal fusion procedure using an
aprevoTM custom-made anatomically designed interbody fusion
device was 22 days with a cost of $288,499, indicating it is an
outlier. In MS-DRG 460, the average length of stay for the 64 cases
reporting the performance of a spinal fusion procedure using an
aprevoTM custom-made anatomically designed interbody fusion
device ranged from 1.0 day to 8.0 days and the average costs ranged
from $8,981 to $325,104.
In our analysis of the claims data for MS-DRGs 453, 454, and 455,
we also identified a number of cases for which additional spinal fusion
procedures were performed, beyond the logic for case assignment to the
respective MS-DRG. For example, the logic for case assignment to MS-
DRGs 453, 454, and 455 requires at least one anterior column fusion and
one posterior column fusion (that is, combined anterior and posterior
fusion). We note that the aprevoTM custom-made anatomically
designed interbody fusion device is used in the performance of an
anterior column fusion. Findings from our analysis of MS-DRG 453 show
that of the 26 cases reporting a combined anterior and posterior fusion
(including an aprevoTM custom-made anatomically designed
interbody fusion device), 24 cases also reported another spinal fusion
procedure. We categorized these cases as ``multiple level fusions''
where another procedure code describing a spinal fusion procedure was
reported in addition to the combined anterior and posterior fusion
procedure codes. Findings from our analysis of MS-DRG 454 show that of
the 129 cases reporting a combined anterior and posterior fusion
(including an aprevoTM custom-made anatomically designed
interbody fusion device), 100 cases also reported another spinal fusion
procedure. Lastly, findings from our analysis of MS-DRG 455 show that
of the 87 cases reporting a combined anterior and posterior fusion
(including an aprevoTM custom-made anatomically designed
interbody fusion device), 51 cases also reported another spinal fusion
procedure.
While the findings from our analysis indicate a wide range in the
average length of stay and average costs for cases reporting the
performance of a spinal fusion procedure using an aprevoTM
custom-made anatomically designed interbody fusion device, we believe
the increase in resource utilization for certain cases may be partially
attributable to the performance of multiple level fusion procedures
and, specifically for MS-DRGs 453 and 454, the reporting of secondary
diagnosis MCC and CC conditions. Our analysis of the data for MS-DRGs
453 and 454 show that the cases reporting the performance of a spinal
fusion procedure using an aprevoTM custom-made anatomically
designed interbody fusion device also reported multiple MCC and CC
conditions, which we believe may be an additional contributing factor
to the increase in resource utilization for these cases, combined with
the reported performance of multiple level fusions.
In our analysis of the data for MS-DRGs 453, 454, and 455 and cases
reporting the performance of a spinal fusion procedure using an
aprevoTM custom-made anatomically designed interbody fusion
device, we also identified other procedures that were reported, some of
which are designated as operating room (O.R.) procedures, that we
believe may be another contributing factor to the increase in resource
utilization and complexity for these cases. (We note that because a
discectomy is frequently performed in connection with a spinal fusion
procedure, we did not consider these procedures as contributing factors
to consumption of resources in these spinal fusion cases). In the
tables that follow we provide a list of the top 5 MCC and CC
conditions, as well as the top 5 O.R. procedures (excluding discectomy)
reported in MS-DRGs 453, 454, and 455 that we believe may be
contributing factors to the increase in resource utilization and
complexity for these cases. We note that the logic for case assignment
to MS-DRG 453 includes the reporting of at least one
[[Page 35978]]
secondary diagnosis MCC condition (``with MCC'') and cases that group
to this MS-DRG may also report secondary diagnosis CC conditions. We
are providing the frequency data for both the top 5 secondary diagnosis
MCC conditions and the top 5 secondary diagnosis CC conditions, in
addition to the top 5 O.R. procedures (excluding discectomy) that were
reported for spinal fusion cases with an aprevoTM custom-
made anatomically designed interbody fusion device in MS-DRG 453.
Because the logic for case assignment to MS-DRG 454 includes the
reporting of at least one secondary diagnosis CC condition (``with
CC'') we are providing the top 5 secondary diagnosis CC conditions and
the top 5 O.R. procedures (excluding discectomy) that were reported for
spinal fusion cases with an aprevoTM custom-made
anatomically designed interbody fusion device in MS-DRG 454. We note
that the logic for case assignment to MS-DRG 455 is ``without CC/MCC''
and does not include any secondary diagnosis MCC or CC conditions,
therefore, we are only providing a table with the top 5 O.R. procedures
(excluding discectomy) reported for that MS-DRG in addition to a spinal
fusion procedure.
BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TP02MY24.029
[[Page 35979]]
As previously summarized, our analysis of the claims data for cases
reporting the performance of a spinal fusion procedure using an
aprevoTM custom-made anatomically designed interbody fusion
device demonstrated a low volume of cases and higher average costs in
comparison to all the cases in their respective MS-DRGs (that is, in
MS-DRGs 453, 454, 455, 458, 459, and 460). Therefore, we expanded our
analysis to include all spinal fusion cases in MS-DRGs 453, 454, 455,
456, 457, 458, 459, and 460 to identify and further examine the cases
reporting multiple level fusions versus single level fusions, multiple
MCCs or CCs, and other O.R. procedures as we believed that clinically,
all of these factors may contribute to increases in resource
utilization, severity of illness and technical complexity.
We began our expanded analysis with MS-DRGs 453, 454, and 455.
Based on the findings for a subset of the cases (that is, the subset of
cases reporting the performance of a spinal fusion procedure using an
aprevoTM custom-made anatomically designed interbody fusion
device) in these MS-DRGs as previously discussed, and our review of the
logic for case assignment to these MS-DRGs, we developed three
categories of spinal fusion procedures to further examine. The first
category was for the single level combined anterior and posterior
fusions except cervical, the second category was for the multiple level
combined anterior and posterior fusions except cervical and the third
category was for the combined anterior and posterior cervical spinal
fusions. We refer the reader to Table 6P.2d for the list of procedure
codes we identified to categorize the single level combined anterior
and posterior fusions except cervical, Table 6P.2e for the list of
procedure codes we identified to categorize the multiple level combined
anterior and posterior fusions except cervical, and Table 6P.2f for the
list of procedure codes we identified to categorize the combined
anterior and posterior cervical spinal fusions. Findings from our
analysis are shown in the following table.
[GRAPHIC] [TIFF OMITTED] TP02MY24.030
BILLING CODE 4120-01-C
The data show that across MS-DRGs 453, 454, and 455, cases
reporting multiple level combined anterior and posterior fusion
procedures have a comparable average length of stay (9.6 days versus
9.5 days, 4.8 days versus 4.3 days, and 3.0 days versus 2.6 days,
respectively) and higher average costs ($91,358 versus $80,420, $64,065
versus $54,983, and $50,097 versus $41,015) compared to all the cases
in MS-DRGs 453, 454, and 455, respectively. The data also show that
across MS-DRGs 453, 454, and 455, cases reporting multiple level
combined anterior and posterior fusion procedures have a longer average
length of stay (9.6 days versus 6.4 days, 4.8 days versus 3.4 days, and
3.0 days versus 2.3 days, respectively) and higher average costs
($91,358 versus $47,031, $64,065 versus $38,107, and $50,097 versus
$33,010, respectively) compared to cases reporting a single level
combined anterior and posterior fusion. For cases reporting a combined
anterior and posterior cervical fusion across MS-DRGs 453 and 454, the
data show a longer average length of stay (12.5 days versus 9.5 days,
and 5.1 days versus 4.3 days, respectively) compared to all the cases
in MS-DRGs 453 and 454 and a comparable average length of stay (2.9
days versus 2.6 days) for cases reporting a combined anterior and
posterior cervical fusion in MS-DRG 455. The data also show that across
MS-DRGs 453, 454, and 455, cases reporting a combined anterior and
posterior cervical fusion have higher average costs ($75,077 versus
$47,031, $52,274 versus $38,107, and $37,515 versus $33,010,
respectively) compared to the single level combined anterior and
posterior fusion cases.
The data also reflect that in applying the logic that was developed
for the three categories of spinal fusion in MS-DRGs 453, 454, and 455
(single level combined anterior and posterior fusion except cervical,
multiple level combined anterior and posterior fusion except cervical,
and combined anterior and posterior cervical fusion), there is a
[[Page 35980]]
small redistribution of cases from the current MS-DRGs 453, 454, and
455 to other spinal fusion MS-DRGs because the logic for case
assignment to MS-DRGs 453, 454, and 455 is currently satisfied with any
one procedure code from the anterior spinal fusion logic list and any
one procedure code from the posterior spinal fusion logic list,
however, the logic lists that were developed for our analysis using the
three categories of spinal fusion are comprised of specific procedure
code combinations to satisfy the criteria for case assignment to any
one of the three categories developed. For example, based on our
analysis of MS-DRG 453 using the September update of the FY 2023 MedPAR
file, the total number of cases found in MS-DRG 453 is 4,066 and with
application of the logic for each of the three categories, the total
number of cases in MS-DRG 453 is 4,042 (791 + 2,664 + 587 = 4,042), a
difference of 24 cases. Using the September update of the FY 2023
MedPAR file, the total number of cases found in MS-DRG 454 is 20,425
and with application of the logic for each of the three categories, the
total number of cases in MS-DRG 454 is 20,370 (6,481 + 12,498 + 1,391 =
20,370), a difference of 55 cases. Lastly, using the September update
of the FY 2023 MedPAR file, the total number of cases found in MS-DRG
455 is 17,000 and with application of the logic for each of the three
categories, the total number of cases in MS-DRG 455 is 16,987 (9,763 +
6,879 + 345 = 16,987), a difference of 13 cases. Overall, a total of 92
cases are redistributed from MS-DRGs 453, 454, and 455 to other spinal
fusion MS-DRGs.
The findings from our analysis of MS-DRGs 453, 454, and 455 are
consistent with the expectation that clinically, the greater the number
of spinal fusion procedures performed during a single procedure (for
example, intervertebral levels fused), the greater the consumption of
resources expended. We believe the use of interbody fusion cages, other
types of spinal instrumentation, operating room time, comorbidities,
pharmaceuticals, and length of stay may all be contributing factors to
resource utilization for spinal fusion procedures. In addition, it is
expected that as a result of potential changes to the logic for case
assignment to a MS-DRG, there will be a redistribution of cases among
the MS-DRGs.
Based on our review and analysis of the spinal fusion cases in MS-
DRGs 453, 454, and 455, we believe new MS-DRGs are warranted to
differentiate between multiple level combined anterior and posterior
spinal fusions except cervical, single level combined anterior and
posterior spinal fusions except cervical, and combined anterior and
posterior cervical spinal fusions, to more appropriately reflect
utilization of resources for these procedures, including those
performed with an aprevoTM custom-made anatomically designed
interbody fusion device. We note that the performance of a spinal
fusion procedure using an aprevoTM custom-made anatomically
designed interbody fusion device as identified by any one of the 12
previously listed procedure codes would not be reported for a cervical
spinal fusion procedure as reflected in Table 6P.2f associated with
this proposed rule and available on the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps.
To compare and analyze the impact of our suggested modifications,
we ran simulations using claims data from the September 2023 update of
the FY 2023 MedPAR file. The following table illustrates our findings
for all 23,017 cases reporting procedure codes describing multiple
level combined anterior and posterior spinal fusions.
[GRAPHIC] [TIFF OMITTED] TP02MY24.031
Consistent with our established process as discussed in section
II.C.1.b. of the preamble of this proposed 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 note 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] TP02MY24.032
For the proposed new MS-DRGs, there is (1) at least 500 or more
cases in the MCC group, the CC subgroup, and in the without CC/MCC
subgroup; (2) at least 5 percent of the cases are in the MCC subgroup,
the CC subgroup, and in 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
with 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 power of
the base MS-DRG in capturing differences in expected cost between the
proposed MS-DRG severity level splits by at least 3 percent and thus
improve the overall accuracy of the IPPS payment system.
As a result, for FY 2025, we are proposing to create new MS-DRG 426
(Multiple Level Combined Anterior and Posterior Spinal Fusion Except
Cervical with MCC), new MS-DRG 427 (Multiple Level Combined Anterior
and Posterior Spinal Fusion Except Cervical with CC), and new MS-DRG
428 (Multiple Level Combined Anterior and Posterior Spinal Fusion
Except Cervical without CC/MCC). The following table reflects a
simulation of the proposed new MS-DRGs.
[[Page 35981]]
[GRAPHIC] [TIFF OMITTED] TP02MY24.033
The next step in our analysis of the impact of our suggested
modifications to MS-DRGs 453, 454, and 455 was to review the cases
reporting single combined anterior and posterior cervical fusions. The
following table illustrates our findings for all 16,059 cases reporting
procedure codes describing single level combined anterior and posterior
spinal fusions.
[GRAPHIC] [TIFF OMITTED] TP02MY24.034
Consistent with our established process as discussed in section
II.C.1.b. of the preamble of this proposed 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 note that, as shown in the table that follows, a three-
way split of this proposed new base MS-DRG failed to meet the criterion
that at least 5% or more of the cases are in the MCC subgroup. It also
failed to meet the criterion that there be at least a 20% difference in
average costs between the CC and NonCC (without CC/MCC) subgroup. The
following table illustrates our findings.
[GRAPHIC] [TIFF OMITTED] TP02MY24.035
As discussed in section II.C.1.b. of the preamble of this proposed
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 note 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 5% or more of the cases in the with
MCC subgroup.
[GRAPHIC] [TIFF OMITTED] TP02MY24.036
We then applied the criteria for a two-way split for the ``with CC/
MCC and without CC/MCC'' subgroups. 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 a 20% difference in average costs between the ``with
CC/MCC and without CC/MCC'' subgroup.
[GRAPHIC] [TIFF OMITTED] TP02MY24.037
We note 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 2025, we are proposing to create new
base MS-DRG 402 (Single Level Combined Anterior and Posterior Spinal
Fusion Except Cervical). The following table reflects a simulation of
the proposed new base MS-DRG.
[GRAPHIC] [TIFF OMITTED] TP02MY24.038
For the final step in our analysis of the impact of our suggested
modifications to MS-DRGs 453, 454, and 455 we reviewed the cases
reporting combined anterior and posterior cervical fusions. The
following table illustrates our findings for all 2,323 cases reporting
procedure codes
[[Page 35982]]
describing combined anterior and posterior cervical spinal fusions.
[GRAPHIC] [TIFF OMITTED] TP02MY24.039
Consistent with our established process as discussed in section
II.C.1.b. of the preamble of this proposed 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 note that, as shown in the table that follows, a three-
way split of this proposed new base MS-DRG failed to meet the criterion
that that there be at least 500 cases in the NonCC subgroup.
[GRAPHIC] [TIFF OMITTED] TP02MY24.040
As discussed in section II.C.1.b. of the preamble of this proposed
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 note that, as shown in the table that
follows, a two-way split of this proposed new base MS-DRG was met. 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 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] TP02MY24.041
Accordingly, because the criteria for the two-way split were met,
we believe a split (or CC subgroup) is warranted for the proposed new
base MS-DRG. As a result, for FY 2025, we are proposing to create new
MS-DRG 429 (Combined Anterior and Posterior Cervical Spinal Fusion with
MCC) and new MS-DRG 430 (Combined Anterior and Posterior Cervical
Spinal Fusion without MCC). The following table reflects a simulation
of the proposed new MS-DRGs.
[GRAPHIC] [TIFF OMITTED] TP02MY24.042
We then analyzed the cases reporting spinal fusion procedures in
MS-DRGs 456, 457, and 458. As previously described, the logic for case
assignment to MS-DRGs 456, 457, and 458 is defined by principal
diagnosis logic and extensive fusion procedures. Cases reporting a
principal diagnosis of spinal curvature, malignancy, or infection or an
extensive fusion procedure will group to these MS-DRGs. We refer the
reader to the ICD-10 MS-DRG Definitions Manual Version 41.1 available
on the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/ms-drg-classifications-and-software for complete documentation of the GROUPER logic for MS-
DRGs 456, 457, and 458.
As also previously described, in our initial analysis of cases
reporting the performance of a spinal fusion procedure using an
aprevoTM custom-made anatomically designed interbody fusion
device, the 13 cases we found in MS-DRGs 456 and 457 (2 + 11 = 13,
respectively) appeared to be grouping appropriately, however, the
average costs for the 6 cases found in MS-DRG 458 showed a difference
of approximately $13,880. Because of the low volume of cases reporting
the performance of a spinal fusion procedure using an
aprevoTM custom-made anatomically designed interbody fusion
device in the ``without CC/MCC'' MS-DRG 458, and the low volume of
cases reporting the performance of a spinal fusion procedure using an
aprevoTM custom-made anatomically designed interbody fusion
device in MS-DRGs 456, 457, and 458 overall (2 + 11 + 6 = 19), for this
expanded review of the claims data, we are sharing the results of our
analysis in association with cases reporting extensive fusion
procedures in MS-DRGs 456, 457, and 458. Our findings are shown in the
following table.
[[Page 35983]]
[GRAPHIC] [TIFF OMITTED] TP02MY24.043
The data show that the 332 cases reporting an extensive fusion
procedure in MS-DRG 456 have a shorter average length of stay (11.5
days versus 12.6 days) and higher average costs ($89,773 versus
$76,060) compared to all the cases in MS-DRG 456. For MS-DRG 457, the
data show that the 171 cases reporting an extensive fusion have a
comparable average length of stay (6.6 days versus 6.1 days) and higher
average costs ($75,588 versus $52,179) compared to all the cases in MS-
DRG 457. Lastly, for MS-DRG 458, the data show that the 146 cases
reporting an extensive fusion procedure have a comparable average
length of stay (3.8 days versus 3.1 days) and higher average costs
($48,035 versus $39,260) compared to all the cases in MS-DRG 458.
We believe that over time, the volume of cases reporting the
performance of a spinal fusion procedure using an aprevoTM
custom-made anatomically designed interbody fusion device in MS-DRGs
456, 457, and 458 may increase and we could consider further in the
context of the cases reporting an extensive fusion procedure. However,
due to the logic for case assignment to these MS-DRGs also being
defined by diagnosis code logic, additional analysis would be needed
prior to considering any modification to the current structure of these
MS-DRGs. As we continue to evaluate how we may refine these spinal
fusion MS-DRGs, we are also seeking public comments and feedback on
other factors that should be considered in the potential restructuring
of MS-DRGs 456, 457, and 458. Thus, for FY 2025, we are proposing to
maintain the current structure of MS-DRGs 456, 457, and 458, without
modification. Feedback and other suggestions for future rulemaking may
be submitted by October 20, 2024 and directed to MEARISTM at
https://mearis.cms.gov/public/home.
Next, we performed an expanded analysis for spinal fusion cases
reported in MS-DRGs 459 and 460. We note that cases grouping to MS-DRG
459 have at least one secondary diagnosis MCC condition reported
(``with MCC'') and because MS-DRG 460 is ``without MCC'', cases
grouping to this MS-DRG may include the reporting of at least one
secondary diagnosis CC condition (in addition to cases that may not
report a CC (for example, NonCC)). Based on the findings for a subset
of the cases (that is, the subset of cases reporting the performance of
a spinal fusion procedure using an aprevoTM custom-made
anatomically designed interbody fusion device) in these MS-DRGs as
previously discussed, and our review of the logic for case assignment
to these MS-DRGs, we developed two categories of spinal fusion
procedures to further examine. The first category was for the single
level spinal fusions except cervical, and the second category was for
the multiple level spinal fusions except cervical. We refer the reader
to Table 6P.2g for the list of procedure codes we identified to
categorize the single level spinal fusions except cervical and Table
6P.2h for the list of procedure codes we identified to categorize the
multiple level spinal fusions except cervical. Findings from our
analysis are shown in the following table.
[GRAPHIC] [TIFF OMITTED] TP02MY24.044
The data show that the 2,069 cases reporting a multiple level
spinal fusion except cervical in MS-DRG 459 have a longer average
length of stay (10.1 days versus 9.6 days) and higher average costs
($57,209 versus $53,192) when compared to all the cases in MS-DRG 459.
The data also show that the 2,069 cases reporting a multiple level
spinal fusion except cervical in MS-DRG 459 have a longer average
length of stay (10.1 days versus 8.9 days) and higher average costs
($57,209 versus $46,031) when compared to the 1,098 cases reporting a
single level spinal fusion except cervical in MS-DRG 459. For MS-DRG
460, the data show that the 14,677 cases reporting a multiple level
spinal fusion except cervical have a comparable average length of stay
(3.9 days versus 3.4 days) and higher average costs ($36,932 versus
$32,586) when compared to all the cases in MS-DRG 460. The data also
show that the 14,677 cases reporting a multiple level spinal fusion
except cervical have a comparable average length of stay (3.9 days
versus 3.0 days) and higher average costs ($36,932 versus $28,110) when
compared to the 14,058 cases reporting a single level spinal fusion
except cervical in MS-DRG 460.
Based on our review and analysis of the spinal fusion cases in MS-
DRGs 459 and 460, we believe new MS-DRGs are warranted to differentiate
between multiple level spinal fusions except cervical and single level
spinal fusions except cervical to more appropriately reflect
utilization of resources for these procedures, including those
performed with an aprevoTM custom-made anatomically designed
interbody fusion device.
[[Page 35984]]
To compare and analyze the impact of our suggested modifications,
we ran simulations using claims data from the September 2023 update of
the FY 2023 MedPAR file. The following table illustrates our findings
for all 16,746 cases reporting procedure codes describing multiple
level spinal fusions except cervical.
[GRAPHIC] [TIFF OMITTED] TP02MY24.045
Consistent with our established process as discussed in section
II.C.1.b. of the preamble of this proposed 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 proposed new 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 note that, as shown in the table
that follows, a three-way split of this proposed new base MS-DRG failed
to meet the criterion that there be at least a 20% difference in
average costs between the CC and NonCC (without CC/MCC) subgroup. The
following table illustrates our findings.
[GRAPHIC] [TIFF OMITTED] TP02MY24.046
As discussed in section II.C.1.b. of the preamble of this proposed
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 note that, as shown in the table that
follows, a two-way split of this proposed new base MS-DRG was met. 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 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] TP02MY24.047
As a result, for FY 2025, we are proposing to create new MS-DRGs
447 (Multiple Level Spinal Fusion Except Cervical with MCC) and new MS-
DRG 448 (Multiple Level Spinal Fusion Except Cervical without MCC). We
are also proposing to revise the title for existing MS-DRGs 459 and 460
to ``Single Level Spinal Fusion Except Cervical with MCC and without
MCC'', respectively. This proposal would better differentiate the
resource utilization, severity of illness and technical complexity
between single level and multiple level spinal fusions that do not
include cervical spinal fusions in the logic for case assignment. The
following table reflects a simulation of the proposed new MS-DRGs.
[GRAPHIC] [TIFF OMITTED] TP02MY24.048
In conclusion, we are proposing to delete MS-DRGs 453, 454, and 455
and proposing to create 8 new MS-DRGs. We are proposing to create new
MS-DRG 426 (Multiple Level Combined Anterior and Posterior Spinal
Fusion Except Cervical with MCC), MS-DRG 427 (Multiple Level Combined
Anterior and Posterior Spinal Fusion Except Cervical with CC), MS-DRG
428 (Multiple Level Combined Anterior and Posterior Spinal Fusion
Except Cervical without CC/MCC), MS-DRG 402 (Single Level Combined
Anterior and Posterior Spinal Fusion Except Cervical), MS-DRG 429
(Combined Anterior and Posterior Cervical Spinal Fusion with MCC), MS-
DRG 430 (Combined Anterior and Posterior Cervical Spinal Fusion without
MCC), MS-DRG 447 (Multiple Level Spinal Fusion Except Cervical with
MCC) and MS-DRG 448 (Multiple Level Spinal Fusion Except Cervical
without MCC) for FY 2025. We are proposing the logic for case
assignment to these proposed new MS-DRGs as displayed in Table 6P.2d,
Table 6P.2e, Table 6P.2f, Table 6P.2g, and Table 6P.2h. We are also
proposing to revise the title for MS-DRGs 459 and
[[Page 35985]]
460 to ``Single Level Spinal Fusion Except Cervical with MCC and
without MCC'', respectively. Lastly, as discussed in section II.C.14 of
the preamble of this proposed rule, we are proposing conforming changes
to the surgical hierarchy for MDC 08.
7. MDC 10 (Endocrine, Nutritional and Metabolic Diseases and
Disorders): Resection of Right Large Intestine
We identified an inconsistency in the MDC and MS-DRG assignment of
procedure codes describing resection of the right large intestine and
resection of the left large intestine with an open and percutaneous
endoscopic approach. ICD-10-PCS procedure codes 0DTG0ZZ (Resection of
left large intestine, open approach) and 0DTG4ZZ (Resection of left
large intestine, percutaneous endoscopic approach) are currently
assigned to MDC 10 in MS-DRGs 628, 629, and 630 (Other Endocrine,
Nutritional and Metabolic O.R. Procedures with MCC, with CC, and
without CC/MCC, respectively). However, the procedure codes that
describe resection of the right large intestine with an open or
percutaneous endoscopic approach, 0DTF0ZZ (Resection of right large
intestine, open approach) and 0DTF4ZZ (Resection of right large
intestine, percutaneous endoscopic approach) are not assigned to MDC 10
in MS-DRGs 628, 629, and 630. To ensure clinical alignment and
consistency, as well as appropriate MS-DRG assignment, we are proposing
to add procedure codes 0DTF0ZZ and 0DTF4ZZ to MDC 10 in MS-DRGs 628,
629, and 630 effective October 1, 2024 for FY 2025.
8. MDC 15 (Newborns and Other Neonates With Conditions Originating in
Perinatal Period): MS-DRG 795 Normal Newborn
We received a request to review the GROUPER logic that would
determine the assignment of cases to MS-DRG 794 (Neonate with Other
Significant Problems). The requestor stated that it appears that MS-DRG
794 is the default MS-DRG in MDC 15 (Newborns and Other Neonates with
Conditions Originating in Perinatal Period), as the GROUPER logic for
MS-DRG 794 displayed in the ICD-10 MS-DRG Version 41.1 Definitions
Manual is defined by a ``principal or secondary diagnosis of newborn or
neonate, with other significant problems, not assigned to DRG 789
through 793 or 795''. The requestor expressed concern that defaulting
to MS-DRG 794, instead of MS-DRG 795 (Normal Newborn), for assignment
of cases in MDC 15 could contribute to overpayments in healthcare by
not aligning the payment amount to the appropriate level of care in
newborn cases. The requestor recommended that CMS update the GROUPER
logic that would determine the assignment of cases to MS-DRGs in MDC 15
to direct all cases that do not have the diagnoses and procedures as
specified in the Definitions Manual to instead be grouped to MS-DRG
795.
Specifically, the requestor expressed concern that a newborn
encounter coded with a principal diagnosis code from ICD-10-CM category
Z38 (Liveborn infants according to place of birth and type of
delivery), followed by code P05.19 (Newborn small for gestational age,
other), P59.9 (Neonatal jaundice, unspecified), Q38.1 (Ankyloglossia),
Q82.5 (Congenital non-neoplastic nevus), or Z23 (Encounter for
immunization) is assigned to MS-DRG 794. The requestor stated that they
performed a detailed claim level study, and in their clinical
assessment, newborn encounters coded with a principal diagnosis code
from ICD-10-CM category Z38, followed by diagnosis code P05.19, P59.9,
Q38.1, Q82.5, or Z23 in fact clinically describe normal newborn
encounters and the case assignment should instead be to MS-DRG 795.
Our analysis of this grouping issue confirmed that when a principal
diagnosis code from MDC 15, such as a diagnosis code from category Z38
(Liveborn infants according to place of birth and type of delivery), is
reported followed by ICD-10-CM code P05.19 (Newborn small for
gestational age, other), Q38.1 (Ankyloglossia) or Q82.5 (Congenital
non-neoplastic nevus), the case is assigned to MS-DRG 794.
However, as we examined the GROUPER logic that would determine an
assignment of cases to MS-DRG 795, we noted the ``only secondary
diagnosis'' list under MS-DRG 795 already includes ICD-10-CM codes
P59.9 (Neonatal jaundice, unspecified) and Z23 (Encounter for
immunization). Therefore, when a principal diagnosis code from MDC 15,
such as a diagnosis code from category Z38 (Liveborn infants according
to place of birth and type of delivery) is reported, followed by ICD-
10-CM code P59.9 or Z23, the case is currently assigned to MS-DRG 795,
not MS-DRG 794, as suggested by the requestor. We refer the reader to
the ICD-10 MS-DRG Version 41.1 Definitions Manual (available on the CMS
website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/ms-drg-classifications-and-software) for
complete documentation of the GROUPER logic for MS-DRGs 794 and 795.
Next, we reviewed the claims data from the September 2023 update of
the FY 2023 MedPAR file; however, we found zero cases across MS-DRGs
794 and 795. We then examined the clinical factors. The description for
ICD-10-CM diagnosis code P05.19 is ``Newborn small for gestational age,
other'' and the inclusion term in the ICD-10-CM Tabular List of
Diseases for this diagnosis code is ``Newborn small for gestational
age, 2500 grams and over.'' We note that ``small-for-gestational age''
is diagnosed by assessing the gestational age and the weight of the
baby after birth. There is no specific treatment for small-for-
gestational-age newborns. Most newborns who are moderately small for
gestational age are healthy babies who just happen to be on the smaller
side. Unless the newborn is born with an infection or has a genetic
disorder, most small-for-gestational-age newborns have no symptoms and
catch up in their growth during the first year of life and have a
normal adult height. Next, ICD-10-CM diagnosis code Q38.1 describes
ankyloglossia, also known as tongue-tie, which is a condition that
impairs tongue movement due to a restrictive lingual frenulum. In
infants, tongue-tie is treated by making a small cut to the lingual
frenulum to allow the tongue to move more freely. This procedure,
called a frenotomy, can be done in a healthcare provider's office
without anesthesia. Newborns generally recover within about a minute of
the procedure, and pain relief is usually not indicated. Lastly, ICD-
10-CM diagnosis code Q82.5 describes a congenital non-neoplastic nevus.
A congenital nevus is a type of pigmented birthmark that appears at
birth or during a baby's first year. Most congenital nevi do not cause
health problems and may only require future monitoring.
In reviewing these three ICD-10-CM codes and the conditions they
describe; we believe these diagnoses generally do not prolong the
inpatient admission of the newborn and newborns with these diagnoses
generally receive standard follow-up care after birth. Clinically, we
agree with the requestor that newborn encounters coded with a principal
diagnosis code from ICD-10-CM category Z38 (Liveborn infants according
to place of birth and type of delivery), followed by code P05.19
(Newborn small for gestational age, other), Q38.1 (Ankyloglossia), or
Q82.5 (Congenital non-neoplastic nevus) should not map to MS-DRG 794
(Neonate with Other Significant Problems) and should instead be
assigned to MS-DRG 795 (Normal
[[Page 35986]]
Newborn). Therefore, for the reasons discussed, we are proposing to
reassign diagnosis code P05.19 from the ``principal or secondary
diagnosis'' list under MS-DRG 794 to the ``principal diagnosis'' list
under MS-DRG 795 (Normal Newborn). We are also proposing to add
diagnosis codes Q38.1 and Q82.5 to the ``only secondary diagnosis''
list under MS-DRG 795 (Normal Newborn). Under this proposal, cases with
a principal diagnosis described by an ICD-10-CM code from category Z38
(Liveborn infants according to place of birth and type of delivery),
followed by codes P05.19, Q38.1, or Q82.5 will be assigned to MS-DRG
795.
In response to the recommendation that CMS update the GROUPER logic
that would determine an assignment of cases to MS-DRGs in MDC 15, we
agree with the requestor that the GROUPER logic for MS-DRG 794 is
defined by a ``principal or secondary diagnosis of newborn or neonate,
with other significant problems, not assigned to DRG 789 through 793 or
795''. We acknowledge that MS-DRG 794 utilizes ``fall-through'' logic,
meaning if a diagnosis code is not assigned to any of the other MS-
DRGs, then assignment ``falls-through'' to MS-DRG 794. We have started
to examine the GROUPER logic that would determine the assignment of
cases to the MS-DRGs in MDC 15, including MS-DRGs 794 and 795, to
determine where further refinements could potentially be made to better
account for differences in clinical complexity and resource
utilization. However, as we have noted in prior rulemaking (72 FR
47152), we cannot adopt the same approach to refine the newborn MS-DRGs
because of the extremely low volume of Medicare patients there are in
these MS-DRGs. Additional time is needed to fully and accurately
evaluate cases currently grouping to the MS-DRGs in MDC 15 to consider
if restructuring the current MS-DRGs would better recognize the
clinical distinctions of these patient populations. Any proposed
modifications to these MS-DRGs will be addressed in future rulemaking
consistent with our annual process.
As noted earlier, we have started our examination of the GROUPER
logic that would determine an assignment of cases to MS-DRGs in MDC 15.
During this review we noted the logic for MS-DRG 795 (Normal Newborn)
includes five diagnosis codes from ICD-10-CM category Q81
(Epidermolysis bullosa). We refer the reader to the ICD-10 MS-DRG
Version 41.1 Definitions Manual (available via on the CMS website at:
https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/ms-drg-classifications-and-software) for complete
documentation of the GROUPER logic for MS-DRG 795. The five diagnosis
codes and their current MDC and MS-DRG assignments are listed in the
following table.
[GRAPHIC] [TIFF OMITTED] TP02MY24.049
We reviewed this grouping issue and noted that epidermolysis
bullosa (EB) is a group of genetic (inherited) disorders that causes
skin to be fragile, blister, and tear easily in response to minimal
friction or trauma. In some cases, blisters form inside the body in
places such as the mouth, esophagus, other internal organs, or eyes.
When the blisters heal, they can cause painful scarring. In severe
cases, the blisters and scars can harm internal organs and tissue
enough to be fatal. Patients diagnosed with severe cases of EB have a
life expectancy that ranges from infancy to 30 years of age.
EB has four primary types: simplex, junctional, dystrophic, and
Kindler syndrome, and within each type there are various subtypes,
ranging from mild to severe. A skin biopsy can confirm a diagnosis of
EB and identify which layers of the skin are affected and determine the
type of epidermolysis bullosa. Genetic testing may also be ordered to
diagnose the specific type and subtype of the disease. In caring for
patients with EB, adaptions may be necessary in the form of handling,
feeding, dressing, managing pain, and treating wounds caused by the
blisters and tears. If there is a known diagnosis of EB, but the
neonate has no physical signs at birth, there will still need to be
specialty consultation in the inpatient setting or referral for
outpatient follow-up. We believe the five diagnosis codes from ICD-10-
CM category Q81 (Epidermolysis bullosa) describe conditions that
require advanced care and resources similar to other conditions already
assigned to the logic of MS-DRG 794 and MS-DRGs 595 and 596 (Major Skin
Disorders with MCC and without MCC, respectively), even in cases where
the type of EB is unspecified.
Therefore, for clinical consistency, we are proposing to reassign
ICD-10-CM diagnosis codes Q81.0, Q81.1, Q81.2, Q81.8, and Q81.9 from
MS-DRGs 606 and 607 in MDC 09 (Diseases and Disorders of the Skin,
Subcutaneous Tissue and Breast) and MS-DRG 795 (Normal Newborn) in MDC
15 to MS-DRGs 595 and 596 in MDC 09 and MS-DRG 794 in MDC 15, effective
October 1, 2024 for FY 2025.
9. MDC 17 (Myeloproliferative Diseases and Disorders, Poorly
Differentiated Neoplasms): Acute Leukemia
We identified a replication issue from the ICD-9 based MS-DRGs to
the ICD-10 based MS-DRGs regarding the assignment of six ICD-10-CM
diagnosis codes that describe a type of acute leukemia. Under the
Version 32 ICD-9-CM based MS-DRGs, the ICD-9-CM diagnosis codes as
shown in the following table were assigned to surgical MS-DRGs 820,
821, and 822 (Lymphoma and Leukemia with Major O.R. Procedures with
MCC, with CC, and without CC/MCC, respectively), surgical MS-DRGs 823,
824, and 825 (Lymphoma and Non-Acute Leukemia with Other Procedures
with MCC, with CC, and without CC/MCC, respectively), and medical MS-
DRGs 840, 841, and 842 (Lymphoma and Non-Acute Leukemia with MCC, with
CC, and without CC/MCC, respectively) in MDC 17 (Myeloproliferative
Diseases and Disorders, Poorly Differentiated Neoplasms). The six ICD-
10-PCS code translations also shown in the following table, that
provide more detailed and specific information for the ICD-9-CM codes
reflected, also currently group to MS-DRGs 820, 821, 822, 823, 824,
825, 840, 841 and 842 in the ICD-10 MS-DRGs Version 41.1. We refer the
reader to the ICD-10 MS-DRG Definitions Manual Version 41.1 (available
on the CMS website at: https://www.cms.gov/
[[Page 35987]]
medicare/payment/prospective-payment-systems/acute-inpatient-pps/ms-
drg-classifications-and-software) for complete documentation of the
GROUPER logic for MS-DRGs 820, 821, 822, 823, 824, 825, 840, 841, and
842.
[GRAPHIC] [TIFF OMITTED] TP02MY24.050
During our review of this issue, we noted that under ICD-9-CM, the
diagnosis codes as reflected in the table did not describe the acuity
of the diagnosis (for example, acute versus chronic). This is in
contrast to their six comparable ICD-10-CM code translations listed in
the previous table that provide more detailed and specific information
for the ICD-9-CM diagnosis codes and do specify the acuity of the
diagnoses.
We note that ICD-10-CM codes C94.20, C94.21, and C94.22 describe
acute megakaryoblastic leukemia (AMKL), a rare subtype of acute myeloid
leukemia (AML) that affects megakaryocytes, platelet-producing cells
that reside in the bone marrow. Similarly, ICD-10-CM codes C94.40,
C94.41, and C94.42 describe acute panmyelosis with myelofibrosis
(APMF), a rare form of acute myeloid leukemia characterized by acute
panmyeloid proliferation with increased blasts and accompanying
fibrosis of the bone marrow that does not meet the criteria for AML
with myelodysplasia related changes. As previously mentioned, these six
diagnosis codes are assigned to MS-DRGs 820, 821, 822, 823, 824, 825,
840, 841, and 842. The GROUPER logic lists for MS-DRGs 820, 821, and
822 includes diagnosis codes describing lymphoma and both acute and
non-acute leukemias, however the logic lists for MS-DRGs 823, 824, 825,
840, 841, and 842 contain diagnosis codes describing lymphoma and non-
acute leukemias. In our analysis of this grouping issue, we also noted
that cases reporting a chemotherapy principal diagnosis with a
secondary diagnosis describing acute megakaryoblastic leukemia or acute
panmyelosis with myelofibrosis are assigned to MS-DRGs 846, 847, and
848 (Chemotherapy without Acute Leukemia as Secondary Diagnosis, with
MCC, with CC, and without CC/MCC, respectively) in Version 41.1.
Next, we examined claims data from the September 2023 update of the
FY 2023 MedPAR file for MS-DRG 823, 824, 825, 840, 841, and 842 to
identify cases reporting one of the six diagnosis codes listed
previously that describe acute megakaryoblastic leukemia or acute
panmyelosis with myelofibrosis. We also examined MS-DRGs 846, 847, and
848 (Chemotherapy without Acute Leukemia as Secondary Diagnosis, with
MCC, with CC, and without CC/MCC, respectively). Our findings are shown
in the following tables:
[GRAPHIC] [TIFF OMITTED] TP02MY24.051
As shown in the table, in MS-DRG 823, we identified a total of
2,235 cases with an average length of stay of 14 days and average costs
of $40,587. Of those 2,235 cases, there were two cases reporting a
diagnosis code that describes acute megakaryoblastic leukemia or acute
panmyelosis with myelofibrosis, with average costs higher than the
average costs in the FY 2023 MedPAR file for MS-DRG 823 ($49,600
compared to $40,587) and a longer average length of stay (31.5 days
compared to 14 days). We found zero cases in MS-DRG 824 reporting a
diagnosis code that describes acute megakaryoblastic leukemia or acute
panmyelosis with myelofibrosis. In MS-DRG 825, we identified a total of
427 cases with an average length of stay of 2.9 days and average costs
of $10,959. Of those 427 cases, there was one case reporting a
diagnosis code that describes acute megakaryoblastic leukemia or acute
panmyelosis with myelofibrosis, with costs higher than the average
costs in the FY 2023 MedPAR file for MS-DRG 825 ($17,293 compared to
$10,959) and a longer length of stay (6 days compared to 2.9 days).
[[Page 35988]]
[GRAPHIC] [TIFF OMITTED] TP02MY24.052
As shown in the table, in MS-DRG 840, we identified a total of
7,747 cases with an average length of stay of 9.6 days and average
costs of $26,215. Of those 7,747 cases, there were 12 cases reporting a
diagnosis code that describes acute megakaryoblastic leukemia or acute
panmyelosis with myelofibrosis, with average costs lower than the
average costs in the FY 2023 MedPAR file for MS-DRG 840 ($21,357
compared to $26,215) and a shorter average length of stay (8.7 days
compared to 9.6 days). In MS-DRG 841, we identified a total of 5,019
cases with an average length of stay of 5.3 days and average costs of
$13,502. Of those 5,019 cases, there were six cases reporting a
diagnosis code that describes acute megakaryoblastic leukemia or acute
panmyelosis with myelofibrosis, with average costs lower than the
average costs in the FY 2023 MedPAR file for MS-DRG 841 ($6,976
compared to $13,502) and a shorter average length of stay (2.8 days
compared to 5.3 days). We found zero cases in MS-DRG 842 reporting a
diagnosis code that describes acute megakaryoblastic leukemia or acute
panmyelosis with myelofibrosis.
[GRAPHIC] [TIFF OMITTED] TP02MY24.053
As shown in the table, in MS-DRG 847, we identified a total of
7,329 cases with an average length of stay of 4.4 days and average
costs of $11,250. Of those 7,329 cases, there were two cases reporting
a chemotherapy principal diagnosis code with a secondary diagnosis code
that describes acute megakaryoblastic leukemia or acute panmyelosis
with myelofibrosis, with average costs lower than the average costs in
the FY 2023 MedPAR file for MS-DRG 840 ($7,569 compared to $11,250) and
a longer average length of stay (5 days compared to 4.4 days). We found
zero cases in MS-DRGs 846 and 848 reporting a diagnosis code that
describes acute megakaryoblastic leukemia or acute panmyelosis with
myelofibrosis.
Next, we examined the MS-DRGs within MDC 17. Given that the six
diagnoses codes describe subtypes of acute myeloid leukemia, we
determined that the cases reporting a principal diagnosis of acute
megakaryoblastic leukemia or acute panmyelosis with myelofibrosis would
more suitably group to medical MS-DRGs 834, 835, and 836 (Acute
Leukemia without Major O.R. Procedures with MCC, with CC, and without
CC/MCC, respectively). Similarly, cases reporting a chemotherapy
principal diagnosis with a secondary diagnosis describing acute
megakaryoblastic leukemia or acute panmyelosis with myelofibrosis would
more suitably group to medical MS-DRGs 837, 838, and 839 (Chemotherapy
with Acute Leukemia as Secondary Diagnosis, or with High Dose
Chemotherapy Agent with MCC, with CC or High Dose Chemotherapy Agent,
and without CC/MCC, respectively).
We then examined claims data from the September 2023 update of the
FY 2023 MedPAR for MS-DRGs 834, 835, 836, 837, 838, and 839. Our
findings are shown in the following table.
[[Page 35989]]
[GRAPHIC] [TIFF OMITTED] TP02MY24.054
While the average costs for all cases in MS-DRGs 834, 835, 836,
837, 838, and 839 are higher than the average costs of the small number
of cases reporting a diagnosis code that describes acute
megakaryoblastic leukemia or acute panmyelosis with myelofibrosis, or
reporting a chemotherapy principal diagnosis with a secondary diagnosis
describing acute megakaryoblastic leukemia or acute panmyelosis with
myelofibrosis, and the average lengths of stay are longer, we note that
diagnosis codes C94.20, C94.21, C94.22, C94.40, C94.41, and C94.42
describe types of acute leukemia. For clinical coherence, we believe
these six diagnosis codes would be more appropriately grouped along
with other ICD-10-CM diagnosis codes that describe types of acute
leukemia.
We reviewed this grouping issue, and our analysis indicates that
the six diagnosis codes describing the acute megakaryoblastic leukemia
or acute panmyelosis with myelofibrosis were initially assigned to the
list of diagnoses in the GROUPER logic for MS-DRGs 823, 824, 825, 840,
841, and 842 as a result of replication in the transition from ICD-9 to
ICD-10 based MS-DRGs. We also note that diagnosis codes C94.20, C94.21,
C94.22, C94.40, C94.41, and C94.42 do not describe non-acute leukemia
diagnoses.
Accordingly, because the six diagnosis codes that describe acute
megakaryoblastic leukemia or acute panmyelosis with myelofibrosis are
not clinically consistent with non-acute leukemia diagnoses, and it is
clinically appropriate to reassign these diagnosis codes to be
consistent with the other diagnosis codes that describe acute leukemias
in MS-DRGs 834, 835, 836, 837, 838, and 839, we are proposing the
reassignment of diagnosis codes C94.20, C94.21, C94.22, C94.40, C94.41,
and C94.42 from MS-DRGs 823, 824 and 825 (Lymphoma and Non-Acute
Leukemia with Other Procedures with MCC, with CC, and without CC/MCC,
respectively), and MS-DRGs 840, 841, and 842 (Lymphoma and Non-Acute
Leukemia with MCC, with CC, and without CC/MCC, respectively) to MS-
DRGs 834, 835, and 836 (Acute Leukemia without Major O.R. Procedures
with MCC, with CC, and without CC/MCC, respectively) and MS-DRGs 837,
838, and 839 (Chemotherapy with Acute Leukemia as Secondary Diagnosis,
or with High Dose Chemotherapy Agent with MCC, with CC or High Dose
Chemotherapy Agent, and without CC/MCC, respectively) in MDC 17,
effective FY 2025. Under this proposal, diagnosis codes C94.20, C94.21,
C94.22, C94.40, C94.41, and C94.42 will continue to be assigned to
surgical MS-DRGs 820, 821, and 822 (Lymphoma and Leukemia with Major
O.R. Procedures with MCC, with CC, and without CC/MCC, respectively).
In our review of the MS-DRGs in MDC 17 for further refinement, we
next examined the procedures currently assigned to MS-DRGs 820, 821,
and 822 (Lymphoma and Leukemia with Major O.R. Procedures with MCC,
with CC, and without CC/MCC, respectively) and MS-DRGs 826, 827, and
828 (Myeloproliferative Disorders or Poorly Differentiated Neoplasms
with Major O.R. Procedures with MCC, with CC, and without CC/MCC,
respectively). We note that the logic for case assignment to MS-DRGs
820, 821, 822, 826, 827, and 828 is comprised of a logic list entitled
``Operating Room Procedures'' which is defined by a list of 4,320 ICD-
10-PCS procedure codes, including 90 ICD-10-PCS codes describing bypass
procedures from the cerebral ventricle to various body parts. We refer
the reader to the ICD-10 MS-DRG Definitions Manual Version 41.1
(available on the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps) for complete
documentation of the GROUPER logic for MS-DRGs 820, 821, 822, 826, 827,
and 828.
In our review of the procedures currently assigned to MS-DRGs 820,
821, 822, 826, 827, and 828, we noted 12 ICD-10-PCS procedure codes
that describe bypass procedures from the cerebral ventricle to the
subgaleal space or cerebral cisterns, such as subgaleal or cisternal
shunt placement, that are not included in the logic for MS-DRGs 820,
821, 822, 826, 827, and 828. The 12 procedure codes are listed in the
following table.
[GRAPHIC] [TIFF OMITTED] TP02MY24.055
[[Page 35990]]
A subgaleal shunt consists of a shunt tube with one end in the
lateral ventricles while the other end is inserted into the subgaleal
space of the scalp, while a ventriculo-cisternal shunt diverts the
cerebrospinal fluid flow from one of the lateral ventricles, via a
ventricular catheter, to the cisterna magna of the posterior fossa.
Both procedures allow for the drainage of excess cerebrospinal fluid.
Indications for ventriculosubgaleal or ventriculo-cisternal shunting
include acute head trauma, subdural hematoma, hydrocephalus, and
leptomeningeal disease (LMD) in malignancies such as breast cancer,
lung cancer, melanoma, acute lymphocytic leukemia (ALL) and non-
hodgkin's lymphoma (NHL).
Recognizing that acute lymphocytic leukemia (ALL) and non-hodgkin's
lymphoma (NHL) are indications for ventriculosubgaleal or ventriculo-
cisternal shunting, we support adding the 12 ICD-10-PCS codes
identified in the table to MS-DRGs 820, 821, 822, 826, 827, and 828 in
MDC 17 for consistency to align with the procedure codes listed in the
definition of MS-DRGs 820, 821, 822, 826, 827, and 828 and also to
permit proper case assignment when a principal diagnosis from MDC 17 is
reported with one of the procedure codes in the table that describes
bypass procedures from the cerebral ventricle to the subgaleal space or
cerebral cisterns. Therefore, we are proposing to add the 12 procedure
codes that describe bypass procedures from the cerebral ventricle to
the subgaleal space or cerebral cisterns listed previously to MS-DRGs
820, 821, 822, 826, 827, and 828 in MDC 17 for FY 2025.
Lastly, in our analysis of the MS-DRGs in MDC 17 for further
refinement, we noted that the logic for case assignment to medical MS-
DRGs 834, 835, and 836 (Acute Leukemia without Major O.R. Procedures
with MCC, with CC, and without CC/MCC, respectively) as displayed in
the ICD-10 MS-DRG Version 41.1 Definitions Manual (available on the CMS
website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps) is comprised of a logic list entitled
``Principal Diagnosis'' and is defined by a list of 27 ICD-10-CM
diagnosis codes describing various types of acute leukemias. When any
one of the 27 listed diagnosis codes from the ``Principal Diagnosis''
logic list is reported as a principal diagnosis, without a procedure
code designated as an O.R. procedure or without a procedure code
designated as a non-O.R. procedure that affects the MS-DRG, the case
results in assignment to MS-DRG 834, 835, or 836 depending on the
presence of any additional MCC or CC secondary diagnoses. We note
however, that while not displayed in the ICD-10 MS-DRG Version 41.1
Definitions Manual, when any one of the 27 listed diagnosis codes from
the ``Principal Diagnosis'' logic list is reported as a principal
diagnosis, along with a procedure code designated as an O.R. procedure
that is not listed in the logic list of MS-DRGs 820, 821, and 822
(Lymphoma and Leukemia with Major O.R. Procedures with MCC, with CC,
and without CC/MCC, respectively), the case also results in assignment
to medical MS-DRG 834, 835, or 836 depending on the presence of any
additional MCC or CC secondary diagnoses.
As medical MS-DRG 834, 835, and 836 contains GROUPER logic that
includes ICD-10-PCS procedure codes designated as O.R. procedures, we
examined claims data from the September 2023 update of the FY 2023
MedPAR file for MS-DRG 834, 835, and 836 to identify cases reporting an
O.R. procedure. Our findings are shown in the following table:
[GRAPHIC] [TIFF OMITTED] TP02MY24.056
As shown by the table, in MS-DRG 834, we identified a total of
4,094 cases, with an average length of stay of 16.3 days and average
costs of $49,986. Of those 4,094 cases, there were 277 cases reporting
an O.R. procedure, with higher average costs as compared to all cases
in MS-DRG 834 ($92,246 compared to $49,986), and a longer average
length of stay (28.2 days compared to 16.3 days). In MS-DRG 835, we
identified a total of 1,682 cases with an average length of stay of 7.2
days and average costs of $19,023. Of those 1,682 cases, there were 79
cases reporting an O.R. procedure, with higher average costs as
compared to all cases in MS-DRG 835 ($30,771 compared to $19,023), and
a longer average length of stay (10.4 days compared to 7.2 days). In
MS-DRG 836, we identified a total of 230 cases with an average length
of stay of 4 days and average costs of $11,225. Of those 230 cases,
there were 7 cases reporting an O.R. procedure, with higher average
costs as compared to all cases in MS-DRG 836 ($17,950 compared to
$11,225), and a longer average length of stay (5.9 days compared to 4
days). The data analysis shows that the average costs of cases
reporting an O.R. procedure are higher than for all cases in their
respective MS-DRG.
The data analysis clearly shows that cases reporting a principal
diagnosis code describing a type of acute leukemia with an ICD-10-PCS
procedure code designated as O.R. procedure that is not listed in the
logic list of MS-DRGs 820, 821, and 822 have higher average costs and
longer lengths of stay compared to all the cases in their assigned MS-
DRG. For these reasons, we are proposing to create a new surgical MS-
DRG for cases reporting a principal diagnosis code describing a type of
acute leukemia with an O.R. procedure.
To compare and analyze the impact of our suggested modifications,
we ran a simulation using the claims data from the September 2023
update of the FY 2023 MedPAR file. The following table illustrates our
findings for all 367 cases reporting a principal diagnosis code
describing a type of acute leukemia with an ICD-10-PCS procedure code
designated as O.R. procedure that is not listed in the logic list of
MS-DRGs 820, 821, and 822. We believe the resulting proposed MS-DRG
assignment, reflecting these modifications, is more
[[Page 35991]]
clinically homogeneous, coherent and better reflects hospital resource
use.
[GRAPHIC] [TIFF OMITTED] TP02MY24.057
We applied the criteria to create subgroups in a base MS-DRG as
discussed in section II.C.1.b. of this FY 2025 IPPS/LTCH PPS proposed
rule. As shown in the table, we identified a total of 367 cases using
the claims data from the September 2023 update of the FY 2023 MedPAR
file, so the criterion that there are at least 500 or more cases in
each subgroup could not be met. Therefore, for FY 2025, we are not
proposing to subdivide the proposed new MS DRG for acute leukemia with
other procedures into severity levels.
In summary, for FY 2025, we are proposing to create a new base
surgical MS-DRG for cases reporting a principal diagnosis describing a
type of acute leukemia with an ICD-10-PCS procedure code designated as
O.R. procedure that is not listed in the logic list of MS-DRGs 820,
821, and 822 in MDC 17. The proposed new MS-DRG is proposed new MS-DRG
850 (Acute Leukemia with Other Procedures). We are proposing to add the
27 ICD-10-CM diagnosis codes describing various types of acute
leukemias currently listed in the logic list entitled ``Principal
Diagnosis'' in MS-DRGs 834, 835, and 836 as well as ICD-10-CM codes
C94.20, C94.21, C94.22, C94.40, C94.41, and C94.42 discussed earlier in
this section to the proposed new MS-DRG 850. We are also proposing to
add the procedure codes from current MS-DRGs 823, 824, and 825
(Lymphoma and Non-Acute Leukemia with Other Procedures with MCC, with
CC, and without CC/MCC, respectively) to the proposed new MS-DRG 850.
We note that in the current logic list of MS-DRGs 823, 824, and 825
there are 189 procedure codes describing stereotactic radiosurgery of
various body parts that are designated as non-O.R. procedures affecting
the MS-DRG, therefore, as part of the logic for new MS-DRG 850, we are
also proposing to designate these 189 codes as non-O.R. procedures
affecting the MS-DRG.
In addition, we are proposing to revise the titles for MS-DRGs 834,
835, and 836 by deleting the reference to ``Major O.R. Procedures'' in
the title. Specifically, we are proposing to revise the titles of
medical MS-DRGs 834, 835, and 836 from ``Acute Leukemia without Major
O.R. Procedures with MCC, with CC, and without CC/MCC'', respectively
to ``Acute Leukemia with MCC, with CC, and without CC/MCC'',
respectively to better reflect the GROUPER logic that will no longer
include ICD-10-PCS procedure codes designated as O.R. procedures. We
note that discussion of the surgical hierarchy for the proposed
modifications is discussed in section II.C.15. of this proposed rule.
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 2023 update of the FY 2023 MedPAR file of cases found to
group to MS-DRGs 981 through 983 or MS-DRGs 987 through 989, we did not
identify any cases for reassignment and are not proposing to move any
cases from MS-DRGs 981 through 983 or MS-DRGs 987 through 989 into a
surgical MS-DRGs for the MDC into which the principal diagnosis or
procedure is assigned.
In addition to the internal review of procedures producing
assignment to MS-DRGs 981 through 983 or MS-DRGs 987 through 989, 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 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. Generally, we
move only those procedures for which we have an adequate number of
discharges to analyze the data.
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. Based on the
results of our review of the claims data from the September 2023 update
of the FY 2023 MedPAR file we did not identify any cases for
reassignment. We also did not receive any requests suggesting
reassignment. Therefore, for FY 2025 we are not proposing to move any
cases reporting procedure codes from MS-
[[Page 35992]]
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 MS-DRGs), we have a list of
procedure codes that are considered operating room (O.R.) procedures.
Historically, we developed this list using physician panels that
classified each procedure code based on the procedure and its effect on
consumption of hospital resources. For example, generally the presence
of a surgical procedure which required the use of the operating room
would be expected to have a significant effect on the type of hospital
resources (for example, operating room, recovery room, and anesthesia)
used by a patient, and therefore, these patients were considered
surgical. Because the claims data generally available do not precisely
indicate whether a patient was taken to the operating room, surgical
patients were identified based on the procedures that were performed.
Generally, if the procedure was not expected to require the use of
the operating room, the patient would be considered medical (non-O.R.).
Currently, each ICD-10-PCS procedure code has designations that
determine whether and in what way the presence of that procedure on a
claim impacts the MS-DRG assignment. First, each ICD-10-PCS procedure
code is either designated as an O.R. procedure for purposes of MS-DRG
assignment (``O.R. procedures'') or is not designated as an O.R.
procedure for purposes of MS-DRG assignment (``non-O.R. procedures'').
Second, for each procedure that is designated as an O.R. procedure,
that O.R. procedure is further classified as either extensive or non-
extensive. Third, for each procedure that is designated as a non-O.R.
procedure, that non-O.R. procedure is further classified as either
affecting the MS-DRG assignment or not affecting the MS-DRG assignment.
We refer to these designations that do affect MS-DRG assignment as
``non O.R. affecting the MS-DRG.'' For new procedure codes that have
been finalized through the ICD-10 Coordination and Maintenance
Committee meeting process and are proposed to be classified as
O.R. procedures or non-O.R. procedures affecting the MS-DRG, 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 proposed rule, we
are making Table 6B.--New Procedure Codes--FY 2025 available on the CMS
website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps.html. We also refer readers to the ICD-10
MS-DRG Version 41.1 Definitions Manual at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/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. We also stated that in consideration of the 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 final rule (88 FR 58749)
that 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. In response to this discussion in the
FY 2024 IPPS/LTCH PPS final rule, we received a comment by the October
20, 2023 deadline. The commenter acknowledged that there is no easy
rule that would allow CMS to designate certain surgeries as ``non-
O.R.'' procedures. The commenter stated that they believed that open
procedures should always be designated O.R. procedures and approaches
other than open should not be a sole factor in designating a procedure
as non-O.R. as some minimally-invasive procedures using a percutaneous
endoscopic approach require more training,
[[Page 35993]]
specialized equipment, time, and resources than traditional open
procedures. In addition, the commenter stated that whether a procedure
is frequently or generally performed in the outpatient setting should
not be used for determination of O.R. vs non-O.R. designation and noted
that a surgery that can be performed in the outpatient setting for a
clinically stable patient may not be able to be safely performed on a
patient who is clinically unstable. The commenter also asserted that
for procedures that can be performed in various locations within the
hospital, that is, bedside vs operating room, there should be a
mechanism to differentiate the setting of the procedure to determine
the MS-DRG assignment as in the commenter's assessment, the ICD-10
classification does not provide a way to indicate the severity of
certain conditions, or the complexity of procedures performed.
CMS appreciates the commenter's feedback and recommendations as to
factors to consider in evaluating O.R. designations. We agree with the
commenter and believe that there may be other factors to consider with
regard to resource utilization. As discussed in the FY 2024 IPPS/LTCH
PPS final rule, 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 will consider as we examine the
designation of a procedure in the ICD-10-PCS classification system. 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. We are considering the feedback
received on what factors and/or criteria to consider in determining
whether a procedure is designated as an O.R. procedure in the ICD-10-
PCS classification system as continue to develop our process and
methodology, and will provide more detail on this analysis and the
methodology for conducting this comprehensive review 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.
For this FY 2025 IPPS/LTCH PPS proposed rule, we did not receive
any requests regarding changing the designation of specific ICD-10-PCS
procedure codes from non-O.R. to O.R. procedures, or to change the
designation from O.R. procedures to non-O.R. procedures by the October
20, 2023 deadline. In this section of the proposed rule, we discuss the
proposals we are making based on our internal review and analysis and
we discuss the process that was utilized for evaluating each procedure
code. For each procedure, we considered--
Whether the procedure would typically require the
resources of an operating room;
Whether it is an extensive or a non-extensive procedure;
and
To which MS-DRGs the procedure should be assigned.
We note that many MS-DRGs require the presence of any O.R.
procedure. As a result, cases with a principal diagnosis associated
with a particular MS-DRG would, by default, be grouped to that MS-DRG.
Therefore, we do not list these MS-DRGs in our discussion in this
section of this proposed rule. Instead, we only discuss MS-DRGs that
require explicitly adding the relevant procedure codes to the GROUPER
logic in order for those procedure codes to affect the MS-DRG
assignment as intended.
For procedures that would not typically require the resources of an
operating room, we determined if the procedure should affect the MS-DRG
assignment. In cases where we are proposing to change the designation
of procedure codes from non-O.R. procedures to O.R. procedures, we also
are proposing one or more MS-DRGs with which these procedures are
clinically aligned and to which the procedure code would be assigned.
In addition, cases that contain O.R. procedures will map to MS-DRGs
981, 982, or 983 (Extensive O.R. Procedure Unrelated to Principal
Diagnosis with MCC, with CC, and without CC/MCC, respectively) or MS-
DRGs 987, 988, or 989 (Non-Extensive O.R. Procedure Unrelated to
Principal Diagnosis with MCC, with CC, and without CC/MCC,
respectively) when they do not contain a principal diagnosis that
corresponds to one of the MDCs to which that procedure is assigned.
These procedures need not be assigned to MS-DRGs 981 through 989 in
order for this to occur. Therefore, we did not specifically address
that aspect in summarizing the proposals we are making based on our
internal review and analysis in this section of this proposed rule.
b. Non-O.R. Procedures to O.R. Procedures
(1) Laparoscopic Biopsy of Intestinal Body Parts
During our review, we noted inconsistencies in how procedures
involving laparoscopic excisions of intestinal body parts are
designated. Procedure codes describing the laparoscopic excision of
intestinal body parts differ by qualifier. ICD-10-PCS procedure codes
describing excisions of intestinal body parts with the diagnostic
qualifier ``X'', are used to report these procedures when performed for
diagnostic purposes. We identified the following five related codes:
[GRAPHIC] [TIFF OMITTED] TP02MY24.058
We noted the ICD-10-PCS procedure codes describing the laparoscopic
excision of intestinal body parts for diagnostic purposes listed
previously have been assigned different attributes in terms of
designation as an O.R. or Non-O.R. procedure when compared to similar
procedures describing the laparoscopic excisions of intestinal body
parts for nondiagnostic purposes. In the ICD-10 MS-DRGs Version 41,
these ICD-10-PCS codes are currently recognized as non-O.R. procedures
for purposes of MS-DRG assignment, while similar excision of intestinal
body part procedure codes with the same approach but different
qualifiers are recognized as O.R. procedures.
Upon further review and consideration, we believe that procedure
codes 0DBF4ZX, 0DBG4ZX, 0DBL4ZX, 0DBM4ZX and 0DBN4ZX describing a
laparoscopic excision of an intestinal body parts for diagnostic
[[Page 35994]]
purposes warrant designation as an O.R. procedures consistent with
other laparoscopic excision procedures performed on the same intestinal
body parts for nondiagnostic purposes. We also believe it is clinically
appropriate for these procedures to group to the same MS-DRGs as the
procedures describing excision procedures performed on the intestinal
body parts for nondiagnostic purposes. Therefore, we are proposing to
add procedure codes 0DBF4ZX, 0DBG4ZX, 0DBL4ZX, 0DBM4ZX and 0DBN4ZX to
the FY 2025 ICD-10 MS-DRG Version 42 Definitions Manual in Appendix E--
Operating Room Procedures and Procedure Code/MS-DRG Index as O.R.
procedures assigned to MS-DRG 264 (Other Circulatory System O.R.
Procedures) in MDC 05 (Diseases and Disorders of the Circulatory
System); MS-DRGs 329, 330, and 331 (Major Small and Large Bowel
Procedures, with MCC, with CC, and without CC/MCC, respectively) in MDC
06 (Diseases and Disorders of the Digestive System); MS-DRGs 820, 821,
and 822 (Lymphoma and Leukemia with Major O.R. Procedures with MCC, CC,
without CC/MCC, respectively) and MS-DRGS 826, 827, and 828
(Myeloproliferative Disorders or Poorly Differentiated Neoplasms with
Major O.R. Procedures with MCC, with CC, and without CC/MCC,
respectively) in MDC 17 (Myeloproliferative Diseases and Disorders,
Poorly Differentiated Neoplasms); MS-DRGs 907, 908, and 909 (Other O.R.
Procedures for Injuries with MCC, with CC, and without CC/MCC,
respectively) in MDC 21 (Injuries, Poisonings and Toxic Effects of
Drugs); and MS-DRGs 957, 958, and 959 (Other O.R. Procedures for
Multiple Significant Trauma with MCC, with CC, and without CC/MCC,
respectively) in MDC 24 (Multiple Significant Trauma).
(2) Laparoscopic Biopsy of Gallbladder and Pancreas
During our review, we noted inconsistencies in how procedures
involving laparoscopic excisions of gallbladder or pancreas are
designated. Procedure codes describing the laparoscopic excision of the
gallbladder or pancreas differ by qualifier. The ICD-10-PCS procedure
code describing an excision of the gallbladder and the procedure code
describing an excision of the pancreas with the diagnostic qualifier
``X'', are used to report these procedures when performed for
diagnostic purposes. We identified the following two related codes:
[GRAPHIC] [TIFF OMITTED] TP02MY24.059
We noted the ICD-10-PCS procedure codes describing the laparoscopic
excision of the gallbladder or the pancreas for diagnostic purposes
listed previously have been assigned different attributes in terms of
designation as an O.R. or a Non-O.R. procedure when compared to similar
procedures describing the laparoscopic excisions of the gallbladder or
the pancreas for nondiagnostic purposes. In the ICD-10 MS-DRGs Version
41, these ICD-10-PCS codes are currently recognized as non-O.R.
procedures for purposes of MS-DRG assignment, while similar excision of
the gallbladder or the pancreas procedure codes with the same approach
but different qualifiers are recognized as O.R. procedures.
Upon further review and consideration, we believe that procedure
code 0FB44ZX describing a laparoscopic excision of the gallbladder for
diagnostic purposes and procedure code 0FBG4ZX describing a
laparoscopic excision of the pancreas for diagnostic purposes both
warrant designation as an O.R. procedure consistent with other
laparoscopic excision procedures performed on the same body parts for
nondiagnostic purposes. We also believe it is clinically appropriate
for these procedures to group to the same MS-DRGs as the procedures
describing excision procedures performed on the gallbladder or pancreas
for nondiagnostic purposes. Therefore, we are proposing to add
procedure code 0FB44ZX to the FY 2025 ICD-10 MS-DRG Version 42
Definitions Manual in Appendix E--Operating Room Procedures and
Procedure Code/MS-DRG Index as an O.R. procedure assigned to MS-DRGs
411, 412, and 413 (Cholecystectomy with C.D.E., with MCC, with CC, and
without CC/MCC, respectively) and MS-DRGs 417, 418, and 419
(Laparoscopic Cholecystectomy without C.D.E., with MCC, with CC, and
without CC/MCC, respectively) in MDC 07 (Diseases and Disorders of the
Hepatobiliary System and Pancreas); MS-DRGs 820, 821, and 822 (Lymphoma
and Leukemia with Major O.R. Procedures with MCC, with CC, and without
CC/MCC, respectively) and MS-DRGS 826, 827, and 828 (Myeloproliferative
Disorders or Poorly Differentiated Neoplasms with Major O.R. Procedures
with MCC, with CC, and without CC/MCC, respectively) in MDC 17
(Myeloproliferative Diseases and Disorders, Poorly Differentiated
Neoplasms); MS-DRGs 907, 908, and 909 (Other O.R. Procedures for
Injuries with MCC, with CC, and without CC/MCC, respectively) in MDC 21
(Injuries, Poisonings and Toxic Effects of Drugs); and MS-DRGs 957,
958, and 959 (Other O.R. Procedures for Multiple Significant Trauma
with MCC, with CC, and without CC/MCC, respectively) in MDC 24
(Multiple Significant Trauma).
We are also proposing to add procedure code 0FBG4ZX to the FY 2025
ICD-10 MS-DRG Version 42 Definitions Manual in Appendix E--Operating
Room Procedures and Procedure Code/MS-DRG Index as an O.R. procedure
assigned to MS-DRGs 405, 406, and 407 (Pancreas, Liver and Shunt
Procedures, with MCC, with CC, and without CC/MCC, respectively) in MDC
06 (Diseases and Disorders of the Digestive System); MS-DRGs 628, 629
and 630 (Other Endocrine, Nutritional and Metabolic O.R. Procedures
with MCC, with CC, and without CC/MCC, respectively) in MDC 10
(Endocrine, Nutritional and Metabolic Diseases and Disorders); MS-DRGs
907, 908, and 909 (Other O.R. Procedures for Injuries with MCC, with
CC, and without CC/MCC, respectively) in MDC 21 (Injuries, Poisonings
and Toxic Effects of Drugs); and MS-DRGs 957, 958, and 959 (Other O.R.
Procedures for Multiple Significant Trauma with MCC, with CC, and
without CC/MCC, respectively) in MDC 24 (Multiple Significant Trauma).
12. Proposed Changes to the MS-DRG Diagnosis Codes for FY 2025
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
[[Page 35995]]
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 IPPS/LTCH PPS final rule, we generally
did not finalize our proposed changes to the severity designations for
the ICD-10-CM diagnosis codes, other than the changes to the severity
level designations for the diagnosis codes in category Z16 (Resistance
to antimicrobial drugs) from a NonCC to a CC. We stated that postponing
adoption of the proposed comprehensive changes in the severity level
designations would allow further opportunity to provide additional
background to the public on the methodology utilized and clinical
rationale applied across diagnostic categories to assist the public in
its review. We refer readers to the FY 2020 IPPS/LTCH PPS final rule
(84 FR 42150 through 42152) for a complete discussion of our response
to public comments regarding the proposed severity level designation
changes for FY 2020.
As discussed in the FY 2021 IPPS/LTCH PPS proposed rule (85 FR
32550), to provide the public with more information on the CC/MCC
comprehensive analysis discussed in the FY 2020 IPPS/LTCH PPS proposed
and final rules, CMS hosted a listening session on October 8, 2019. The
listening session included a review of this methodology utilized to
mathematically measure the impact on resource use. We refer readers to
https://www.cms.gov/Outreach-and-Education/Outreach/OpenDoorForums/Downloads/10082019ListingSessionTrasncriptandQandAsandAudioFile.zip for
the transcript and audio file of the listening session. We also refer
readers to https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/ms-drg-classifications-and-software 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 summation of the comments we received for each of the nine
guiding principles and our responses to those comments. We note that
since the FY 2021 IPPS/LTCH PPS final rule we have continued to solicit
feedback regarding the nine guiding principles, as well as other
possible ways we can incorporate meaningful indicators of clinical
severity. We have encouraged 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 when providing feedback or comments. In the
FY 2024 IPPS/LTCH PPS proposed rule (88 FR 26748 through 26750) we
illustrated how the nine guiding principles might be applied in
evaluating changes to the severity designations of diagnosis codes in
our discussion of our proposed changes to the severity level
designation for certain diagnosis codes that describe homelessness.
Since the FY 2021 IPPS/LTCH PPS final rule, we have not received any
additional feedback or comments on the nine guiding principles;
therefore, we are proposing to finalize the nine guiding principles as
listed previously in this FY 2025 IPPS/LTCH PPS proposed rule. Under
this proposal, our evaluations to determine the extent to which the
presence of a diagnosis code as a secondary diagnosis results in
increased hospital resource use will include 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 the nine
guiding principles.
[[Page 35996]]
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 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,'' \4\ 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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\4\ 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.\5\ The subset of Z
codes that describe the social determinants of health are found in
categories Z55-Z65 (Persons with potential health hazards related to
socioeconomic and psychosocial circumstances). These codes describe a
range of issues related--but not limited--to education and literacy,
employment, housing, ability to obtain adequate amounts of food or safe
drinking water, and occupational exposure to toxic agents, dust, or
radiation.
---------------------------------------------------------------------------
\5\ Available at: https://health.gov/healthypeople/priority-areas/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 discussed in the FY 2024 IPPS/LTCH PPS final rule (88 FR 58755
through 58759), based on our analysis of the impact on resource use for
the ICD-10-CM Z codes that describe homelessness and after
consideration of public comments, we finalized 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. We stated our expectation that finalizing the changes
would encourage 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 SDOH
codes, CMS can further examine the claims data and consider future
changes to the designation of these codes when reported as a secondary
diagnosis. We further stated CMS would continue to monitor and evaluate
the reporting of the diagnosis codes describing social and economic
circumstances.
We refer the reader to the following section of this proposed rule
for our proposed changes to the severity level designation for the
diagnosis codes that describe inadequate housing and housing
instability for FY 2025.
We have updated the Impact on Resource Use Files on the CMS website
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
2023 MedPAR files. These files are posted on the CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/ms-drg-classifications-and-software. As discussed in
prior rulemaking, we also continue to be interested in receiving
feedback on how we might further foster the documentation and reporting
of the
[[Page 35997]]
most specific diagnosis codes supported by the available medical record
documentation and clinical knowledge of the patient's health condition
to more accurately reflect each health care encounter and improve the
reliability and validity of the coded data.
For new diagnosis codes approved for FY 2025, consistent with our
annual process for designating a severity level (MCC, CC, or NonCC) for
new diagnosis codes, we first review the predecessor code designation,
followed by review and consideration of other factors that may be
relevant to the severity level designation, including the severity of
illness, treatment difficulty, complexity of service and the resources
utilized in the diagnosis or treatment of the condition. We note that
this process does not automatically result in the new diagnosis code
having the same designation as the predecessor code. We refer the
reader to section II.C.13 of this proposed rule for the discussion of
the proposed changes to the ICD-10-CM and ICD-10-PCS coding systems for
FY 2025.
c. Proposed Changes to Severity Levels
1. SDOH--Inadequate Housing/Housing Instability
As discussed earlier in this section, in continuation of our
examination of the SDOH Z codes, for this proposed rule, we reviewed
the mathematical data on the impact on resource use for the subset of
ICD-10-CM Z codes that describe the social determinants of health found
in categories Z55-Z65 (Persons with potential health hazards related to
socioeconomic and psychosocial circumstances).
The ICD-10-CM SDOH Z codes that describe inadequate housing and
housing instability are currently designated as NonCCs when reported as
secondary diagnoses. The following table reflects the impact on
resource use data generated using claims from the September 2023 update
of the FY 2023 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 a more detailed explanation of the
columns in the table.
[GRAPHIC] [TIFF OMITTED] TP02MY24.060
The table shows that the C1 value is 2.63 for ICD-10-CM diagnosis
code Z59.10 and 1.85 for ICD-10-CM diagnosis code Z59.19. 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 two SDOH Z codes
are reported as a secondary diagnosis, the resources involved in caring
for a patient experiencing inadequate housing support increasing the
severity level from a NonCC to a CC. In contrast, the C1 value for ICD-
10-CM diagnosis code Z59.11 is 0.51 and is 0.99 for ICD-10-CM diagnosis
code Z59.12. A C1 value generally closer to 1 suggests the resources
involved in caring for patients experiencing inadequate housing in
terms of environmental temperature and utilities are more aligned with
a NonCC severity level than a CC or an MCC severity level.
The underlying cause of the inconsistency between the C1 values for
inadequate housing, unspecified and other inadequate housing and the
two more specific codes that describe the necessities unavailable in
the housing environment is unclear. We note that diagnosis codes Z59.10
(Inadequate housing, unspecified), Z59.11 (Inadequate housing
environmental temperature), Z59.12 (Inadequate housing utilities), and
Z59.19 (Other inadequate housing) became effective on April 1, 2023 (FY
2023). In reviewing the historical C1 values for code Z59.1 (Inadequate
housing), the predecessor code before the code was expanded to further
describe inadequate housing and the basic necessities unavailable in
the housing environment, we note the mathematical data for the impact
on resource use generated using claims from the FY 2019, FY 2020, FY
2021, and FY 2022 MedPAR files reflects C1 values for code Z59.1 of
2.09, 1.73, 2.04, and 2.69, respectively. We refer the reader to the
Impact on Resource Use Files generated using claims from the FY 2019
through the FY 2022 MedPAR files posted on the CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/ms-drg-classifications-and-software. We believe the lower
C1 values for ICD-10-CM
[[Page 35998]]
codes Z59.11 (Inadequate housing environmental temperature) and Z59.12
(Inadequate housing utilities) reflected in the mathematical data for
the impact on resource use generated using claims from the FY 2023
MedPAR file may be attributed to lack of use or knowledge about the
newly expanded codes, such that the data may not yet reflect the full
impact on resource use for patients experiencing these circumstances.
Similarly, the table shows that the C1 value is 1.97 for ICD-10-CM
diagnosis code Z59.811. 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 value in the table is generally close to 2, the data suggest
that when this SDOH Z code is reported as a secondary diagnosis, the
resources involved in caring for a patient experiencing an imminent
risk of homelessness support increasing the severity level from a NonCC
to a CC. In contrast, the C1 value for ICD-10-CM diagnosis code Z59.812
(Housing instability, housed, homelessness in past 12 months) and
(Housing instability, housed unspecified) is 0.76 and is 0.92 for ICD-
10-CM diagnosis code Z59.819. A C1 value generally closer to 1 suggests
the resources involved in caring for patients experiencing housing
instability, with history of homelessness in the past 12 months or
housing instability, unspecified are more aligned with a NonCC severity
level than a CC or an MCC severity level. The underlying cause of the
inconsistency between the C1 values for codes describing housing
instability is unclear.
We note that diagnosis codes Z59.811, Z59.812, and Z59.819 became
effective on October 1, 2021 (FY 2022). In reviewing the historical C1
values for code Z59.8 (Other problems related to housing and economic
circumstances), the predecessor code before the code was expanded to
further describe the problems related to housing and economic
circumstances, we note the mathematical data for the impact on resource
use generated using claims from the FY 2019 and FY 2020 MedPAR files
reflects C1 values for code Z59.8 of 1.92 and 1.63, respectively. There
were no data reflected for this code in the Impact on Resource Use File
generated using claims from the FY 2021 MedPAR files. The mathematical
data for the impact on resource use generated using claims from the FY
2022 MedPAR file reflects C1 values for codes Z59.811, Z59.812, and
Z59.819 of 2.44, 3.12, and 2.09, respectively. We are uncertain if the
fluctuations in the C1 values from year to year, or FY 2021, in
particular, may reflect fluctuations that may be a result of the COVID-
19 public health emergency or even reduced hospitalizations of certain
conditions. We are also uncertain if the fluctuations may be attributed
to lack of use or knowledge about the expanded codes, such that the
data on the reporting of codes Z59.812 and Z59.819 may not yet reflect
the full impact on resource use for patients experiencing these
circumstances.
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, we note that, similar to
homelessness, inadequate housing and housing instability are
circumstances that can impede patient cooperation or management of
care, or both. In addition, patients experiencing inadequate housing
and housing instability can require a higher level of care by needing
an extended length of stay.
Inadequate housing is defined as an occupied housing unit that has
moderate or severe physical problems (for example, deficiencies in
plumbing, heating, electricity, hallways, and upkeep).6 7
Features of substandard housing have long been identified as
contributing to the spread of infectious diseases. Patients living in
inadequate housing may be exposed to health and safety risks, such as
vermin, mold, water leaks, and inadequate heating or cooling
systems.8 9 An increasing body of evidence has associated
poor housing conditions with morbidity from infectious diseases,
chronic illnesses, exposure to toxins, injuries, poor nutrition, and
mental disorders.\10\
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\6\ US Bureau of the Census. American Housing Survey (AHS).
Washington, DC: US Bureau of the Census; 2010. Available at http://www.census.gov/hhes/www/housing/ahs/ahs.html.
\7\ US Bureau of the Census. Codebook for the American Housing
Survey, public use file: 1997 and later. Washington, DC: US Bureau
of the Census; 2009. Available at http://www.huduser.org/portal/datasets/ahs/AHS_Codebook.pdf.
\8\ Hern[aacute]ndez, D. (2016). Affording housing at the
expense of health: Exploring the housing and neighborhood strategies
of poor families. Journal of Family Issues, 37(7), 921-946. doi:
10.1177/0192513X14530970.
\9\ Joint Center for Housing Studies. (2020). The state of the
nation's housing 2020. Harvard University. https://www.jchs.harvard.edu/sites/default/files/reports/files/Harvard_JCHS_The_State_of_the_Nations_Housing_2020_Report_Revised_120720.pdf.
\10\ Krieger J, Higgins DL. Housing and health: time again for
public health action. Am J Public Health. 2002 May;92(5):758-68.
doi: 10.2105/ajph.92.5.758. PMID: 11988443; PMCID: PMC1447157.
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Housing instability encompasses a number of challenges, such as
having trouble paying rent, overcrowding, moving frequently, or
spending the bulk of household income on housing.\11\ These experiences
may negatively affect physical health and make it harder to access
health care. Studies have found moderate evidence to suggest that
housing instability is associated with higher prevalence of overweight/
obesity, hypertension, diabetes, and cardiovascular disease, worse
hypertension and diabetes control, and higher acute health care
utilization among those with diabetes and cardiovascular disease.\12\
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\11\ Office of Disease Prevention and Health Promotion.
Retrieved on December 27, 2023 from https://health.gov/healthypeople/priority-areas/social-determinants-health/literature-summaries/housing-instability.
\12\ Gu, K.D., Faulkner, K.C. & Thorndike, A.N. Housing
instability and cardiometabolic health in the United States: a
narrative review of the literature. BMC Public Health 23, 931
(2023). https://doi.org/10.1186/s12889-023-15875-6.
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In reviewing the mathematical data for the impact on resource use
generated using claims from the FY 2023 MedPAR file for the seven ICD-
10-CM codes describing inadequate housing and housing instability
comprehensively and reviewing the potential impact these circumstances
could have on patients' clinical course, we note that whether the
patient is experiencing inadequate housing or housing instability, the
patient 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, and have difficulties adhering
to medication regimens. Experiencing inadequate housing or housing
instability may negatively affect a patient's physical health and make
it harder to access timely health care.\8,9\ Delays in medical care may
increase morbidity and mortality risk among those with underlying,
preventable, and treatable medical conditions.\13\ In
[[Page 35999]]
addition, findings also suggest that patients experiencing inadequate
housing or housing instability are associated with higher rates of
inpatient admissions for mental, behavioral, and neurodevelopmental
disorders, longer hospital stays, and substantial health care
costs.\14\
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\13\ Gertz AH, Pollack CC, Schultheiss MD, Brownstein JS.
Delayed medical care and underlying health in the United States
during the COVID-19 pandemic: A cross-sectional study. Prev Med Rep.
2022 Aug;28:101882. doi: 10.1016/j.pmedr.2022.101882. Epub 2022 Jul
5. PMID: 35813398; PMCID: PMC9254505.
\14\ Rollings KA, Kunnath N, Ryus CR, Janke AT, Ibrahim AM.
Association of Coded Housing Instability and Hospitalization in the
US. JAMA Netw Open. 2022;5(11):e2241951. doi:10.1001/
jamanetworkopen.2022.41951.
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Therefore, after considering the impact on resource use data
generated using claims from the September 2023 update of the FY 2023
MedPAR file for the seven ICD-10-CM diagnosis codes that describe
inadequate housing and housing instability and consideration of the
nine guiding principles, we are proposing to change the severity level
designation for diagnosis codes Z59.10 (Inadequate housing,
unspecified), Z59.11 (Inadequate housing environmental temperature),
Z59.12 (Inadequate housing utilities), Z59.19 (Other inadequate
housing), Z59.811 (Housing instability, housed, with risk of
homelessness), Z59.812 (Housing instability, housed, homelessness in
past 12 months) and Z59.819 (Housing instability, housed unspecified)
from NonCC to CC for FY 2025.
As discussed in the FY 2023 IPPS/LTCH PPS final rule (87 FR 48868),
if SDOH Z codes are not consistently reported in inpatient claims data,
our methodology utilized to mathematically measure the impact on
resource use, as described previously, may not adequately reflect what
additional resources were expended by the hospital to address these
SDOH circumstances in terms of requiring clinical evaluation, extended
length of hospital stay, increased nursing care or monitoring or both,
and comprehensive discharge planning. We will continue to monitor SDOH
Z code reporting, including reporting based on SDOH screening performed
as a result of new quality measures in the Hospital Inpatient Quality
Reporting program. We may consider proposing 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 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.
To inform future rulemaking, feedback and other suggestions may be
submitted by October 20, 2024 and directed to MEARISTM at:
https://mearis.cms.gov/public/home.
2. Causally Specified Delirium
Additionally, for this FY 2025 IPPS/LTCH PPS proposed rule, we
received a request to change the severity level designations of the
ICD-10-CM diagnosis codes that describe causally specified delirium
from CC to MCC when reported as secondary diagnoses. Causally specified
delirium is delirium caused by the physiological effects of a medical
condition, by the direct physiological effects of a substance or
medication, including withdrawal, or by multiple or unknown etiological
factors. The requestor noted that ICD-10-CM diagnosis codes G92.8
(Other toxic encephalopathy), G92.9 (Unspecified toxic encephalopathy)
and G93.41 (Metabolic encephalopathy) are currently all designated as
MCCs. According to the requestor, a diagnosis of delirium implies an
underlying acute encephalopathy, and as such, the severity designation
of the diagnosis codes that describe causally specified delirium should
be on par with the severity designation of the diagnosis codes that
describe toxic encephalopathy and metabolic encephalopathy. The
requestor stated that toxic encephalopathy, metabolic encephalopathy,
and causally specified delirium all describe core symptoms of
impairment of level of consciousness and cognitive change caused by a
medical condition or substance.
The requestor further stated that there is robust literature
detailing the impact delirium can have on cognitive decline, rates of
functional decline, subsequent dementia diagnosis,
institutionalization, care complexity and costs, readmission rates, and
mortality. The requestor considered each of the nine guiding principles
discussed earlier in this section and noted how each of the principles
could be applied in evaluating changes to the severity designations of
the diagnosis codes that describe causally specified delirium in their
request. Specifically, the requestor stated that delirium is a textbook
example that maps to the nine guiding principles for evaluating a
potential change in severity designation in that delirium (1) has a
bidirectional link with dementia, (2) indexes physiological
vulnerability across populations, (3) impacts healthcare systems across
levels of care, (4) complicates postoperative recovery, (5) consigns
patients to higher levels of care, and for longer, (6)impedes patient
engagement in care, (7) has several recent treatment guidelines, (8)
indicates neuronal/brain injury, and (9) represents a common expression
of terminal illness.
The requestor identified 37 ICD-10-CM diagnosis codes that describe
causally specified delirium. We agree that these 37 diagnosis codes are
all currently designated as CCs. We refer the reader to Appendix G of
the ICD-10 MS-DRG Version 41.1 Definitions Manual (available on the CMS
website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/ms-drg-classifications-and-software) for
the complete list of diagnoses designated as CCs when reported as
secondary diagnoses, except when used in conjunction with the principal
diagnosis in the corresponding CC Exclusion List in Appendix C. To
evaluate this request, we analyzed the claims data in the September
2023 update of the FY 2023 MedPAR file. The following table shows the
analysis for each of the diagnosis codes identified by the requestor
that describe causally specified delirium.
BILLING CODE 4120-01-P
[[Page 36000]]
[GRAPHIC] [TIFF OMITTED] TP02MY24.061
[[Page 36001]]
[GRAPHIC] [TIFF OMITTED] TP02MY24.062
BILLING CODE 4120-01-C
We analyzed these data as described in FY 2008 IPPS final rule (72
FR 47158 through 47161). The table shows that the C1 values of the
diagnosis codes that describe causally specified delirium range from a
low of 0.35 to a high of 4.00. As stated earlier, a C1 value close to
2.0 suggests the condition is more like a CC than a non-CC but not as
significant in resource usage as an MCC. On average, the C1 values of
the diagnoses that describe causally specified delirium suggest that
these codes are more like a NonCC than a CC. We note diagnosis code
F11.221 (Opioid dependence with intoxication delirium) had a C1 value
of 4.00, however our analysis reflects that this diagnosis code was
reported as a secondary diagnosis in only 42 claims, and only one claim
reported F11.221 as a secondary diagnosis with no other secondary
diagnosis or with all other secondary diagnoses that are NonCCs.
The C2 findings of the diagnosis codes that describe causally
specified delirium range from a low of 0.28 to a high of 3.22 and the
C3 findings range from a low of 1.25 to a high of 3.85. The data are
clearly mixed between the C2 and C3 findings, and do not consistently
support a change in the severity level. On average, the C2 and C3
findings again suggest that these codes that describe causally
specified delirium are more similar to a NonCC.
In considering the nine guiding principles, as summarized
previously, we note that delirium is a diagnosis that can impede
patient cooperation or management of care or both. Delirium is a
confusional state that can manifest as agitation, tremulousness, and
hallucinations or even somnolence and decreased arousal. In addition,
patients diagnosed with delirium can require a higher level of care by
needing intensive monitoring, and a greater number of caregivers.
Managing disruptive behavior, particularly agitation and combative
behavior, is a challenging aspect in caring for patients diagnosed with
delirium. Prevention and treatment of delirium can include avoiding
factors known to cause or aggravate delirium; identifying and treating
the underlying acute illness; and where appropriate using low-dose,
short-acting pharmacologic agents.
After considering the C1, C2, and C3 values of the 37 ICD-10-CM
diagnosis codes that describe causally specified delirium and
consideration of the nine guiding principles, we believe these 37 codes
should not be designated as MCCs. While there is a lack of consistent
claims data to support a severity level change from CCs to MCCs, we
recognize patients with delirium can utilize increased hospital
resources and can be at a higher severity level. Therefore, we are
proposing to retain the severity designation of the 37 codes listed
previously as CCs for FY 2025.
d. Proposed Additions and Deletions to the Diagnosis Code Severity
Levels for FY 2025
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 2025 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 2025;
Table 6J.1--Proposed Additions to the CC List-FY 2025; and
Table 6J.2--Proposed Deletions to the CC List-FY 2025
[[Page 36002]]
e. Proposed CC Exclusions List for FY 2025
In the September 1, 1987 final notice (52 FR 33143) concerning
changes to the DRG classification system, we modified the GROUPER logic
so that certain diagnoses included on the standard list of CCs would
not be considered valid CCs in combination with a particular principal
diagnosis. We created the CC Exclusions List for the following reasons:
(1) to preclude coding of CCs for closely related conditions; (2) to
preclude duplicative or inconsistent coding from being treated as CCs;
and (3) to ensure that cases are appropriately classified between the
complicated and uncomplicated DRGs in a pair.
In the May 19, 1987 proposed notice (52 FR 18877) and the September
1, 1987 final notice (52 FR 33154), we explained that the excluded
secondary diagnoses were established using the following five
principles:
Chronic and acute manifestations of the same condition
should not be considered CCs for one another;
Specific and nonspecific (that is, not otherwise specified
(NOS)) diagnosis codes for the same condition should not be considered
CCs for one another;
Codes for the same condition that cannot coexist, such as
partial/total, unilateral/bilateral, obstructed/unobstructed, and
benign/malignant, should not be considered CCs for one another;
Codes for the same condition in anatomically proximal
sites should not be considered CCs for one another; and
Closely related conditions should not be considered CCs
for one another.
The creation of the CC Exclusions List was a major project
involving hundreds of codes. We have continued to review the remaining
CCs to identify additional exclusions and to remove diagnoses from the
master list that have been shown not to meet the definition of a CC. We
refer readers to the FY 2014 IPPS/LTCH PPS final rule (78 FR 50541
through 50544) for detailed information regarding revisions that were
made to the CC and CC Exclusion Lists under the ICD-9-CM MS-DRGs.
The ICD-10 MS-DRGs Version 41.1 CC Exclusion List is included as
Appendix C in the ICD-10 MS-DRG Definitions Manual (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.
Effective for the April 1, 2024 release of the ICD-10 MS-DRG
Definitions Manual, Version 41.1, a new section has been added to
Appendix C as follows:
Part 3: Secondary Diagnosis CC/MCC Severity Exclusions in Select MS-
DRGs
Part 3 lists diagnosis codes that are designated as a complication
or comorbidity (CC) or major complication or comorbidity (MCC) and
included in the definition of the logic for the listed MS-DRGs. When
reported as a secondary diagnosis and grouped to one of the listed MS-
DRGs, the diagnosis is excluded from acting as a CC/MCC for severity in
DRG assignment.
The purpose of this new section is to include the list of MS-DRGs
subject to what is referred to as suppression logic. In addition to the
suppression logic excluding secondary diagnosis CC or MCC conditions
that may be included in the definition of the logic for a DRG, it is
also based on the presence of other secondary diagnosis logic defined
within certain base DRGs. Therefore, if a MS-DRG has secondary
diagnosis logic, the suppression is activated regardless of the
severity of the secondary diagnosis code(s) for appropriate grouping
and MS-DRG assignment.
Each MS-DRG is defined by a particular set of patient attributes
including principal diagnosis, specific secondary diagnoses,
procedures, sex, and discharge status. The patient attributes which
define each MS-DRG are displayed in a series of headings which indicate
the patient characteristics used to define the MS-DRG. These headings
indicate how the patient's diagnoses and procedures are used in
determining MS-DRG assignment. Following each heading is a complete
list of all the ICD-10-CM diagnosis or ICD-10-PCS procedure codes
included in the MS-DRG. One of these headings is secondary diagnosis.
Secondary diagnosis. Indicates that a specific set of
secondary diagnoses are used in the definition of the MS-DRG. For
example, a secondary diagnosis of acute leukemia with chemotherapy is
used to define MS-DRG 839.
The full list of MS-DRGs where suppression occurs is shown in the
following table.
[[Page 36003]]
[GRAPHIC] [TIFF OMITTED] TP02MY24.063
We believe this additional information about the suppression logic
may further assist users of the ICD-10 MS-DRG GROUPER software and
related materials.
In our review of the MS-DRGs containing secondary diagnosis logic
in association with the suppression logic previously discussed, we
identified another set of MS-DRGs containing secondary diagnosis logic
in the definition of the MS-DRG. Specifically, we identified 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), as displayed in the ICD-10
MS-DRG Version 41.1 Definitions Manual (which is available on the CMS
website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/ms-drg-classifications-and-software) which
contains secondary diagnosis logic.
Of the seven logic lists included in the definition of MS-DRGs 673,
674, and 675, there are three ``Or Principal Diagnosis'' logic lists
and one ``With Secondary Diagnosis'' logic list. The first ``Or
Principal Diagnosis'' logic list is comprised of 21 diagnosis codes
describing conditions such as chronic kidney disease, kidney failure,
and complications related to a vascular dialysis catheter or kidney
transplant. The second ``Or Principal Diagnosis'' logic list is
comprised of four diagnosis codes describing diabetes with diabetic
chronic kidney disease followed by a ``With Secondary Diagnosis'' logic
list that includes diagnosis codes N18.5 (Chronic kidney disease, stage
5) and N18.6 (End stage renal disease). These logic lists are
components of 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.
The third ``Or Principal Diagnosis'' logic list is comprised of three
diagnosis codes describing Type 1 diabetes with different kidney
complications as part of the special logic in MS-DRGs 673, 674, and 675
for pancreatic islet cell transplantation performed in the absence of
any other surgical procedure.
Under the Version 41.1 ICD-10 MS-DRGs, diagnosis code N18.5
(Chronic kidney disease, stage 5) is currently designated as a CC and
diagnosis code N18.6 (End stage renal disease) is designated as an MCC.
In our review of the MS-DRGs containing secondary diagnosis logic in
association with the suppression logic, we noted that currently, when
some diagnosis codes from the ``Or Principal Diagnosis'' logic lists in
MS-DRGs 673, 674, and 675 are reported as the principal diagnosis and
either diagnosis code N18.5 or N18.6 from the ``With Secondary
Diagnosis'' logic list is reported as a secondary diagnosis, some cases
are grouping to MS-DRG 673 (Other Kidney and Urinary Tract Procedures
with MCC) or to MS-DRG 674 (Other Kidney and Urinary Tract Procedures
with CC) in the absence of any other MCC or CC secondary diagnoses
being reported.
In our analysis of this issue, we noted that diagnosis codes N18.5
and N18.6 are excluded from acting as a CC or MCC, when reported with
principal
[[Page 36004]]
diagnoses from Principal Diagnosis Collection Lists 1379 and 1380,
respectively, as reflected in Part 1 of Appendix C in the CC Exclusion
List. We refer the reader to Part 1 of Appendix C in the CC Exclusion
List as displayed in the ICD-10 MS-DRG Version 41.1 Definitions Manual
(which is available on the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/ms-drg-classifications-and-software) for the complete list of principal
diagnoses in Principal Diagnosis Collection Lists 1379 and 1380.
Specifically, when codes N18.5 or N18.6 are reported as secondary
diagnoses, they are considered as NonCCs when the diagnosis codes from
the ``Or Principal Diagnosis'' logic lists in MS-DRGs 673, 674, and 675
reflected in the following table are reported as the principal
diagnosis under the CC Exclusion logic.
[GRAPHIC] [TIFF OMITTED] TP02MY24.064
We also noted that currently, a subset of diagnosis codes from the
first ``Or Principal Diagnosis'' logic list in MS-DRGs 673, 674, and
675 are not listed in Principal Diagnosis Collection Lists 1379 or 1380
for diagnosis codes N18.5 and N18.6, respectively. As a result, when
one of the 13 diagnosis codes listed in the following table are
reported as the principal diagnosis, and either diagnosis code N18.5 or
N18.6 from the ``With Secondary Diagnosis'' logic list are reported as
a secondary diagnosis, the cases are grouping to MS-DRG 673 (Other
Kidney and Urinary Tract Procedures with MCC) or to MS-DRG 674 (Other
Kidney and Urinary Tract Procedures with CC) when also reported with a
procedure code describing the insertion of a tunneled or totally
implantable vascular access device.
[[Page 36005]]
[GRAPHIC] [TIFF OMITTED] TP02MY24.065
Consistent with how other similar logic lists function in the ICD-
10 GROUPER software for case assignment to the ``with MCC'' or ``with
CC'' MS-DRGs, the logic for case assignment to MS-DRG 673 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.
Likewise, the logic for case assignment to MS-DRG 674 is intended to
require any other diagnosis designated as a CC and reported as a
secondary diagnosis for appropriate assignment.
Therefore, for FY 2025, we are proposing to correct the logic for
case assignment to MS-DRGs 673, 674, and 675 by adding suppression
logic to exclude diagnosis codes N18.5 (Chronic kidney disease, stage
5) and N18.6 (End stage renal disease) from the logic list entitled
``With Secondary Diagnosis'' from acting as a CC or an MCC,
respectively, when reported as a secondary diagnosis with one of the 13
previously listed principal diagnosis codes from the ``Or Principal
Diagnosis'' logic lists in MS-DRGs 673, 674, and 675 for appropriate
grouping and MS-DRG assignment. Under this proposal, when diagnosis
codes N18.5 or N18.6 are reported as a secondary diagnosis with one of
the 13 previously listed principal diagnosis codes, the GROUPER will
assign MS-DRG 675 (Other Kidney and Urinary Tract Procedures without
CC/MCC) in the absence of any other MCC or CC secondary diagnoses being
reported. We also note that the current list of MS-DRGs subject to
suppression logic as previously discussed and listed under Version 41.1
includes MS-DRGs that are not subdivided by a two-way severity level
split (``with MCC and without MCC'' or ``with CC/MCC and without CC/
MCC'') or a three-way severity level split (with MCC, with CC, and
without CC/MCC, respectively), or the listed MS-DRG includes diagnoses
that are not currently designated as a CC or MCC. To avoid potential
confusion, we are proposing to refine how the suppression logic is
displayed under Appendix C--Part 3 to not display the MS-DRGs where the
suppression logic has no impact on the grouping (meaning the logic list
for the affected MS-DRG contains diagnoses that are all designated as
NonCCs, or the MS-DRG is not subdivided by a severity level split) as
reflected in the draft Version 42 ICD-10 MS-DRG Definitions Manual,
which is available in association with this proposed rule at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps.
In addition, we are proposing changes to the ICD-10 MS-DRGs Version
42 CC Exclusion List based on the diagnosis code updates as discussed
in section II.C.13. of this FY 2025 IPPS/LTCH PPS proposed rule.
Therefore, we have developed Table 6G.1.--Proposed Secondary Diagnosis
Order Additions to the CC Exclusions List--FY 2025; Table 6G.2.--
Proposed Principal Diagnosis Order Additions to the CC Exclusions
List--FY 2025; Table 6H.1.--Proposed Secondary Diagnosis Order
Deletions to the CC Exclusions List--FY 2025; and Table 6H.2.--Proposed
Principal Diagnosis Order Deletions to the CC Exclusions List--FY 2025.
For Table 6G.1, each secondary diagnosis code proposed for addition to
the CC Exclusion List is shown with an asterisk and the principal
diagnoses proposed to exclude the secondary diagnosis code are provided
in the indented column immediately following it. For Table 6G.2, each
of the principal diagnosis codes for which there is a CC exclusion is
shown with an asterisk and the conditions proposed for addition to the
CC Exclusion List that will not count as a CC are provided in an
indented column immediately following the affected principal diagnosis.
For Table 6H.1, each secondary diagnosis code proposed for deletion
from the CC Exclusion List is shown with an asterisk followed by the
principal diagnosis codes that currently exclude it. For Table 6H.2,
each of the principal diagnosis codes is shown with an asterisk and the
proposed deletions to the CC Exclusions List are provided in an
indented column immediately following the affected principal
[[Page 36006]]
diagnosis. Tables 6G.1., 6G.2., 6H.1., and 6H.2. associated with this
proposed rule are available on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html.
13. Proposed Changes to the ICD-10-CM and ICD-10-PCS Coding Systems
To identify new, revised and deleted diagnosis and procedure codes,
for FY 2025, 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 proposed rule.
These tables are not published in the Addendum to this 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 this proposed rule. As
discussed in section II.C.15. of the preamble of this proposed rule,
the code titles are adopted as part of the ICD-10 (previously ICD-9-CM)
Coordination and Maintenance Committee meeting process. Therefore,
although we publish the code titles in the IPPS proposed and final
rules, they are not subject to comment in the proposed or final rules.
We are proposing the MDC and MS-DRG assignments for the new
diagnosis codes and procedure codes as set forth in Table 6A.--New
Diagnosis Codes and Table 6B.--New Procedure Codes. In addition, the
proposed severity level designations for the new diagnosis codes are
set forth in Table 6A. and the proposed O.R. status for the new
procedure codes are set forth in Table 6B. Consistent with our
established process, we examined the MS-DRG assignment and the
attributes (severity level and O.R. status) of the predecessor
diagnosis or procedure code, as applicable, to inform our proposed
assignments and designations. Specifically, we review the predecessor
code and MS-DRG assignment most closely associated with the new
diagnosis or procedure code, and in the absence of claims data, we
consider other factors that may be relevant to the MS-DRG assignment,
including the severity of illness, treatment difficulty, complexity of
service and the resources utilized in the diagnosis and/or treatment of
the condition. We note that this process does not automatically result
in the new diagnosis or procedure code being proposed for assignment to
the same MS-DRG or to have the same designation as the predecessor
code.
We are making available on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html
the following tables associated with this proposed rule:
Table 6A.--New Diagnosis Codes--FY 2025;
Table 6B.--New Procedure Codes--FY 2025;
Table 6C.--Invalid Diagnosis Codes--FY 2025;
Table 6D.--Invalid Procedure Codes--FY 2025;
Table 6E.--Revised Diagnosis Code Titles--FY 2025;
Table 6F.--Revised Procedure Code Titles--FY 2025;
Table 6G.1.--Proposed Secondary Diagnosis Order Additions
to the CC Exclusions List--FY 2025;
Table 6G.2.--Proposed Principal Diagnosis Order Additions
to the CC Exclusions List--FY 2025;
Table 6H.1.--Proposed Secondary Diagnosis Order Deletions
to the CC Exclusions List--FY 2025;
Table 6H.2.--Proposed Principal Diagnosis Order Deletions
to the CC Exclusions List--FY 2025;
Table 6I.1.--Proposed Additions to the MCC List--FY 2025;
Table 6J.1.--Proposed Additions to the CC List--FY 2025;
and
Table 6J.2.--Proposed Deletions to the CC List--FY 2025.
14. Proposed Changes to the Surgical Hierarchies
Some inpatient stays entail multiple surgical procedures, each one
of which, occurring by itself, could result in assignment of the case
to a different MS-DRG within the MDC to which the principal diagnosis
is assigned. Therefore, it is necessary to have a decision rule within
the GROUPER by which these cases are assigned to a single MS-DRG. The
surgical hierarchy, an ordering of surgical classes from most resource-
intensive to least resource-intensive, performs that function.
Application of this hierarchy ensures that cases involving multiple
surgical procedures are assigned to the MS-DRG associated with the most
resource-intensive surgical class.
A surgical class can be composed of one or more MS-DRGs. For
example, in MDC 11, the surgical class ``kidney transplant'' consists
of a single MS-DRG (MS-DRG 652) and the class ``major bladder
procedures'' consists of three MS-DRGs (MS-DRGs 653, 654, and 655).
Consequently, in many cases, the surgical hierarchy has an impact
on more than one MS-DRG. The methodology for determining the most
resource-intensive surgical class involves weighting the average
resources for each MS-DRG by frequency to determine the weighted
average resources for each surgical class. For example, assume surgical
class A includes MS-DRGs 001 and 002 and surgical class B includes MS-
DRGs 003, 004, and 005. Assume also that the average costs of MS-DRG
001 are higher than that of MS-DRG 003, but the average costs of MS-
DRGs 004 and 005 are higher than the average costs of MS-DRG 002. To
determine whether surgical class A should be higher or lower than
surgical class B in the surgical hierarchy, we would weigh the average
costs of each MS-DRG in the class by frequency (that is, by the number
of cases in the MS-DRG) to determine average resource consumption for
the surgical class. The surgical classes would then be ordered from the
class with the highest average resource utilization to that with the
lowest, with the exception of ``other O.R. procedures'' as discussed in
this proposed rule.
This methodology may occasionally result in assignment of a case
involving multiple procedures to the lower-weighted MS-DRG (in the
highest, most resource-intensive surgical class) of the available
alternatives. However, given that the logic underlying the surgical
hierarchy provides that the GROUPER search for the procedure in the
most resource-intensive surgical class, in cases involving multiple
procedures, this result is sometimes unavoidable.
We note that, notwithstanding the foregoing discussion, there are a
few instances when a surgical class with a lower average cost is
ordered above a surgical class with a higher average cost. For example,
the ``other O.R. procedures'' surgical class is uniformly ordered last
in the surgical hierarchy of each MDC in which it occurs, regardless of
the fact that the average costs for the MS-DRG or MS-DRGs in that
surgical class may be higher than those for other surgical classes in
the MDC. The ``other O.R. procedures'' class is a group of procedures
that are only infrequently related to the diagnoses in the MDC but are
still occasionally performed on patients with cases assigned to the MDC
with these diagnoses. Therefore, assignment to these surgical classes
should only occur if no other surgical class more closely related to
the diagnoses in the MDC is appropriate.
A second example occurs when the difference between the average
costs for two surgical classes is very small. We have found that small
differences generally do not warrant reordering of the hierarchy
because, as a result of
[[Page 36007]]
reassigning cases on the basis of the hierarchy change, the average
costs are likely to shift such that the higher-ordered surgical class
has lower average costs than the class ordered below it.
Based on the changes that we are proposing to make for FY 2025, as
discussed in section II.C. of the preamble of this proposed rule, we
are proposing to modify the existing surgical hierarchy for FY 2025 as
follows.
As discussed in section II.C.4.a. of the preamble of this proposed
rule, we are proposing 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 are proposing to sequence proposed new MS-DRG
317 (Concomitant Left Atrial Appendage Closure and Cardiac Ablation)
above MS-DRG 275 (Cardiac Defibrillator Implant with Cardiac
Catheterization and 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).
As discussed in section II.C.4.b. of the preamble of this proposed
rule, we are proposing to revise the title for MS-DRG 276 from
``Cardiac Defibrillator Implant with MCC'' to ``Cardiac Defibrillator
Implant with MCC or Carotid Sinus Neurostimulator''.
As discussed in section II.C.6.b. of the preamble of this proposed
rule, we are proposing to delete MS-DRGs 453, 454, and 455 (Combined
Anterior and Posterior Spinal Fusion with MCC, with CC, and without CC/
MCC, respectively). Based on the changes we are proposing to make for
those MS-DRGs in MDC 08 (Diseases and Disorders of the Musculoskeletal
System and Connective Tissue), we are proposing to revise the surgical
hierarchy for MDC 08 as follows: In MDC 08, we are proposing to
sequence proposed new MS-DRGs 426, 427, and 428 (Multiple Level
Combined Anterior and Posterior Spinal Fusion Except Cervical with MCC,
with CC, and without CC/MCC, respectively) above proposed new MS-DRG
402 (Single Level Combined Anterior and Posterior Spinal Fusion Except
Cervical). We are proposing to sequence proposed new MS-DRGs 429 and
430 (Combined Anterior and Posterior Cervical Spinal Fusion with MCC
and without MCC, respectively) above 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 below proposed new MS-DRG 402. We are proposing to sequence
proposed new MS-DRGs 447 and 448 (Multiple Level Spinal Fusion Except
Cervical with MCC and without MCC, respectively) above proposed revised
MS-DRGs 459 and 460 (Single Level Spinal Fusion Except Cervical with
and without MCC, respectively) and below MS-DRGs 456, 457, and 458.
Lastly, as discussed in section II.C.9. of the preamble of this
proposed rule, we are proposing to revise the surgical hierarchy for
the MDC 17 (Myeloproliferative Diseases and Disorders, Poorly
Differentiated Neoplasms) MS-DRGs as follows: For the MDC 17 MS-DRGs,
we are proposing to sequence proposed new MS-DRG 850 (Acute Leukemia
with Other Procedures) above MS-DRGs 823, 824 and 825 (Lymphoma and
Non-Acute Leukemia with Other Procedures with MCC, with CC, and without
CC/MCC, respectively) and below MS-DRGs 820, 821, and 822 (Lymphoma and
Leukemia with Major O.R. 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 42 is
illustrated in the following tables.
[GRAPHIC] [TIFF OMITTED] TP02MY24.066
[[Page 36008]]
[GRAPHIC] [TIFF OMITTED] TP02MY24.067
[GRAPHIC] [TIFF OMITTED] TP02MY24.068
15. Maintenance of the ICD-10-CM and ICD-10-PCS Coding Systems
In September 1985, the ICD-9-CM Coordination and Maintenance
Committee was formed. This is a Federal interdepartmental committee,
co-chaired by the Centers for Disease Control and Prevention's (CDC)
National Center for Health Statistics (NCHS) and CMS, charged with
maintaining and updating the ICD-9-CM system. The final update to ICD-
9-CM codes was made on October 1, 2013. Thereafter, the name of the
Committee was changed to the ICD-10 Coordination and Maintenance
Committee, effective with the March 19-20, 2014 meeting. The ICD-10
Coordination and Maintenance Committee addresses updates to the ICD-
10-CM and ICD-10-PCS coding systems. The Committee is jointly
responsible for approving coding changes, and developing errata,
addenda, and other modifications to the coding systems to reflect newly
developed procedures and technologies and newly identified diseases.
The Committee is also responsible for promoting the use of Federal and
non-Federal educational programs and other communication techniques
with a view toward standardizing coding applications and upgrading the
quality of the classification system.
The official list of ICD-9-CM diagnosis and procedure codes by
fiscal year can be found on the CMS website at: https://www.cms.gov/medicare/coding-billing/icd-10-codes/icd-9-cm-diagnosis-procedure-codes-abbreviated-and-full-code-titles.
The official list of ICD-10-CM and ICD-10-PCS codes can be found on
the CMS website at: http://www.cms.gov/Medicare/Coding/ICD10/index.html.
The NCHS has lead responsibility for the ICD-10-CM and ICD-9-CM
diagnosis codes included in the Tabular List and Alphabetic Index for
Diseases, while CMS has lead responsibility for the ICD-10-PCS and ICD-
9-CM procedure codes included in the Tabular List and Alphabetic Index
for Procedures.
The Committee encourages participation in the previously mentioned
process by health- related organizations. In this regard, the Committee
holds public meetings for discussion of educational issues and
[[Page 36009]]
proposed coding changes. These meetings provide an opportunity for
representatives of recognized organizations in the coding field, such
as the American Health Information Management Association (AHIMA), the
American Hospital Association (AHA), and various physician specialty
groups, as well as individual physicians, health information management
professionals, and other members of the public, to contribute ideas on
coding matters. After considering the opinions expressed during the
public meetings and in writing, the Committee formulates
recommendations, which then must be approved by the agencies.
The Committee presented proposals for coding changes for
implementation in FY 2025 at a public meeting held on September 12-13,
2023 and finalized the coding changes after consideration of comments
received at the meetings and in writing by November 15, 2023.
The Committee held its Spring 2024 meeting on March 19-20, 2024.
The deadline for submitting comments on these code proposals is April
19, 2024. 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
2024 would be included in the October 1, 2024 update to the ICD-10-CM
diagnosis and ICD-10-PCS procedure code sets. As discussed in earlier
sections of the preamble of this proposed rule, there are new, revised,
and deleted ICD-10-CM diagnosis codes and ICD-10-PCS procedure codes
that are captured in Table 6A.--New Diagnosis Codes, Table 6B.--New
Procedure Codes, Table 6C.--Invalid Diagnosis Codes, Table 6D.--Invalid
Procedure Codes, Table 6E.--Revised Diagnosis Code Titles, and Table
6F.--Revised Procedure Code Titles for this proposed rule, which are
available on the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps.
The code titles are adopted as part of the ICD-10 (previously ICD-
9-CM) Coordination and Maintenance Committee process. Therefore,
although we make the code titles available for the IPPS proposed rule,
they are not subject to comment in the proposed rule. Because of the
length of these tables, they are not published in the Addendum to the
proposed rule. Rather, they are available on the CMS website as
discussed in section VI. of the Addendum to the proposed rule.
Recordings for the virtual meeting discussions of the procedure
codes at the Committee's September 12-13, 2023 meeting and the March
19-20, 2024 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 12-13, 2023 meeting and March 19-20, 2024 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].
CMS implemented 41 new procedure codes including the insertion of a
palladium-103 collagen implant into the brain, the excision or
resection of intestinal body parts using a laparoscopic hand-assisted
approach, the transfer of omentum for pedicled omentoplasty procedures,
and the administration of talquetamab into the ICD-10-PCS
classification effective with discharges on and after April 1, 2024.
The procedure codes are as follows:
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The 41 procedure codes are also reflected in Table 6B- New
Procedure Codes, which is available on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS. We are soliciting public comments on the most
appropriate MDC, MS-DRG, and operating room status assignments for
these codes for FY 2025, as well as any other options for the GROUPER
logic.
We note that Change Request (CR) 13458, Transmittal 12384, titled
``April 2024 Update to the Medicare Severity--Diagnosis Related Group
(MS-DRG) Grouper and Medicare Code Editor (MCE) Version 41.1'' was
issued on November 30, 2023 (available on the CMS website at: https://www.cms.gov/regulations-and-guidance/guidance/transmittals/2023-transmittals/r12384cp) regarding the release of an updated version of
the ICD-10 MS-DRG GROUPER and Medicare Code Editor software, Version
41.1, effective with discharges on and after April 1, 2024, reflecting
the new procedure codes. The updated software, along with the updated
ICD-10 MS-DRG Version 41.1 Definitions Manual and the Definitions of
Medicare Code Edits Version 41.1 manual is available at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/ms-drg-classifications-and-software.
[[Page 36013]]
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 the Medicare Modernization Act (Pub. L. 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 proposed rule, there were code proposals presented for
an April 1, 2024 implementation at the September 12-13, 2023 Committee
meetings. Following the receipt of public comments, the code proposals
were approved and finalized, therefore, there were new codes
implemented April 1, 2024.
Consistent with the process we outlined for the April 1
implementation date, we announced the new codes in November 2023 and
provided the updated code files in December 2023 and ICD-10-CM Official
Guidelines for Coding and Reporting in January 2024. In the February
05, 2024 Federal Register (89 FR 7710), notice for the March 19-20,
2024 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, 2024 we made available the updated Version 41.1 ICD-10 MS-
DRG GROUPER software and related materials on the CMS web page at:
https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/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-billing/icd-10-codes/updates-revisions-icd-9-cm-procedure-codes-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-billing/icd-10-codes. CMS also sends electronic files containing all ICD-10-CM and
ICD-10-PCS coding changes to its Medicare contractors for use in
updating their systems and providing education to providers.
Information on ICD-10-CM diagnosis codes, along with the Official ICD-
10-CM Coding Guidelines, can be found on the CDC website at https://www.cdc.gov/nchs/icd/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.
For FY 2024, there are currently 74,044 diagnosis codes and 78,638
procedure codes. As displayed in Table 6A.--New Diagnosis Codes and in
Table 6B.--New Procedure Codes associated with this proposed rule (and
available on the CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps), there are 252 new
diagnosis codes that have been finalized for FY 2025 at the time of the
development of this proposed rule and 41 new procedure codes that were
effective with discharges on and after April 1, 2024. The code titles
are adopted as part of the ICD-10 Coordination and Maintenance
Committee process. Thus, although we publish the code titles in the
IPPS proposed and final rules, they are not subject to comment in the
proposed or final rules. We will continue to provide the October
updates in this manner in the IPPS proposed and final rules.
[[Page 36014]]
16. 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. Proposed Changes for FY 2025
As discussed in section II.C.5. of the preamble of this proposed
rule, for FY 2025, we are proposing to revise the title of MS-DRG 276
from ``Cardiac Defibrillator Implant with MCC'' to ``Cardiac
Defibrillator Implant with MCC or Carotid Sinus Neurostimulator''.
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-DRG 276 is 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. Therefore, we are
proposing that if the applicable proposed MS-DRG changes are finalized,
we would make conforming changes to the title of MS-DRG 276 as
reflected in the table that follows. We are also proposing to continue
to include the existing MS-DRGs currently subject to the policy as
displayed in the following table.
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The final list of MS-DRGs subject to the IPPS policy for replaced
devices offered without cost or with a credit will be included in the
FY 2025 IPPS/LTCH PPS final rule and also will be issued to providers
in the form of a Change Request (CR).
D. Recalibration of the FY 2025 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 2025, we propose 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 2023 MedPAR data used in this
proposed rule include discharges occurring on October 1, 2022, through
September 30, 2023, based on bills received by CMS through December 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 2023 MedPAR file used in calculating the relative weights
includes data for approximately 6,887,902 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 2023 update of
the FY 2023 MedPAR file complies with version 5010 of the X12 HIPAA
Transaction and Code Set Standards, and includes a variable called
``claim type.'' Claim type ``60'' indicates that the claim was an
inpatient claim paid as fee-for-service. Claim types ``61,'' ``62,''
``63,'' and ``64'' relate to encounter claims, Medicare Advantage IME
claims, and HMO no-pay claims. Therefore, the calculation of the
proposed relative weights for FY 2025 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. In addition, the data exclude Rural Emergency
Hospitals (REHs), including hospitals that subsequently became REHs
after the period from which the data were taken. We note that the
proposed FY 2025 relative weights are based on the ICD-10-CM diagnosis
codes and ICD-10-PCS procedure codes from the FY 2023 MedPAR claims
data, grouped through the ICD-10 version of
[[Page 36017]]
the proposed FY 2025 GROUPER (Version 42).
The second data source used in the cost-based relative weighting
methodology is the Medicare cost report data files from the Healthcare
Cost Report Information System (HCRIS). In general, we use the HCRIS
dataset that is 3 years prior to the IPPS fiscal year. Specifically,
for this proposed rule, we used the December 2023 update of the FY 2022
HCRIS for calculating the FY 2025 cost-based relative weights.
Consistent with our historical practice, for this FY 2025 proposed
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 2025 IPPS Proposed
Rule Home Page'' or ``Acute Inpatient Files for Download.''
2. Methodology for Calculation of the Relative Weights
a. General
We calculated the proposed FY 2025 relative weights based on 19
CCRs. The methodology we are proposing to use to calculate the FY 2025
MS-DRG cost-based relative weights based on claims data in the FY 2023
MedPAR file and data from the FY 2022 Medicare cost reports is as
follows:
To the extent possible, all the claims were regrouped
using the proposed FY 2025 MS-DRG classifications discussed in sections
II.B. and II.C. of the preamble of this proposed rule.
The transplant cases that were used to establish the
relative weights for heart and heart-lung, liver and/or intestinal, and
lung transplants (MS-DRGs 001, 002, 005, 006, and 007, respectively)
were limited to those Medicare-approved transplant centers that have
cases in the FY 2023 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, CT scan charges, and 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 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 Present on Admission (POA) 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
[[Page 36018]]
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
that 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 2024, and consistent with how we have treated hospitals
that participated in the BPCI Initiative, for FY 2025, 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 2024 IPPS/LTCH
PPS final rule, we are also proposing to include all applicable data
from subsection (d) hospitals participating in the Comprehensive Care
for Joint Replacement (CJR) Model in our IPPS payment modeling and
ratesetting calculations.
The charges for each of the 19 cost groups for each claim were
standardized to remove the effects of differences in area wage levels,
IME and DSH payments, and for hospitals located in Alaska and Hawaii,
the applicable cost-of-living adjustment. Because hospital charges
include charges for both operating and capital costs, we standardized
total charges to remove the effects of differences in geographic
adjustment factors, cost-of-living adjustments, and DSH payments under
the capital IPPS as well. Charges were then summed by MS-DRG for each
of the 19 cost groups so that each MS-DRG had 19 standardized charge
totals. Statistical outliers were then removed. These charges were then
adjusted to cost by applying the proposed national average CCRs
developed from the FY 2022 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 proposed rule and available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS. The supplemental
data file shows the lines on the cost report and the corresponding
revenue codes that we used to create the proposed 19 national cost
center CCRs. If we receive comments about the groupings in this
supplemental data file, we may consider these comments as we finalize
our policy.
Consistent with historical practice, we account for rare situations
of non-monotonicity in a base MS-DRG and its severity levels, where the
mean cost in the higher severity level is less than the mean cost in
the lower severity level, in determining the relative weights for the
different severity levels. If there are initially non-monotonic
relative weights in the same base DRG and its severity levels, then we
combine the cases that group to the specific non-monotonic MS-DRGs for
purposes of relative weight calculations. For example, if there are two
non-monotonic MS-DRGs, combining the cases across those two MS-DRGs
results in the same relative weight for both MS-DRGs. The relative
weight calculated using the combined cases for those severity levels is
monotonic, effectively removing any non-monotonicity with the base DRG
and its severity levels. For this FY 2025 proposed rule, this
calculation was applied to address non-monotonicity for cases that
grouped to the following: MS-DRG 016 and MS-DRG 017, MS-DRG 095 and MS-
DRG 096, MS-DRG 504 and MS-DRG 505, MS-DRG 797 and MS-DRG 798. In the
supplemental file titled AOR/BOR File, we include statistics for the
affected MS-DRGs both separately and with cases combined.
We are inviting public comments on our proposals related to
recalibration of the proposed FY 2025 relative weights and the changes
in relative weights from FY 2024.
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 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 would 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
[[Page 36019]]
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 \15\ 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 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 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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\15\ 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. We also finalized use of this same
proxy for the FY 2023 IPPS/LTCH PPS final rule (87 FR 48894).
Following the issuance of the FY 2023 IPPS/LTCH PPS final rule, we
issued guidance \16\ 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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\16\ https://www.cms.gov/files/document/r11727cp.pdf.
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In the FY 2024 IPPS/LTCH PPS final rule, we explained that the
MedPAR claims data now includes a field that identifies whether or not
the claim includes expanded access use of immunotherapy. We stated that
for the FY 2022 MedPAR claims data, this field identifies whether or
not the claim includes condition code ZB, and for the FY 2023 MedPAR
data and subsequent years, this field will identify whether or not the
claim includes condition code 90. We further noted 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.
Accordingly, and as discussed further in the FY 2024 IPPS/LTCH PPS
final rule, we finalized two modifications to our methodology for
identifying clinical trial claims and expanded access use claims in MS-
DRG 018 (88 FR 58791). First, we finalized to exclude claims with the
presence of condition code ``90'' (or, for FY 2024 ratesetting, which
was 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, we finalized 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 finalized 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 ``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, we also finalized modifications to
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. We refer readers to the FY 2024 IPPS/
LTCH PPS final rule for further discussion of these modifications (88
FR 58791).
In this FY 2025 IPPS/LTCH PPS proposed rule, we are proposing to
continue to use our methodology as modified in the FY 2024 IPPS/LTCH
PPS final rule for identifying clinical trial claims and expanded
access use claims in MS-DRG 018. First, we exclude claims with the
presence of condition code ``90'' 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, we 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 are
proposing that in calculating the relative weight for MS-DRG 018 for FY
2025, 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 ``90'' would be excluded from the
calculation of the average cost for MS-DRG 018.
We are also proposing to continue to use the methodology as
modified in the FY 2024 IPPS/LTCH PPS final rule to calculate 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:
[[Page 36020]]
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''.
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.
Under our proposal to continue to apply this methodology, based on
the December 2023 update of the FY 2023 MedPAR file used for this
proposed rule, we estimated that the average costs of cases assigned to
MS-DRG 018 that are identified as clinical trial cases ($116,831) were
34 percent of the average costs of the cases assigned to MS-DRG 018
that are identified as non-clinical trial cases ($342,684).
Accordingly, as we did for FY 2024, we are proposing to adjust the
transfer-adjusted case count for MS-DRG 018 by applying the proposed
adjustor of 0.34 to the applicable clinical trial and expanded access
use immunotherapy cases, and to use this adjusted case count for MS-DRG
018 in calculating the national average cost per case, which is used in
the calculation of the relative weights. Therefore, in calculating the
national average cost per case for purposes of this proposed rule, each
case identified as an applicable clinical trial or expanded access use
immunotherapy case was adjusted by 0.34. As we did for FY 2024, we are
applying this same adjustor for the applicable cases that group to MS-
DRG 018 for purposes of budget neutrality and outlier simulations. We
are also proposing to update the value of the adjustor based on more
recent data for the final rule.
d. 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
proposed rule, we present the proposed budget neutrality adjustment for
reclassification and recalibration of the FY 2025 MS-DRG relative
weights with application of this cap. We are also making available on
the CMS website a supplemental file demonstrating the application of
the permanent 10 percent cap for FY 2025. For a further discussion of
the proposed budget neutrality adjustment for FY 2025, we refer readers
to the Addendum of this proposed rule.
3. Development of Proposed National Average Cost-To-Charge Ratios
(CCRs)
We developed the proposed national average CCRs as follows:
Using the FY 2022 cost report data, we removed CAHs, Indian Health
Service hospitals, all-inclusive rate hospitals, and cost reports that
represented time periods of less than 1 year (365 days). We included
hospitals located in Maryland because we include their charges in our
claims database. Then we created CCRs for each provider for each cost
center (see the supplemental data file for line items used in the
calculations) and removed any CCRs that were greater than 10 or less
than 0.01. We normalized the departmental CCRs by dividing the CCR for
each department by the total CCR for the hospital for the purpose of
trimming the data. Then we took the logs of the normalized cost center
CCRs and removed any cost center CCRs where the log of the cost center
CCR was greater or less than the mean log plus/minus 3 times the
standard deviation for the log of that cost center CCR. Once the cost
report data were trimmed, we calculated a Medicare-specific CCR. The
Medicare-specific CCR was determined by taking the Medicare charges for
each line item from Worksheet D-3 and deriving the Medicare-specific
costs by applying the hospital-specific departmental CCRs to the
Medicare-specific charges for each line item from Worksheet D-3. Once
each hospital's Medicare-specific costs were established, we summed the
total Medicare-specific costs and divided by the sum of the total
Medicare-specific charges to produce national average, charge-weighted
CCRs.
After we multiplied the total charges for each MS-DRG in each of
the 19 cost centers by the corresponding national average CCR, we
summed the 19 ``costs'' across each MS-DRG to produce a total
standardized cost for the MS-DRG. The average standardized cost for
each MS-DRG was then computed as the total standardized cost for the
MS-DRG divided by the transfer-adjusted case count for the MS-DRG. The
average cost for each MS-DRG was then divided by the national average
standardized cost per case to determine the proposed relative weight.
The proposed FY 2025 cost-based relative weights were then normalized
by an adjustment factor of 1.92287 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 2024 relative weight, we set the
proposed FY 2025 relative weight equal to 90 percent of the FY 2024
relative weight. The proposed relative weights for FY 2025 as set forth
in Table 5 associated with this proposed rule and available on the CMS
website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS reflect the application of this cap.
The proposed 19 national average CCRs for FY 2025 are as follows:
[[Page 36021]]
[GRAPHIC] [TIFF OMITTED] TP02MY24.074
Since FY 2009, the relative weights have been based on 100 percent
cost weights based on our MS-DRG grouping system.
When we recalibrated the DRG weights for previous years, we set a
threshold of 10 cases as the minimum number of cases required to
compute a reasonable weight. We are proposing to use that same case
threshold in recalibrating the proposed MS-DRG relative weights for FY
2025. Using data from the FY 2023 MedPAR file, there were 8 MS-DRGs
that contain fewer than 10 cases. For FY 2025, because we do not have
sufficient MedPAR data to set accurate and stable cost relative weights
for these low-volume MS-DRGs, we are proposing to compute relative
weights for the low-volume MS-DRGs by adjusting their final FY 2024
relative weights by the percentage change in the average weight of the
cases in other MS-DRGs from FY 2024 to FY 2025. The crosswalk table is
as follows.
[[Page 36022]]
[GRAPHIC] [TIFF OMITTED] TP02MY24.075
E. Add-On Payments for New Services and Technologies for FY 2025
1. Background
Effective for discharges beginning on or after October 1, 2001,
section 1886(d)(5)(K)(i) of the Act requires the Secretary to establish
(after notice and opportunity for public comment) a mechanism to
recognize the costs of new medical services and technologies (sometimes
collectively referred to in this section as ``new technologies'') under
the IPPS. Section 1886(d)(5)(K)(vi) of the Act specifies that a medical
service or technology will be considered new if it meets criteria
established by the Secretary after notice and opportunity for public
comment. Section 1886(d)(5)(K)(ii)(I) of the Act specifies that a new
medical service or technology may be considered for new technology add-
on payment if, based on the estimated costs incurred with respect to
discharges involving such service or technology, the DRG prospective
payment rate otherwise applicable to such discharges under this
subsection is inadequate. The regulations at 42 CFR 412.87 implement
these provisions and Sec. 412.87(b) specifies three criteria for a new
medical service or technology to receive the additional payment: (1)
The medical service or technology must be new; (2) the medical service
or technology must be costly such that the DRG rate otherwise
applicable to discharges involving the medical service or technology is
determined to be inadequate; and (3) the service or technology must
demonstrate a substantial clinical improvement over existing services
or technologies. In addition, certain transformative new devices and
antimicrobial products may qualify under an alternative inpatient new
technology add-on payment pathway, as set forth in the regulations at
Sec. 412.87(c) and (d).
We note that section 1886(d)(5)(K)(i) of the Act requires that the
Secretary establish a mechanism to recognize the costs of new medical
services and technologies under the payment system established under
that subsection, which establishes the system for paying for the
operating costs of inpatient hospital services. The system of payment
for capital costs is established under section 1886(g) of the Act.
Therefore, as discussed in prior rulemaking (72 FR 47307 through
47308), we do not include capital costs in the add-on payments for a
new medical service or technology or make new technology add-on
payments under the IPPS for capital-related costs.
In this rule, we highlight some of the major statutory and
regulatory provisions relevant to the new technology add-on payment
criteria, as well as other information. For further discussion on the
new technology add-on payment criteria, we refer readers to the FY 2012
IPPS/LTCH PPS final rule (76 FR 51572 through 51574), the FY 2020 IPPS/
LTCH PPS final rule (84 FR 42288 through 42300), and the FY 2021 IPPS/
LTCH PPS final rule (85 FR 58736 through 58742).
a. New Technology Add-on Payment Criteria
(1) Newness Criterion
Under the first criterion, as reflected in Sec. 412.87(b)(2), a
specific medical service or technology will no longer be considered
``new'' for purposes of new medical service or technology add-on
payments after CMS has recalibrated the MS-DRGs, based on available
data, to reflect the cost of the technology. We note that we do not
consider a service or technology to be new if it is substantially
similar to one or more existing technologies. That is, even if a
medical product receives a new FDA approval or clearance, it may not
necessarily be considered ``new'' for purposes of new technology add-on
payments if it is ``substantially similar''
[[Page 36023]]
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 2025
are presented in a data file that is available, along with the other
data files associated with the FY 2024 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 2026 are
presented in a data file that is available on the CMS website, along
with the other data files associated with the FY 2025 proposed rule, by
clicking on the FY 2025 IPPS Proposed 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;
The new medical service or technology offers a treatment option for
a patient population unresponsive to, or ineligible for, currently
available treatments;
The new medical service or technology offers the ability to
diagnose a medical condition in a patient population where that medical
condition is currently undetectable, or offers the ability to diagnose
a medical condition earlier in a patient population than allowed by
currently available methods, and there must also be evidence that use
of the new medical service or technology to make a diagnosis affects
the management of the patient. The new medical service or technology
offers a treatment option for a patient population unresponsive to, or
ineligible for, currently available treatments;
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
[[Page 36024]]
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 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. 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 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
[[Page 36025]]
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 to be considered for the
following fiscal year.
Section 503(d)(2) of the MMA (Pub. L. 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 the MMA, 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 (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 July 1 prior to the particular fiscal year
for which the applicant applied for new technology add-on payments,
provided that the technology otherwise meets the applicable add-on
payment criteria. Under this policy, cases involving eligible
antimicrobial products would begin receiving the new technology add-on
payment sooner, effective for discharges the quarter after the date of
FDA marketing authorization, provided that the technology receives FDA
marketing authorization before July 1 of the fiscal year for which the
applicant applied for new technology add-on payments.
In the FY 2024 IPPS/LTCH PPS final rule (88 FR 58948 through
58958), we finalized that, beginning with the new technology add-on
payment applications for FY 2025, for technologies that are not already
FDA market authorized for the indication that is the subject of the new
technology add-on payment application, applicants must have a complete
and active FDA market authorization request at the time of new
technology add-on payment application submission and must provide
documentation of FDA acceptance or filing to CMS at the time of
application submission, consistent with the type of FDA marketing
authorization application the applicant
[[Page 36026]]
has submitted to FDA. See Sec. 412.87(e) and further discussion in the
FY 2024 IPPS/LTCH PPS final rule (88 FR 58948 through 58958). We also
finalized 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), as reflected at Sec. Sec. 412.87(f)(2) and
(f)(3), as amended and redesignated in the FY 2024 IPPS/LTCH PPS final
rule (88 FR 58948 through 58958, 88 FR 59331).
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 regarding Medicare's coverage, coding,
and payment processes, and how they can navigate these processes,
whether for new technology add-on payments or otherwise, should review
the updated resource guide available at: https://www.cms.gov/medicare/coding-billing/guide-medical-technology-companies-other-interested-parties. Parties that would like to further discuss questions or
concerns with CMS should 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 2026 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 2026, 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 December 31, 2026.
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 the MMA, provides for a mechanism for public input before
publication of a notice of proposed rulemaking regarding whether a
medical service or technology represents a substantial clinical
improvement. The process for evaluating new medical service and
technology applications requires the Secretary to do all of the
following:
Provide, before publication of a proposed rule, for public
input regarding whether a new service or technology represents an
advance in medical technology that substantially improves the diagnosis
or treatment of Medicare beneficiaries.
Make public and periodically update a list of the services
and technologies for which applications for add-on payments are
pending.
Accept comments, recommendations, and data from the public
regarding whether a service or technology represents a substantial
clinical improvement.
Provide, before publication of a proposed rule, for a
meeting at which organizations representing hospitals, physicians,
manufacturers, and any other interested party may present comments,
recommendations, and data regarding whether a new medical service or
technology represents a substantial clinical improvement to the
clinical staff of CMS.
In order to provide an opportunity for public input regarding add-
on payments for new medical services and technologies for FY 2025 prior
to publication of the FY 2025 IPPS/LTCH PPS proposed rule, we published
a notice in the Federal Register on September 28, 2023 (88 FR 66850)
and held a virtual town hall meeting on
[[Page 36027]]
December 13, 2023. 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
2025 new medical service and technology add-on payment applications
before the publication of the FY 2025 IPPS/LTCH IPPS proposed rule.
Approximately 130 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 18, 2023 deadline, in our evaluation of the
new technology add-on payment applications for FY 2025 in the
development of the FY 2025 IPPS/LTCH PPS proposed rule. In response to
the published notice and the December 13, 2023 New Technology Town Hall
meeting, we received written comments regarding the applications for FY
2025 new technology add-on payments. As explained earlier and in the
Federal Register notice announcing the New Technology Town Hall meeting
(88 FR 66850 through 66853), 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 2025. Therefore, we are not summarizing any written comments in this
proposed rule that are unrelated to the substantial clinical
improvement criterion. In section II.E.5. of the preamble of the
proposed rule, we are summarizing comments regarding individual
applications, or, if applicable, indicating that there were no comments
received in response to the New Technology Town Hall meeting notice or
New Technology Town Hall meeting, at the end of each discussion of the
individual applications.
3. ICD-10-PCS Section ``X'' Codes for Certain New Medical Services and
Technologies
As discussed in the FY 2016 IPPS/LTCH PPS final rule (80 FR 49434),
the ICD-10-PCS includes a new section containing the new Section ``X''
codes, which began being used with discharges occurring on or after
October 1, 2015. Decisions regarding changes to ICD-10-PCS Section
``X'' codes will be handled in the same manner as the decisions for all
of the other ICD-10-PCS code changes. That is, proposals to create,
delete, or revise Section ``X'' codes under the ICD-10-PCS structure
will be referred to the ICD-10 Coordination and Maintenance Committee.
In addition, several of the new medical services and technologies that
have been, or may be, approved for new technology add-on payments may
now, and in the future, be assigned a Section ``X'' code within the
structure of the ICD-10-PCS. We posted ICD-10-PCS Guidelines on the CMS
website at: https://www.cms.gov/Medicare/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. Proposed FY 2025 Status of Technologies Receiving New Technology
Add-On Payments for FY 2024
In this section of the proposed rule, we discuss the proposed FY
2025 status of 31 technologies approved for FY 2024 new technology add-
on payments, as set forth in the tables that follow. Specifically, we
present our proposals to continue the new technology add-on payments
for FY 2025 for those technologies that were approved for the new
technology add-on payment for FY 2024, and which would still be
considered ``new'' for purposes of new technology add-on payments for
FY 2025. We also present our proposals to discontinue new technology
add-on payments for FY 2025 for those technologies that were approved
for the new technology add-on payment for FY 2024, and which would no
longer be considered ``new'' for purposes of new technology add-on
payments for FY 2025.
Additionally, we note that we conditionally approved
DefenCathTM (taurolidine/heparin) for FY 2024 new technology
add-on payments under the alternative pathway for certain antimicrobial
products (88 FR 58942 through 58944), subject to the technology
receiving FDA marketing authorization by July 1, 2024.
DefenCathTM (taurolidine/heparin) received FDA marketing
authorization on November 15, 2023, and was eligible to receive new
technology add-on payments in FY 2024 beginning with discharges on or
after January 1, 2024. As DefenCathTM (taurolidine/heparin)
received FDA marketing authorization prior to July 1, 2024, and was
approved for new technology add-on payments in FY 2024, we are
proposing to continue making new technology add-on payments for
taurolidine/heparin for FY 2025.
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).
Table II.E.--01 lists the technologies for which we are proposing
to continue making new technology add-on payments for FY 2025 because
they are still considered ``new'' for purposes of new technology add-on
payments. This table also presents the newness start date, new
technology add-on payment start date, 3-year anniversary date of the
product's entry onto the U.S. market, relevant final rule citations
from prior fiscal years, proposed maximum add-on payment amount, and
coding assignments for each technology. We refer readers to the cited
final rules in the following table for a complete discussion of the new
technology add-on payment application, coding, and payment amount for
these technologies, including the applicable indications and discussion
of the newness start date.
We are inviting public comments on our proposals to continue new
technology add-on payments for FY 2025 for the technologies listed in
the following table.
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[[Page 36028]]
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[[Page 36029]]
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Table II.E.-02 lists the technologies for which we are proposing to
discontinue making new technology add-on payments for FY 2025 because
they are no longer ``new'' for purposes of new technology add-on
payments. This table
[[Page 36030]]
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 refer readers to the cited final rules in the following 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.
We are inviting public comments on our proposals to discontinue new
technology add-on payments for FY 2025 for the technologies listed in
Table II.E.-02.
[GRAPHIC] [TIFF OMITTED] TP02MY24.078
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[[Page 36031]]
6. Proposed FY 2025 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 are continuing to summarize each application in this proposed rule.
However, 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 2025 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), including 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 2025
new technology add-on payment applications.
We received 16 applications for new technology add-on payments for
FY 2025 under the new technology add-on payment traditional pathway. As
discussed previously, in the FY 2024 IPPS/LTCH PPS final rule (88 FR
58948 through 58958), we finalized that beginning with the new
technology add-on payment applications for FY 2025, for technologies
that are not already FDA market authorized for the indication that is
the subject of the new technology add-on payment application,
applicants must have a complete and active FDA market authorization
request at the time of new technology add-on payment application
submission and must provide documentation of FDA acceptance or filing
to CMS at the time of application submission, consistent with the type
of FDA marketing authorization application the applicant has submitted
to FDA. See Sec. 412.87(e) and further discussion in the FY 2024 IPPS/
LTCH PPS final rule (88 FR 58948 through 58958). Of the 16 applications
received under the traditional pathway, one applicant was not eligible
for consideration for new technology add-on payment because it did not
meet these requirements, and three applicants withdrew their
application prior to the issuance of this proposed rule. In accordance
with the regulations under Sec. 412.87(f), applicants for FY 2025 new
technology add-on payments must have received FDA approval or clearance
by May 1 of the year prior to the beginning of the fiscal year for
which the application is being considered. We are addressing the
remaining 12 applications. We note that the manufacturer for
Casgevy\TM\ (exagamglogene autotemcel) submitted a single application,
but for two separate indications, each of which is discussed separately
in this section.
a. CASGEVYTM (exagamglogene autotemcel) First Indication:
Sickle Cell Disease (SCD)
Vertex Pharmaceuticals, Inc. submitted an application for new
technology add-on payments for Casgevy\TM\ for FY 2025 for use in
sickle cell disease. According to the applicant, Casgevy\TM\ is a one-
time, clustered regularly interspaced short palindromic repeats
(CRISPR)/CRISPR-associated protein 9 (Cas9) modified autologous cluster
of differentiation (CD)34+ hematopoietic stem & progenitor cell (HSPC)
cellular therapy approved for the treatment of sickle cell disease
(SCD) in patients 12 years and older with recurrent vaso-occlusive
crises (VOC). Per the applicant, using a CRISPR/Cas9 gene editing
technique, the patient's CD34+ HSPCs are edited ex vivo via Cas9, a
nuclease enzyme that uses a highly specific guide ribonucleic acid
(gRNA), at the critical transcription factor binding site GATA1 in the
erythroid specific enhancer region of the B-cell lymphoma/leukemia 11A
(BCL11A) gene. According to the applicant, as a result of the editing,
GATA1 binding is irreversibly disrupted, and BCL11A expression is
reduced, resulting in an increased production of fetal hemoglobin
(HbF), and recapitulating a naturally occurring, clinically benign
condition called hereditary persistence of fetal hemoglobin (HPFH) that
reduces or eliminates SCD symptoms. As stated by the applicant,
Casgevy\TM\ infusion induces increased HbF production in SCD patients
to >=20 percent, which is known to be associated with fewer SCD
complications via addressing the underlying cause of SCD by preventing
RBC sickling. We note that the applicant is also seeking new technology
add-on payments for Casgevy\TM\ for FY 2025 for use in treating
transfusion-dependent beta thalassemia (TDT), as discussed separately
later in this section.
Please refer to the online application posting for Casgevy\TM\,
available at https://mearis.cms.gov/public/publications/ntap/NTP2310171VPTU, for additional detail describing the technology and the
disease treated by the technology.
With respect to the newness criterion, according to the applicant,
Casgevy\TM\ was granted Biologics License Application (BLA) approval
from FDA on December 8, 2023, for treatment of SCD in patients 12 years
of age or older with recurrent VOCs. According to the applicant,
Casgevy\TM\ became commercially available immediately after FDA
approval. Casgevy\TM\ is available in 20 mL vials containing 4 to 13 x
10\6\ CD34+ cells/mL frozen in 1.5 to 20 mL of solution. The minimum
dose is 3 x 10\6\ CD34+ cells per kg of body weight, which may be
contained within multiple vials.
Effective April 1, 2023, the following ICD-10-PCS codes may be used
to uniquely describe procedures involving the use of Casgevy\TM\:
XW133J8 (Transfusion of exagamglogene autotemcel into peripheral vein,
percutaneous approach, new technology group 8) and XW143J8 (Transfusion
of exagamglogene autotemcel into central vein, percutaneous approach,
new technology group 8). The applicant provided a list of ICD-10-CM
diagnosis codes that may be used to identify this indication for
Casgevy\TM\. Please refer to the online application posting for the
complete list of ICD-10-CM codes provided by the applicant. We believe
the relevant ICD-10-CM codes to identify the indication of SCD would
be: D57.1 (Sickle-cell disease without crisis), D57.20 (Sickle-cell/Hb-
C disease without crisis), D57.40 (Sickle-cell thalassemia without
crisis), D57.42 (Sickle-cell thalassemia beta zero without crisis),
D57.44 (Sickle-cell thalassemia beta plus without crisis), or D57.80
(Other sickle-cell disorders without crisis). We are inviting public
comments on the use of these ICD-10-CM diagnosis codes to identify the
indication of SCD for purposes of the new technology add-on payment, if
approved.
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 Casgevy\TM\ is not substantially similar to other
currently available technologies, because Casgevy\TM\ is the
[[Page 36032]]
first approved therapy to use CRISPR gene editing technology and no
other approved technology uses the same or a similar mechanism of
action; 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 Casgevy\TM\ for the applicant's complete statements in
support of its assertion that Casgevy\TM\ is not substantially similar
to other currently available technologies.
[GRAPHIC] [TIFF OMITTED] TP02MY24.079
We note that CasgevyTM may have the same or similar
mechanism of action to LyfgeniaTM, for which we also
received an application for new technology add-on payments for FY 2025.
Casgevy\TM\ and Lyfgenia\TM\ are both gene therapies using modified
autologous CD34+ hematopoietic stem and progenitor cell (HSPC)
therapies administered via stem cell transplantation for the treatment
of SCD. LyfgeniaTM was approved by FDA for this indication
on December 8, 2023. We note that both technologies are autologous, ex-
vivo modified hematopoietic stem-cell biological products. For these
technologies, patients are required to undergo CD34+ HSPC mobilization
followed by apheresis to extract CD34+ HSPCs for manufacturing and then
myeloablative conditioning using busulfan to deplete the patient's bone
marrow in preparation for the technologies' modified stem cells to
engraft to the bone marrow. Once engraftment occurs for both
technologies, the patient's cells start to produce a different form of
hemoglobin in order to reduce the sickling hemoglobin. Further, both
technologies appear to map to the same MS-DRGs, MS-DRG 016 (Autologous
Bone Marrow Transplant with CC/MCC) and 017 (Autologous Bone Marrow
Transplant without CC/MCC), and to treat the same or similar disease
(sickle cell disease) in the same or similar patient population
(patients 12 years of age and older who have a history of vaso-
occlusive events). Accordingly, as it appears that CasgevyTM
and LyfgeniaTM may use the same or similar mechanism of
action to achieve a therapeutic outcome (that is, to reduce the amount
of sickling hemoglobin to reduce and prevent VOEs associated with SCD),
would be assigned to the same MS-DRG, and treat the same or similar
patient population and disease, we believe that these technologies may
be substantially similar to each other such that they should be
considered as a single application for purposes of new technology add-
on payments. We note that if we determine that this technology is
substantially similar to LyfgeniaTM, we believe the newness
period would begin on December 8, 2023, the date both
CasgevyTM and LyfgeniaTM received FDA approval
for SCD. We are interested in information on how these two technologies
may differ from each other with respect to the substantial similarity
criteria and newness criterion, to inform our analysis of whether
CasgevyTM and LyfgeniaTM are substantially
similar to each other and therefore should be considered as a single
application for purposes of new technology add-on payments.
We are inviting public comments on whether CasgevyTM
meets the newness criterion, including whether CasgevyTM is
substantially similar to LyfgeniaTM and whether these
technologies should be evaluated as a single technology for purposes of
new technology add-on payments.
With respect to the cost criterion, the applicant searched the FY
2022 MedPAR and provided multiple analyses to demonstrate that
Casgevy\TM\ meets the cost criterion. The applicant included two
cohorts in the analyses to identify potential cases representing
patients who may be eligible for Casgevy\TM\: the first cohort included
all cases in MS-DRG 014 (Allogeneic Bone Marrow Transplant) to account
for the low volume of SCD or transfusion-dependent beta thalassemia
(TDT) cases,
[[Page 36033]]
and the second cohort included cases in MS-DRG 014 (Allogeneic Bone
Marrow Transplant) with any ICD-10-CM diagnosis code of SCD or TDT. The
applicant explained that the cost analyses for SCD and TDT were
combined because the volume of cases with a sickle cell disease or beta
thalassemia diagnosis code was very low, and because it believed both
indications would be approved in time for new technology add-on
payment. In addition, the applicant noted that when searching for cases
in DRG 014 with SCD or beta thalassemia diagnosis codes, there were no
beta thalassemia cases. The applicant noted that cases included in the
analysis may not be a completely accurate representation of cases that
will be eligible for Casgevy\TM\ but that the analyses were provided in
recognition of the low volume of cases.
The applicant performed two analyses for each cohort: one with all
prior drug charges maintained, representing a scenario in which there
is no change to patient drug regimen with the use of Casgevy\TM\; and
the other with all prior drug charges removed, representing a scenario
in which no ancillary drugs are used in the treatment of Casgevy\TM\
patients. Per the applicant, this was done because some patients
receiving CasgevyTM could receive fewer ancillary drugs
during the inpatient stay, but it was difficult to know with certainty
whether this would be the case or to identify the exact differences in
drug regimens between patients receiving CasgevyTM and those
receiving allogeneic bone marrow transplants. The applicant noted the
analyses with drug charges removed were likely an over-estimation of
the ancillary drug charges that would be removed in cases involving the
use of Casgevy\TM\, but these were provided as sensitivity analyses.
According to the applicant, eligible cases for CasgevyTM
will be mapped to either Pre-MDC MS-DRG 016 (Autologous Bone Marrow
Transplant with CC/MCC) or Pre-MDC MS-DRG 017 (Autologous Bone Marrow
Transplant without CC/MCC), depending on whether complications or
comorbidities (CCs) or major complications or comorbidities (MCCs) are
present. For each analysis, the applicant used the FY 2025 new
technology add-on payment threshold for Pre-MDC MS-DRG 016 for all
identified cases, because it was typically higher than the threshold
for Pre-MDC MS-DRG 017. Each analysis followed the order of operations
described in the table later in this section.
For the first cohort, the applicant included all cases associated
with MS-DRG 014 (Allogeneic Bone Marrow Transplant). The applicant used
the inclusion/exclusion criteria described in the following table and
identified 996 claims mapping to MS-DRG 014. With all prior drug
charges maintained (Scenario 1), the applicant calculated a final
inflated average case-weighted standardized charge per case of
$12,325,062, which exceeded the average case-weighted threshold amount
of $182,491. With all prior drug charges removed (Scenario 2), the
applicant calculated a final inflated average case-weighted
standardized charge per case of $12,181,526, which exceeded the average
case-weighted threshold amount of $182,491.
For the second cohort, the applicant searched for cases within MS-
DRG 014 (Allogeneic Bone Marrow Transplant) with any ICD-10-CM
diagnosis codes representing SCD or TDT. The applicant used the
inclusion/exclusion criteria described in the following table and
identified 11 claims mapping to MS-DRG 014 (Allogeneic Bone Marrow
Transplant). With all prior drug charges maintained (Scenario 3), the
applicant calculated a final inflated average case-weighted
standardized charge per case of $12,125,212, which exceeded the average
case-weighted threshold amount of $182,491. With all prior drug charges
removed (Scenario 4), the applicant calculated a final inflated average
case-weighted standardized charge per case of $12,086,551, which
exceeded the average case-weighted threshold amount of $182,491.
Because the final inflated average case-weighted standardized
charge per case exceeded the average case-weighted threshold amount in
all scenarios, the applicant maintained that Casgevy\TM\ meets the cost
criterion.
[[Page 36034]]
[GRAPHIC] [TIFF OMITTED] TP02MY24.080
We are inviting public comments on whether Casgevy\TM\ meets the
cost criterion.
---------------------------------------------------------------------------
\17\ Lists referenced here may be found in the cost criterion
codes and MS-DRGs attachments included in the online posting for the
technology.
---------------------------------------------------------------------------
With regard to the substantial clinical improvement criterion, the
applicant asserted that Casgevy\TM\ represents a substantial clinical
improvement over existing technologies because it is anticipated to
expand patient eligibility for potentially curative SCD therapies, have
improved clinical outcomes relative to available therapies, and avoid
certain serious risks or side effects associated with existing
potentially curative treatment options for SCD. The applicant provided
one study to support these claims, as well as eight background articles
about clinical outcomes and safety risks of other SCD treatments.\18\
The following table summarizes the applicant's assertions regarding the
substantial clinical improvement criterion. Please see the online
posting for Casgevy\TM\ for the applicant's complete statements
regarding the substantial clinical improvement criterion and the
supporting evidence provided.
---------------------------------------------------------------------------
\18\ Background articles are not included in the following table
but can be accessed via the online posting for the technology.
---------------------------------------------------------------------------
[[Page 36035]]
[GRAPHIC] [TIFF OMITTED] TP02MY24.081
After review of the information provided by the applicant, we have
the following concerns regarding whether Casgevy\TM\ meets the
substantial clinical improvement criterion. We note that the only
assessment of the technology submitted was from conference
presentations that provide data on the ongoing CLIMB-121 trial, a phase
1/2/3 single-arm trial assessing a single dose of CasgevyTM
in patients 12 to 35 years old with SCD and a history of 2 or more
severe VOCs per year over 2 years. The most recent data presented at
ASH in December 2023,\19\ which appears to supersede the earlier
results from Locatelli et al. (2023),\20\ indicates 44 participants
received CasgevyTM for SCD, of which only 30 participants
were evaluable for the primary and key secondary endpoints because they
were followed for at least 16 months (up to 45.5 months) post
CasgevyTM infusion. The applicant stated 96.7% of patients
achieved the primary efficacy endpoint (free of severe VOCs for at
least 12 consecutive months) and 100% of patients achieved the key
secondary efficacy endpoint (free from in-patient hospitalization for
severe VOCs for at least 12 consecutive months). Additionally, the
applicant noted a safety profile consistent with myeloablative busulfan
and autologous HSCT and that there were no malignancies nor serious
adverse events related to CasgevyTM. However, we note that
the provided evidence did not include peer-reviewed literature that
directly assessed the use of Casgevy\TM\ for SCD. We also question
whether the small study population may limit the generalizability of
these study outcomes to a Medicare population. In addition, from the
evidence submitted, we were also unable to determine where the study
took place (that is, within the U.S. or in locations outside the U.S),
which may also limit generalizability to the Medicare population.
Additionally, we question if the short follow-up duration is sufficient
to assess improvements in long-term clinical outcomes.
---------------------------------------------------------------------------
\19\ Frangoul H, et al. Presented at the 65th Annual American
Society of Hematology. 11 Dec 2023.
\20\ Locatelli F, et al. Presented at the 28th Annual European
Hematology Association; 11 June 2023.
---------------------------------------------------------------------------
Furthermore, the applicant asserted that CasgevyTM
significantly improves clinical outcomes relative to services or
technologies previously available. Regarding the claim that
CasgevyTM is the first gene therapy specifically approved
for the treatment of SCD in patients 12 years and older with
[[Page 36036]]
recurrent VOCs, the applicant claims it was first to submit and have
their BLA accepted for a genetic therapy for treatment of SCD. The
applicant states the PDUFA date for CasgevyTM of December 8,
2023, and the PDUFA data for another gene therapy for SCD is December
20, 2023, and that Casgevy and another product were both approved on
December 8, 2023, as the first gene therapies for SCD. However, while
this claim was made in support of the assertion that
CasgevyTM significantly improves clinical outcomes, we note
that the information submitted regarding PDUFA dates and FDA approvals
does not appear to provide data regarding a significantly improved
clinical outcome under Sec. 412.87(b)(1)(ii)(C).
With regards to the claim that CasgevyTM is expected to
avoid certain serious risks or side effects associated with approved
viral-based gene therapies for SCD, the applicant cites the potential
risk of insertional oncogenesis after treatment with
LyfgeniaTM per the package insert for this other gene
therapy for SCD. We note that because clinical trials are conducted
under widely varying conditions, we question whether adverse reaction
rates observed in the clinical trials of one drug can be directly
compared to rates in the clinical trials of another drug. We also
question if the follow-up duration for patients treated with
CasgevyTM is sufficient to assess improvement in the rate of
malignancy.
With regard to the claim that CasgevyTM is expected to
avoid certain serious risks or side effects associated with existing
potentially curative treatment options for SCD, the applicant states
that there are significant risks associated with allo-HSCT, including
graft failure (up to 9 percent frequency), acute and chronic graft-
versus-host disease (GVHD) (with chronic GVHD up to 18 percent
frequency), severe infection, hematologic malignancy, bleeding events,
and death. In contrast, the applicant claims CasgevyTM does
not require an allogeneic donor as each patient is their own donor and
therefore does not have risks of acute and chronic GVHD or immunologic
risks of secondary graft failure/rejection, in addition to not
requiring post-transplant immunosuppressive therapies. However, we
would be interested in additional evidence regarding the frequency and
clinical relevance of side effects such as severe infection,
hematologic malignancy, bleeding events, and death for both therapies.
We are inviting public comments on whether Casgevy\TM\ meets the
substantial clinical improvement criterion.
We did not receive any written comments in response to the New
Technology Town Hall meeting notice published in the Federal Register
regarding the substantial clinical improvement criterion for
Casgevy\TM\.
b. Casgevy\TM\ (exagamglogene autotemcel) Second Indication:
Transfusion-Dependent [beta]-Thalassemia (TDT)
Vertex Pharmaceuticals, Inc. submitted an application for new
technology add-on payments for Casgevy\TM\ for FY 2025 for TDT.
According to the applicant, Casgevy\TM\ is a one-time, clustered
regularly interspaced short palindromic repeats (CRISPR)/CRISPR-
associated protein 9 (Cas9) modified autologous cluster of
differentiation (CD)34+ hematopoietic stem & progenitor cell (HSPC)
cellular therapy indicated for the treatment of transfusion-dependent
[beta]-thalassemia (TDT) in patients 12 years of age or older. Per the
applicant, using a CRISPR/Cas9 gene editing technique, the patient's
CD34+ HSPCs are edited ex vivo via Cas9, a nuclease enzyme that uses a
highly specific guide ribonucleic acid (gRNA), at the critical
transcription factor binding site GATA1 in the erythroid specific
enhancer region of the B-cell lymphoma/leukemia 11A (BCL11A) gene.
According to the applicant, as a result of the editing, GATA1 binding
is irreversibly disrupted, and BCL11A expression is reduced, resulting
in an increased production of fetal hemoglobin (HbF). As stated by the
applicant, this increase in HbF recapitulates a naturally occurring,
clinically benign condition called hereditary persistence of fetal
hemoglobin (HPFH). The applicant states that as a result, Casgevy\TM\
infusion induces increased HbF production in TDT patients so that
circulating red blood cells (RBC) exhibit nearly 100 percent HbF,
eliminating the need for RBC transfusions. As previously discussed
earlier in this section, the applicant is also seeking new technology
add-on payments for Casgevy\TM\ for FY 2025 for use in treating SCD.
Please refer to the online application posting for Casgevy\TM\,
available at https://mearis.cms.gov/public/publications/ntap/NTP2310171VPTU, for additional detail describing the technology and the
disease treated by the technology.
With respect to the newness criterion, according to the applicant,
Casgevy\TM\ was granted Biologics License Application (BLA) approval
from FDA on January 16, 2024, for the treatment of TDT in patients 12
years of age and older. The applicant also explained that the minimum
dosage of Casgevy\TM\ is 3x10\6\ CD34 + cells per kg of patient's
weight. A single dose of Casgevy\TM\ is supplied in one or more vials,
with each vial containing 4 to 13x10\6\ cells/mL suspended in 1.5 to 20
mL of cryo-preservative medium.
Effective April 1, 2023, the following ICD-10-PCS codes may be used
to uniquely describe procedures involving the use of Casgevy\TM\:
XW133J8 (Transfusion of exagamglogene autotemcel into peripheral vein,
percutaneous approach, new technology group 8) and XW143J8 (Transfusion
of exagamglogene autotemcel into central vein, percutaneous approach,
new technology group 8). The applicant provided a list of diagnosis
codes that may be used to currently identify this indication for
Casgevy\TM\ 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 believe the relevant ICD-10-CM codes to
identify the indication of TDT would be: D56.1 (Beta thalassemia),
D56.2 (Delta-beta thalassemia), or D56.5 (Hemoglobin E-beta
thalassemia). We are inviting public comments on the use of these ICD-
10-CM diagnosis codes to identify the indication of TDT for purposes of
the new technology add-on payment, if approved.
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 Casgevy\TM\ is not substantially similar to other
currently available technologies because Casgevy\TM\ is the first
approved therapy to use CRISPR gene editing as its mechanism of action,
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 Casgevy\TM\ for the applicant's complete statements in
support of its assertion that Casgevy\TM\ is not substantially similar
to other currently available technologies.
[[Page 36037]]
[GRAPHIC] [TIFF OMITTED] TP02MY24.082
We question whether Casgevy\TM\ may be the same or similar to other
gene therapies used to treat TDT, specifically Zynteglo\TM\, which was
approved for treatment of TDT on August 17, 2022. Casgevy\TM\ and
Zynteglo\TM\ are both gene therapies using modified autologous CD34+
HSPC therapies administered via stem cell transplantation for the
treatment of TDT. Both technologies are autologous, ex-vivo modified
hematopoietic stem-cell biological products. For these technologies,
patients are required to undergo CD34+ HSPC mobilization followed by
apheresis to extract CD34+ HSPCs for manufacturing and then
myeloablative conditioning using busulfan to deplete the patient's bone
marrow in preparation for the technologies' modified stem cells to
engraft to the bone marrow. Once engraftment occurs, the patient's
cells start to produce a different form of hemoglobin to increase total
hemoglobin and reduce the need for RBC transfusions. Therefore, it
appears as if Casgevy\TM\ and Zynteglo\TM\ would use a similar
mechanism of action to achieve a therapeutic outcome for the treatment
of TDT. Further, both technologies appear to map to the same MS-DRGs,
MS-DRG 016 (Autologous Bone Marrow Transplant with CC/MCC) and 017
(Autologous Bone Marrow Transplant without CC/MCC), and to treat the
same or similar disease (beta thalassemia) in the same or similar
patient population (patients who require regular blood transfusions).
Accordingly, we believe that these technologies may be substantially
similar to each other. We note that if Casgevy\TM\ is substantially
similar to Zynteglo\TM\ for the treatment of TDT, we believe the
newness period for this technology would begin on August 17, 2022, with
the Biologics License Application (BLA) approval date for Zynteglo\TM\.
We are inviting public comments on whether Casgevy\TM\ is
substantially similar to existing technologies and whether Casgevy\TM\
meets the newness criterion.
With respect to the cost criterion, the applicant searched the FY
2022 MedPAR and provided multiple analyses to demonstrate that
Casgevy\TM\ meets the cost criterion. The applicant included two
cohorts in the analyses to identify potential cases representing
patients who may be eligible for Casgevy\TM\: the first cohort included
all cases in MS-DRG 014 (Allogeneic Bone Marrow Transplant) to account
for the low volume of sickle cell disease (SCD) or TDT cases, and the
second cohort included cases in MS-DRG 014 (Allogeneic Bone Marrow
Transplant) with any ICD-10-CM diagnosis code of SCD or TDT. The
applicant explained that the cost analyses for SCD and TDT were
combined because the volume of cases with a sickle cell disease or beta
thalassemia diagnosis code was very small, and because it believed both
indications would be approved in time
[[Page 36038]]
for new technology add-on payment. In addition, the applicant noted
that when searching for cases in DRG 014 with SCD or beta thalassemia
diagnosis codes, there were no beta thalassemia cases. The applicant
noted that cases included in the analysis may not be a completely
accurate representation of cases that will be eligible for Casgevy\TM\
but that the analyses were provided in recognition of the low volume of
cases.
The applicant performed two analyses for each cohort: one with all
prior drug charges maintained, representing a scenario in which there
is no change to patient drug regimen with the use of Casgevy\TM\; and
the other with all prior drug charges removed, representing a scenario
in which no ancillary drugs are used in the treatment of Casgevy\TM\
patients. Per the applicant, this was done because some patients
receiving CasgevyTM could receive fewer ancillary drugs
during the inpatient stay, but it was difficult to know with certainty
whether this would be the case or to identify the exact differences in
drug regimens between patients receiving CasgevyTM and those
receiving allogeneic bone marrow transplants. The applicant notes the
analyses with drug charges removed were likely an over-estimation of
the ancillary drug charges that would be removed in cases involving the
use of Casgevy\TM\, but these were provided as sensitivity analyses.
According to the applicant, eligible cases for CasgevyTM
will be mapped to either Pre-MDC MS-DRG 016 (Autologous Bone Marrow
Transplant with CC/MCC) or Pre-MDC MS-DRG 017 (Autologous Bone Marrow
Transplant without CC/MCC), depending on whether complications or
comorbidities (CCs) or major complications or comorbidities (MCCs) are
present. For each analysis, the applicant used the FY 2025 new
technology add-on payment threshold for Pre-MDC MS-DRG 016 for all
identified cases, because it was typically higher than the threshold
for Pre-MDC MS-DRG 017. Each analysis followed the order of operations
described in the table later in this section.
For the first cohort, the applicant included all cases associated
with MS-DRG 014 (Allogeneic Bone Marrow Transplant). The applicant used
the inclusion/exclusion criteria described in the following table and
identified 996 claims mapping to MS-DRG 014. With all prior drug
charges maintained (Scenario 1), the applicant calculated a final
inflated average case-weighted standardized charge per case of
$12,325,062, which exceeded the average case-weighted threshold amount
of $182,491. With all prior drug charges removed (Scenario 2), the
applicant calculated a final inflated average case-weighted
standardized charge per case of $12,181,526, which exceeded the average
case-weighted threshold amount of $182,491.
For the second cohort, the applicant searched for cases within MS-
DRG 014 (Allogeneic Bone Marrow Transplant) with any ICD-10-CM
diagnosis codes representing SCD or TDT. The applicant used the
inclusion/exclusion criteria described in the following table and
identified 11 claims mapping to MS-DRG 014 (Allogeneic Bone Marrow
Transplant). With all prior drug charges maintained (Scenario 3), the
applicant calculated a final inflated average case-weighted
standardized charge per case of $12,125,212, which exceeded the average
case-weighted threshold amount of $182,491. With all prior drug charges
removed (Scenario 4), the applicant calculated a final inflated average
case-weighted standardized charge per case of $12,086,551, which
exceeded the average case-weighted threshold amount of $182,491.
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 Casgevy\TM\ meets the cost
criterion.
---------------------------------------------------------------------------
\21\ Lists referenced here may be found in the cost criterion
codes and MS-DRGs attachment included in the online posting for the
technology.
[GRAPHIC] [TIFF OMITTED] TP02MY24.083
[[Page 36039]]
We are inviting public comments on whether Casgevy\TM\ meets the
cost criterion.
With regard to the substantial clinical improvement criterion, the
applicant asserted that Casgevy\TM\ represents a substantial clinical
improvement over existing technologies because it is expected to avoid
certain serious risks or side effects associated with the existing
approved gene therapy for TDT, Zynteglo\TM\. The applicant provided one
study to support these claims, as well as two package inserts.\22\ The
following table summarizes the applicant's assertion regarding the
substantial clinical improvement criterion. Please see the online
posting for Casgevy\TM\ for the applicant's complete statements
regarding the substantial clinical improvement criterion and the
supporting evidence provided.
---------------------------------------------------------------------------
\22\ Background articles are not included in the following table
but can be accessed via the online posting for the technology.
[GRAPHIC] [TIFF OMITTED] TP02MY24.084
After review of the information provided by the applicant, we have
the following concerns regarding whether Casgevy\TM\ meets the
substantial clinical improvement criterion. We note that the provided
evidence did not include any peer-reviewed literature that directly
assessed the use of Casgevy\TM\ for TDT. We note that the only
assessment of the technology submitted was from a conference
presentation \23\ that provides data on the CLIMB-111 trial, an ongoing
phase 1/2/3 single-arm trial assessing a single dose of
CasgevyTM in patients 12 to 35 years old with TDT. The data
submitted by the applicant indicated 48 participants aged 12 to 35
years received CasgevyTM for TDT, of which only 27
participants were evaluable for the primary and key secondary endpoints
because they were followed for at least 16 months (up to 43.7 months)
after CasgevyTM infusion. Per the applicant's conference
presentation, 88.9% of participants achieved both the primary efficacy
endpoint (transfusion independence for 12 consecutive months while
maintaining a weighted average hemoglobin of at least 9 g/dL) and the
key secondary efficacy endpoint (transfusion independence for 6
consecutive months while maintaining a weighted average hemoglobin of
at least 9 g/dL). The applicant noted that two patients had serious
adverse events related to CasgevyTM. Due to the small study
population and the median age of participants in the study, we question
if these study outcomes would be generalizable to a Medicare
population. In addition, from the evidence submitted, we were also
unable to determine where the study took place (that is, within the
U.S. or in locations outside the U.S), which may also limit
generalizability to the Medicare population. We also question if the
short follow-up duration is sufficient to assess improvements in long-
term clinical outcomes.
---------------------------------------------------------------------------
\23\ Locatelli F, et al. Presented at the 28th Annual European
Hematology Association; 11 June 2023.
---------------------------------------------------------------------------
Furthermore, with regard to the claim that CasgevyTM is
expected to avoid certain serious risks or side effects associated with
approved viral-based gene therapies for TDT, the applicant stated that
Zynteglo\TM\ utilizes gene transfer to use a modified, inert lentivirus
to add working exogenous copies of the [beta]-globin gene to increase
functional hemoglobin A; due to this mechanism of action and the semi-
random nature of viral integration, the applicant stated that treatment
with Zynteglo\TM\ carries the risk of lentiviral vector (LVV)-mediated
insertional oncogenesis after treatment. The applicant explained that
Casgevy\TM\ is an autologous ex-vivo modified hematopoietic stem-cell
biological product which uses a non-viral mechanism of action (CRISPR/
Cas9 gene editing), and therefore, this technology does not carry a
risk for insertional oncogenesis. The applicant also noted that gene
editing approaches, including CRISPR/Cas9, have the potential to
produce off-target edits, but in trials to date, off-target gene
editing has not been observed in the edited CD34+ cells from healthy
donors or patients. We note that we are unclear regarding the frequency
and related clinical relevance of LVV-mediated oncogenesis. We also
question if the follow-up duration for patients treated with
CasgevyTM is sufficient to assess improvement in the rate of
malignancy. We would be interested in more information on the overall
safety profile comparison between Casgevy\TM\ and Zynteglo\TM\, as well
as any comparisons of CasgevyTM to another potentially
curative treatment, allogeneic hematopoietic stem cell transplant for
patients with TDT.
We are inviting public comments on whether Casgevy\TM\ meets the
substantial clinical improvement criterion.
We did not receive any written comments in response to the New
Technology Town Hall meeting notice published in the Federal Register
regarding the substantial clinical improvement criterion for
Casgevy\TM\.
c. DuraGraft[supreg] (Vascular Conduit Solution)
Marizyme, Inc. submitted an application for new technology add-on
payments for DuraGraft[supreg] for FY 2025. According to the applicant,
DuraGraft[supreg] is an intraoperative vein-graft preservation solution
used during the harvesting and grafting interval during coronary artery
bypass graft surgery (CABG). The applicant stated that the use of
DuraGraft[supreg] does not change clinical/surgical practice; it
replaces solutions currently used for flushing and storage of the
saphenous vein grafts (SVG) from harvesting through grafting, including
tests for graft leakage. As noted in the FY 2024 IPPS/LTCH PPS proposed
rule (88 FR 26795), Somahlution, Inc., acquired by Marizyme in
2020,\24\ submitted and
[[Page 36040]]
withdrew applications for new technology add-on payments for
DuraGraft[supreg] for FY 2018 and FY 2019. The applicant also submitted
an application for new technology add-on payments for FY 2020, as
summarized in the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19305
through 19312), that it withdrew prior to the issuance of the FY 2020
IPPS/LTCH PPS final rule (84 FR 42180). We note that the applicant also
submitted an application for new technology add-on payments for FY
2024, as summarized in the FY 2024 IPPS/LTCH PPS proposed rule (88 FR
26795 through 26803), that it withdrew prior to the issuance of the FY
2024 IPPS/LTCH PPS final rule (88 FR 58804).
---------------------------------------------------------------------------
\24\ NASDAQ. Marizyme, Inc. Completes Acquisition of
Somahlution, Inc. and Raises $7.0 Million in Private Placement
[verbar] Nasdaq (accessed 1/23/2023).
---------------------------------------------------------------------------
Please refer to the online application posting for
DuraGraft[supreg], available at https://mearis.cms.gov/public/publications/ntap/NTP231012EE9NW, for additional detail describing the
technology and intraoperative ischemic injury.
With respect to the newness criterion, according to the applicant,
DuraGraft[supreg] was granted De Novo classification from FDA on
October 4, 2023, for adult patients undergoing Coronary Artery Bypass
Grafting surgeries and is intended for flushing and storage of SVGs
from harvesting through grafting for up to 4 hours. Per the applicant,
DuraGraft[supreg] is not yet commercially available due to a delay
related to finalizing the label prior to manufacturing.
The applicant stated that effective October 1, 2017, the following
ICD-10-PCS code may be used to uniquely describe procedures involving
the use of DuraGraft[supreg]: XY0VX83 (Extracorporeal introduction of
endothelial damage inhibitor to vein graft, new technology group 3).
Please refer to the online application posting for the complete list of
ICD-10-CM and PCS 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
asserted that DuraGraft[supreg] is not substantially similar to other
currently available technologies because DuraGraft[supreg] is a first-
in-class product as a storage and flushing solution for vascular grafts
used during CABG surgery and the components of DuraGraft[supreg]
directly interfere with the mechanisms of oxidative damage, 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
DuraGraft[supreg] for the applicant's complete statements in support of
its assertion that DuraGraft[supreg] is not substantially similar to
other currently available technologies.
[GRAPHIC] [TIFF OMITTED] TP02MY24.085
In the FY 2024 IPPS/LTCH PPS proposed rule (88 FR 26796), we
expressed concern that the mechanism of action of DuraGraft[supreg] may
be the same or similar to other vein graft storage solutions.
Similarly, we note that according to the applicant, DuraGraft[supreg]
prevents intraoperative ischemic injury to the endothelial layer of
free vascular grafts, reducing the risks for post-CABG vein graft
disease and graft failure, which are clinical manifestations of graft
ischemia reperfusion injury (IRI), and we question whether
DuraGraft[supreg] might have a similar mechanism of action as existing
treatments for preventing ischemic injury of vein grafts during CABG
surgery and reducing vein graft disease or its complications following
CABG surgery. We are inviting public comments on whether
DuraGraft[supreg] is substantially similar to existing technologies and
whether DuraGraft[supreg] meets the newness criterion.
With respect to the cost criterion, to identify potential cases
representing patients who may be eligible for DuraGraft[supreg], the
applicant searched the FY 2022 MedPAR file for cases reporting a
combination of ICD-10-CM/PCS codes that represent patients who
underwent CABG procedures. Please see the online posting for
DuraGraft[supreg] for a complete list of MS-DRGs and ICD-10-CM and PCS
codes provided by the applicant. Using the inclusion/exclusion criteria
described in the following table, the applicant identified 33,511 cases
mapping to 59 MS-DRGs, including MS-DRG 236 (Coronary Bypass Without
Cardiac Catheterization Without MCC) representing 21.9 percent of the
identified cases. The applicant followed the order of operations
described in the following table and
[[Page 36041]]
calculated a final inflated average case-weighted standardized charge
per case of $321,620, which exceeded the average case-weighted
threshold amount of $235,829. Because the final inflated average case-
weighted standardized charge per case exceeded the average case-
weighted threshold amount, the applicant asserted that
DuraGraft[supreg] meets the cost criterion.
[GRAPHIC] [TIFF OMITTED] TP02MY24.086
We note the following concerns regarding the cost criterion.
Although the applicant did not remove direct or indirect charges
related to the prior technology, we note that the applicant indicated
that the use of DuraGraft[supreg] replaces solutions currently used for
flushing and storage of the SVGs harvested through grafting, including
tests for graft leakage, in its discussion of the newness criterion.
Therefore, we question whether the cost criterion analysis should
remove charges for related or prior technologies, such as autologous
heparinized blood (AHB), Plasmalyte/Normosol, Lactated Ringers, and
heparinized saline (HS).
---------------------------------------------------------------------------
\25\ Lists referenced here may be found in the cost criterion
codes and MS-DRGs attachment included in the online posting for the
technology.
---------------------------------------------------------------------------
We are inviting public comments on whether DuraGraft[supreg] meets
the cost criterion.
With regard to the substantial clinical improvement criterion, the
applicant asserted that DuraGraft[supreg] represents a substantial
clinical improvement over existing technologies because there is no
other product or technology that reduces the incidence of peri-
operative myocardial infarction. The applicant provided four studies to
support this assertion, as well as 47 background articles about
reducing major adverse cardiac events (MACE).\26\ The following table
summarizes the applicant's assertions regarding the substantial
clinical improvement criterion. Please see the online posting for
DuraGraft[supreg] for the applicant's complete statements regarding the
substantial clinical improvement criterion and the supporting evidence
provided.
---------------------------------------------------------------------------
\26\ Background articles are not included in the following table
but can be accessed via the online posting for the technology.
---------------------------------------------------------------------------
BILLING CODE 4120-01-P
[[Page 36042]]
[GRAPHIC] [TIFF OMITTED] TP02MY24.087
BILLING CODE 4120-01-C
After review of the information provided by the applicant, we have
the following concerns regarding whether DuraGraft[supreg] meets the
substantial clinical improvement criterion. As discussed in the FY 2024
IPPS/LTCH PPS proposed rule (88 FR 26800 through 26801), we expressed
concern regarding the relatively small sample sizes of the Szalkiewicz
et al. (2022) \27\ and Perrault et al. (2021) \28\ studies, as compared
to the number of potentially eligible patients for this technology, and
relatively short follow-up periods. We continue to question whether the
sample was representative of the number of Medicare beneficiaries
potentially eligible for DuraGraft[supreg]. We refer readers to the FY
2024 IPPS/LTCH PPS proposed rule for further discussion of these
concerns. For its FY 2025 application, the applicant also cited Lopez-
Menendez et al. (2021),\29\ which we note used a sample size of 180,
and therefore we similarly question whether
[[Page 36043]]
the results of this study would be replicated with a larger patient
sample.
---------------------------------------------------------------------------
\27\ Szalkiewicz, P, Emmert, MY, and Heinisch, PP, et al (2022).
Graft Preservation confers myocardial protection during coronary
artery bypass grafting. Frontiers in Cardiovascular Medicine, July
2022, pp 1-10. DOI 10.3389/fcvm.2022.922357.
\28\ Perrault, LP, Carrier, M, and Voisine, P, et al (2021).
Sequential multidetector computed tomography assessments after
venous graft treatment solution in coronary artery bypass grafting.
Journal of Thoracis and Cardiovascular Surgery. Jan. 2021, Vol. 161,
Number 1, 96-106. https://doi.org/10.1016/j.jtcvs.2019.10.115.
\29\ Lopez-Menendez J, Castro-Pinto M, and Fajardo E, Miguelena
J, et al. Vein graft preservation with an endothelial damage
inhibitor in isolated coronary artery bypass surgery: an
observational propensity score-matched analysis. J Thorac Dis
2023;15(10):5549-5558.
---------------------------------------------------------------------------
In the FY 2024 IPPS/LTCH proposed rule (88 FR 26800 through 26801),
we also questioned whether the results from the Haime et al. (2018)
\30\ study could be generalized to other patient groups, including
nonveterans, women, or those from other racial or ethnic groups. We
continue to question whether the demographic profiles in the Perrault,
Szalkiewicz, and Haime studies that the applicant submitted were
comparable with those of the U.S. Medicare patients who underwent CABG
surgery. For its FY 2025 application, the applicant also cited the
Lopez-Menendez et al. (2021) \31\ study, which was based on a European
patient population that was predominantly male (82 percent to 90
percent). However, as we noted in the FY 2024 IPPS/LTCH PPS proposed
rule (88 FR 26800 through 26801), among the Medicare fee-for-service
beneficiaries who underwent CABG surgery, male patients accounted for
two-thirds (66 percent) of this population. Therefore, we continue to
question whether the findings of these studies would be replicable
among the Medicare population.
---------------------------------------------------------------------------
\30\ Haime, M, McLean RR, and Kurgansky KE, et al (2018).
Relationship between intra-operative vein graft treatment with
DuraGraft[supreg] or saline and clinical outcomes after coronary
artery bypass grafting, Expert Review of Cardiovascular Therapy,
16:12, 963-970. DOI: 10.1080/14779072.2018.1532289.
\31\ Ibid.
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We are inviting public comments on whether DuraGraft[supreg] meets
the substantial clinical improvement criterion.
In this section, we summarize and respond to written public
comments received in response to the New Technology Town Hall meeting
notice published in the Federal Register regarding the substantial
clinical improvement criterion for DuraGraft[supreg].
Comment: The applicant submitted a public comment in response to
our question as to why two propensity match models were used in the
propensity match comparison of the EU DuraGraft[supreg] Registry to the
STS Registry that it presented during the New Technology Town Hall
meeting. The applicant explained that the goal of propensity matching
was to balance patient and technical factors predictive of mortality
throughout the observation period and to correct for differences that
may be encountered in the U.S. and Europe. The applicant stated that a
primary propensity score model (PSM) with 35 variables (2,400 patients
matched), and a secondary PSM with 25 variables (2,522 patients
matched, sensitivity analysis) were used. The applicant noted that the
propensity variables were chosen with a goal of comparing variables
descriptive of (1) U.S. and Western European populations, (2) the
general practice of cardiac surgery, and (3) standards of care for
surgical technique. The applicant noted that an important set of
variables that needed to be balanced were the components of the
EuroScore II (ESII). ESII is comprised of 18 patient variables and, per
the applicant, is considered to be the best predictor of peri-operative
and early mortality. ESII variables relevant for shorter term mortality
were supplemented with appropriate predictors for longer term
mortality.32 33 34
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\32\ Aldea, G.S., Bakaeen, F.G., Pal, J., Fremes, S., Head,
S.J., Sabik, J., Rosengart, T., Kappetein, A.P., Thourani, V.H.,
Firestone, S., Mitchell, J.D., & Society of Thoracic Surgeons
(2016). The Society of Thoracic Surgeons Clinical Practice
Guidelines on Arterial Conduits for Coronary Artery Bypass Grafting.
The Annals of thoracic surgery, 101(2), 801-809. https://doi.org/10.1016/j.athoracsur.2015.09.100.
\33\ Kolh, P., Kurlansky, P., Cremer, J., Lawton, J., Siepe, M.,
& Fremes, S. (2016). Transatlantic Editorial: A Comparison Between
European and North American Guidelines on Myocardial
Revascularization. The Annals of thoracic surgery, 101(6), 2031-
2044. https://doi.org/10.1016/j.athoracsur.2016.02.062.
\34\ Shahian, D.M., O'Brien, S.M., Sheng, S., Grover, F.L.,
Mayer, J.E., Jacobs, J.P., Weiss, J.M., Delong, E.R., Peterson,
E.D., Weintraub, W.S., Grau-Sepulveda, M.V., Klein, L.W., Shaw,
R.E., Garratt, K.N., Moussa, I.D., Shewan, C.M., Dangas, G.D., &
Edwards, F.H. (2012). Predictors of long-term survival after
coronary artery bypass grafting surgery: results from the Society of
Thoracic Surgeons Adult Cardiac Surgery Database (the ASCERT study).
Circulation, 125(12), 1491-1500. https://doi.org/10.1161/CIRCULATIONAHA.111.066902.
---------------------------------------------------------------------------
The applicant noted that the set of variables for the primary PSM
included 35 characteristics that are most strongly associated with
mortality across the time periods (including 1-year post-CABG) and were
consistently observed to have the highest degree of impact in the
studies. The applicant stated that these variables include
demographics, cardiac and pre-op surgical risk factors, coronary
anatomy, and surgical/procedural key characteristics (for example,
grafting strategy and conduit selection) to serve as the primary
analysis. The applicant indicated that all characteristics in the ESII
are included in the risk factors, with the exception of endocarditis,
surgery on the thoracic aorta, weight of the intervention, and poor
mobility, as they are not relevant to the subset of patients being
propensity matched, or in the case of poor mobility, not collected in
both databases. The applicant stressed that this list was reviewed and
edited with FDA during the pre-submission process. To further allow for
the selection of a cohort matched for standard of care and surgical
technique between the European and U.S. populations, additional
relevant variables were added including pre-op cardiac risk, coronary
anatomy, and surgical technique.
The applicant further noted that the set of variables for the
secondary PSM included 25 of the 35 variables from the primary PSM,
excluding characteristics of pre-op cardiac risk factors, coronary
anatomy, and aspects of surgical technique. The applicant asserted that
the secondary PSM serves as a sensitivity analysis to estimate whether
the standard of care for the treatment of patients with advanced
coronary artery disease and surgical techniques differ for patients in
the two cohorts which are otherwise balanced for surgical risk factors,
and whether these differences could affect mortality outcomes.
Response: We thank the applicant for its comments. We also note
that the applicant has provided the baseline demographic
characteristics and surgical risk factors of the two cohorts before and
after propensity score matching, which appears to demonstrate that the
two cohorts were more similar in those characteristics and factors as a
result of propensity score matching. We will take this information into
consideration when deciding whether to approve new technology add-on
payments for DuraGraft[supreg].
d. ELREXFIOTM (elranatamab-bcmm)
Pfizer, Inc. submitted an application for new technology add-on
payments for ELREXFIOTM for FY 2025. According to the
applicant, ELREXFIOTM is a B-cell maturation antigen (BCMA)
directed cluster of differentiation (CD)3 T-cell engager indicated for
the treatment of adult patients with relapsed or refractory multiple
myeloma (RRMM) who have received at least four prior lines of therapy,
including a proteasome inhibitor (PI), an immunomodulatory agent
(IMiD), and an anti-CD38 monoclonal antibody (mAb). Per the applicant,
ELREXFIOTM is a bispecific, humanized immunoglobulin 2-
alanine (IgG2[Delta]a) kappa antibody derived from two mAbs,
administered as a fixed-dose, subcutaneous treatment. We note that the
applicant submitted an application for new technology add-on payments
for ELREXFIOTM for FY 2024 under the name elranatamab, as
summarized in the FY 2024 IPPS/LTCH PPS proposed rule (88 FR 26803
through 26809), but the technology did not meet the July 1, 2023
deadline for FDA approval or clearance of the technology and,
[[Page 36044]]
therefore, was not eligible for consideration for new technology add-on
payments for FY 2024 (88 FR 58804).
Please refer to the online application posting for
ELREXFIOTM available at https://mearis.cms.gov/public/publications/ntap/NTP2310176PV9B, for additional detail describing the
technology and the disease treated by the technology.
With respect to the newness criterion, according to the applicant,
ELREXFIOTM was granted Biologics License Application (BLA)
approval from FDA on August 14, 2023, for the treatment of adult
patients with RRMM who have received at least four prior lines of
therapy, including a PI, an IMiD, and an anti-CD38 mAb. According to
the applicant, ELREXFIOTM was commercially available
immediately after FDA approval. Per the applicant, the recommended
doses of ELREXFIO\TM\ subcutaneous injection are step-up doses of 12 mg
on day 1 and 32 mg on day 4, followed by a first treatment dose of 76
mg on day 8 and subsequent treatment doses as indicated in the label.
The applicant noted that treatment doses may be administered in an
inpatient or outpatient setting. Per the applicant, patients should be
hospitalized for 48 hours after administration of the first step-up
dose, and for 24 hours after administration of the second step-up dose.
The applicant assumed that there would be a single inpatient stay, with
one 44 mg vial used per dose, resulting in two doses (each a step-up
dose) being administered.
The applicant stated that effective October 1, 2023, the following
ICD-10-PCS code may be used to uniquely describe procedures involving
the use of ELREXFIOTM: XW013L9 (Introduction of elranatamab
antineoplastic into subcutaneous tissue, percutaneous approach, new
technology group 9). The applicant stated that C90.00 (Multiple myeloma
not having achieved remission), C90.01 (Multiple myeloma in remission),
C90.02 (Multiple myeloma in relapse), and Z51.12 (Encounter for
antineoplastic immunotherapy) may be used to currently identify the
indication for ELREXFIOTM 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 ELREXFIOTM is not substantially similar to
other currently available technologies because it is the only therapy
approved for the treatment of patients with RRMM who have received 4
prior lines of therapy including a PI, IMiD, and mAb that uses a
humanized IgG2a antibody for the mechanism of action. Per the
applicant, it is also the only BCMA-directed bispecific antibody (bsAb)
therapy with clinical study data in its prescribing information
supporting use in patients who have received prior BCMA-directed
therapy, 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 ELREXFIOTM for the applicant's
complete statements in support of its assertion that
ELREXFIOTM is not substantially similar to other currently
available technologies.
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With regard to the newness criterion, similar to our discussion in
the FY 2024 IPPS/LTCH PPS proposed rule (88 FR 26804), we note that
ELREXFIOTM may have a similar mechanism of action to that of
TECVAYLI[supreg], for which we approved an application for new
technology add-on payments for FY 2024 (88 FR 58891) for the treatment
of adult patients with RRMM after four or more prior lines of therapy,
including a PI, an IMiD, and an anti-CD38 mAb. As we previously noted,
TECVAYLI[supreg]'s mechanism of action is described as a bsAb, with
binding domains that simultaneously bind the BCMA target on tumor cells
and the CD3 T-cell receptor (88 FR 58886). The applicant asserts that
ELREXFIOTM has a unique CDR (the region of antibody that
recognizes and binds to target epitopes) that is critical to the
mechanism of action because it results in different targeted regions,
impacting how the drug works to target the cancer cells. However, it is
unclear how these differences result in a substantially different
mechanism of action from TECVAYLI[supreg]. Because of the apparent
similarity with the bsAb for ELREXFIOTM that uses binding
domains that simultaneously bind the BCMA target on tumor cells and the
CD3 T-cell receptor, we believe that the mechanism of action for
ELREXFIOTM may be the same or similar to that of
TECVAYLI[supreg]. The applicant also asserts that ELREXFIOTM
is different from TECVAYLI[supreg] because the two are based on
different immunoglobulin isotypes, and with the lower effector function
of IgG2, ELREXFIOTM should only activate T-cells in the
presence of BCMA and thus should only stimulate an immune response in
the tumor. Based on our understanding, however, that this may relate to
the risk of adverse event from ELREXFIOTM administration but
is not critical to the way the drug treats the underlying disease, we
question whether this would therefore relate to an assessment of
substantial clinical improvement, rather than of substantial
similarity.
We also note that ELREXFIOTM and TECVAYLI[supreg] may
treat the same or similar disease (RRMM) in the same or similar patient
population (patients who have previously received a PI, IMiD, and an
anti-CD38 mAb). The applicant claims ELREXFIOTM is different
from TECVAYLI[supreg] because the prescribing information includes a
new subpopulation, the patient population that had received prior BCMA-
directed therapy. However, we believe the lack of inclusion of this
population in the prescribing information for TECVAYLI[supreg] does not
necessarily exclude the use of TECVAYLI[supreg] in this patient
population, nor does the FDA prescribing information for
TECVAYLI[supreg] specifically exclude this patient population. As such,
it is unclear whether ELREXFIOTM would in fact treat a
patient population different from TECVAYLI[supreg]. Accordingly, as it
appears that ELREXFIOTM and TECVAYLI[supreg] may use the
same or similar mechanism of action to achieve a therapeutic outcome,
would be assigned to the same MS-DRG, and treat the same or similar
patient population and disease, we believe that these technologies may
be substantially similar to each other. We note that if we determine
that this technology is substantially similar to TECVAYLI[supreg], we
believe the newness period for this technology would begin on November
9, 2022, the date TECVAYLI[supreg] became commercially available.
Furthermore, we believe another applicant for FY 2025 new
technology add-on payments, TALVEYTM, may also be
substantially similar to ELREXFIOTM. Per the application for
TALVEYTM, TALVEYTM is a bispecific antibody
approved for the treatment of adults with RRMM who have received at
least four prior lines of therapy, including a PI, IMiD, and an anti-
CD38 monoclonal antibody. The applicant for TALVEYTM states
TALVEYTM recruits CD3-expressing T cells to myeloma cells
that express GPRC5D, resulting in activation of the T cell receptor
pathway and lysis of GPRC5D-expressing MM cells. Per the applicant for
TALVEYTM, TALVEYTM was available for sale
immediately after its approval on August 9, 2023. We
[[Page 36047]]
believe TALVEYTM may be substantially similar to
ELREXFIOTM because it is also a bispecific antibody that
treats RRMM in patients who have previously received a PI, IMiD, and an
anti-CD38 mAb. Additionally, we note that similar to
ELREXFIOTM, the prescribing information for
TALVEYTM includes the population with prior exposure to BCMA
T-cell redirection therapy. Accordingly, as it appears that
ELREXFIOTM and TALVEYTM would use the same or
similar mechanism of action to achieve a therapeutic outcome, would be
assigned to the same MS-DRG, and would treat the same or similar
disease in the same or similar patient population, we believe that
these technologies may also 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 note that if ELREXFIOTM
is determined to only be substantially similar to TALVEYTM,
and not TECVAYLI[supreg], we believe the newness period for
ELREXFIOTM would begin on August 9, 2023, the date
TALVEYTM received FDA approval.
We are interested in receiving information on how these
technologies may differ from each other with respect to the substantial
similarity and newness criteria, to inform our analysis of whether
ELREXFIOTM is substantially similar to TALVEYTM
and/or TECVAYLI[supreg].
We are inviting public comments on whether ELREXFIOTM is
substantially similar to existing technologies and whether
ELREXFIOTM meets the newness criterion.
With respect to the cost criterion, to identify potential cases
representing patients who may be eligible for ELREXFIOTM,
the applicant searched the FY 2022 MedPAR for cases reporting one of
the following ICD-10-CM codes in any position: C90.00 (Multiple myeloma
not having achieved remission), C90.01 (Multiple myeloma in remission),
or C90.02 (Multiple myeloma in relapse). Using the inclusion/exclusion
criteria described in the following table, the applicant identified
4,689 claims mapping to five MS-DRGs: MS-DRGs 840, 841, and 842
(Lymphoma and Non-Acute Leukemia with MCC, with CC, and without CC/MCC,
respectively), and MS-DRGs 846 and 847 (Chemotherapy without Acute
Leukemia as Secondary Diagnosis with MCC and with CC, respectively).
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 $170,699, which exceeded the average
case-weighted threshold amount of $77,190. Because the final inflated
average case-weighted standardized charge per case exceeded the average
case-weighted threshold amount, the applicant asserted that
ELREXFIOTM meets the cost criterion.
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We are inviting public comments on whether ELREXFIOTM
meets the cost criterion.
With regards to the substantial clinical improvement criterion, the
applicant asserted that ELREXFIOTM represents a substantial
clinical improvement over existing technologies because it is a new
treatment option for late-line RRMM patients who are refractory to or
otherwise ineligible for existing therapy. Per the applicant, it
significantly improves outcomes compared to existing therapy (Cohort A
objective response rate (ORR) of 57.7 percent with a complete response
(CR) or better achieved in 25.8 percent and very good partial response
(VGPR) in 25.8 percent; Cohort B ORR of 33.3 percent with duration of
response (DOR) of 84.3 percent at 9 months), has a manageable safety
profile, and shorter hospitalization than TECVAYLI[supreg] and
TALVEYTM. The applicant provided nine studies assessing
ELREXFIOTM to support these claims, as well as 12 background
articles about RRMM and comparator technologies.\35\ The following
table summarizes the applicant's assertions regarding the substantial
clinical improvement criterion. Please see the online posting for
ELREXFIOTM for the applicant's complete statements regarding
the substantial clinical improvement criterion and the supporting
evidence provided.
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\35\ Background articles are not included in the following table
but can be accessed via the online posting for the technology.
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After review of the information provided by the applicant, we have
the following concerns regarding whether ELREXFIOTM meets
the substantial clinical improvement criterion.
With respect to the claim ELREXFIOTM is a new treatment
option for late-line patients with RRMM who are refractory to existing
therapies or otherwise ineligible for or unable to access them, the
applicant states the nature of the disease is such that patients
typically become refractory to the available treatment options or
patients may be unable to access some therapies for other reasons. The
applicant further notes patients need new therapies with new mechanisms
of action that can provide better efficacy, extend the duration of
response, and be available to a larger subset of the late-line RRMM
population, particularly patients with prior BCMA-directed therapy
exposure. The applicant states that ELREXFIOTM addresses
these limitations since it does not require patient-specific
manufacturing and is the only BCMA-directed bispecific antibody therapy
that has clinical study data on outcomes for patients exposed to prior
BCMA-directed therapy in its prescribing information. We note the
evidence presented does not identify a specific population that would
benefit from ELREXFIOTM that would not be eligible for or
benefit from other therapies for late-line RRMM, including
TECVAYLI[supreg], TALVEYTM, CARVYKTI[supreg], and
ABECMA[supreg]. With regard to the population with prior BCMA-directed
therapy exposure, as noted previously, the prescribing information for
TALVEYTM also includes efficacy data in this population and
the lack of inclusion of this population in the prescribing information
for TECVAYLI[supreg] does not exclude the use of this drug for these
patients.
With respect to the claim that ELREXFIOTM is the only
BCMA-directed bispecific antibody with clinical study data in the
prescribing information to support use in patients who have been
treated with prior BCMA-directed therapy, the applicant states that
although clinical studies evaluating TECVAYLI[supreg] included prior
BCMA-exposed RRMM patients, in Section 14 of the prescribing
information,\36\ the
[[Page 36051]]
FDA-approved labeling does not acknowledge outcomes or safety data for
prior BCMA-exposed patients. Furthermore, the applicant contends this
lack of inclusion suggests that prior-BCMA exposed patients continue to
have a high unmet need despite the availability of TECVAYLI[supreg],
and that the inclusion of this clinical study data in
ELREXFIOTM's prescribing information suggests that
ELREXFIOTM is able to fill this unmet need. However, as
noted previously, the lack of inclusion of similar study data in
TECVAYLI[supreg]'s prescribing information does not exclude the use of
this drug in these patients. Additionally, TALVEYTM is a
bsAb that was also studied in this patient population and has an
indication for patients with prior BCMA-directed therapy.
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\36\ TECVAYLI (teclistamab-cqyv), injection, for subcutaneous
use; Janssen Biotech, Inc., 2023.
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With respect to the claim that CAR T-cell therapies are largely
unavailable to Medicare beneficiaries with late-line RRMM, the
applicant states CAR T-cells take a significant amount of time to
manufacture, and given the rapid nature of RRMM, some patients may die
or become ineligible for treatment by the time the CAR T-cells are
available for infusion. However, we note that TECVAYLI[supreg] and
TALVEYTM have also received FDA approval and would therefore
be options for patients who are unable to access or receive CAR T-cell
therapy.
The applicant states that MM is an incurable malignancy and that
patients' ability to respond to therapy diminishes over time, leading
to a reduced duration of response and eventually exhausting available
therapy options to manage the disease. The applicant asserts that
patients typically undergo several lines of therapy before exhausting
therapy options and succumbing to the disease. The applicant references
the low objective response rates (ORRs) of selinexor and conventional
chemotherapy in RRMM patients. We note there are several treatments
available to patients with RRMM who have received at least four prior
lines of therapy including a PI, an IMiD, and an anti-CD38 mAb, such as
TECVAYLI[supreg], TALVEYTM, ABECMA[supreg], and
CARVYKTI[supreg]. It is not clear from the evidence provided that there
is a patient population eligible for and responsive to
ELREXFIOTM that is neither eligible for nor responsive to
any of these other available therapies.
The applicant further claims that ELREXFIOTM's generally
manageable safety profile without dysgeusia and other toxicities that
severely impact quality of life, in conjunction with the improved
efficacy in late-line RRMM, makes it a substantial clinical improvement
treatment over existing therapies. Additionally, the applicant asserts
that dysgeusia and nail-related and skin-related toxicities that reduce
quality of life with TALVEYTM are not reported with
ELREXFIOTM. However, the safety profile of
ELREXFIOTM was not compared to ABECMA[supreg],
CARVYKTI[supreg], or TECVAYLI[supreg]. We also note we did not receive
evidence related to improved efficacy that compares
ELREXFIOTM with ABECMA[supreg], CARVYKTI[supreg],
TALVEYTM, or TECVAYLI[supreg], and we question if
ELREXFIOTM improves efficacy relative to these other
therapies.
With respect to the claim that ELREXFIOTM significantly
improves outcomes compared to existing therapies approved for late-line
RRMM, including prior BCMA-exposed patients, the applicant provides
study results from MagnetisMM-3, an open-label, phase 2 study where
after receiving two step-up priming doses, patients received
subcutaneous ELREXFIOTM once weekly in 28-day cycles, which
after six cycles, was followed by once every 2 weeks for persistent
responders.\37\ The applicant stated the ORR for ELREXFIOTM
was 61 percent and the percentage of patients that had at least a
complete response was 37.4 percent after a median follow-up of 17.6
months in patients with RRMM and no prior exposure to BCMA-directed
therapy.\38\ The applicant acknowledges the lack of head-to-head
studies and submits indirect comparison analyses comparing
ELREXFIOTM to belantamab, selinexor-dexamethasone, real-
world physician's choice of treatment, real-world external control
arms, and TECVAYLI[supreg] in patients with triple-class refractory
multiple myeloma. The referenced indirect comparisons by Hlavacek et
al. (2023) \39\ and Costa et al. (2023) 40 41 showed the ORR
for ELREXFIOTM was significantly higher compared to
belantamab, selinexor-dexamethasone, real-world physician's choice of
treatment based on local clinical practice, and real-world external
control arms. We note, however, that no similar comparative analyses
were provided by the applicant to compare ELREXFIOTM to
TALVEYTM ABECMA[supreg], or CARVYKTI[supreg] . In the
absence of direct comparative trials between ELREXFIOTM and
TECVAYLI[supreg], the applicant submitted the results of an unanchored
matching-adjusted indirect comparison (MAIC) between the MagnetisMM-3
study, previously described, and the MajesTEC-1 study, assessing the
relative efficacy of the two therapies in patients with relapsed or
refractory MM na[iuml]ve to prior BCMA-directed therapy (Isha Mol et
al., 2023).\42\ MajesTEC-1 was an open-label, phase 1-2 study where
patients with RRMM and no prior exposure to BCMA-targeted therapy
received a weekly subcutaneous injection of TECVAYLI[supreg] after two
step-up doses.\43\ As stated by the applicant, the results of the MAIC
demonstrate ELREXFIOTM significantly improved ORR and PFS
versus TECVAYLI[supreg]. We note, however, that the mechanism used in
the MAIC to reweight MagnetisMM-3 patients to match the baseline
characteristics of patients from MajesTEC-1 is unclear, as is the
sensitivity analysis in which missing values of the adjusted baseline
characteristics for ELREXFIOTM patients were imputed by a
random sample of the observations in MagnetisMM-3 to potentially
increase the effective sample size. In addition, while the ORR and PFS
in the two analyses (base case adjusted and sensitivity analysis) were
significantly improved with ELREXFIOTM over
TECVAYLI[supreg], we note that the confidence intervals were wide,
reducing the certainty in these conclusions. The ORR odds ratio 95
percent confidence interval was 1.01 to 3.19 for the base case adjusted
analysis and 1.04 to 3.14 for the sensitivity analysis. Furthermore,
other outcomes
[[Page 36052]]
measured, such as the duration of response and overall survival, did
not demonstrate significant improvement with ELREXFIOTM.
Additionally, we note that with regard to the claim that
ELREXFIOTM significantly improves outcomes specifically in
RRMM patients who have had prior BMCA-directed therapy, the applicant
references the ELREXFIOTM prescribing information and
additional MagnetisMM-3 Cohort B data showing an ORR of 33.3 percent in
patients with prior BCMA-directed antibody drug conjugate (ADC) or CAR
T-cell therapy. However, we note that TECVAYLI[supreg] and
TALVEYTM may also be treatment options for BCMA-exposed
patients and we would appreciate information on comparative efficacy
between ELREXFIOTM and these treatment options in the prior
BCMA-directed therapy population.
---------------------------------------------------------------------------
\37\ Lesokhin AM, Tomasson MH, Arnulf B, et al. Elranatamab in
relapsed or refractory multiple myeloma: Phase 2 MagnetisMM-3 trial
results. Nat Med. 2023 Aug 15. Online ahead of print.
\38\ Michael H. Tomasson, et al., Long-Term Efficacy and Safety
of Elranatamab Monotherapy in the Phase 2 MagnetisMM-3 Trial in
Relapsed or Refractory Multiple Myeloma. Oral presentation at: 65th
American Society of Hematology (ASH) Annual Meeting; 2023 Dec. 9-12.
\39\ Hlavacek P, Mol I, Hu Y, et al. Indirect treatment
comparison of elranatamab with belmaf, sel-dex, and real-world
physician's choice of treatment in patients with triple-class
exposed relapsed/refractory multiple myeloma. Presented at the
European Hematology Association (EHA) Congress, 2023 June 8-11,
Frankfurt, Germany.
\40\ Costa LJ, LeBlanc TW, Tesch H, et al. An indirect
comparison of elranatamab's (ELRA) objective response rate (ORR)
from MagnetisMM-3 (MM-3) versus real-world external control arms in
triple-class refractory (TCR) multiple myeloma (MM). Presented at
the European Hematology Association (EHA) Congress, 2023 June 8-11,
Frankfurt, Germany.
\41\ Costa LJ, et al., An Indirect Comparison of Elranatamab's
Progression-Free Survival and Overall Survival from MagnetisMM-3
Versus Real-World External Control Arms in Triple-Class Refractory
Multiple Myeloma. Abstract presented at the 65th American Society of
Hematology (ASH) Annual Meeting; 2023 Dec. 9-12.
\42\ Isha Mol, et al., A Matching-Adjusted Indirect Comparison
of the Efficacy of Elranatamab and Teclistamab in Patients with
Triple-Class Exposed/Refractory Multiple Myeloma. Oral presentation
at: 65th American Society of Hematology (ASH) Annual Meeting; 2023
Dec. 9-12.
\43\ Moreau P, Garfall AL, van de Donk NWCJ, et al. Teclistamab
in Relapsed or Refractory Multiple Myeloma. NEJM. 2022 Aug 11.
---------------------------------------------------------------------------
With respect to the claim that ELREXFIOTM offers fewer
hospitalization days during the step-up dosing period than other
bispecific antibodies approved for patients with RRMM, thus lowering
barriers to patient access, the applicant references the prescribing
information for ELREXFIOTM, TECVAYLI[supreg], and
TALVEYTM to indicate that assuming patients are not sent
home between step-up doses, based on the step-up dosing schedules, the
patient would be hospitalized for 5 days with ELREXFIOTM, 9
days with TECVAYLI[supreg], and 9 to 12 days with TALVEYTM.
While the shorter step-up dosing may lead to a shorter hospitalization,
the applicant assumes, but does not demonstrate that the shorter step-
up dosing period and potentially shorter hospitalization would lower
barriers to patient access. Additionally, we note that there are other
variables besides duration of inpatient stay for the step-up dosing
that may affect availability or access to therapies, such that a
shorter step-up dosing duration may not necessarily result in better
access to therapy. For instance, social, financial, age-related, prior
therapy, and patient and provider dosing preferences may also affect
access to therapy. Furthermore, while the shorter step-up dosing
schedule should theoretically lead to a shorter hospitalization, we
note that the risk and severity of adverse drug events and patient
response could vary by drug, and that no clinical data was provided to
support this claim.
We are inviting public comments on whether ELREXFIOTM
meets the substantial clinical improvement criterion.
We did not receive any written comments in response to the New
Technology Town Hall meeting notice published in the Federal Register
regarding the substantial clinical improvement criterion for
ELREXFIOTM.
e. FloPatch FP120
Flosonics Medical (R.A. 1929803 Ontario Corp.) submitted an
application for new technology add-on payments for FloPatch FP120 for
FY 2025. According to the applicant, FloPatch FP120 is a wireless,
wearable, continuous wave (4 MHz) Doppler ultrasound device that
adheres over peripheral vessels (that is, carotid & jugular) that
assesses blood flow in the peripheral vessels, enabling rapid and
repeatable dynamic assessments of both arterial and venous flow
simultaneously. According to the applicant, the FloPatch FP120
cardiovascular blood flowmeter adheres to a patient's neck (or any
other major vessel) and transmits Doppler-shifted ultrasonic waves from
the transducer to the artery and vein at a fixed angle of insonation
that are then reflected by moving blood cells back to the transducer.
Per the applicant, the signal processing unit wirelessly outputs data
to a secure iOS mobile medical application, which displays metrics from
the Doppler signal, such as maximal velocity trace and corrected flow
time, in a user-friendly interface. Per the applicant, FloPatch FP120
will optimize clinical workflow, is easy-to-use and hands-free, cloud-
connected, and can be deployed in under one minute, providing
instantaneous results.
Please refer to the online application posting for FloPatch FP120,
available at https://mearis.cms.gov/public/publications/ntap/NTP231017D56F4, for additional detail describing the technology and the
types of conditions that the technology might help diagnose and/or
treat.
With respect to the newness criterion, according to the applicant,
FloPatch FP120 received 510(k) clearance from FDA on May 3, 2023 for
use for the noninvasive assessment of blood flow in the carotid artery.
Per the applicant, in a more recent FDA 510(k) submission, the proposed
indication is for use for the noninvasive assessment of blood flow in
peripheral vasculature. However, based on the application submitted by
the applicant, the new technology add-on payment application for
FloPatch FP120 is not eligible for consideration for FY 2025 for the
proposed indication (for use for the noninvasive assessment of blood
flow in peripheral vasculature) because documentation of FDA acceptance
or filing of the marketing authorization request, that indicates that
FDA has determined that the application is sufficiently complete to
allow for substantive review by FDA, was not provided to CMS at the
time of new technology add-on payment application submission. As such,
the new technology add-on payment application for FloPatch FP120 is
only eligible for consideration for FY 2025 for the narrower indication
for use for the noninvasive assessment of blood flow in carotid artery.
We note that prior to the May 3, 2023 clearance, there were two FDA
510(k) clearances for the FloPatch FP120; one obtained in 2022 and one
in 2020. The indications in the 2020, 2022, and 2023 clearances are
identical, that is, for use for the noninvasive assessment of blood
flow in the carotid artery.\44\ In addition, the 2020 clearance was
based on substantial equivalence to the FloPatch FP110 device,\45\
which was an earlier version of FloPatch FP120 and was also FDA-
cleared. According to the applicant, FloPatch FP120 was commercially
available for this use as of January 1, 2023. However, as noted
earlier, the provided FDA 510(k) clearance was dated May 3, 2023.
Because the market availability date as indicated by the applicant
preceded the 2023 clearance date, and because the 2020 and 2022
clearances had the same indication as the 2023 clearance, we question
when the technology first became commercially available for use for the
noninvasive assessment of blood flow in the carotid artery and request
additional information on the market availability date for this
indication. Per the applicant, one FloPatch FP120 device would be used
per inpatient stay.
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\44\ K223843, May 3, 2023; K222242, December 9, 2022; and
K200337, March 24, 2020.
\45\ K191388, June 21, 2019.
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According to the applicant, there are currently no ICD-10-PCS
procedure codes to distinctly identify FloPatch FP120. We note that the
applicant submitted a request for approval for a unique ICD-10-PCS
procedure code for FloPatch FP120 beginning in FY 2025. The applicant
provided a list of diagnosis codes that may be used to currently
identify the indication for FloPatch FP120 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.
[[Page 36053]]
With respect to the substantial similarity criteria, the applicant
asserted that FloPatch FP120 is not substantially similar to other
currently available technologies because FloPatch FP120 offers real-
time, non-invasive monitoring of hemodynamic changes of both the
arterial and venous blood flow, improving fluid management decisions.
Per the applicant, FloPatch FP120 surpasses current methods by
providing continuous data, enhancing patient safety, and addressing
unmet clinical needs for immediate, precise assessments, 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
FloPatch FP120, for the applicant's complete statements in support of
its assertion that FloPatch FP120 is not substantially similar to other
currently available technologies.
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We note the following concerns with regard to the newness
criterion. With respect to the first substantial similarity criterion,
whether FloPatch FP120 uses the same or similar mechanism of action for
a therapeutic outcome when compared to existing technologies, we note
we did not receive information from the applicant regarding predicate
devices for FloPatch FP120 that were previously FDA-cleared in its
discussion of existing technologies. As noted, there are three prior
FDA 510(k) clearances for the FloPatch FP120, with the same indication
for use for the noninvasive assessment of blood flow in the carotid
artery.\46\ In addition, the 2020 clearance was based on substantial
equivalence to the FloPatch FP110 device,\47\ which was an earlier
version of FloPatch FP120 and was also FDA-cleared. We note that all of
the FloPatch FP120 FDA-cleared devices, as well as the FP110 version
have an identical method of attachment of the ultrasound probe to the
human body, and the same intended use and indications for use.
Accordingly, as the technology was already approved for use for this
same indication outside of the 2- to 3-year newness period, it appears
that it would no longer be considered new for purposes of new
technology add-on payments.
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\46\ K223843, May 3, 2023; K222242, December 9, 2022; and
K200337, March 24, 2020.
\47\ K191388, June 21, 2019.
---------------------------------------------------------------------------
In addition, we question whether a different placement method or
the addition of a wearable functionality for the noninvasive assessment
of blood flow would constitute a different mechanism of action, and
also whether these differences may instead be relevant to the
assessment of substantial clinical improvement, rather than of newness.
For example, while the applicant described FloPatch FP120 as user-
friendly, we question whether ease-of-use in itself represents a
mechanism of action unique from existing technologies for a therapeutic
outcome, as the primary underlying mechanism of action is still Doppler
ultrasound technology.
With respect to the second substantial similarity criterion, that
is, whether a product is assigned to the same or a different MS-DRG,
although the applicant asserts that the device is new and has not
undergone sufficient review to be recognized as a treatment within the
existing MS-DRGs, we note that the applicant stated that FloPatch FP120
could be relevant to existing MS-DRGs that pertain to septicemia or
severe sepsis for the assessment of volume responsiveness. We believe
that, based on its indication, cases involving the use FloPatch FP120
would be assigned to the same MS-DRGs as those involving existing
technologies used for invasive and non-invasive measurements of blood
flow, such as for patients with septicemia or severe sepsis.
With respect to the third substantial similarity criterion, that
is, whether the technology involves treatment of the same or similar
type of disease or patient population when compared to an existing
technology, the applicant maintained that existing technologies do not
provide clinicians with the information they need, and while FloPatch
LP120 serves a similar purpose as existing technology, its process has
been optimized by providing a safer, more accurate, and instantaneous
method of assessment. While this may be relevant to the assessment of
substantial clinical improvement, it does not appear to be related to
newness, and we remain unclear about how the patient population for
which FloPatch FP120 is used differs from other patients for which
existing non-invasive (for example, Doppler ultrasound devices) and
invasive technologies are used for hemodynamic monitoring in a same or
similar type of disease (such as septicemia or severe sepsis).
Accordingly, as it appears that the May 3, 2023 FDA 510(k)
clearance and prior FDA 510(k) clearances for FloPatch FP120 may use
the same or similar mechanism of action to achieve a therapeutic
outcome, would be assigned to the same MS-DRG, and treat the same or
similar patient population and disease, we believe that these
technologies may be substantially similar to each other. We note that
if FloPatch FP120 as described in its 2023 FDA 510(k) clearance is
substantially similar to prior versions as described in the 2022 and
2020 FDA 510(k) clearances, we believe the newness period for this
technology would begin on March 24, 2020 with the earliest FDA 510(k)
clearance date for FloPatch FP120 (K200337) and therefore, because the
3-year anniversary date of the technology's entry onto the U.S. market
(March 24, 2023) occurred in FY 2023, the technology would no longer be
considered new and would not be eligible for new technology add-on
payments for FY 2025.
We are inviting public comments on whether FloPatch FP120 is
substantially similar to existing technologies and whether FloPatch
FP120 meets the newness criterion.
With respect to the cost criterion, to identify potential cases
representing patients who may be eligible for FloPatch FP120, the
applicant searched the FY 2022 MedPAR for cases with ICD-10-CM
diagnosis code category of E877 (Fluid overload, unspecified) and MS-
DRG codes for septicemia or severe sepsis. Using the inclusion/
exclusion criteria described in the following table, the applicant
identified 690,320 cases mapping to septicemia or severe sepsis 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 $93,703, which exceeded the average
case-weighted threshold amount of $70,142. Because the final inflated
average case-weighted standardized charge per case exceeded the average
case-weighted threshold amount, the applicant asserted that FloPatch
FP120 meets the cost criterion.
BILLING CODE 4120-01-P
[[Page 36055]]
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We note the following concern regarding the cost criterion. Per the
applicant, FloPatch FP120 is not indicated for use for a particular
disease or diagnosis, but rather to assess changes in blood flow in
response to a preload challenge and that it monitors hemodynamic change
in response to a clinical intervention. We note that the applicant
limited their coding determination and cost analysis to cases
associated with a diagnosis of septicemia or severe sepsis with the
identified MS-DRGs, 870, 871, and 872, as these are the cases for which
FloPatch FP120 is best suited. However, the applicant stated that
patients who are categorized under MS-DRGs other than 870, 871, and 872
can develop sepsis even though they are not initially admitted under a
sepsis-related DRG, such as post-surgical patients or patients admitted
for acute conditions like heart failure or chronic illnesses such as
diabetes or renal disease. As these patients may also require vigilant
monitoring for sepsis and fluid overload in a broader range of clinical
scenarios, we are interested in additional information regarding
whether such cases using the technology would map to other DRGs, and if
those cases should also be included in the cost analysis.
We are inviting public comments on whether FloPatch FP120 meets the
cost criterion.
With regard to the substantial clinical improvement criterion, the
applicant asserted that FloPatch FP120 overcomes barriers associated
with traditional flow-directed therapies, which are often invasive and
require specific expertise, by offering a non-invasive, user-friendly
alternative. Per the applicant, the FloPatch FP120 makes precision
fluid management more accessible, enabling early detection of preload
unresponsiveness, thereby minimizing complications from over-
resuscitation. The applicant asserted that FloPatch FP120 offers a
treatment option for a patient population unresponsive to, or
ineligible for, currently available treatments; 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 that use of FloPatch FP120
significantly improves clinical outcomes relative to services or
technologies previously available. The applicant provided five studies
to support these claims. We also note that seven other articles
submitted as supporting evidence should more appropriately be
characterized as background articles because they do not directly
assess the use of FloPatch FP120. Instead, those seven articles focus
on the relationship between fluid responsiveness status during septic
shock resuscitation.\48\ The following table summarizes the applicant's
assertions regarding the substantial clinical improvement criterion.
Please see the online posting for FloPatch FP120 for the applicant's
complete statements regarding the substantial clinical improvement
criterion and the supporting evidence provided.
---------------------------------------------------------------------------
\48\ 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 36056]]
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We note the following concerns regarding whether FloPatch FP120
meets the substantial clinical improvement criterion.
In support of its assertion that FloPatch FP120 offers a treatment
option for a patient population unresponsive to, or ineligible for,
currently available treatments, the applicant stated that FloPatch
FP120 improves patient accessibility to flow-directed therapy. The
applicant referred to the Kenny et al. (2021a) \49\ study that focused
on a novel, hands-free CW Doppler patch developed for easily and
continuously monitoring changes in blood flow velocities in the common
carotid artery. The study included in vitro experiments conducted using
moving string and blood-mimicking flow phantoms; a small usability
study with 22 participants, and an in vivo proof-of-concept study with
one healthy volunteer and one congestive heart failure patient. While
the study found that the CW Doppler patch demonstrated accuracy in
identifying changes in target velocity in string and flow phantom
experiments, that it was easy to use, and that the Doppler patch could
continuously record and track instantaneous changes in carotid velocity
time integral (VTI) during a passive leg raise, we question if the
evidence demonstrates that the FloPatch FP120 substantially improves
patient accessibility to flow directed therapy relative to existing
technologies. We would be interested in evidence comparing the use of
FloPatch FP120 and existing technologies to demonstrate improvements in
patient accessibility. In addition, we note that the study had small
sample sizes, which may raise concerns about the reliability of the
findings.
---------------------------------------------------------------------------
\49\ Kenny J-[Eacute]S, Munding CE, Eibl JK, et al. (2021a) A
novel, hands-free ultrasound patch for continuous monitoring of
quantitative Doppler in the carotid artery. Scientific Reports
11(1):1-11.
---------------------------------------------------------------------------
To support its claim that FloPatch FP120 improves patient
accessibility to flow-directed therapy, the applicant also included
findings from the Kenny et al. (2023a) \50\ study about the time cost
of physiologically ineffective intravenous fluid in the emergency
department (ED). Per the applicant, this study sought to
[[Page 36057]]
quantify the burden of fluid unresponsiveness early in ED care and
calculate the time spent providing physiologically ineffective IV fluid
using FloPatch FP120. It was a prospective study design, using a
convenience sample of 51 adult patients presenting to a single
community ED requiring IV fluid expansion for any indication, and
identified 86 preload challenges, and 19,667 carotid Doppler beats. The
study authors concluded that a clinically significant fraction of fluid
unresponsive or refractory patients was observed early in their ED
care, and a considerable amount of time was spent providing
physiologically ineffective IV fluid, and that these findings may
indicate an area in ED care where using wearable Doppler ultrasound
technology, like FloPatch FP120, would improve clinical efficiency. We
question whether these findings can be replicated in studies with a
larger sample. We also question if a study using a patient sample
representative of those potentially appropriate for FloPatch FP120
would yield similar results as one using a convenience sample. In
addition, we are interested in whether a multi-center trial would
generate the same result as a single-site study, where site-specific
attributes could potentially confound study results, reducing the
reliability of the findings.
---------------------------------------------------------------------------
\50\ Kenny J-[Eacute]S, Gibbs SO, Johnston D, et al. (2023a) The
time cost of physiologically ineffective intravenous fluids in the
emergency department: an observational pilot study employing
wearable Doppler ultrasound. Journal of Intensive Care 11:7 https://doi.org/10.1186/s40560-023-00655-6.
---------------------------------------------------------------------------
The applicant also asserted that FloPatch FP120 is able to diagnose
sepsis in a population where sepsis is currently undetectable, or to
diagnose it earlier than currently available technologies. The
applicant claimed that diagnosing preload unresponsiveness early in
care is important because doing so reduces complications. However,
although the applicant provided studies demonstrating that FloPatch
FP120 can diagnose sepsis, these studies do not appear to demonstrate
that the use of the technology to make a diagnosis affected the
management of the patients, as required under Sec.
412.87(b)(1)(ii)(B). For example, in the Kenny et al. (2023a) \51\
study on time cost of physiologically ineffective intravenous fluids in
the ED, as discussed earlier, there was no evidence linking the use of
FloPatch FP120 to changes in the management of patients such as
initiating or discontinuing IV fluid expansion.
---------------------------------------------------------------------------
\51\ Kenny J-[Eacute]S, Gibbs SO, Johnston D, et al. (2023a) The
time cost of physiologically ineffective intravenous fluids in the
emergency department: an observational pilot study employing
wearable Doppler ultrasound. Journal of Intensive Care 11:7 https://doi.org/10.1186/s40560-023-00655-6.
---------------------------------------------------------------------------
To further support its claim that diagnosing preload
unresponsiveness early in care is important because doing so reduces
complications, the applicant also used the Kenny et al. (2021c) \52\
study about correlation between carotid Doppler ultrasonography and
stroke volume. The study found that compared with existing handheld
Doppler devices, FloPatch FP120 was able to capture and analyze a large
number of cardiac cycles, account for inherent SV variation over many
cardiorespiratory cycles, and eliminate the effects of human errors.
The applicant hypothesized that when measured over many cardiac cycles,
monitoring SV change using FloPatch FP120 might support diagnosis and
management of evolving hypovolemia. While this study and those
discussed earlier demonstrated that FloPatch FP120 provided noninvasive
assessment of blood flow to determine SV changes, similar to our
previous concern, we remain interested in evidence showing how use of
the technology to make a diagnosis affects the management of patients,
such as the use of FloPatch FP120 to initiate or discontinue IV fluid
expansion in response to the observed SV changes.
---------------------------------------------------------------------------
\52\ Kenny JS, Barjaktarevic I, Mackenzie DC, et al. Carotid
Doppler ultrasonography correlates with stroke volume in a human
model of mypovolaemia and resuscitation: analysis of 48 570 cycles.
British Journal of Anesthesia 2021c. 127(2):E62-E63.
---------------------------------------------------------------------------
The applicant also referred to the findings of the Kenny et al.
(2023b) \53\ study on simultaneous venous-arterial Doppler during
preload augmentation to support its claim that diagnosing preload
unresponsiveness early in care is important because it reduces
complications. In that study, the researchers concluded that FloPatch
FP120 (referenced as the wearable Doppler biosensor) can help identify
patients with dynamic fluid intolerance, potentially guiding IV fluid
management and preventing downstream complications and costs. We are
concerned that the small clinical sample size and presence of potential
confounders could call into question the reliability and validity of
the findings. In addition, we note that this study does not appear to
demonstrate that use of FloPatch FP120 to assess preload responsiveness
affected the management of the patients, as the study states that the
treating clinician was blinded to the results of the wearable
ultrasound and that the choice for preload augmentation was at the
discretion of the treating clinician.
---------------------------------------------------------------------------
\53\ Kenny JS, Gibbs SO, Eibl JK, et al. (2023b) Simultaneous
venous-arterial Doppler during preload augmentation: illustrating
the Doppler Starling curve. Ultrasound J Jul 28;15(1):32. https://doi.org10.1186/s13089-023-00330-9.
---------------------------------------------------------------------------
To support the assertion that FloPatch FP120 significantly improves
clinical outcomes relative to services or technologies previously
available, the applicant claimed that current services for sepsis
patients are providing IV fluids without flow guidance, and referred to
three Kenny studies (2021a, 2023a, and 2023b), discussed earlier. As
discussed, we are interested in additional evidence that assesses the
impact of FloPatch FP120 compared to existing technologies that can be
used to provide flow guidance on clinical outcomes.
We are inviting public comments on whether FloPatch FP120 meets the
substantial clinical improvement criterion.
We did not receive any written comments in response to the New
Technology Town Hall meeting notice published in the Federal Register
regarding the substantial clinical improvement criterion for FloPatch
FP120.
f. HEPZATOTM KIT (Melphalan for Injection/Hepatic Delivery
System)
Delcath System submitted an application for new technology add-on
payments for HEPZATOTM KIT for FY 2025. According to the
applicant, HEPZATOTM KIT is a drug/device combination
product consisting of melphalan and the Hepatic Delivery System (HDS),
indicated as a liver-directed treatment for adult patients with uveal
melanoma with unresectable hepatic metastases. Per the applicant, the
HDS is used to perform percutaneous hepatic perfusion (PHP), an
intensive local hepatic chemotherapy procedure, in which the alkylating
agent melphalan hydrochloride is delivered intra-arterially to the
liver with simultaneous extracorporeal filtration of hepatic venous
blood return (hemofiltration).
Please refer to the online application posting for
HEPZATOTM KIT, available at https://mearis.cms.gov/public/publications/ntap/NTP2310160RLLX, for additional detail describing the
technology and the disease treated by the technology.
With respect to the newness criterion, according to the applicant,
HEPZATOTM KIT was granted approval as a New Drug Application
(NDA) from FDA on August 14, 2023, for use as a liver-directed
treatment for adult patients with uveal melanoma with unresectable
hepatic metastases affecting less than 50 percent of the liver and no
extrahepatic disease or extrahepatic disease limited to the bone, lymph
nodes, subcutaneous tissues, or lung that is amenable to resection or
radiation. According to the
[[Page 36058]]
applicant, the technology became available for sale on January 8, 2024,
because manufacturing did not commence until after FDA approval was
granted. Melphalan hydrochloride, a component of the
HEPZATOTM KIT, is administered by intra-arterial infusion
into the hepatic artery at a dose of 3 mg/kg of body weight with a
maximum dose of 220 mg during a single HEPZATO treatment. The drug is
infused over 30 minutes, followed by a 30-minute washout period.
According to the applicant, treatments should be administered every 6
to 8 weeks, but can be delayed until recovery from toxicities, and as
per clinical judgement.
The applicant stated that, effective October 1, 2023, the following
ICD-10-PCS code may be used to uniquely describe procedures involving
the use of HEPZATOTM KIT: XW053T9 (Introduction of melphalan
hydrochloride antineoplastic into peripheral artery, percutaneous
approach, new technology group 9). The applicant provided a list of
diagnosis codes that may be used to currently identify the indication
for HEPZATOTM KIT under the ICD-10-CM coding system. Please
refer to the online application posting for the complete list of ICD-
10-CM and ICD-10-PCS 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
asserted that HEPZATOTM KIT is not substantially similar to
other currently available technologies because it offers the first
liver-directed treatment option to patients with liver-dominant
metastatic ocular melanoma (mOM) who may be poor candidates for liver
resection and/or who may have difficulty tolerating systemic
chemotherapy. According to the applicant, HEPZATOTM KIT uses
a unique PHP procedure to isolate liver circulation and deliver a high
concentration of melphalan to liver tumors via infusion followed by
filtration of the hepatic venous flow to remove melphalan out of the
blood with extracorporeal filters, 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 HEPZATOTM KIT
for the applicant's complete statements in support of its assertion
that HEPZATOTM KIT is not substantially similar to other
currently available technologies.
BILLING CODE 4120-01-P
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[[Page 36060]]
We are inviting public comments on whether HEPZATOTM KIT
is substantially similar to existing technologies and whether
HEPZATOTM KIT meets the newness criterion. We are also
inviting public comments on drug-device combination technology
considerations for new technology add-on payments. Specifically, we
seek comment on whether reformatting the delivery mechanism for a drug
would represent a new mechanism of action for drug-device combination
technologies, and on factors that should be considered when considering
new technology add-on payments for technologies that may use a drug or
device component that is no longer new in combination with a new drug
or device component.
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 2022 MedPAR file using a
combination of ICD-10-CM and/or PCS codes to identify potential cases
representing patients who may be eligible for HEPZATOTM KIT.
The applicant explained that it used different codes to demonstrate
different cohorts that may be eligible for HEPZATOTM KIT
because it is indicated for a rare condition, hepatic-dominant mOM,
which does not have a unique ICD-10-CM diagnosis code to identify
potential cases with the specific diagnosis of interest, nor a unique
ICD-10-PCS procedure code that would identify patients receiving this
specific procedure. The applicant believed the cases identified in the
analysis are the closest proxies to the cases potentially eligible for
the use of HEPZATOTM KIT. Each analysis followed the order
of operations described in the table later in this section.
For the first analysis, the applicant searched for cases with ICD-
10-PCS code 3E05305 (Introduction of other antineoplastic into
peripheral artery, percutaneous approach) for the PHP procedure, and
ICD-10-CM code Z51.11 (Encounter for antineoplastic chemotherapy) as
the primary diagnosis for the administration of chemotherapy during an
inpatient stay. In addition, the applicant narrowed the analysis to
cases with liver-dominant mOM using at least one secondary liver
metastases diagnosis plus at least one ocular melanoma diagnosis.
Please see the online posting for HEPZATOTM KIT for the
complete list of codes provided by the applicant. The applicant used
the inclusion/exclusion criteria described in the following table.
Under this analysis, the applicant identified 11 claims mapping to one
MS-DRG: 829 (Myeloproliferative Disorders or Poorly Differentiated
Neoplasms with Other Procedures with CC/MCC). The applicant calculated
a final inflated average case-weighted standardized charge per case of
$1,068,530, which exceeded the average case-weighted threshold amount
of $104,848.
For the second analysis, the applicant searched for the following
combination of ICD-10-CM diagnosis codes: Z51.11 (Encounter for
antineoplastic chemotherapy) as the primary diagnosis code, in
combination with at least one of the following secondary liver
metastases codes: C78.7 (Secondary malignant neoplasm of liver and
intrahepatic bile duct), or C22.9 (Malignant neoplasm of liver, not
specified as primary or secondary). The applicant used the inclusion/
exclusion criteria described in the following table. Under this
analysis, the applicant identified 1,134 claims mapping to nine MS-
DRGs, with 94 percent of identified cases mapping to three MS-DRGs: 829
(Myeloproliferative Disorders or Poorly Differentiated Neoplasms with
Other Procedures with CC/MCC), as well as 846 and 847 (Chemotherapy
without Acute Leukemia as Secondary Diagnosis with MCC, and with CC,
respectively). The applicant calculated a final inflated average case-
weighted standardized charge per case of $1,066,207, which exceeded the
average case-weighted threshold amount of $81,652.
For the third analysis, the applicant searched for cases where the
ICD-10-CM code Z51.11 (Encounter for antineoplastic chemotherapy) is
the primary diagnosis or the ICD-10 PCS code 3E05305 (Introduction of
other antineoplastic into peripheral artery, percutaneous approach) is
reported. In addition, the case also needed to include at least one of
the following secondary liver metastases codes: C78.7 (Secondary
malignant neoplasm of liver and intrahepatic bile duct) or C22.9
(Malignant neoplasm of liver, not specified as primary or secondary).
The applicant used the inclusion/exclusion criteria described in the
following table. Under this analysis, the applicant identified 1,277
claims mapping to 12 MS-DRGs with 92 percent of identified cases
mapping to three MS-DRGs: 829 (Myeloproliferative Disorders or Poorly
Differentiated Neoplasms with Other Procedures with CC/MCC); as well as
846 and 847 (Chemotherapy without Acute Leukemia as Secondary Diagnosis
with MCC, and with CC, respectively). The applicant calculated a final
inflated average case-weighted standardized charge per case of
$1,067,772, which exceeded the average case-weighted threshold amount
of $80,245.
For the fourth analysis, the applicant searched for cases reporting
the following combination of ICD-10-CM diagnosis codes: C78.7
(Secondary malignant neoplasm of liver and intrahepatic bile duct) or
C22.9 (Malignant neoplasm of liver), in combination with at least one
ocular melanoma ICD-10-CM code. Please see the online posting for
HEPZATOTM KIT for the complete list of codes provided by the
applicant. The applicant used the inclusion/exclusion criteria
described in the following table. Under this analysis, the applicant
identified 1,059 claims mapping to 91 MS-DRGs with none exceeding 4.91
percent. The applicant calculated a final inflated average case-
weighted standardized charge per case of $1,062,553, which exceeded the
average case-weighted threshold amount of $66,104.
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 HEPZATOTM KIT
meets the cost criterion.
BILLING CODE 4120-01-P
[[Page 36061]]
[GRAPHIC] [TIFF OMITTED] TP02MY24.098
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\54\ Lists referenced here may be found in the cost criterion
codes and MS-DRGs attachment included in the online posting for the
technology.
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[[Page 36062]]
[GRAPHIC] [TIFF OMITTED] TP02MY24.099
We are inviting public comments on whether HEPZATOTM KIT
meets the cost criterion.
With regard to the substantial clinical improvement criterion, the
applicant asserted that HEPZATOTM KIT represents a
substantial clinical improvement over existing technologies because it
offers a minimally invasive, targeted, effective, and safe treatment
option to patients with liver-dominant mOM who may be poor candidates
for liver resection or who may have difficulty tolerating systemic
chemotherapy which results in a substantial clinical improvement in
response and survival rates over best available care and quality of
life compared to pre-treatment. The applicant provided 11 studies to
support these claims, as well as one background article about use of
chemosaturation with PHP (CS-PHP) as a palliative treatment option for
patients with unresectable cholangiocarcinoma.\55\ The following table
summarizes the applicant's assertions regarding the substantial
clinical improvement criterion. Please see the online posting for
HEPZATOTM
[[Page 36063]]
KIT for the applicant's complete statements regarding the substantial
clinical improvement criterion and the supporting evidence provided.
---------------------------------------------------------------------------
\55\ Background articles are not included in the following table
but can be accessed via the online posting for the technology.
[GRAPHIC] [TIFF OMITTED] TP02MY24.100
[[Page 36064]]
[GRAPHIC] [TIFF OMITTED] TP02MY24.101
BILLING CODE 4120-01-C
After review of the information provided by the applicant, we have
the following concerns regarding whether HEPZATOTM KIT meets
the substantial clinical improvement criterion. With respect to the
applicant's assertion that HEPZATOTM KIT offers a treatment
option for a patient population unresponsive or ineligible for
currently available treatments, while the applicant stated that
HEPZATOTM KIT offers an additional treatment option to
patients with liver-dominant mOM who may be poor candidates for liver
resection or who may have difficulty tolerating systemic chemotherapy,
it did not provide evidence in support of this assertion. We would be
interested in information regarding whether there are potential
Medicare patient populations that may have difficulty tolerating (or be
unresponsive to) KIMMTRAK[supreg] or other currently available
treatments, but would be a good candidate for HEPZATOTM KIT.
[[Page 36065]]
Regarding the claim that HEPZATOTM KIT improves survival
over other treatment options, the applicant provided seven peer-
reviewed cohort studies, summary material from an unpublished study,
and one randomized controlled clinical study to support the claim.
The seven peer reviewed cohort studies
56 57 58 59 60 61 62 provide a range of results of overall
survival as reported for patients treated with the HEPZATOTM
KIT (median overall survival after first Chemosaturation with
Percutaneous Hepatic Perfusion [CS-PHP] ranged from 9.6 months to 27.4
months depending on the study, and median one-year overall survival
rate raged from 44 percent to 77 percent depending on study). A few of
the seven peer reviewed cohort studies (Karydis et al. (2018), Tong et
al. (2022); Meier et al. (2021)) reported statistically significant
improvement in overall survival (OS) when compared to non-responders or
stable disease groups. Only one of the seven studies, Dewald et al.
(2021), compared results to alternative treatments, but statistical
significance was not achieved (P = 0.97) with CS-PHP resulting in a
median OS of 24.1 months compared with 23.6 months for patients
receiving other therapies. We believe that additional evidence
supporting that HEPZATOTM KIT offers a significant
difference in OS rates compared to currently available treatments would
be helpful in our evaluation of the applicant's assertion. We note that
several of the studies provided as evidence include small, non-
randomized studies without the use of comparators or controls, which
may affect the ability to draw meaningful conclusions about treatment
outcomes from the results of the studies. We also note that a majority
of the studies provided (Bruning et al. (2020); Vogl et al. (2017);
Dewald et al. (2021); Meijer et al. (2021); and Artzner et al. (2019))
were conducted outside the United States. We question if there may be
differences in treatment guidelines between these countries that may
have affected clinical outcomes.
---------------------------------------------------------------------------
\56\ Bruning R, Tiede M, Schneider M, et al. Unresectable
Hepatic Metastasis of Uveal Melanoma: Hepatic Chemosaturation with
High-Dose Melphalan-Long-Term Overall Survival Negatively Correlates
with Tumor Burden. Radiol Res Pract. 2020.
\57\ Vogl TJ, Koch SA, Lotz G, et al. Percutaneous Isolated
Hepatic Perfusion as a Treatment for Isolated Hepatic Metastases of
Uveal Melanoma: Patient Outcome and Safety in a Multi-centre Study.
Cardiovasc Intervent Radiol. Jun 2017;40(6):864-872.
\58\ Dewald CLA, Hinrichs JB, Becker LS, et al. Chemosaturation
with Percutaneous Hepatic Perfusion: Outcome and Safety in Patients
with Metastasized Uveal Melanoma. Rofo. Aug 2021;193(8):928-936.
\59\ Meijer TS, Burgmans MC, de Leede EM, et al. Percutaneous
Hepatic Perfusion with Melphalan in Patients with Unresectable
Ocular Melanoma Metastases Confined to the Liver: A Prospective
Phase II Study. Ann Surg Oncol. Feb 2021;28(2):1130-1141.
\60\ Karydis I, Gangi A, Wheater MJ, et al. Percutaneous hepatic
perfusion with melphalan in uveal melanoma: A safe and effective
treatment modality in an orphan disease. J Surg Oncol. May
2018;117(6):1170-1178.
\61\ Artzner C, Mossakowski O, Hefferman G, et al.
Chemosaturation with percutaneous hepatic perfusion of melphalan for
liver-dominant metastatic uveal melanoma: a single center
experience. Cancer Imaging. Mayphip 30 2019;19(1):31.
\62\ Tong TML, Samim M, Kapiteijn E, et al. Predictive
parameters in patients undergoing percutaneous hepatic perfusion
with melphalan for unresectable liver metastases from uveal
melanoma: a retrospective pooled analysis. Cardiovasc Intervent
Radiol. 2022;45(9):1304-1313.
---------------------------------------------------------------------------
The applicant also submitted summary presentation material evidence
to support this claim in the form of a poster and slides for the FOCUS
study,\63\ in which 144 patients were enrolled, with 91 patients
receiving percutaneous hepatic perfusion (PHP) treatment and 32
patients receiving best available care (BAC). According to the
applicant, preliminary results from the phase III FOCUS Trial show that
progression free survival (PFS) was 9.03 months among PHP patients and
just over 3 months among best available care (BAC) patients. OS among
treated PHP patients was 19.25 months and among treated BAC patients
was 14.49 months. However, this study has yet to be published and is
not yet available for analysis and peer review. At this point, we are
unable to verify the methods, results, and conclusions of this study as
the applicant only provided evidence in the form of a poster and
presentation. For example, one citation provided by the applicant in
the form of a non-peer-reviewed conference presentation details
preliminary results from the FOCUS Phase III Trial. We would be
interested in the statistical analysis (including p value and CI data)
surrounding the OS rates. In addition, the poster notes that due to
slow enrollment and patient reluctance to receive BAC treatment, the
trial design was amended to a single arm design with all eligible
patients receiving PHP after discussion with FDA. We would be
interested in detail about these specific eligibility requirements, as
well as how the potential for confounding variables resulting from any
differences in the resulting populations were identified and mitigated.
---------------------------------------------------------------------------
\63\ Delcath ASCO 2022 FOCUS Trial Poster; FOCUS Trial Ongoing
(See online posting for Hepzato\TM\ Kit).
---------------------------------------------------------------------------
In the published randomized clinical trial \64\ (RCT) provided by
the applicant, the median hepatic progression free survival (hPFS), the
primary endpoint of the trial, was 7.0 months for patients using
HEPZATOTM KIT compared to 1.6 months for patients receiving
BAC. However, the median overall survival (OS) with the treatment of
HEPZATOTM KIT was 10.6 months (95 percent CI 6.9-13.6
months) compared to 10.0 months (95 percent CI 6.0-13.1 months) for the
group of patients who received BAC. The study notes that median OS was
not significantly different (PHP-Mel 10.6 months vs. BAC 10.0 months),
but OS was 13.1 months (95 percent CI 10.0-20.3 months) in BAC patients
who crossed over and received treatment with PHP-Mel (n = 28, 57.1
percent). In the study discussion of OS, Hughes, et al. concluded that
the 57 percent of patients who were allowed to crossover confounded the
ability to analyze any survival advantage associated with PHP Mel. We
would be interested in additional evidence in our evaluation of the
applicant's assertion that HEPZATOTM KIT substantially
improves survival over other treatment options.
---------------------------------------------------------------------------
\64\ Hughes MS, Zager J, Faries M, et al. Results of a
Randomized Controlled Multicenter Phase III Trial of Percutaneous
Hepatic Perfusion Compared with Best Available Care for Patients
with Melanoma Liver Metastases. Ann Surg Oncol. Apr 2016;23(4):1309-
19.
---------------------------------------------------------------------------
Regarding the claim that HEPZATOTM KIT increases
response rate over BAC, we note that across the retrospective studies,
response rates ranged from an overall response rate of 42.3 percent
[Dewald et al (2021)] to a partial response of 89 percent [Vogl et al.
(2017)] depending on the study. However, as the applicant cited to many
of the same retroactive studies that it referenced in support of the
claim of improved survival [Bruning et al. (2020); Vogl et al. (2017);
Dewald et al. (2021); Meijer et al. (2021); Artzner et al. (2019); Tong
et al. (2022); Karydis et al. (2018)], we have the same questions as
discussed previously regarding the ability to draw meaningful
conclusions from the results of these studies in evaluation of this
claim.
Regarding the unpublished FOCUS study (Delcath ASCO 2022 FOCUS
Trial Poster),\65\ previously described, the applicant stated that in
the preliminary results from the FOCUS Trial, the overall response rate
(ORR) among PHP patients was 36.3 percent, nearly three
[[Page 36066]]
times better that the 12.5 percent ORR among BAC patients. However, as
previously noted, we would be interested in details about the
eligibility requirements, and how the potential for confounding
variables resulting from any differences in the resulting populations
were identified and mitigated.
---------------------------------------------------------------------------
\65\ Delcath ASCO 2022 FOCUS Trial Poster; FOCUS Trial Ongoing
(See online posting for Hepzato\TM\ Kit).
---------------------------------------------------------------------------
Lastly, with regard to the assertion that HEPZATOTM KIT
improves quality of life over pre-treatment, the applicant submitted
the Vogl et al. (2017) study as evidentiary support. The study was a
retrospective, multi-center study reporting outcome and safety after
percutaneous isolated hepatic perfusion (PIHP) with Melphalan for
patients with uveal melanoma and metastatic disease limited to the
liver. Thirty-five PIHP treatments were performed in 18 patients (8
male, 10 female) at seven hospitals across the U.S and Germany between
January 2012 and December 2016. Patients' life quality was assessed
using four-point scale questionnaires to rate overall health and life
quality after therapy, how much their health and quality of life had
changed after therapy, and how pleased they were with PIHP. We note
that the study used a subjective four-point measurement scale to
determine quality-of-life used in the study. We question if a more
objective assessment tool would be more helpful in evaluating a
patient's quality of life. It is unclear if the survey questions were
asked verbally, and by whom, or if the survey was answered in writing
by the patient alone. As the study was not randomized and the patients'
responses were not anonymous, we question if there may have been
resulting response bias, or interviewer bias that would impact our
ability to draw meaningful conclusions about a subjective measurement
of improved quality of life. In addition, we note that the study
utilized the Delcath Hepatic CHEMOSAT[supreg] Delivery System for
Melphalan components as part of the treatment, and it is unclear if the
technologies used in the study are the same as HEPZATOTM
KIT, or what differences may exist between the technologies. We would
be interested in information about any differences between Delcath's
HEPZATOTM KIT and the technologies used in this study for
PIHP with Melphalan.
We are inviting public comments on whether HEPZATOTM KIT
meets the substantial clinical improvement criterion.
We did not receive any written comments in response to the New
Technology Town Hall meeting notice published in the Federal Register
regarding the substantial clinical improvement criterion for
HEPZATOTM KIT.
g. LantidraTM (donislecel-jujn (Allogeneic Pancreatic Islet
Cellular Suspension for Hepatic Portal Vein Infusion))
CellTrans Inc. submitted an application for new technology add-on
payments for LantidraTM for FY 2025. According to the
applicant, LantidraTM is an allogeneic pancreatic islet
cellular therapy indicated for the treatment of adults with Type 1
diabetes who are unable to approach target hemoglobin A1c (HbA1c)
because of repeated episodes of severe hypoglycemia despite intensive
diabetes management and education. Per the applicant,
LantidraTM is used in conjunction with concomitant
immunosuppression. The applicant asserted that the route of
administration for LantidraTM is infusion into the hepatic
portal vein only. The applicant noted that following transplant, the
patient is monitored for graft function and safety issues, including
potential adverse reactions due to immunosuppression. The applicant
stated that the primary mechanism of action for LantidraTM
is the secretion of insulin by the beta cells within the infused
allogeneic islet of Langerhans, which are responsible for regulating
blood glucose levels in response to glucose stimulation.
Please refer to the online application posting for
LantidraTM, available at https://mearis.cms.gov/public/publications/ntap/NTP231017H5N2T, for additional detail describing the
technology and the disease treated by the technology.
With respect to the newness criterion, according to the applicant,
LantidraTM was granted approval for a Biologics License
Application (BLA) from FDA on June 28, 2023, for the treatment of
adults with Type 1 diabetes who are unable to approach target HbA1c
because of current repeated episodes of severe hypoglycemia despite
intensive diabetes management and education. According to the
applicant, the technology was commercially available on January 8,
2024. The applicant stated that the approved manufacturing site for
LantidraTM is at the University of Illinois (UI) Health, UI
in Chicago and time was needed to transfer islet cell transplant
clinical protocols to the UI Health transplant division.
We note that under national coverage determination (NCD) 260.3.1
Islet Cell Transplantation in the Context of a Clinical Trial, Medicare
will pay for the routine costs, as well as transplantation and
appropriate related items and services, for Medicare beneficiaries
participating in a National Institutes of Health (NIH)-sponsored
clinical trial(s). Specifically, Medicare will cover transplantation of
pancreatic islet cells, the insulin producing cells of the pancreas.
Coverage may include the costs of acquisition and delivery of the
pancreatic islet cells, as well as clinically necessary inpatient and
outpatient medical care and immunosuppressants. Because
LantidraTM may be covered by Medicare when it is used in the
setting of a clinical trial, we will evaluate whether
LantidraTM is eligible for new technology add-on payments
for FY 2025. We note that any payment made under the Medicare program
for services provided to a beneficiary would be contingent on CMS'
coverage of the item, and any restrictions on the coverage would apply.
The applicant stated that the recommended minimum dose is 5,000
equivalent islet number (EIN)/kg for the initial infusion, and 4,500
EIN/kg for subsequent infusion(s) in the same recipient. The maximum
dose per infusion is dictated by the estimated tissue volume, which
should not exceed 10 cc per infusion, and the total EIN present in the
infusion bag (up to a maximum of 1 x 10[supcaret]6 EIN per bag). A
second infusion may be performed if the patient does not achieve
independence from exogenous insulin within 1-year post-infusion or
within 1-year after losing independence from exogenous insulin after a
previous infusion. A third infusion may be performed using the same
criteria as for the second infusion.
According to the applicant, there are currently no ICD-10-PCS
procedure codes to distinctly identify LantidraTM. We note
that the applicant submitted a request for approval for a unique ICD-
10-PCS procedure code for LantidraTM beginning in FY 2025.
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 LantidraTM has not been assigned to the same
MS-DRG when compared to an existing technology to achieve a therapeutic
outcome. The following table summarizes the applicant's assertions
regarding the substantial similarity criteria. Please see the online
application posting for LantidraTM for the applicant's
complete statements in support of its assertion that
LantidraTM
[[Page 36067]]
is not substantially similar to other currently available technologies.
[GRAPHIC] [TIFF OMITTED] TP02MY24.102
We are inviting public comments on whether LantidraTM is
substantially similar to existing technologies and whether
LantidraTM meets the newness criterion.
With respect to the cost criterion, the applicant included the two
most recent patient cases with charges of LantidraTM billed
by a hospital that administered the technology, based on that
hospital's billing data file on the undiscounted costs. The applicant
stated that it attempted to identify potential cases representing
patients who may be eligible for LantidraTM by searching the
FY 2022 MedPAR and the 100 percent sample FY 2022 Standard Analytical
Files (SAF) for cases reporting ICD-10-CM/PCS codes and MS-DRGs codes
that were relevant to the FDA approved indication and administration of
LantidraTM, however, it could not confirm if cost data from
the two most recent patient cases were included in the FY 2022 MedPAR
or SAF. As a result, the applicant provided the charges billed by the
hospital for these two cases. The applicant stated that the MS-DRG
coded for the two cases was MS-DRG 639 (Diabetes without CC/MCC). 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 $374,547, which exceeded the average
case-weighted threshold amount of $32,311. Because the final inflated
average case-weighted standardized charge per case exceeded the average
case-weighted threshold amount, the applicant asserted that
LantidraTM meets the cost criterion.
[GRAPHIC] [TIFF OMITTED] TP02MY24.103
We note the following concerns regarding the cost criterion. We
note that the applicant did not remove any charges or indirect charges
related to prior technology without providing further details. We are
interested in
[[Page 36068]]
additional information regarding whether LantidraTM would
replace any prior technology. We are also interested in how the
applicant estimated an inflation factor of 10.00 percent to apply to
the standardized charges. With respect to the cases included in the
cost analysis, we note that the applicant limited the cost analysis to
the two most recent patient cases with charges of LantidraTM
billed by the hospital, which the applicant asserted were the best
available data for the FY 2022 cost analysis. We note the MS-DRG coded
for these two cases was MS-DRG 639 (Diabetes without CC/MCC). We are
interested in information as to whether cases in other MS-DRGs would be
potentially eligible for LantidraTM and if these cases
should also be included in the cost analysis by using appropriate
inclusion/exclusion criteria based on reporting of ICD-10-CM/PCS codes.
We are inviting public comments on whether LantidraTM
meets the cost criterion.
With regard to the substantial clinical improvement criterion, the
applicant asserted that LantidraTM represents a substantial
clinical improvement over existing technologies. The applicant asserted
that patients with the indication of Type 1 diabetes characterized by
hypoglycemic unawareness are at risk of severe hypoglycemia,
complications, and death, if untreated. According to the applicant,
when intensive insulin therapy is not sufficient for addressing
symptoms of severe hypoglycemia, LantidraTM infusion into
the hepatic portal vein offers a safe and effective minimally invasive
alternative with proven clinical outcomes, less complications, and
similar overall costs to that of whole pancreas transplantation. The
applicant also asserted that LantidraTM provides a treatment
option for patients unresponsive to, or ineligible for, currently
available treatments because whole pancreas transplant, a currently
available treatment, is associated with greater surgical and post-
procedural risk than pancreatic islet transplantation. Additionally,
the applicant asserted that due to procedural risks, some patients may
not be appropriate surgical candidates for whole pancreas
transplantation.\66\ The applicant provided two patient testimonials,
one study combining results of a Phase 1/2 and a Phase 3 clinical study
to support these claims, as well as one background article.\67\ The
following table summarizes the applicant's assertions regarding the
substantial clinical improvement criterion. Please see the online
posting for LantidraTM for the applicant's complete
statements regarding the substantial clinical improvement criterion and
the supporting evidence provided.
---------------------------------------------------------------------------
\66\ CellTrans Inc., Cellular, Tissue, and Gene Therapies
Advisory Committee Briefing Document LantidraTM
(donislecel) for the Treatment of Brittle Type 1 Diabetes Mellitus.
https://www.fda.gov/media/147529/download April 15, 2021. Pages 22
and 105.
\67\ Background articles are not included in the following table
but can be accessed via the online posting for the technology.
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BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TP02MY24.104
[[Page 36069]]
BILLING CODE 4120-01-C
After review of the information provided by the applicant, we have
the following concerns regarding whether LantidraTM meets
the substantial clinical improvement criterion. We are interested in
evidence on clinical outcomes based on comparison of
LantidraTM with currently available treatments, including
whole pancreatic transplant or recent advances in glucose monitoring
and insulin delivery systems that are FDA-approved. We also note that
according to the summary of the long-term six-year follow-up of
patients from the LantidraTM clinical trials,\68\ the number
of evaluable patients was reduced from 30 at the baseline to 12 at year
6. We question whether the small number would impact the reliability of
the conclusions about insulin independence and reduction in severe
hypoglycemic events. Regarding the applicant's claim that
LantidraTM patients achieved insulin independence, improved
HbA1c endpoints, had fewer hypoglycemia episodes, and experienced
improved quality of life, the applicant stated that the Phase 1/2 and 3
trials had over 10 years of extended follow-up, but specific results on
long-term efficacy appear to be provided only up to 6 years post- the
last transplant.\69\ We would be interested in learning about available
results from any longer-term follow-up. In addition, we would be
interested in data demonstrating that LantidraTM results in
improved clinical outcomes like reduced mortality to support an
assessment of whether LantidraTM represents a substantial
clinical improvement.
---------------------------------------------------------------------------
\68\ CellTrans, Inc. 2021, Table 20, p. 60.
\69\ Ibid.
---------------------------------------------------------------------------
We are inviting public comments on whether LantidraTM
meets the substantial clinical improvement criterion.
We did not receive any written comments in response to the New
Technology Town Hall meeting notice published in the Federal Register
regarding the substantial clinical improvement criterion for
LantidraTM.
h. AMTAGVITM (lifileucel)
Iovance Biotherapeutics, Inc. submitted an application for new
technology add-on payments for AMTAGVITM (lifileucel) for FY
2025. According to the applicant, AMTAGVITM is an one-time,
single-dose autologous tumor-infiltrating lymphocyte (TIL)
immunotherapy for the treatment of advanced (unresectable or
metastatic) melanoma comprised of a suspension of TIL for intravenous
infusion. We note that Iovance Biotherapeutics submitted an application
for new technology add-on payments for AMTAGVITM for FY 2022
under the name lifileucel, as summarized in the FY 2022 IPPS/LTCH PPS
proposed rule (86 FR 25272 through 25282) but withdrew the application
prior to the issuance of the FY 2022 IPPS/LTCH PPS final rule (86 FR
44979). We also note that the applicant submitted an application for
AMTAGVITM for FY 2023 under the name lifileucel, as
summarized in the FY 2023 IPPS/LTCH PPS proposed rule (87 FR 28244
through 28257), 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
AMTAGVITM, available at https://mearis.cms.gov/public/publications/ntap/NTP231012V8Y9J, for additional detail describing the
technology and the treatment of unresectable or metastatic melanoma.
With respect to the newness criterion, according to the applicant,
AMTAGVITM was granted Biologics License Application (BLA)
approval from FDA on February 16, 2024 for treatment of adult patients
with unresectable or metastatic melanoma previously treated with a
programmed cell death protein 1 (PD-1) blocking antibody, and if B-raf
proto-oncogene (BRAF) V600 mutation positive, a BRAF inhibitor with or
without a mitogen-activated extracellular signal-regulated kinase (MEK)
inhibitor. The applicant stated that AMTAGVITM has received
Regenerative Medicine Advanced Therapy (RMAT), Orphan Drug, and Fast
Track designations from FDA for the treatment of advanced melanoma.
According to the applicant, AMTAGVITM is expected to be
commercially available within 30-40 days post-FDA approval due to the
need for the physician to prescribe AMTAGVITM, the treatment
center to receive approval from the patient's insurer and to schedule
and surgically resect the patient's tumor tissue, the 22-day TIL
manufacturing process, and shipment/invoicing of AMTAGVITM
to the treatment center for patient administration. We are interested
in additional information regarding the delay in the technology's
market availability, as it seems that the technology would need to be
available for sale before a physician would be able to prescribe
AMTAGVITM.
According to the applicant, AMTAGVITM is provided as a
single dose for infusion containing a suspension of TIL in up to four
patient-specific intravenous (IV) infusion bag(s), with each dose
containing 7.5 x 10[supcaret]9 to 72 x 10[supcaret]9 viable cells. The
applicant further noted that there is a lymphodepleting regimen
administered before infusion of AMTAGVITM, and, post-
AMTAGVITM infusion, an interleukin 2 (IL-2) infusion at
600,000 IU/kg is administered every 8 to 12 hours, for up to a maximum
of 6 doses, to support cell expansion in vivo.
The applicant stated that effective October 1, 2022, the following
ICD-10-PCS codes may be used to uniquely describe procedures involving
the use of AMTAGVITM: XW033L7 (Introduction of lifileucel
immunotherapy into peripheral vein, percutaneous approach, new
technology group 7), and XW043L7 (Introduction of lifileucel
immunotherapy into central vein, percutaneous approach, new technology
group 7). The applicant stated that all diagnosis codes under the
category C43 (Malignant melanoma of skin) may be used to currently
identify the indication for AMTAGVITM 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 AMTAGVITM is not substantially similar to
other currently available technologies because TIL immunotherapy with
AMTAGVITM has a novel and unique mechanism of action which
delivers a highly customized, personalized, and targeted, single-
infusion treatment for advanced melanoma, and AMTAGVITM is
the first and only TIL immunotherapy approved for the treatment of
advanced (unresectable or metastatic) melanoma, 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
AMTAGVITM for the applicant's complete statements in support
of its assertion that AMTAGVITM is not substantially similar
to other currently available technologies.
BILLING CODE 4120-01-P
[[Page 36070]]
[GRAPHIC] [TIFF OMITTED] TP02MY24.105
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\70\ Olson D, et al. Immune checkpoint inhibitors (ICI)
treatment after progression on anti-PD-1 therapy in advanced
melanoma: a systematic literature review. National Comprehensive
Care Network (NCCN) Annual Conference, Poster. March-April 2023.
\71\ Schumacher TN, Schreiber RD: Neoantigents in cancer
immunotherapy. Science 348:69-74, 2015.
\72\ Simpson-Abelson MR, Hilton F, Fardis M, et al: Iovance
generation-2 tumor-infiltrating lymphocyte (TIL) product is
reinvigorated during the manufacturing process. Ann Ocol 31:S645-
S671, 2020 (suppl 4).
\73\ Raskov H, et al. British Journal of Cancer (2021) 124:359-
367, https://doi.org/10.038/s41416-020-01048-4.
\74\ Fardis M, et al. Current and future directions for tumor
infiltrating lymphocyte therapy for the treatment of solid tumors.
Cell and Gene Therapy Insights, 2020; 6(6), 855-863.
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[[Page 36071]]
[GRAPHIC] [TIFF OMITTED] TP02MY24.106
We are inviting public comments on whether AMTAGVITM is
substantially similar to existing technologies and whether
AMTAGVITM meets the newness criterion.
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 2022 MedPAR file using
different combinations of ICD-10-CM codes, ICD-10-PCS codes, and/or
inpatient length-of-stay (LOS) of 10 or more days. The applicant
explained that it used different combinations to demonstrate four
different cohorts that may be eligible for the technology. According to
the applicant, eligible cases for AMTAGVITM will be mapped
to Pre-MDC MS-DRG 018 (Chimeric Antigen Receptor (CAR) T-cell and Other
Immunotherapies). For each analysis, the applicant used the FY 2025 new
technology add-on payments threshold for Pre-MDC MS-DRG 018 for all
identified cases. Each analysis followed the order of operations
described in the table later in this section.
For the first analysis, the applicant searched for potential cases
for the following combination of ICD-10-CM diagnosis/procedure codes:
any melanoma and metastasis diagnosis codes and any cytokine
interleukin-2 (IL-2) or chemotherapy procedure codes. Please see the
online posting for AMTAGVITM for the complete list of codes
provided by the applicant. The applicant used the inclusion/exclusion
criteria described in the following table. Under this analysis, the
applicant identified 176 claims mapping to 16 MS-DRGs, with each MS-DRG
representing 6.3 percent of identified cases. The applicant calculated
a final inflated average case-weighted standardized charge per case of
$2,150,682, which exceeded the average case-weighted threshold amount
of $1,374,450.
For the second analysis, the applicant searched for potential cases
for the following ICD-10-CM diagnosis/procedure codes in combination
with an inpatient LOS of 10 or more days: any melanoma and metastasis
diagnosis codes and any cytokine interleukin-2 (IL-2) or chemotherapy
procedure codes. Please see the online posting for AMTAGVITM
for the complete list of codes provided by the applicant. The applicant
used the inclusion/exclusion criteria described in the following table.
Under this analysis, the applicant identified 77 claims mapping to
seven MS-DRGs, with each MS-DRG representing 14.3 percent of identified
cases. The applicant calculated a final inflated average case-weighted
standardized charge per case of $2,207,367, which exceeded the average
case-weighted threshold amount of $1,374,450.
For the third analysis, the applicant searched for potential cases
for the following combination of ICD-10-CM diagnosis/procedure codes: a
code describing primary or admitting diagnosis of melanoma and a
metastasis diagnosis code. Please see the online posting for
AMTAGVITM for the complete list of codes provided by the
applicant. The applicant used the inclusion/exclusion criteria
described in the following table. Under this analysis, the applicant
identified 735 claims mapping to 64 MS-DRGs, with each MS-DRG
representing 3.4 percent to 1.5 percent of identified cases. The
applicant calculated a final inflated average case-weighted
standardized charge per case of $2,017,903, which exceeded the average
case-weighted threshold amount of $1,374,450.
For the fourth analysis, the applicant searched for potential cases
for the following combination of ICD-10-CM diagnosis/procedure codes: a
code describing any diagnosis of melanoma and a metastasis diagnosis
code. Please see the online posting for AMTAGVITM
[[Page 36072]]
for the complete list of codes provided by the applicant. The applicant
used the inclusion/exclusion criteria described in the following table.
Under this analysis, the applicant identified 6,648 claims mapping to
358 MS-DRGs, each MS-DRG representing 0.2 percent to 6.7 percent of
identified cases. The applicant calculated a final inflated average
case-weighted standardized charge per case of $2,018,905, which
exceeded the average case-weighted threshold amount of $1,374,450.
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 AMTAGVITM meets
the cost criterion.
[[Page 36073]]
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[[Page 36074]]
[GRAPHIC] [TIFF OMITTED] TP02MY24.108
BILLING CODE 4120-01-C
We are inviting public comments on whether AMTAGVITM
meets the cost criterion.
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\75\ Lists referenced here may be found in the cost criterion
codes and MS-DRGs attachment included in the online posting for the
technology.
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With regard to the substantial clinical improvement criterion, the
applicant asserted that AMTAGVITM represents a substantial
clinical improvement over existing technologies because the efficacy
and safety profile of the single infusion of AMTAGVITM TIL
immunotherapy addresses an important unmet need in the advanced
(unresectable or metastatic) melanoma population who lack effective or
approved treatment options after being previously treated with ICI
therapy. The applicant asserts that the clinically meaningful and
durable activity of AMTAGVITM represents substantial
clinical improvement over published outcomes for chemotherapy. The
applicant provided four studies to support these claims, as well as 22
background articles about treatments for advanced melanoma.\76\
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\76\ Background articles are not included in the following table
but can be accessed via the online posting for the technology.
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The following table summarizes the applicant's assertions regarding
the substantial clinical improvement criterion. Please see the online
posting for AMTAGVITM for the applicant's complete
statements regarding the substantial clinical improvement criterion and
the supporting evidence provided.
[[Page 36075]]
[GRAPHIC] [TIFF OMITTED] TP02MY24.109
After review of the information provided by the applicant, we have
the following concerns regarding whether AMTAGVITM meets the
substantial clinical improvement criterion.
In support of its application, the applicant provided data from the
C-144-01 study, an ongoing phase two multicenter study (NCT02360579) to
assess the efficacy and safety of autologous TIL in patients with stage
IIIc-IV metastatic melanoma, which consisted of: Cohort 1 (n = 30
generation 1 no-cryopreserved TIL product); Cohort 2 (n = 66 generation
2 cryopreserved TIL product); Cohort 3 (a sub-sample of n = 10 from
Cohorts 1, 2, and 4); and Cohort 4 (n = 75 generation 2 cryopreserved
TIL product). In regard to the sample studied (Cohorts 2 & 4 combined)
by Chesney et al. (2022),\77\ similar to concerns raised in the FY 2022
IPPS/LTCH PPS proposed rule (86 FR 25281), we continue to question the
appropriateness of combining Cohorts 2 and 4 together. Furthermore,
similar to concerns raised in the FY 2023 IPPS/LTCH PPS proposed rule
(87 FR 28256 through 28257), we note that in the study of Chesney et
al. (2022), 54 percent of the sample size included males with a median
age of 56; data on race, ethnicity, and other demographics are not
presented. Given that the average age of Medicare beneficiaries is
substantially older, and that Medicare beneficiaries often have
multiple comorbidities, we question whether the sample evaluated is
appropriately representative of the Medicare population and whether
this sample has a disease burden similar to that seen in Medicare
beneficiaries.\78,79,80\ Thus, similar to concerns raised in the FY
2023 IPPS/LTCH PPS proposed rule (87
[[Page 36076]]
FR 28256 through 28257), we are concerned that the findings may not be
generalizable to Medicare beneficiaries. Furthermore, as discussed in
the FY 2023 IPPS/LTCH PPS proposed rule (87 FR 28256), we continue to
question whether the patient sample evaluated in the Sarnaik et al.
(2021) \81\ study is appropriately representative of the Medicare
population and whether this sample has a disease burden similar to that
seen in Medicare beneficiaries.
---------------------------------------------------------------------------
\77\ Chesney J, et al. J Immunother Cancer 2022
;10:3005755.Doi:10.1136/jitc-2022-005755.
\78\ https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/Chronic-Conditions/Medicare_Beneficiary_Characteristics.
\79\ Centers for Medicare and Medicaid Services. Chronic
Conditions among Medicare Beneficiaries, Chartbook, 2012 Edition.
Baltimore, MD. 2012. https://www.cms.gov/research-statistics-data-and-systems/statistics-trends-and-reports/chronic-conditions/downloads/2012chartbook.pdf.
\80\ Cher, B., Ryan, A. M., Hoffman, G. J., & Sheetz, K. H.
(2020). Association of Medicaid Eligibility With Surgical
Readmission Among Medicare Beneficiaries. JAMA network open, 3(6),
e207426. https://doi.org/10.1001/jamanetworkopen.2020.7426.
\81\ Sarnaik A, et al. Lifileucel, a tumor-infiltrating
lymphocyte therapy, in metastatic melanoma. J Clin Oncol.
2021;39(24):2656-66. doi:10.1200/JCO.21.00612 (Published online
first: 2021/05/13).
---------------------------------------------------------------------------
Second, similar to concerns raised in the FY 2022 IPPS/LTCH PPS
proposed rule (86 FR 25279 through 25282) and the FY 2023 IPPS/LTCH PPS
proposed rule (87 FR 28256 through 28257), we continue to note that
while multiple background studies were provided in support of the
applicant's claims for substantial clinical improvement, those that
evaluate AMTAGVITM are based solely on the C-144-01 trial.
The background studies focus primarily on describing the limitations of
other therapies rather than supporting the role of
AMTAGVITM, and no direct comparisons to other existing
therapies such as targeted therapies with combination BRAF plus MEK
inhibitors or nivolumab plus ipilimumab were provided. Therefore, we
would be interested in additional information comparing
AMTAGVITM to existing treatments (for example, evidence
comparing AMTAGVITM phase two studies to the phase two
studies of existing or approved treatments by using meta-analysis after
systematic review, or evidence based on retrospective cohort studies of
the relevant patients to assess whether AMTAGVITM had
significantly different impact on any outcomes compared to existing or
approved treatments).
Third, similar to concerns raised in the FY 2022 IPPS/LTCH PPS
proposed rule (86 FR 25279 through 25282), and the FY 2023 IPPS/LTCH
PPS proposed rule (87 FR 28256 through 28257), we note that the Chesney
et al. (2022) \82\ study uses a surrogate endpoint, ORR, which combines
the results of complete and partial responders; we question whether
this correlates to improvement in clinical outcomes such as overall
survival (OS).
---------------------------------------------------------------------------
\82\ Chesney J, et al. J Immunother Cancer 2022;
10:3005755.Doi:10.1136/jitc-2022-005755.
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Finally, similar to concerns raised in the FY 2023 IPPS/LTCH PPS
proposed rule (87 FR 28256 through 28257), we note that according to
the applicant, high-dose IL-2 has been used to treat metastatic
melanoma in the past and is given as a post-treatment to
AMTAGVITM. According to the applicant, the occurrence of
grade 3 and 4 treatment-emergent adverse events (TEAEs) was early and
consistent with the lymphodepletion regimen (NMA-LD) and known profile
of IL-2. If AMTAGVITM is always given in conjunction with
the pre- and post-treatments, we question how it is possible to
determine the cause of the TEAEs which are categorized as severe based
on the Common Terminology Criteria for Adverse Events v4.03. We
continue to question whether the effect seen in C-144-01 is due to
AMTAGVITM itself or due to other factors such as the use of
IL-2, general changes in medical practice over time, and the specific
sample identified for the trial at hand.
We are inviting public comments on whether AMTAGVITM
meets the substantial clinical improvement criterion.
We did not receive any written comments in response to the New
Technology Town Hall meeting notice published in the Federal Register
regarding the substantial clinical improvement criterion for
AMTAGVITM.
i. LyfgeniaTM (lovotibeglogene autotemcel)
Bluebird bio, Inc. submitted an application for new technology add-
on payments for Lyfgenia\TM\ (lovotibeglogene autotemcel) for FY 2025.
According to the applicant, Lyfgenia\TM\ is an autologous hematopoietic
stem cell-based gene therapy indicated for the treatment of patients 12
years of age or older with sickle cell disease (SCD) and a history of
vaso-occlusive events (VOE). Lyfgenia\TM\, administered as a single-
dose intravenous infusion, consists of an autologous cluster of
differentiation 34+ (CD34+) cell-enriched population from patients with
SCD that contains hematopoietic stem cells (HSCs) transduced with BB305
lentiviral vector (LVV) encoding the [beta]-globin gene
([beta]A-T87Q-globin gene), suspended in a cryopreservation
solution. The applicant explained that Lyfgenia\TM\ is designed to add
functional copies of a modified form of the [beta]A-T87Q-
globin gene into a patient's own HSCs, which allows their red blood
cells to produce an anti-sickling adult hemoglobin (HbA\T87Q\), to
reduce or eliminate downstream complications of SCD.
Please refer to the online application posting for Lyfgenia\TM\,
available at https://mearis.cms.gov/public/publications/ntap/NTP231013X3AK8, for additional detail describing the technology and the
disease treated by the technology.
With respect to the newness criterion, according to the applicant,
Lyfgenia\TM\ was granted Biologics License Application (BLA) approval
from FDA on December 8, 2023, for the treatment of patients 12 years of
age or older with SCD and a history of VOEs. The applicant stated that
it anticipates that LyfgeniaTM will become available for
sale on April 16, 2024 and that the first commercial claim for
Lyfgenia\TM\ will occur within approximately 130 days post-FDA approval
to allow for the one-time activity to commercially qualify the contract
manufacturer organization (CMO), followed by apheresis of the first
patient at the qualified treatment center (QTC), where the personalized
starting material will be shipped to the CMO for drug product
manufacturing, release testing, and shipment of final product to the
QTC for the one-time infusion. We are interested in additional
information regarding the delay in the technology's market
availability, as it appears that the technology would need to be
available for sale prior to the enrollment of the first patient at the
QTC. According to the applicant, Lyfgenia\TM\ is provided in infusion
bags containing 1.7 to 20x10\6\ cells/mL (1.4 to 20 x 10\6\ CD34+
cells/mL) in approximately 20 mL of solution and is supplied in one to
four infusion bags. Per the applicant, the minimum dose is 3.0 x 10\6\
CD34+ cells/kg patient weight.
According to the applicant, as of October 1, 2023, there are
currently two ICD-10-PCS procedure codes to distinctly identify the
intravenous administration of Lyfgenia\TM\: XW133H9 (Transfusion of
lovotibeglogene autotemcel into central vein, percutaneous approach,
new technology group 9) and XW143H9 (Transfusion of lovotibeglogene
autotemcel into peripheral 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 Lyfgenia\TM\ 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
asserted that Lyfgenia\TM\ is not substantially
[[Page 36077]]
similar to other currently available technologies, because Lyfgenia\TM\
has a distinct mechanism of action, which converts SCD at the genetic,
cellular, and physiologic level to a non-sickling phenotype through the
expression of the gene therapy-derived antisickling
[beta]A-T87Q-globin gene, and that therefore, the technology
meets the newness criterion. Additionally, the applicant stated
LyfgeniaTM is not substantially similar to other currently
available therapeutic approaches indicated for SCD or to any drug
therapy assigned to any MS-DRG in the 2022 MedPAR data.
The following table summarizes the applicant's assertions regarding
the substantial similarity criteria. Please see the online application
posting for Lyfgenia\TM\ for the applicant's complete statements in
support of its assertion that Lyfgenia\TM\ is not substantially similar
to other currently available technologies.
BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TP02MY24.110
BILLING CODE 4120-01-C
We note that Lyfgenia\TM\ may have the same or similar mechanism of
action to Casgevy\TM\, for which we also received an application for
new technology add-
[[Page 36078]]
on payments for FY 2025. Lyfgenia\TM\ and Casgevy\TM\ are both gene
therapies using modified autologous CD34+ hematopoietic stem and
progenitor cell (HSPC) therapies administered via stem cell
transplantation for the treatment of SCD. Both technologies are
autologous, ex-vivo modified hematopoietic stem-cell biological
products. As previously discussed, CasgevyTM was approved by
FDA for this indication on December 8, 2023. For these technologies,
patients are required to undergo CD34+ HSPC mobilization followed by
apheresis to extract CD34+ HSPCs for manufacturing and then
myeloablative conditioning using busulfan to deplete the patient's bone
marrow in preparation for the technologies' modified stem cells to
engraft to the bone marrow. Once engraftment occurs for both
technologies, the patient's cells start to produce a different form of
hemoglobin to reduce the amount of sickling hemoglobin. Further, both
technologies appear to map to the same MS-DRGs, MS-DRG 016 (Autologous
Bone Marrow Transplant with CC/MCC) and 017 (Autologous Bone Marrow
Transplant without CC/MCC), and to treat the same or similar disease
(sickle cell disease) in the same or similar patient population
(patients 12 years of age and older who have a history of vaso-
occlusive events). Accordingly, as it appears that Lyfgenia\TM\ and
Casgevy\TM\ may use the same or similar mechanism of action to achieve
a therapeutic outcome (that is, to reduce the amount of sickling
hemoglobin to reduce and prevent VOEs associated with SCD), would be
assigned to the same MS-DRG, and treat the same or similar patient
population and disease, we believe that these technologies may be
substantially similar to each other such that they should be considered
as a single application for purposes of new technology add-on payments.
We note that if we determine that this technology is substantially
similar to CasgevyTM, we believe the newness period would
begin on December 8, 2023, the date both LyfgeniaTM and
CasgevyTM received FDA approval for SCD. We are interested
in information on how these two technologies may differ from each other
with respect to the substantial similarity criteria and newness
criterion, to inform our analysis of whether LyfgeniaTM and
CasgevyTM are substantially similar to each other and
therefore should be considered as a single application for purposes of
new technology add-on payments.
We are inviting public comment on whether LyfgeniaTM
meets the newness criterion, including whether LyfgeniaTM is
substantially similar to CasgevyTM and whether these
technologies should be evaluated as a single technology for purposes of
new technology add-on payments.
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 2022 MedPAR using different
ICD-10-CM codes to identify potential cases representing patients who
may be eligible for Lyfgenia\TM\. Per the applicant, Lyfgenia\TM\ is
intended for patients who have not already undergone Allogeneic Bone
Marrow Transplant or Autologous Bone Marrow Transplant. The applicant
explained that it used different ICD-10-CM codes to demonstrate
different cohorts of SCD patients that may be eligible for the
technology.
According to the applicant, eligible cases for Lyfgenia\TM\ will be
mapped to either Pre-MDC MS-DRG 016 (Autologous Bone Marrow Transplant
with CC/MCC) or 017 (Autologous Bone Marrow Transplant without CC/MCC).
For each cohort, the applicant performed two sets of analyses using
either the FY 2025 new technology add-on payments threshold for Pre-MDC
MS-DRG 016 or Pre-MDC MS-DRG 017 for all identified cases. We note that
the FY 2025 new technology add-on payments thresholds for both Pre-MDC
MS-DRG 016 and Pre-MDC MS-DRG 017 are $182,491. Each analysis followed
the order of operations described in the table later in this section.
For the primary cohort, the applicant searched for an appropriate
group of patients with any ICD-10-CM diagnosis code for SCD with
crisis. Please see the online posting for LyfgeniaTM for the
complete list of ICD-10-CM codes provided by the applicant. The
applicant used the inclusion/exclusion criteria described in the
following table. Under this analysis, the applicant identified 12,357
claims mapping to 167 MS-DRGs, including MS-DRGs 811 and 812 (Red Blood
Cell Disorders with MCC and without MCC, respectively) representing
76.0 percent of total identified cases. The applicant calculated a
final inflated average case-weighted standardized charge per case of
$11,677,887, which exceeded the average case-weighted threshold amount
of $182,491.
For the sensitivity 1 cohort, the applicant searched for a narrower
cohort of patients with the admitting or primary ICD-10-CM diagnosis
codes of Hemoglobin-SS (Hb-SS) SCD with crisis for the most common
genotype of SCD. Please see the online posting for
LyfgeniaTM for a complete list of ICD-10-CM codes provided
by the applicant. The applicant used the inclusion/exclusion criteria
described in the following table. Under this analysis, the applicant
identified 10,987 claims mapping to 160 MS-DRGs, including MS-DRGs 811
and 812 (Red Blood Cell Disorders with and without MCC, respectively)
representing 75.1 percent of total identified cases. The applicant
calculated a final inflated average case-weighted standardized charge
per case of $11,680,025, which exceeded the average case-weighted
threshold amount of $182,491.
For the sensitivity 2 cohort, the applicant searched for a broader
cohort of patients with the primary or secondary ICD-10-CM diagnosis
codes for SCD with or without crisis. Please see the online posting for
LyfgeniaTM for a complete list of ICD-10-CM codes provided
by the applicant. The applicant used the inclusion/exclusion criteria
described in the following table. Under this analysis, the applicant
identified 17,120 claims mapping to 453 MS-DRGs, including MS-DRGs 811
and 812 (Red Blood Cell Disorders with and without MCC, respectively)
representing 56.3 percent of total identified cases. The applicant
calculated a final inflated average case-weighted standardized charge
per case of $11,681,718, which exceeded the average case-weighted
threshold amount of $182,491.
Because the final inflated average case-weighted standardized
charge per case exceeded the average case-weighted threshold amount in
all scenarios, the applicant maintained that Lyfgenia\TM\ meets the
cost criterion.
[[Page 36079]]
[GRAPHIC] [TIFF OMITTED] TP02MY24.111
We are inviting public comments on whether Lyfgenia\TM\ meets the
cost criterion. With regard to the substantial clinical improvement
criterion, the applicant asserted that Lyfgenia\TM\ represents a
substantial clinical improvement over existing technologies, because
Lyfgenia\TM\ is a one-time administration gene therapy that uniquely
impacts the pathophysiology of SCD at the genetic level and offers the
potential for stable, durable production of anti-sickling hemoglobin
HbA\T87Q\, with approximately 85 percent of RBCs producing HbA\T87Q\,
leading to complete resolution of severe VOEs in patients with SCD
through 5.5 years of follow-up. The applicant asserted that for these
reasons Lyfgenia\TM\ is a much-needed treatment option for a patient
population ineligible for allo-HSCT or without a matched related donor
and significantly improves health-related quality of life. The
applicant provided seven studies on LyfgeniaTM to support
these claims, as well as 22 background articles about SCD and its
current treatments.\84\ The following table summarizes the applicant's
assertions regarding the substantial clinical improvement criterion.
Please see the online posting for Lyfgenia\TM\ for the applicant's
complete statements regarding the substantial clinical improvement
criterion and the supporting evidence provided.
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\83\ Lists referenced here may be found in the cost criterion
codes and MS-DRGs attachment included in the online posting for the
technology.
\84\ Background articles are not included in the following table
but can be accessed via the online posting for the technology.
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BILLING CODE 4120-01-P
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[[Page 36081]]
[GRAPHIC] [TIFF OMITTED] TP02MY24.113
BILLING CODE 4120-01-C
After review of the information provided by the applicant, we have
the following concerns regarding whether Lyfgenia\TM\ meets the
substantial clinical improvement criterion. With respect to the claim
that Lyfgenia\TM\ presents an acceptable risk-benefit profile in terms
of efficacy and safety for patients with SCD while allowing clinically
meaningful improvements in HRQoL, the applicant stated the safety
profile remains generally consistent with risk of autologous stem cell
transplant, myeloablative conditioning, and underlying SCD.
Additionally, the applicant mentions that serious treatment-emergent
adverse events (TEAEs) of grade 3 or higher TEAEs were reported, but no
cases of veno-occlusive liver disease, graft failure, or vector-
mediated replication competent lentivirus were reported. Per the
applicant, three patients had adverse events attributed to
Lyfgenia\TM\, including 2 events deemed possibly related and 1 event
deemed definitely related, with all 3 resolving within 1 week of onset.
We note that the applicant submitted one published article about Group
C results, an interim analysis by Kanter et al. (2022) \85\ in which
Lyfgenia\TM\'s safety and efficacy were evaluated in a nonrandomized,
open-label, single-dose phase 1-2 clinical trial (HGB-206) where 35
Group C patients had received LyfgeniaTM infusion. Group C
was established after optimizing the treatment process in the initial
cohorts, Groups A (7 patients) and B (2 patients). There was also a
more stringent inclusion criterion for severe vaso-occlusive events
before enrollment for Group C. The median follow-up was 17.3 months
(range, 3.7-37.6) and 25 patients met both the inclusion criteria for
vaso-occlusive events before enrollment and a minimum 6-month follow-up
required for assessment of vaso-occlusive events. After receiving
Lyfgenia\TM\, 12 patients (34 percent) had at least one serious adverse
event; the most frequently reported were abdominal pain, drug
withdrawal syndrome (opiate), nausea, and vomiting (6 percent each).
The two events that were deemed to be possibly related to
LyfgeniaTM were grade 2 leukopenia and grade 1 decreased
diastolic blood pressure and the one event that was deemed to be
definitely related was grade 2 febrile neutropenia. Although this
evidence was provided to assert LyfgeniaTM improves clinical
outcomes relative to previously available therapies, we note that the
risk-benefit profile and HRQoL for LyfgeniaTM is not
compared to existing therapies. We would be interested in additional
information regarding the risk-benefit profile of LyfgeniaTM
compared to existing therapies, including clarification regarding an
acceptable risk-benefit profile for patients with SCD and whether
Lyfgenia\TM\ fits this profile. We also question if the length of
patient follow-up (median: 17.3 months, range: 3.7 to 37.6) would be
sufficient to assess long-term safety outcomes.
---------------------------------------------------------------------------
\85\ Kanter, J., Walters, M.C., Krishnamurti, L., Mapara, M.Y.,
Kwiatkowski, J.L, Rifkin-Zenenberg, S., Aygun, B., Kasow, K.A.,
Pierciey, Jr., F.J., Bonner, M., Miller, A., Zhang, X., Lynch, J.,
Kim, D., Ribeil, J.A., Asmal, M., Goyal, S., Thompson, A.A., &
Tisdale, J.F. (2022). Biologic and Clinical Efficacy of LentiGlobin
for Sickle Cell Disease. The New England Journal of Medicine, 386,
617-628. https://doi.org/10.1056/nejmoa2117175.
---------------------------------------------------------------------------
Finally, with respect to the applicant's assertion that
LyfgeniaTM improves clinical outcomes by halting SCD
progression, presenting an acceptable risk-benefit profile with
clinically meaningful improvement in HRQoL, and results in complete
resolution of sVOEs, we note that the applicant provided multiple
sources of evidence that analyze the same phase 1-2 clinical study for
LyfgeniaTM, HGB-206. We received an additional unpublished
source \86\ that provided some data on the phase 3 HGB-210 trial and
combined this with data from HGB-206 with a total of 34 patients being
evaluable for efficacy and 47 for safety. The median age of these 47
patients was 23 years. Due to the small study population and the median
age of participants in the studies, we question if the safety and
efficacy data from these studies would be generalizable to the Medicare
population.
---------------------------------------------------------------------------
\86\ Kanter J, et al. 65th ASH Annual Meeting and Exposition.
December 9-12, 2023. Abstract 1051. Oral presentation (December
11th).
---------------------------------------------------------------------------
We are inviting public comments on whether Lyfgenia\TM\ meets the
substantial clinical improvement criterion.
We did not receive any written comments in response to the New
Technology Town Hall meeting notice published in the Federal Register
regarding the substantial clinical improvement criterion for
Lyfgenia\TM\.
j. Quicktome Software Suite (Quicktome Neurological Visualization and
Planning Tool)
Omniscient Neurotechnology submitted an application for new
technology add-on payments for Quicktome Software Suite for FY 2025.
According to the applicant, Quicktome Software Suite is a cloud-based
software that uses artificial intelligence (AI) tools and the
scientific field of connectomics to analyze millions of data points
derived from a patient's magnetic resonance imaging (MRI). Per the
applicant, Quicktome Software Suite's proprietary Structural
Connectivity Atlas (SCA) uses machine learning and
[[Page 36082]]
tractographic techniques to create highly specific and personalized
maps of a patient's brain or connectome from a standard MRI scan,
regardless of brain shape, size, or physical distortion. The applicant
asserted that the SCA is combined with a key refinement algorithm which
identifies the location of parcels based on the specific structural
characteristics of an individual's brain. The applicant asserted that
Quicktome Software Suite uses resting-state functional MRI (rs-fMRI) to
unveil the brain's network architecture or functional connectome by
mapping blood oxygen level dependent (BOLD) signal correlations across
brain parcels. Per the applicant, using data from a structural or a
functional MRI (fMRI) scan, Quicktome Software Suite's proprietary AI
allows clinicians to quickly and accurately assess the structural
layout (that is, the locations and integrity) or the functional
connectivity (that is, how different brain regions are working
together) of a patient's brain.
Please refer to the online application posting for Quicktome
Software Suite, available at https://mearis.cms.gov/public/publications/ntap/NTP23101722NQE, for additional detail describing the
technology and the disease for which the technology is used.
With respect to the newness criterion, according to the applicant,
the Quicktome Software Suite received FDA 510(k) clearance on May 30,
2023. Per the FDA-cleared indication, the Quicktome Software Suite is
composed of a set of modules intended for the display of medical images
and other healthcare data. It includes functions for image review,
image manipulation, basic measurements, planning, 3D visualization (MPR
reconstructions and 3D volume rendering), and the display of BOLD rs-
MRI scan studies. The FDA clearance for Quicktome Software Suite was
based on substantial equivalence to the legally marketed predicate
device, StealthViz Advanced Planning Application with Stealth Diffusion
Tensor Imaging (DTI)TM Package (hereafter referred to as
StealthVizTM), as both of these devices allow the import and
export of DICOM images to a hospital picture archiving and
communication system (PACS); contain a graphical user interface to
conduct planning and visualization; display MRI anatomical images, as
well as tractography constructed from Diffusion Weighted Images, in 2D
and 3D views; register tractography and an atlas to the underlying
anatomical images; allow adding, removing, and editing of objects
(including automatically segmented and manually defined regions of
interest); and are delivered as software on an off-the-shelf hardware
platform.\87\ Prior to the FDA 510(k) clearance of Quicktome Software
SuiteTM in 2023, the technology, under the trade name
Quicktome, received FDA 510(k) clearance on March 9, 2021, based on
substantial equivalence to StealthVizTM.\88\
StealthVizTM received FDA 510(k) clearance on May 16, 2008
for use in two- and three-dimensional (2D and 3D) surgical planning and
image review and analysis. According to the FDA 510(k) summary for
StealthVizTM, it enables digital diagnostic and functional
imaging datasets, reviewing and analyzing the data in various 2D and 3D
presentation formats, performing image fusion of datasets, segmenting
structures in the images with manual and automatic tools and converting
them into 3D objects for display, and exporting results to other
Medtronic Navigation planning applications, to a PACS or to Medtronic
Navigation surgical navigation systems such as StealthStation System.
According to the applicant, the Quicktome Software Suite was
commercially available immediately after FDA clearance.
---------------------------------------------------------------------------
\87\ Food and Drug Administration (FDA). 510(k) Premarket
notification for Medtronic Navigation, Inc.'s StealthViz Advanced
Planning Application with StealthDTI Package. K081512. May 16, 2008.
\88\ FDA. K203518. 2021.
---------------------------------------------------------------------------
According to the applicant, there are currently no ICD-10-PCS
procedure codes to distinctly identify the Quicktome Software Suite. We
note that the applicant submitted a request for approval for a unique
ICD-10-PCS procedure code for the Quicktome Software Suite beginning in
FY 2025. The applicant provided a list of diagnosis codes that may
currently be used to identify the indication for Quicktome Software
Suite 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
asserted that Quicktome Software Suite is not substantially similar to
other currently available technologies because it is the first and only
FDA-cleared platform to enable connectomic analysis at an individual
level using machine learning and tractographic techniques to create
personalized maps of the human brain. In addition, the applicant
asserted that Quicktome Software Suite is the first cleared
neurological planning tool to offer rs-fMRI capabilities. Per the
applicant, Quicktome Software Suite eliminates the need for highly
trained personnel, who may not be available at most institutions, and
therefore, the technology meets the newness criterion. The applicant
further asserted that current technologies that rely on task-based fMRI
(tb-fMRI) can be problematic in brain tumor patients who may be
cognitively impaired because they may be unable to perform required
tasks. The following table summarizes the applicant's assertions
regarding the substantial similarity criteria. Please see the online
application posting for Quicktome Software Suite for the applicant's
complete statements in support of its assertion that the Quicktome
Software Suite is not substantially similar to other currently
available technologies.
[[Page 36083]]
[GRAPHIC] [TIFF OMITTED] TP02MY24.114
We note the following concerns regarding whether Quicktome Software
Suite meets the newness criterion. With respect to the applicant's
claim that Quicktome Software Suite does not use the same or similar
mechanism of action as existing technologies to achieve a therapeutic
outcome, we note that, according to the 510(k) application, it appears
that the Quicktome Software Suite is equivalent to
StealthVizTM, its predicate device. We are unclear how the
Quicktome Software Suite's mechanism of action, which enables patient-
specific connectomic analysis for neurological planning, is different
from that of StealthVizTM. We note that
StealthVizTM received FDA 510(k) clearance on May 16, 2008
for use in 2D/3D surgical planning and image review and analysis, and
therefore is no longer considered new for purposes of new technology
add-on payments. According to the applicant, Quicktome Software Suite
is the first and only FDA-cleared platform to enable brain network
mapping and analysis at an individual level and provides clinicians
with information that was previously only available in a research
setting. We would be interested in further information to support that
the Quicktome Software Suite does not use the same or similar mechanism
of action as StealthVizTM to achieve a therapeutic outcome,
including information regarding capabilities of Quicktome Software
Suite not found in StealthVizTM, and whether and how those
capabilities are the result of a new mechanism of action.
In addition, we note that there are several existing FDA-approved
or cleared technologies (for example, StealthVizTM,
Brainlab's Elements and iPlan products) that analyze fMRI and other
medical imaging data to create 3-D maps of a patient's brain, including
white matter tracts. Furthermore, while the applicant asserted that
Quicktome Software Suite is the only FDA-cleared device that uses a rs-
fMRI, we question whether other FDA-cleared neurosurgical planning and
visualization technologies integrate rs-fMRI, or if the analysis of rs-
fMRI for neurosurgical planning is a mechanism of action unique to
Quicktome Software Suite. We would be interested in more information on
the relevant current standard of care and technologies utilized for
neurosurgical planning and how the mechanism of action of the Quicktome
Software Suite compares to the mechanism of action of existing
technologies and connectomics software.
With respect to the third criterion, whether Quicktome Software
Suite involves the treatment of the same or similar disease and patient
population compared to existing technologies, we note that the
applicant stated that the Quicktome Software Suite does not treat a new
disease type or patient population, but does provide new information
for the treatment of existing patient populations. However, the
provision of new information for the treatment of existing patient
populations does not mean that the technology treats a new disease type
or patient population, and therefore, it is unclear what the basis is
for the applicant's statement that the third criterion is not met. We
would be interested in additional information to support whether and
how Quicktome Software Suite may involve the treatment of a different
type of disease or patient population.
As discussed in the FY 2022 IPPS/LTCH PPS final rule (86 FR 44981),
we also continue to be interested in public comments regarding issues
related to determining newness for technologies that use AI, an
algorithm, or software. Specifically, we are interested in public
comment on how these technologies may be considered for the purpose of
identifying a unique mechanism of action; how updates to AI, an
algorithm, or software would affect an already approved technology or a
competing technology; whether software changes for an already approved
technology could be considered a new mechanism of action, and whether
an improved algorithm by competing technologies would represent a
unique mechanism of action if the outcome is the same as an already
approved AI new technology.
We are inviting public comments on whether Quicktome Software Suite
is substantially similar to existing technologies and whether Quicktome
Software Suite meets the newness criterion.
With respect to the cost criterion, to identify potential cases
representing patients who may be eligible for Quicktome Software Suite,
the applicant searched 2020 Medicare Inpatient
[[Page 36084]]
Hospitals--by Provider and Service data.\89\ The applicant included all
cases from the following MS-DRGs: 025 (Craniotomy and Endovascular
Intracranial Procedures with MCC), 026 (Craniotomy and Endovascular
Intracranial Procedures with CC), and 027 (Craniotomy and Endovascular
Intracranial Procedures without CC/MCC). Using the inclusion/exclusion
criteria described in the following table, the applicant identified
28,401 cases mapping to these three craniotomy MS-DRGs, with 64 percent
of the identified cases mapping to MS-DRG 025. 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
$179,317, which exceeded the average case-weighted threshold amount of
$134,802. Because the final inflated average case-weighted standardized
charge per case exceeded the average case-weighted threshold amount,
the applicant asserted that Quicktome Software Suite meets the cost
criterion.
---------------------------------------------------------------------------
\89\ The Medicare Inpatient Hospitals by Provider and Service
dataset provides information on inpatient discharges for Original
Medicare Part A beneficiaries by IPPS hospitals. It includes
information on the use, payment, and hospital charges for more than
3,000 U.S. hospitals that received IPPS payments. The data are
organized by hospital and Medicare Severity Diagnosis Related Group
(DRG): https://data.cms.gov/provider-summary-by-type-of-service/medicare-inpatient-hospitals/medicare-inpatient-hospitals-by-provider-and-service.
[GRAPHIC] [TIFF OMITTED] TP02MY24.115
We note the following concerns regarding the cost criterion. We
note that the applicant limited its cost analysis to MS-DRGs 025, 026,
and 027 because those three MS-DRGs represent brain tumor resection
procedures, which are the first and most clearly established procedures
for which the technology offers clinical utility. We are interested in
information as to whether the technology would map to other MS-DRGs,
such as 023 and 024 (Craniotomy with Major Device Implant or Acute
Complex CNS PDX with MCC or Chemotherapy, or without MCC,
respectively), or 054 and 055 (Nervous System Neoplasms with and
without MCC, respectively), and if these MS-DRGs should also be
included in the cost analysis. In addition, we question whether every
case within MS-DRGs 025, 026, 027 would be eligible for the technology
and whether there would be any appropriate inclusion/exclusion criteria
by ICD-10-CM/PCS codes within these MS-DRGs to identify potential cases
representing patients who may be eligible for Quicktome Software Suite.
We are inviting public comments on whether Quicktome Software Suite
meets the cost criterion.
With regard to the substantial clinical improvement criterion, the
applicant asserted that Quicktome Software Suite represents a
substantial clinical improvement over existing technologies because
Quicktome supports the visualization and brain mapping that improve
clinical outcomes such as reducing the risk of an extended length of
stay (LOS) and unplanned readmissions for craniotomy patients by
reducing new postoperative neurological deficits that are caused by
damage to brain networks or a patient's connectome. The applicant
further asserted that Quicktome Software Suite is the first and only
FDA-cleared platform to enable connectomic analysis at an individual
level, enabling surgeons to visualize and avoid damaging these brain
networks during surgery, thereby significantly improving clinical
[[Page 36085]]
outcomes relative to services or technologies previously available. The
applicant submitted three published studies and one unpublished study
evaluating the Quicktome Software Suite to support these claims, as
well as four background articles about complications leading to
unplanned readmissions after cranial surgery, factors associated with
extended LOS in patients undergoing craniotomy for tumor resection, the
association of incorporating fMRI in presurgical planning with
mortality and morbidity in brain tumor patients, and the clinical
importance of non-traditional, large-scale brain networks with respect
to the potential adverse effects on patients when these networks are
disrupted during surgery.\90\ We note that one of the articles
submitted as a study using the technology, the Dadario and Sughrue
(2022) \91\ study, should more appropriately be characterized as a
background article because it does not directly assess the use of
Quicktome Software Suite.
---------------------------------------------------------------------------
\90\ Background articles are not included in the following table
but can be accessed via the online posting for the technology.
\91\ Dadario NB, Sughrue ME. Should Neurosurgeons Try to
Preserve Non-Traditional Brain Networks? A Systematic Review of the
Neuroscientific Evidence. Journal of Personalized Medicine. 2022;
12(4):587. https://doi.org/10.3390/jpm12040587.
---------------------------------------------------------------------------
The following table summarizes the applicant's assertions regarding
the substantial clinical improvement criterion. Please see the online
posting for Quicktome Software Suite for the applicant's complete
statements regarding the substantial clinical improvement criterion and
the supporting evidence provided.
BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TP02MY24.116
BILLING CODE 4120-01-C
After our review of the information provided by the applicant, we
have the following concerns regarding whether Quicktome Software Suite
meets the substantial clinical improvement criterion.
With respect to the applicant's claim that Quicktome Software Suite
supports the visualization of brain networks and surgical planning to
avoid damaging them during surgery, we are concerned that the evidence
does not appear to demonstrate that the Quicktome Software Suite's
visualization and brain mapping techniques improve clinical outcomes
relative to services or technologies already available by avoiding or
reducing damage to the brain networks during surgery. For example, the
Shah et al. (2023) \92\ study
[[Page 36086]]
describes the use of connectomics in planning and guiding an awake
craniotomy for a tumor impinging on the language area in a 31-year-old
bilingual woman. The authors stated that Quicktome Software Suite was
used to generate preoperative connectome imaging for the patient, which
helped in assessing the risk of functional deficits, guiding surgical
planning, directing intraoperative mapping stimulation, and providing
insights into postoperative function. The authors further described how
preoperative imaging demonstrated proximity of the tumor to
parcellations of the language area, and how intraoperative awake
language mapping was performed, revealing speech arrest and paraphasic
errors at areas of the tumor boundary correlating to functional regions
that explained these findings. However, we are concerned that the
report is based on a single case, and we question whether these
findings would be generalizable to the broader Medicare population. In
addition, we note that the applicant did not provide evidence based on
comparison of the use of Quicktome Software Suite technology with
currently available cranial mapping software or tractography tools, and
we would be interested in comparisons that assess the use of Quicktome
Software Suite technology to improve these clinical outcomes relative
to currently available technologies, such as StealthVizTM or
Brainlab's Elements and iPlan products.
---------------------------------------------------------------------------
\92\ Shah HA, Ablyazova F, Alrez A, et al. Intraoperative awake
language mapping correlates to preoperative connectomics imaging: An
instructive case. Clin Neurol Neurosurg. 2023 Jun;229:107751. Doi:
10.1016/j.clineuro.2023.107751 Epub 2023 Apr 29. PMID: 3714997. 2.
---------------------------------------------------------------------------
In addition, we question whether the findings related to
Quicktome's efficacy are generalizable to the Medicare population.
Specifically, the Wu et al. (2023) \93\ study aimed to investigate the
involvement of non-traditional brain networks in insulo-Sylvian gliomas
and evaluate the potential of Quicktome Software Suite in optimizing
surgical approaches to preserve cognitive function. The study included
three parts. The first part involved a retrospective analysis of the
location of insulo-Sylvian gliomas in 45 adult patients who underwent
glioma surgery centered in the insular lobe. According to the research
team, Quicktome showed that 98 percent of the tumors involved a non-
traditional eloquent brain network, which is associated with cognitive
or neurological function. In part two, the research team prospectively
collected neuropsychological data on seven patients to assess tumor-
network involvement with change in cognition. Using Quicktome, the
research team found that all seven patients had a tumor involving a
non-traditional eloquent brain network. Part three described how the
research team used Quicktome Software Suite's network mapping
capabilities to inform surgical decision-making and predict the
preservation of cognitive function post-surgery for two prospective
patients. We note that while Quicktome Software Suite was used to
assist surgical decision-making in two patients, as previously
discussed, we question whether these limited findings would be
generalizable to the broader Medicare population, and we would be
interested in comparisons between Quicktome Software Suite and other
currently available technologies to improve these clinical outcomes.
---------------------------------------------------------------------------
\93\ Wu Z, Hu G, Cao B, Liu X, et al. Non-traditional cognitive
brain network involvement in insulo-Sylvian gliomas: a case series
study and clinical experience using Quicktome. Chin Neurosurg J.
2023 May 26;9(1):16. Doi: 10.1186/s41016-023-00325-4 PMID: 37231522;
PMCID: PMC10214670.
---------------------------------------------------------------------------
We also question whether the use of Quicktome Software Suite has a
direct impact on significantly reducing neurological or cognitive
deficits post-surgery. The applicant cited Morell et al. (2022),\94\ a
retrospective, single-center study of 100 patients who underwent
surgery for brain tumor resection. The research team used Quicktome
Software Suite to map and evaluate the integrity of nine large-scale
brain networks in these patients. According to the research team,
Quicktome's analysis showed that for more than half of these patients,
at least one of their brain networks were either affected during brain
surgery or at risk of postsurgical deficits. Among those at risk of
postsurgical deficits, their cortical regions or white matter fibers
were either displaced by the mass effect of the tumor or damaged during
surgery due to proximity to the tumor and/or planned transcortical
trajectory. We note that the primary focus of the study was to
retrospectively map large-scale brain networks in brain tumor patients
using Quicktome Software Suite platform, and therefore does not appear
to demonstrate that use of Quicktome Software Suite avoided damaging
these networks during surgery.
---------------------------------------------------------------------------
\94\ Morell AA, Eichberg DG, Shah AH, et al. Using machine
learning to evaluate large-scale brain networks in patients with
brain tumors: Traditional and non-traditional eloquent areas.
Neurooncol Adv. 2022 Sep 19;4(1):vdac142. Doi: 10.1093/noajnl/
vdac142. PMID: 36299797; PMCID: PMC9586213.
---------------------------------------------------------------------------
Similarly, we note that the applicant cited Hendricks et al.
(n.d.),\95\ which retrospectively analyzed the outcomes of 346 adult
patients who underwent resection of superficial cerebral cavernous
malformations (CMs) from November 2008 through June 2021. We note that
the focus of the study was the use of Quicktome Software Suite to
support the identification of areas of eloquent noneloquence, or cortex
injured or transgressed that causes unexpected deficits. Therefore, we
remain interested in evidence that incorporating Quicktome Software
Suite's analytics into surgical strategies and navigational tools
during craniotomy surgery is associated with improved post-surgical
outcomes.
---------------------------------------------------------------------------
\95\ Hendricks B, Scherschinkski L, Jubran J, et al.
Supratentorial Cavernous Malformation Surgery: The Seven Hotspots of
Novel Cerebral Risk (SUBMITTED MANUSCRIPT).
---------------------------------------------------------------------------
With respect to the applicant's claim that damaging brain networks
during surgery leads to neurologic complications, which are a leading
contributor to increased length of stay (LOS), ICU admission, and
readmissions, the applicant asserted that Quicktome Software Suite
enables surgeons to visualize these brain networks and change their
surgical approach as needed to avoid damaging these networks. We note
that the applicant submitted two documents in support of this claim,
both of which are background documents rather than studies that
evaluate clinical outcomes associated with the use of Quicktome
Software Suite. In particular, the Elsamadicy et al. (2018) \96\ study
showed that altered mental status and sensory or motor deficits were
the primary complications of craniotomies. The Philips et al. (2023)
\97\ study demonstrated that post-operative neurological deficits,
caused by damage to brain networks or a patient's connectome were
responsible for extended length of stay. Although these studies
supported the applicant's claim that damage to brain networks resulted
in neurological complications, increasing LOS and inpatient service
use, we note that the evidence provided for this claim does not assess
the use of Quicktome Software Suite to improve these clinical outcomes,
nor does the evidence appear to demonstrate that use of the technology
substantially improves these clinical outcomes relative to existing
technologies, such as StealthVizTM or Brainlab's Elements
and iPlan products. We would be interested in evidence demonstrating
that
[[Page 36087]]
utilization of the Quicktome Software Suite improves clinical outcomes
related to LOS, ICU admissions, and readmissions relative to existing
technologies.
---------------------------------------------------------------------------
\96\ Elsamadicy, AA, Sergesketter, A, Adogwa, O, et al.
Complications and 30-Day readmission rates after craniotomy/
craniectomy: A single Institutional study of 243 consecutive
patients, Journal of Clinical Neuroscience, Volume 47, 2018, Pages
178-182, ISSN 0967-5868, https://doi.org/10.1016/j.jocn.2017.09.021.
\97\ Phillips KR, Enriquez-Marulanda A, Mackel C, et al.
Predictors of extended length of stay related to craniotomy for
tumor resection. World Neurosurg X. 2023 Mar 31;19:100176.
doi:10.1016/j.wnsx.2023.100176 PMID: 37123627; PMCID: PMC10139985.
---------------------------------------------------------------------------
With respect to the applicant's claim that damaging brain networks
during surgery has adverse effects for patients, including decreased
quality of life and loss of function, the applicant asserted that
Quicktome Software Suite enables surgeons to visualize brain networks
and change their surgical approach as needed to avoid damaging these
networks. The applicant further asserted that while other techniques
have enabled the visualization of tractography or of parts of eloquent
networks, this is not an adequate substitute for the ability to review
the entirety of a patient's connectome (networks such as motor,
language, and vision). Per the applicant, Quicktome Software Suite is
the first of its kind to show the location and function of these
networks and that damage to these networks is associated with poor
outcomes. The applicant cited Vysotski et al. (2019),\98\ who
demonstrated that brain tumor patients who underwent a preoperative
fMRI experienced significantly lower risks for mortality than those who
did not. The applicant also cited Dadario and Sughrue (2022),\99\ who
discussed the clinical importance of preserving non-traditional brain
networks for neurosurgical patients. Similar to our previous concern,
we note that the evidence provided for this claim does not assess the
use of Quicktome Software Suite to improve quality of life and loss of
function, nor does the evidence appear to demonstrate that use of the
technology substantially improves these clinical outcomes relative to
existing technologies. Therefore, we continue to question whether there
is evidence to assess the effectiveness of Quicktome Software Suite to
reduce damage to brain networks during surgery.
---------------------------------------------------------------------------
\98\ Vysotski S, Madura C, Swan B, et al. Preoperative FMRI
Associated with Decreased Mortality and Morbidity in Brain Tumor
Patients. Interdiscip Neurosurg. 2018 Sep;13:40-45. doi: 10.1016/
j.inat.2018.02.001 Epub 2018 Feb 14. PMID: 31341789; PMCID:
PMC6653633.
\99\ Dadario NB, Sughrue ME. Should Neurosurgeons Try to
Preserve Non-Traditional Brain Networks? A Systematic Review of the
Neuroscientific Evidence. Journal of Personalized Medicine. 2022;
12(4):587. https://doi.org/10.3390/jpm12040587.
---------------------------------------------------------------------------
We are also interested in public comments related to how we should
evaluate issues related to determining substantial clinical improvement
for technologies that use AI, an algorithm or software, including
issues related to algorithm transparency, and how CMS should consider
these issues in our assessment of substantial clinical improvement, as
we continue to gain experience in this area. Algorithm transparency
refers to whether, and the extent to which, clinical users are able to
access a consistent, baseline set of information about the algorithms
they use to support their decision making and to assess such algorithms
for fairness, appropriateness, validity, effectiveness, and
safety.\100\
---------------------------------------------------------------------------
\100\ Department of Health and Human Services (December 13,
2023). HHS Finalizes Rule to Advance Health IT Interoperability and
Algorithm Transparency [verbar] HHS.gov, accessed 2/20/2024.
---------------------------------------------------------------------------
We are inviting public comments on whether Quicktome Software Suite
Software Suite meets the substantial clinical improvement criterion.
We did not receive any written comments in response to the New
Technology Town Hall meeting notice published in the Federal Register
regarding the substantial clinical improvement criterion for Quicktome
Software Suite.
k. TALVEYTM (talquetamab-tgvs)
Johnson & Johnson Health Care Systems, Inc. submitted an
application for new technology add-on payments for TALVEYTM
for FY 2025. According to the applicant, TALVEYTM is the
first and only approved G protein-coupled receptor, class C, group 5,
member D (GPRC5D) targeting therapy, a bispecific antibody (bsAb)
approved for the treatment of adults with Relapsed or Refractory
Multiple Myeloma (RRMM) who have received at least four prior lines of
therapy (also referred to herein as 4L+RRMM), including a proteasome
inhibitor (PI), an immunomodulatory agent (IMiD), and an anti-cluster
of differentiation (CD)38 monoclonal antibody (mAb). GPRC5D is an
orphan receptor expressed at a significantly higher level on malignant
Multiple Myeloma (MM) cells than on normal plasma cells.
Please refer to the online application posting for
TALVEYTM available at https://mearis.cms.gov/public/publications/ntap/NTP2310163HW2V, for additional detail describing the
technology and the disease treated by the technology.
With respect to the newness criterion, according to the applicant,
TALVEYTM was granted a Biologic License from FDA on August
9, 2023 for the treatment of adult patients with 4L+RRMM who have
received at least four prior lines of therapy, including a PI, an ImiD,
and an anti-CD38 mAb. According to the applicant, TALVEYTM
was commercially available immediately after FDA approval. Per the
applicant, patients may be dosed on a weekly or bi-weekly dosing
schedule. The applicant noted that patients on a weekly dosing schedule
receive three weight-based doses--a 0.01 mg/kg loading dose, a 0.06 mg/
kg loading dose, and the first 0.40 mg/kg treatment dose--during the
hospital stay; patients on a bi-weekly dosing schedule receive an
additional 0.80 mg/kg treatment dose during the hospital stay.
The applicant submitted a request for approval for a unique ICD-10-
PCS procedure code for TALVEYTM and was granted approval for
the following procedure code effective April 1, 2024: XW01329
(Introduction of talquetamab antineoplastic into subcutaneous tissue,
percutaneous approach, new technology group 9). The applicant stated
that ICD-10-CM codes C90.00 (Multiple myeloma not having achieved
remission) and C90.02 (Multiple myeloma in relapse) may be used to
currently identify the indication for TALVEYTM.
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 TALVEYTM is not substantially similar to other
currently available technologies because it has a unique mechanism of
action as a CD3 T-cell engaging bsAb targeting GPRC5D, 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
TALVEYTM for the applicant's complete statements in support
of its assertion that TALVEYTM is not substantially similar
to other currently available technologies.
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With regard to the newness criterion, we note that
TALVEYTM may have a similar mechanism of action to that of
TECVAYLI[supreg], for which we approved an application for new
technology add-on payments for FY 2024 for the treatment of adult
patients with RRMM after four or more prior lines of therapy, including
a PI, an IMiD, and an anti-CD38 mAb (88 FR 58891). We also note that
TALVEYTM may have a similar mechanism of action to that of
ELREXFIOTM, another applicant for FY 2025 new technology
add-on payments. As previously discussed, ELREXFIOTM was
approved on August 14, 2023 for the treatment of adult patients with
RRMM who have received at least four prior lines of therapy, including
a PI, an IMiD, and an anti-CD38 mAb.
Per the applicant, TALVEYTM has a different mechanism of
action from TECVAYLI[supreg] or ELREXFIOTM because it binds
to different receptors. The applicant noted that TALVEYTM is
the only medicine that targets GPRC5D on myeloma cells. As we
previously noted, TECVAYLI[supreg]'s mechanism of action is described
as a bsAb, with binding domains that simultaneously bind the BCMA
target on tumor cells and the CD3 T-cell receptor (88 FR 58886). As
previously discussed, the mechanism of action for ELREXFIOTM
is as a bsAb that uses binding domains that simultaneously bind the
BCMA target on tumor cells and the CD3 T-cell receptor. However, while
the applicant asserts that TALVEYTM has a unique mechanism
of action as compared to TECVAYLI[supreg] and ELREXFIOTM by
binding to different receptors, we question how binding to a different
protein (GPRC5D) on the tumor cell would result in a different
mechanism of action compared to BCMA targeting bispecific antibodies.
Furthermore, we note that the applicant claimed that the target of
TALVEYTM, GPRC5D, has a unique tissue expression profile,
which results in an adverse event profile distinct from those of the
currently approved bispecific antibodies in RRMM targeting BCMA.
However, as this relates to the risk of adverse event from
TALVEYTM administration but is not critical to the way the
drug treats the underlying disease, we question whether this would
therefore relate to an assessment of substantial clinical
[[Page 36089]]
improvement rather than of substantial similarity. We would welcome
additional information on how molecular differences, such as the
regulation of expression of GPRC5D and BCMA on MM cells during
treatment, should be considered in determining whether a technology
utilizes a different mechanism of action to achieve a therapeutic
outcome.
Accordingly, as it appears that TALVEYTM and
TECVAYLI[supreg] may use the same or similar mechanism of action to
achieve a therapeutic outcome, would be assigned to the same MS-DRG,
and treat the same or similar patient population and disease, we
believe that these technologies may be substantially similar to each
other. We note that if we determine that this technology is
substantially similar to TECVAYLI[supreg], we believe the newness
period would begin on November 9, 2022, the date TECVAYLITM
became commercially available (88 FR 58887).
Furthermore, as noted, we believe another applicant for FY 2025 new
technology add-on payments, ELREXFIOTM, may also be
substantially similar to TALVEYTM. Per the application for
ELREXFIOTM, ELREXFIOTM is a bispecific antibody
approved for the treatment of adults with RRMM who have received at
least four prior lines of therapy, including a PI, an IMiD, and an
anti-CD38 mAb. We believe ELREXFIOTM may be substantially
similar to TALVEYTM because it is also a bispecific antibody
that treats RRMM in patients who have previously received a PI, IMiD,
and an anti-CD38 mAb. Additionally, we note that similar to
TALVEYTM, the prescribing information for
ELREXFIOTM includes the population with prior exposure to
BCMA T-cell redirection therapy. Accordingly, as it appears that
TALVEYTM and ELREXFIOTM would use the same or
similar mechanism of action to achieve a therapeutic outcome, would be
assigned to the same MS-DRG, and would treat the same or similar
patient population and disease, we believe that these technologies may
also 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 note that if TALVEYTM is determined to only
be substantially similar to ELREXFIOTM, and not
TECVAYLI[supreg], we believe the newness period for TALVEYTM
would begin on August 9, 2023, the date TALVEYTM received
FDA approval.
We are interested in receiving information on how these
technologies may differ from each other with respect to the substantial
similarity and newness criteria, to inform our analysis of whether
TALVEYTM is substantially similar to ELREXFIOTM
and/or TECVAYLI[supreg].
We are inviting public comments on whether TALVEYTM is
substantially similar to existing technologies and whether
TALVEYTM meets the newness criterion.
With respect to the cost criterion, to identify potential cases
representing patients who may be eligible for TALVEYTM, the
applicant searched the FY 2022 MedPAR for cases reporting one of the
following ICD-10-CM codes in the first five diagnosis positions on the
claim: C90.00 (Multiple myeloma not having achieved remission), C90.01
(Multiple myeloma in remission), and C90.02 (Multiple myeloma in
relapse). Using the inclusion/exclusion criteria described in the
following table, the applicant identified 4,468 claims mapping to five
MS-DRGs with 82 percent of identified cases mapping to MS-DRGs 840 and
841 (Lymphoma and Non-acute Leukemia with MCC, with CC, respectively).
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 $210,677, which exceeded the average
case-weighted threshold amount of $77,360. Because the final inflated
average case-weighted standardized charge per case exceeded the average
case-weighted threshold amount, the applicant asserted that
TALVEYTM meets the cost criterion.
BILLING CODE 4120-01-P
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We are inviting public comments on whether TALVEYTM
meets the cost criterion.
With regard to the substantial clinical improvement criterion, the
applicant asserted that TALVEYTM represents a substantial
clinical improvement over existing technologies because
TALVEYTM meets two of three criteria for substantial
clinical improvement due to its off-the-shelf availability without the
need for complex manufacturing. Additionally, according to the
applicant, TALVEY\TM\ demonstrates clinically meaningful outcomes in
heavily pre-treated patients who are exposed or naive to prior T-cell
redirection therapy and provides a therapeutic option with a lower
severe infection rate. The applicant provided four studies to support
these claims. We also note that four other articles submitted as
supporting evidence should more appropriately be characterized as
background articles because they do not directly assess the use of
TALVEYTM. Instead, those four articles focus on existing
treatment options (ELREXFIOTM or TECVAYLI[supreg]) or the
high mortality rate of MM patients who died while waiting for CAR-T
cell therapies.\101\
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\101\ Background articles are not included in the following
table but can be accessed via the online posting for the technology.
---------------------------------------------------------------------------
The following table summarizes the applicant's assertions regarding
the substantial clinical improvement criterion. Please see the online
posting for TALVEYTM for the applicant's complete statements
regarding the substantial clinical improvement criterion and the
supporting evidence provided.
[[Page 36091]]
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After review of the information provided by the applicant, we have
the following concerns regarding whether TALVEYTM meets the
substantial clinical improvement criterion. With respect to the
applicant's claim that TALVEYTM offers an efficacious
treatment option for patients who are unable to receive CAR T-cell
therapy, we note that TECVAYLI[supreg] and ELREXFIOTM are
recently FDA-approved alternatives to CAR T-cell therapy with the same
indication as treatments for RRMM for patients ineligible or
unresponsive to four prior lines of therapy, including a PI, an IMiD,
and an anti-CD38 mAb. In addition, although the applicant claimed that
TALVEYTM is more accessible than CAR T-cell therapies
because it is readily available and can be delivered at any acute care
hospitals, we would be interested in evidence comparing the effects of
TALVEYTM and CAR T-cell therapies on mortality and other
clinical outcomes, as we did not receive results from clinical trials
comparing the efficacy of TALVEYTM with CAR T-cell
therapies.
With respect to the applicant's claim that TALVEYTM has
a low incidence of serious and higher-grade infections and preserves B-
cell function, we note that the clinical data from the Hammons et al.
(2023) \102\ study did not appear to support this claim. Specifically,
the difference in the proportion of grade 3+ infections among patients
treated with BCMA bsAb (58 percent), GPRC5D bsAb combination therapy
with daratumumab and/or pomalidomide (33 percent), and GPRC5D bsAb
monotherapy (50 percent) was not statistically significant (p = 0.06).
While the total infection rate per 100 days was lower for the GPRC5D
monotherapy group, the difference was not statistically significant
(BCMA: 0.57 percent, GPRC5D combination: 0.62 percent, GPRC5D
monotherapy: 0.13 percent; p = 0.06). Moreover, the differences among
the three groups in bacterial, viral, and fungal infection rates per
100 days did not reach statistical significance (p = 0.07, 0.4, and
0.14 respectively). In addition, the difference among the three groups
regarding the need for hospitalization was not statistically
significant (p = 0.07). Similarly, we note that according to the
Rodriguez-Otero et al. (2023) \103\ poster presentation, of the 339
patients treated with TALVEYTM, 64 percent (n = 217)
experienced infections, of which 29 percent (n = 63) experienced grade
3-4 infections. The applicant highlighted a conclusion in the
Rodriguez-Otero poster that infection
[[Page 36092]]
rates, particularly rates of higher grade and fatal infections,
occurred less frequently with TALVEYTM compared with those
observed in BCMA-targeted T-cell based therapies. We note that because
clinical trials are conducted under widely varying conditions, we
question whether adverse reaction rates observed in the clinical trials
of one drug can be directly compared to rates in the clinical trials of
another drug without an effort to adjust for such conditions.
---------------------------------------------------------------------------
\102\ Hammons L, Szabo, A, Janardan, A, et al. The changing
spectrum of infection with BCMA and GPRC5D targeting bispecific
antibody (bsAb) therapy in patients with relapsed refractory
multiple myeloma. Haematologica. 2023 Aug 31.
\103\ Rodriguez-Otero, P, Schinke, C, Chari, A, et al. Analysis
of infections and parameters of humoral immunity in patients with
relapsed/refractory multiple myeloma treated with Talquetamab
monotherapy in MonumenTAL-1. 2023 American Society of Clinical
Oncology Annual Meeting, Poster #8020.
---------------------------------------------------------------------------
With respect to the applicant's claim that TALVEYTM
offers clinically meaningful outcomes in heavily pre-treated patients
na[iuml]ve to prior bsAb and CAR T-cell therapy, we note that the
applicant compared the results from MonumenTAL-1, the ongoing
TALVEYTM clinical study, with clinical study results of
TECVAYLI[supreg] and ELREXFIOTM.104 105 The
applicant noted that the overall response rates (ORRs) for
TALVEYTM's 0.4 mg/kg weekly and 0.8 mg/kg biweekly cohorts
of 74.1 percent and 71.7 percent respectively seem higher than the
response rates reported for TECVAYLI[supreg] (63 percent) and
ELREXFIOTM (61 percent). The applicant also noted the
duration of response (DOR), progression free survival (PFS), and
overall survival (OS) for TALVEYTM were comparable to that
of the BCMA bispecific antibodies. However, we note that this was based
on a comparison of three separate clinical trials, which can involve
numerous confounding variables, and the applicant did not provide
supporting data related to clinical trial design or statistical
analysis to explain why the potential effects of confounding variables
should not be a concern for purposes of this comparison. Therefore, we
are interested in additional evidence demonstrating that
TALVEYTM significantly improves clinical outcomes compared
to BCMA bispecific antibodies in heavily pre-treated patients
na[iuml]ve to prior bispecific antibody and CAR T-cell therapy that
adjusts for the effects of confounding factors.
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\104\ Van de Donk, N, Moreau, P, Garfall, AL, et al. Long term
follow-up from MajesTEC-1 of Teclistamab, a BCMAxCD3 bispecific
antibody, in patients with relapsed/refractory multiple myeloma.
2023 American Society of Clinical Oncology Annual Meeting, Poster
#8011.
\105\ Mohty, M, Tomasson, MH, and Arnulf, B, et al. Elranatamab,
a B-cell maturation antigen (BCMA)-CD3 bispecific antibody, for
patients with relapsed/refractory multiple myeloma: Extended follow-
up and bi-weekly administration from the MagnetisMM-3 study. 2023
American Society of Clinical Oncology Annual Meeting, Poster #8039.
---------------------------------------------------------------------------
With respect to the applicant's claim that TALVEYTM
offers clinically meaningful outcomes in patients exposed to prior
bispecific antibody and CAR T-cell therapy, the applicant referenced
past results from MonumenTAL-1 that included a cohort of 51 patients
with prior T-cell redirection therapies (TCR) including BCMA-directed
CAR-T therapies and/or bispecific antibodies, citing an ORR of 64.7
percent in these heavily pre-treated patients.\106\ The applicant also
provided updated results that included an additional 19 patients with
prior TCR that demonstrated similar efficacy, noting slightly higher
ORRs and improved PFS and DOR rates in patients with prior BCMA CAR T-
cell versus prior bispecific antibody therapies. We welcome additional
information demonstrating the efficacy of TALVEYTM in
patients previously treated with BCMA-directed TCRs.
---------------------------------------------------------------------------
\106\ Jakubowiak, AJ, Anguille, S, Karlin, L, et al. Updated
Results of Talquetamab, a GPRC5DxCD3 bispecific antibody, in
patients with relapsed/refractory multiple myeloma with prior
exposure to T-Cell redirecting therapies: results of the Phase \1/2\
MonumenTAL-1 Study 2023 American Society of Hematology Annual
Meeting. Poster #3377.
---------------------------------------------------------------------------
We are inviting public comments on whether TALVEYTM
meets the substantial clinical improvement criterion.
We did not receive any written comments in response to the New
Technology Town Hall meeting notice published in the Federal Register
regarding the substantial clinical improvement criterion for
TALVEYTM.
l. Odronextamab, First Indication: Relapsed or Refractory Diffuse Large
B-Cell Lymphoma (R/R DLBCL)
Regeneron Pharmaceuticals, Inc. submitted an application for new
technology add-on payments for odronextamab for use in relapsed or
refractory diffuse large B-cell lymphoma (R/R DLBCL) for FY 2025.
According to the applicant, odronextamab is the first and only novel,
fully-human Cluster of Differentiation (CD) 20 x CD 3 bispecific
antibody (bsAb) with an immunoglobulin G4 (IgG4)-based structure in B-
Cell non-Hodgkin lymphoma (B-NHL) created using Regeneron's proprietary
Veloci-Bi[supreg] technology that is designed to simultaneously bind to
two types of antigens, CD20 found on both healthy and cancerous B
cells, and CD3 found on T-cells. Per the applicant, simultaneous
engagement of both arms of odronextamab results in the activation of
immune system T-cells, causing it to generate cytotoxic T-cells that
can destroy the targeted cells, including cancerous B-cells. We note
that Regeneron Pharmaceuticals, Inc. also submitted an application for
new technology add-on payments for odronextamab for use in relapsed or
refractory follicular lymphoma (R/R FL) for FY 2025, as discussed
separately later in this section.
Please refer to the online application posting for odronextamab,
available at https://mearis.cms.gov/public/publications/ntap/NTP231017LHBUG, for additional detail describing the technology and the
disease treated by the technology.
With respect to the newness criterion, the applicant stated that
its marketing authorization request for odronextamab has been filed by
FDA and that it anticipates a Biologic License Application (BLA)
decision from FDA for adults with R/R DLBCL after at least two prior
systemic therapies, including patients with or without prior CAR T-cell
therapy, before May 1, 2024. According to the applicant, odronextamab
will be commercially available immediately after FDA approval.
According to the applicant, it anticipates that inpatient usage of
odronextamab might occur due to a physician's order or as a result of
an adverse event, such as cytokine release syndrome (CRS) Grade 2 or
higher, that results in an inpatient admission. The applicant noted
that in the pivotal Phase 2 clinical trial (ELM-2), when CRS Grade 2 or
3 events developed among DLBCL patients (there were no CRS Grade 4 or
higher reported on the recommended dosing regimen), 31 percent of the
time it occurred after the initial dose (0.7 mg), 46 percent after the
first intermediate dose (4 mg), 15 percent after the second
intermediate dose (20 mg), 0 percent after the first full dose (160
mg), and 8 percent after the second full dose & beyond (160 mg). Using
this information, the applicant developed a weighted average inpatient
dose of 17.4 mg.
According to the applicant, there are currently no ICD-10-PCS
procedure codes to distinctly identify odronextamab. We note that the
applicant submitted a request for approval for a unique ICD-10-PCS
procedure code for odronextamab beginning in FY 2025. The applicant
provided a list of diagnosis codes that may be used to currently
identify this indication for odronextamab 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 believe the
relevant ICD-10-CM codes to identify the indication of R/R DLBCL would
be the codes included in category C83 (Non-follicular lymphoma) under
the ICD-10-CM classification in subcategory: C83.3- (Diffuse large B-
cell
[[Page 36093]]
lymphoma). We are inviting public comments on the use of these ICD-10-
CM diagnosis codes to identify the indication of R/R DLBCL for purposes
of the new technology add-on payment, if approved.
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 odronextamab is not substantially similar to other
currently available technologies. According to the applicant, the
mechanism of action for odronextamab presents noteworthy distinctions,
such as reduced potential for immunogenicity and anti-drug antibodies
through its novel fully human design and reduced ability to elicit an
immune response through the blocking effect of the IgG4-based
structure. The applicant also asserted that odronextamab is the only
bispecific antibody (bsAb) with a dedicated prospective cohort that
shows efficacy in patients with R/R DLBCL with prior CAR T-cell therapy
while also showing comparable efficacy in patients without prior CAR T-
cell therapy, 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 odronextamab for the applicant's complete
statements in support of its assertions that odronextamab is not
substantially similar to other currently available technologies.
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We note that according to the applicant, odronextamab may have a
similar mechanism of action to that of EPKINLYTM
(epcoritamab) and COLUMVITM (glofitamab), for which we
approved an application for new technology add-on payments for FY 2024
(88 FR 58835) for the treatment of adult patients with R/R DLBCL after
two or more prior lines of systemic therapy. Specifically, a similar
IgG bsAb engaging CD3 x CD20 mechanism is utilized in the treatment of
the same population of R/R DLBCL adult patients with two or more prior
therapies. Although the applicant asserts that odronextamab is the
first and only fully human, IgG4-based bsAb in B-NHL, which may help
reduce potential for immunogenicity and anti-drug antibodies, we
believe that this would relate to the risk of adverse event from
odronextamab administration but is not critical to the way the drug
treats the underlying disease, and therefore would relate to an
assessment of substantial clinical improvement, rather than of
substantial similarity.
The applicant asserts that it treats a new patient population
because it is indicated for a sub-population of patients within R/R
DLBCL: adult patients with two or more prior therapies after transplant
or CAR T-cell therapy. However, as noted by the applicant, both
EPKINLYTM and COLUMVITM may also be used for
patients with R/R DLBCL with disease progression after transplant or
CAR T-cell therapy, also after two or more lines of systemic therapies.
Therefore, we believe that odronextamab may treat the same or similar
disease in the same or similar patient population as
EPKINLYTM and COLUMVITM. Accordingly, as it
appears that odronextamab, and EPKINLYTM and
COLUMVITM may use the same or similar mechanism of action to
achieve a therapeutic outcome, would be assigned to the same MS-DRG,
and treat the same or similar patient population and disease, we
believe that these technologies may be substantially similar to each
other. We note that if we determine that this technology is
substantially similar to EPKINLYTM and COLUMVITM,
we believe the newness period for this technology would begin on May
19, 2023, the date on which EPKINLYTM received FDA approval,
which is the earliest market availability date submitted for
EPKINLYTM and COLUMVITM. We are interested in
information on how these technologies may differ from each other with
respect to the substantial similarity criteria and newness criterion.
We are inviting public comments on whether odronextamab meets the
newness criterion, including whether odronextamab is substantially
similar to EPKINLYTM and COLUMVITM or other
existing technologies.
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 2022 MedPAR using a combination
of ICD-10-CM and/or PCS codes to identify potential cases representing
patients who may be eligible for odronextamab. 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 tables later in this section.
For the first analysis, the applicant used a list of ICD-10-CM
diagnosis codes to identify cases with primary diagnosis of DLBCL. The
applicant excluded cases with a corresponding ICD-10-CM or ICD-10-PCS
code indicating active treatment. Per the applicant, active treatment
was defined as allogeneic stem cell transplant, bone marrow transplant,
transplant complications, chemotherapy administration, immunotherapy,
or radiation. Please see the online posting for odronextamab for the
complete list of codes provided by the applicant. The applicant used
the inclusion/exclusion criteria described in the following table.
Under this analysis, the applicant identified 3,066 claims mapping to
10 MS-DRGs, including MS-DRG 840 (Lymphoma and Non-Acute Leukemia with
MCC) representing 34.9 percent of the identified cases. The applicant
calculated a final inflated average case-weighted standardized charge
per case of $141,787, which exceeded the average case-weighted
threshold amount of $106,031.
For the second analysis, the applicant identified cases using a
list of ICD-10-CM diagnosis codes: T80.89XA (Other complications
following infusion, transfusion, and therapeutic injection) or D89.832-
D89.839 (Cytokine release syndrome (CRS) Grades 2-5 or unspecified) in
any position. The applicant used the inclusion/exclusion criteria
described in the following table. Under this analysis, the applicant
identified 80 claims mapping to two MS-DRGs: 018 (Chimeric Antigen
Receptor (CAR) T-Cell and Other Immunotherapies) and 811 (Red Blood
Cell Disorders with MCC). The applicant calculated a final inflated
average case-weighted standardized charge per case of $1,095,920, which
exceeded the average case-weighted threshold amount of $936,675.
Because the final inflated average case-weighted standardized
charge per case exceeded the average case-weighted threshold amount in
all scenarios, the applicant maintained that odronextamab meets the
cost criterion.
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[[Page 36095]]
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[[Page 36096]]
We are inviting public comments on whether odronextamab meets the
cost criterion.
With regard to the substantial clinical improvement criterion, the
applicant asserted that odronextamab represents a substantial clinical
improvement over existing technologies because odronextamab offers a
new treatment for patients who are ineligible for CAR T-cell therapy
and represents a substantial clinical improvement over existing
technologies in patients with R/R DLBCL, including those with or
without prior CAR T-cell therapy. According to the applicant,
odronextamab will expand access to heavily pretreated, highly
refractory patients and will offer patients with R/R DLBCL a new
monotherapy that demonstrates substantial clinical benefits, including
a generally manageable safety profile and favorable Health Related
Quality of Life (HRQoL). The applicant also asserted that odronextamab
significantly improves clinical outcomes relative to services or
technologies previously available (such as EPKINLY\TM\ and
COLUMVI\TM\). The applicant provided three studies to support these
claims, as well as nine background articles about other therapies.\107\
The following table summarizes the applicant's assertions regarding the
substantial clinical improvement criterion. Please see the online
posting for odronextamab for the applicant's complete statements
regarding the substantial clinical improvement criterion and the
supporting evidence provided.
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\107\ 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 36097]]
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BILLING CODE 4120-01-C
After review of the information provided by the applicant, we have
the following concerns regarding whether odronextamab meets the
substantial clinical improvement criterion. We note that with respect
to the claim that odronextamab will increase treatment options for
patients with relapsed or refractory diffuse large B-cell lymphoma (R/R
DLBCL) who have a high risk of cytokine release syndrome (CRS), the
applicant submitted the oral presentation slides of the results from a
pre-specified analysis by Kim et al. (2022),\108\ presenting the
interim results for the Phase II trial for odronextamab, ELM-2. In this
trial, 140 patients (median age: 66 years) with R/R DLBCL after 2 or
more lines of therapy, Eastern Cooperative Oncology Group (ECOG) 0 or
1, were assigned to receive either a
[[Page 36098]]
1/20 mg step-up regimen (n = 67) or 0.7/4/20 mg step-up regimen (n =
73) after the study initiated with a first cycle of step-up regimen of
1/20 mg. The regimen was modified to 0.7/4/20 mg during Cycle 1 to
further mitigate the risk of CRS. The rates of CRS grades 2 and 3 for
patients grouped to the 1/20 regimen were 17.9 percent and 7.5 percent
respectively, while rates of CRS grades 2 and 3 for patients grouped to
the 0.7/4/20 regimen were 13.7 percent and 1.4 percent. We note that
although the incidence of grade 3 CRS was lower in the 0.7/4/20 regimen
arm, the applicant indirectly compared these incidence rates with the
rates of trials as found in the prescribing information for other
existing technologies, including EPKINLY\TM\ and COLUMVI\TM\, and it is
unclear if these differences are statistically significant. We also
question whether there are differences between these clinical trials,
such as patient characteristics or other confounding variables, which
would limit such comparability between CRS incidence rates. We are
concerned as to whether the differences identified by the applicant
translate to clinically meaningful improvements for patients treated
with odronextamab as compared to rates for existing treatments.
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\108\ Kim W, Kim T, Cho S, et al. Odronextamab in patients with
relapsed/refractory (R/R) diffuse large B-cell lymphoma (DLBCL):
results from a prespecified analysis of the pivotal Phase II study
ELM-2. Presented at American Society of Hematology (ASH). December
12, 2022.
---------------------------------------------------------------------------
With respect to the claim that odronextamab monotherapy is an
effective treatment option for patients with R/R DLBCL including those
with or without prior CAR T-cell therapy, the applicant submitted the
oral presentation slides of the results from a pre-specified analysis
by Kim et al. (2022),\109\ previously described. The oral presentation
slides refer to the Phase 1 trial for odronextamab (ELM-1) and indicate
consistency of results across trials. The applicant noted that patients
with prior CAR-T therapy demonstrated an objective response rate (ORR)
of 48.4 percent (95 percent CI: 30.2, 66.9), and a Complete Response
(CR) rate of 32.3 percent (n = 44 patients). The applicant cited other
information about CD20xCD3 bsAbs in patients with R/R DLBCL including
the United States Prescribing Information (USPI) for EPKINLY\TM\ and
COLUMVI\TM\ for which 29 percent and 30 percent of patients
respectively were refractory to CAR T-cell therapy. We note that the
provided evidence did not compare the efficacy of odronextamab to
EPKINLY\TM\ or COLUMVI\TM\. Similar to our earlier concern, we question
whether there are confounding factors between studies that would limit
indirect comparisons of ORR and CR. We would be interested in
additional evidence to assess the use of odronextamab in improving
these clinical outcomes relative to existing treatments.
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\109\ Kim W, Kim T, Cho S, et al. Odronextamab in patients with
relapsed/refractory (R/R) diffuse large B-cell lymphoma (DLBCL):
results from a prespecified analysis of the pivotal Phase II study
ELM-2. Presented at American Society of Hematology (ASH). December
12, 2022.
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With respect to the claim that the odronextamab clinical program
enrolled heavily pre-treated and highly refractory patients with high-
grade non-Hodgkins Lymphoma (NHL) and sicker patients based on a worse
ECOG performance status, the applicant submitted the oral slides of the
results from a pre-specified analysis by Kim et al. (2022),\110\
previously described, and the peer-reviewed publication of the
EPKINLY\TM\ dose expansion cohort of the phase I/II clinical trial.
ECOG performance status is based on a five-point scale, with higher
numbers indicating greater disability. Both trials included patients
with ECOG performance status of 0 or 1 and the EPKINLY\TM\ trial also
included ECOG performance status scores of 2; the odronextamab trial (n
= 140) had rates of 32.1 percent and 67.9 percent for ECOG 0 and 1
respectively, whereas the EPKINLY\TM\ trial has ECOG performance status
scores of 47.1 percent, 49.7 percent, and 3.2 percent for ECOG 0, 1,
and 2 respectively. However, we note that these incidence rates of
patient characteristics are indirectly compared across unrelated
clinical trials and patient outcomes are not stratified in either trial
based on these characteristics. For example, we note that the
classification of ``worse ECOG status'' in the odronextamab trial had a
higher incidence rate of patients with ECOG 1 performance status, but
this trial did not include patients with ECOG 2 performance status, as
did the EPKINLY\TM\ trial.
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\110\ Kim W, Kim T, Cho S, et al. Odronextamab in patients with
relapsed/refractory (R/R) diffuse large B-cell lymphoma (DLBCL):
results from a prespecified analysis of the pivotal Phase II study
ELM-2. Presented at American Society of Hematology (ASH). December
12, 2022.
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With regards to the applicant's assertions that odronextamab
significantly improves clinical outcomes relative to existing
technologies because it is the first CD20xCD3 bsAb to report long-term
patient outcomes at longest follow-up of 4.5 years, and that treatment
until disease progression may have benefits on HRQoL for heavily
pretreated patients with R/R DLBCL and potentially addresses unmet
needs in a challenging treatment setting, we are concerned that the
evidence presented does not compare these outcomes to existing
technologies, such as EPKINLY\TM\ or COLUMVI\TM\. For example, although
the applicant stated that odronextamab is the first to report on long-
term patient outcomes with the longest follow-up, there does not appear
to be evidence demonstrating comparisons of long-term patient outcomes
of odronextamab to existing technologies to support its claim that the
technology improves clinical outcomes. In addition, there does not
appear to be evidence of a direct HRQoL comparison to existing
technologies to assess improvements to HRQoL for heavily pretreated
patients with R/R DLBCL. Therefore, we welcome additional evidence
demonstrating comparisons of odronextamab to existing technologies to
support the applicant's claims.
We are inviting public comments on whether odronextamab meets the
substantial clinical improvement criterion.
We did not receive any written comments in response to the New
Technology Town Hall meeting notice published in the Federal Register
regarding the substantial clinical improvement criterion for
odronextamab.
m. Odronextamab, Second Indication: Relapsed or Refractory Follicular
Lymphoma (R/R FL)
Regeneron Pharmaceuticals, Inc. submitted an application for new
technology add-on payments for odronextamab for use in relapsed or
refractory follicular lymphoma (R/R FL) for FY 2025. According to the
applicant odronextamab is the first and only novel, fully-human Cluster
of Differentiation (CD) 20 x CD 3 bispecific antibody (bsAb) with an
immunoglobulin G4 (IgG4)-based structure in B-Cell non-Hodgkin lymphoma
(B-NHL) created using Regeneron's proprietary Veloci-Bi[supreg]
technology that is designed to simultaneously bind to two types of
antigens, CD20, found on both healthy and cancerous B cells, and CD3,
found on T-cells. Per the applicant, simultaneous engagement of both
arms of odronextamab results in the activation of immune system T-
cells, causing it to generate cytotoxic T-cells that can destroy the
targeted cells, including cancerous B cells. As previously discussed
earlier in this section, Regeneron Pharmaceuticals, Inc. also submitted
an application for new technology add-on payments for odronextamab for
use in relapsed or refractory diffuse large B-cell lymphoma (R/R DLBCL)
for FY 2025.
Please refer to the online application posting for odronextamab,
available at https://mearis.cms.gov/public/
[[Page 36099]]
publications/ntap/NTP231017YATW9, for additional detail describing the
technology and B-NHL R/R FL.
With respect to the newness criterion, the applicant stated that
its marketing authorization request for odronextamab has been filed by
FDA and that it anticipates a Biologic License Application (BLA)
decision from FDA for adults with R/R FL after at least two prior
systemic therapies, before May 1, 2024. According to the applicant,
odronextamab will be commercially available immediately after FDA
approval. According to the applicant, it anticipates that inpatient
usage of odronextamab might occur due to a physician's order or as a
result of an adverse event, such as cytokine release syndrome (CRS)
Grade 2 or higher, that results in an inpatient admission. The
applicant noted that in the pivotal Phase 2 clinical trial (ELM-2),
when CRS Grade 2 or 3 events developed among FL patients (there were no
CRS Grade 4 or higher reported on the recommended dosing regimen), 20
percent of the time they occurred after the initial dose (0.7 mg), 50
percent of the time after the first intermediate dose (4 mg), 20
percent of the time after the second intermediate dose (20 mg), 0
percent of the time after the first full dose (80 mg), and 10 percent
of the time after the second full dose and beyond (80 mg). Using this
information, the applicant developed a weighted average inpatient dose
of 14.1 mg.
According to the applicant, there are currently no ICD-10-PCS
procedure codes to distinctly identify odronextamab. We note that the
applicant submitted a request for approval for a unique ICD-10-PCS
procedure code for odronextamab beginning in FY 2025. The applicant
provided a list of diagnosis codes that may be used to currently
identify this indication for odronextamab 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 believe the
relevant ICD-10-CM codes to identify the indication of R/R FL would be
the codes included in category C82 (Follicular lymphoma) under the ICD-
10-CM classification in subcategories: C82.0--(Follicular lymphoma
grade I), C82.1--(Follicular lymphoma grade II), C82.2--(Follicular
lymphoma grade III, unspecified), C82.3--(Follicular lymphoma grade
IIIa), C82.4--(Follicular lymphoma grade IIIb), C82.5--(Diffuse
follicle center lymphoma), C82.6--(Cutaneous follicle center lymphoma),
C82.8--(Other types of follicular lymphoma), or C82.9--(Follicular
lymphoma, unspecified). We are inviting public comments on the use of
these ICD-10-CM diagnosis codes to identify the indication of R/R FL
for purposes of the new technology add-on payment, if approved.
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 odronextamab is not substantially similar to other
currently available technologies because its mechanism of action
presents notable distinctions, such as reduced potential for
immunogenicity and anti-drug antibodies through its novel, fully human
design and reduced ability to elicit an immune response through the
blocking effect of the IgG4-based structure. The applicant further
asserted that odronextamab also has demonstrated efficacy in patients
with FL Grade 3b, which were excluded from the GO29781 study of
mosunetuzumab, and offers consistent efficacy in other high-risk
subgroups of patients with R/R FL, 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 odronextamab for the
applicant's complete statements in support of its assertion that
odronextamab is not substantially similar to other currently available
technologies.
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With regard to the newness criterion, we note that according to the
applicant odronextamab may have a similar mechanism of action to that
of LunsumioTM (mosunetuzumab), another IgG bsAb engaging
CD3xCD20, for which we approved an application for new technology add-
on payments for FY 2024 (88 FR 58844), which treats the same population
of R/R FL adult patients with two or more prior therapies. Although the
applicant states that there are key distinctions between the mechanism
of action of odronextamab and LunsumioTM because
odronextamab is the first and only fully human, IgG4-based bsAb, which
provides additional binding sites and reduces its ability to elicit an
inflammatory immune response, we do not believe that the number of
binding sites results in a different mechanism of action. We also
believe that a reduction in inflammatory immune response would relate
to the risk of an adverse event from odronextamab administration but is
not critical to the way the drug treats the underlying disease, and
therefore would relate to an assessment of substantial clinical
improvement, rather than of substantial similarity.
The applicant asserted that odronextamab treats a sub-population of
patients within the R/R FL adult
[[Page 36101]]
patients with two or more prior therapies in its summary, specifically,
that of R/R FL Grade 3b--a rare subgroup of patients who are generally
excluded from clinical trials.\111\ However, we note that the FDA-
approved labeling for LunsumioTM does not appear to exclude
this patient population. As such, it is unclear whether odronextamab
would treat a patient population different from other CD20 x CD3 IgG
bsAbs that treat patients with R/R FL, such as LunsumioTM.
Accordingly, as it appears that odronextamab and LunsumioTM
may use the same or similar mechanism of action to achieve a
therapeutic outcome, would be assigned to the same MS-DRG, and treat
the same or similar patient population and disease, we believe that
these technologies may be substantially similar to each other. We note
that if we determine that this technology is substantially similar to
LunsumioTM, we believe the newness period for this
technology would begin on December 22, 2022, the date
LunsumioTM received FDA approval.
---------------------------------------------------------------------------
\111\ Barraclough A, England JT, Villa D, Wight J, Hapgood G,
Conn J, Doo NW, Li EW, Gilbertson M, Shaw B, Bishton MJ, Saeed M,
Ratnasingam S, Abeyakoon C, Chong G, Wai SH, Ku M, Lee HP, Fleming
K, Tam C, Douglas G, Cheah CY, Ng ZY, Rolfe T, Mills AK, Hamad N,
Cashman H, Gleeson M, Narayana M, Hawkes EA. Outcomes in grade 3B
follicular lymphoma: an international study led by the Australasian
Lymphoma Alliance. Haematologica. 2023 Sep 1;108(9):2444-2453.
---------------------------------------------------------------------------
We are inviting public comments whether odronextamab meets the
newness criterion, including whether odronextamab is substantially
similar to LunsumioTM or other existing technologies.
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 2022 MedPAR using a combination
of ICD-10-CM and/or PCS codes to identify potential cases representing
patients who may be eligible for odronextamab. 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 tables later in this section.
For the first analysis the applicant used a list of ICD-10-CM
diagnosis codes to identify cases with primary diagnoses of follicular
lymphoma. The applicant excluded cases with a corresponding ICD-10-CM
or ICD-10-PCS code indicating active treatment. Per the applicant,
active treatment was defined as allogeneic stem cell transplant, bone
marrow transplant, transplant complications, chemotherapy
administration, immunotherapy, or radiation. Please see the online
posting for odronextamab for the complete list of codes provided by the
applicant. The applicant used the inclusion/exclusion criteria
described in the following table. Under this analysis, the applicant
identified 482 claims mapping to nine MS-DRGs, including MS-DRG 840
(Lymphoma and Non-Acute Leukemia with MCC) representing 29.3 percent of
the identified 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 $101,177 which
exceeded the average case-weighted threshold amount of $95,779.
For the second analysis the applicant identified cases using a list
of ICD-10-CM diagnosis codes: T80.89XA (Other complications following
infusion, transfusion, and therapeutic injection) or D89.832-D89.839
(Cytokine release syndrome (CRS) Grades 2-5 or unspecified) in any
position. The applicant used the inclusion/exclusion criteria described
in the table later in this section. Under this analysis, the applicant
identified 80 claims mapping to two MS-DRGs, including 018 (Chimeric
Antigen Receptor (CAR) T-Cell and Other Immunotherapies) and 811 (Red
Blood Cell Disorders with MCC). The applicant calculated a final
inflated average case-weighted standardized charge per case of
$1,095,920, which exceeded the average case-weighted threshold amount
of $963,675.
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 odronextamab meets the cost
criterion.
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[[Page 36103]]
We are inviting public comments on whether odronextamab meets the
cost criterion.
---------------------------------------------------------------------------
\112\ Lists referenced here may be found in the cost criterion
codes and MS-DRGs attachment included in the online posting for the
technology.
---------------------------------------------------------------------------
With regard to the substantial clinical improvement criterion, the
applicant asserted that odronextamab represents a substantial clinical
improvement over existing technologies because it will expand access to
heavily pretreated, highly refractory patients for whom existing
therapies are not adequate. According to the applicant, treatment with
odronextamab offers patients with R/R FL a new, readily available
monotherapy that demonstrates multiple substantial clinical benefits,
including a generally manageable safety profile, and establishes a new
benchmark for efficacy. The applicant also asserted that odronextamab
significantly improves clinical outcomes relative to services or
technologies previously available (such as LunsumioTM). The
applicant provided three studies to support these claims, as well as
eight background articles about other therapies for the R/R FL patient
population.\113\ The following table summarizes the applicant's
assertions regarding the substantial clinical improvement criterion.
Please see the online posting for odronextamab for the applicant's
complete statements regarding the substantial clinical improvement
criterion and the supporting evidence provided.
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\113\ 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 36104]]
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After review of the information provided by the applicant, we have
the following concerns regarding whether odronextamab meets the
substantial clinical improvement criterion. We note that with respect
to the claim that odronextamab will increase treatment options for
patients with R/R FL who have a high risk of CRS, the applicant
submitted the oral presentation slides of the results from a pre-
specified analysis by Kim et al. (2022),\114\ presenting the
[[Page 36105]]
interim results for the Phase II trial for odronextamab on the FL
cohort, ELM-2. In this Phase II trial, 131 patients (median age: 61
years) with R/R FL after two or more lines of therapy were grouped to
receive a 1/20 mg step-up regimen (n = 68) or 0.7/4/20 mg step-up
regimen (n = 53) after the study initiated with a first cycle of step-
up regimen of 1/20 mg. The regimen was modified to 0.7/4/20 mg during
Cycle 1 to further mitigate the risk of CRS. The rates of CRS grades 2
and 3 for the 1/20 regimen are 17.6 percent and 5.9 percent,
respectively, compared to the CRS grades 2 and 3 for the 0.7/4/20
regimen of 11.1 percent and 1.6 percent. We note that although the
incidence of grade 3 CRS was lower in the 0.7/4/20 regimen arm, the
applicant submitted the United States Prescribing Information (USPI)
for other therapies (including LunsumioTM and
tisagenlecleucel) used to treat R/R FL patients to provide the CRS
rates following treatment with existing therapies. As the applicant
indirectly compared these incidence rates with those rates of trials as
found in the prescribing information for other existing technologies,
it is unclear if these differences are statistically significant. We
note that because clinical trials are conducted under widely varying
conditions, we question whether adverse reaction rates observed in the
clinical trials of one drug can be directly compared to rates in the
clinical trials of another drug. We question whether such comparisons
across clinical trial cohorts adequately provide evidence of reduced
adverse events in patients treated with odronextamab.
---------------------------------------------------------------------------
\114\ Kim Tae Min, Taszner Michal, Cho Seok-Goo, et al.
Odronextamab in patients with relapsed/refractory (R/R) follicular
lymphoma (FL) Grade 1-3a: results from a prespecified analysis of
the pivotal Phase II study ELM-2. Presented at American Society of
Hematology (ASH). December 12, 2022.
---------------------------------------------------------------------------
Similarly, we note that with respect to the claim that odronextamab
offers patients with heavily pretreated, highly refractory FL a new,
readily available, monotherapy that establishes a new benchmark for
efficacy, the applicant submitted the objective response rates (ORR)
and complete response rates (CR) of its Phase II study, ELM-2 and
compared them to the ORR and CR rates of the LunsumioTM
GO29781 study. We note the same concerns as with the previous claim
about comparing outcomes across studies given the variability in
clinical trial design.
With respect to the claim that odronextamab demonstrated efficacy
in patients with FL Grade 3b disease in the ELM-2 study, although the
applicant provided additional analysis from the ELM-2 study where
odronextamab demonstrated efficacy across six patients enrolled in the
study with FL Grade 3B, we note that it is unclear whether the
additional analysis that was provided in addition to the ELM-2 study
represents an ad-hoc analysis, therefore, we are concerned about
drawing conclusions from this ad-hoc analysis to appropriately
demonstrate efficacy in the FL Grade 3B subgroup. Furthermore, we are
concerned that the applicant did not compare the results of the study
to the efficacy of existing therapies for patients with FL Grade 3B. We
would be interested in additional evidence comparing outcomes between
odronextamab and existing therapies such as Breyanzi[supreg], which is
also approved for patients with FL Grade 3B with relapsed or refractory
disease after two or more lines of systemic therapy.
With respect to the claim that patients in the FL cohort of the
ELM-2 study exhibited more unfavorable select baseline characteristics
compared to those in the LunsumioTM study, the applicant
presented the analysis for odronextamab by Kim et al. (2022),\115\
described previously, and the LunsumioTM phase 2 study on R/
R patients with FL.\116\ The applicant stated that patients treated
with odronextamab in the ELM-2 cohort had received prior autologous
stem cell transplants at a higher rate (30.5 percent) than those
treated in the LunsumioTM study (21%). The applicant also
noted additional unfavorable select baseline characteristics for
patients in the ELM-2 study compared to patients in the
LunsumioTM study, including: more patients with a worse
Eastern Cooperative Oncology Group (ECOG) performance status, as 48.1
percent of patients in ELM-2 had an ECOG performance status of 1,
compared to 41 percent of patients in the LunsumioTM study;
more patients with an Ann Arbor stage III-IV (84.7 percent of patients,
compared to 77 percent of patients in the LunsumioTM study);
more patients with a FLIPI score of 3-5 (58.8 percent of patients,
compared to 44 percent of patients in the LunsumioTM study);
and more older patients, with 38.9 percent of patients >=65 years old
(median age of 61), compared to a median age of 60 for
LunsumioTM. We note these are indirect rate comparisons
across clinical trials without statistical adjustments performed across
the patient populations and clinical outcomes. We also note that
differences in patient characteristics across any two clinical trials,
even with the same selection criteria, are likely to occur. As such, we
question whether the comparison of baseline characteristics across
cohorts in independent clinical trials can be taken as indicative of
differences in clinical outcomes or efficacy between treatments.
---------------------------------------------------------------------------
\115\ Kim Tae Min, Taszner Michal, Cho Seok-Goo, et al.
Odronextamab in patients with relapsed/refractory (R/R) follicular
lymphoma (FL) Grade 1-3a: results from a prespecified analysis of
the pivotal Phase II study ELM-2. Presented at American Society of
Hematology (ASH). December 12, 2022.
\116\ Budde L, Sehn L, et al. Safety and efficacy of
mosunetuzumab, a bispecific antibody, in patients with relapsed or
refractory follicular lymphoma: a single-arm, multicentre, phase 2
study. The Lancet Oncology. 2022; 23: 1055065. https://doi.org/10.1016/S1470-2045(22)00335-7.
---------------------------------------------------------------------------
We are inviting public comments on whether odronextamab meets the
substantial clinical improvement criterion.
We did not receive any written comments in response to the New
Technology Town Hall meeting notice published in the Federal Register
regarding the substantial clinical improvement criterion for
odronextamab.
6. Proposed FY 2025 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
[[Page 36106]]
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 are continuing to summarize each application in this proposed rule.
However, 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 2025 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), including 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 2025 new technology
add-on payment applications.
We received 23 applications for new technology add-on payments for
FY 2025 under the new technology add-on payment alternative pathway. As
discussed previously, in the FY 2024 IPPS/LTCH PPS final rule (88 FR
58948 through 58958), we finalized that beginning with the new
technology add-on payment applications for FY 2025, for technologies
that are not already FDA market authorized for the indication that is
the subject of the new technology add-on payment application,
applicants must have a complete and active FDA market authorization
request at the time of new technology add-on payment application
submission and must provide documentation of FDA acceptance or filing
to CMS at the time of application submission, consistent with the type
of FDA marketing authorization application the applicant has submitted
to FDA. See Sec. 412.87(e) and further discussion in the FY 2024 IPPS/
LTCH PPS final rule (88 FR 58948 through 58958). Of the 23 applications
received under the alternative pathway, seven applications were not
eligible for consideration for new technology add-on payment because
they did not meet these requirements; and two applicants withdrew their
applications prior to the issuance of this proposed rule, including the
withdrawal of the application for DefenCathTM (taurolidine/
heparin), which received conditional approval for new technology add-on
payments for FY 2024, subsequently received FDA approval in November
2023, and therefore was eligible to receive new technology add-on
payments beginning with discharges on or after January 1, 2024. As
discussed in section II.E.4. of this proposed rule, we are proposing to
continue making new technology add-on payments for
DefenCathTM (taurolidine/heparin) for FY 2025. Of the
remaining 14 applications, 12 of the technologies received a
Breakthrough Device designation from FDA. The remaining two
applications were designated as a QIDP by FDA. We did not receive any
applications for technologies approved through the LPAD pathway.
In accordance with the regulations under Sec. 412.87(f)(2),
applicants for new technology add-on payments for FY 2025 for
Breakthrough Devices must have FDA marketing authorization by May 1 of
the year prior to the beginning of the fiscal year for which the
application is being considered. Under Sec. 412.87(f)(3), applicants
for new technology add-on payments for FY 2025 for QIDPs and
technologies approved under the LPAD pathway 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. The policy
finalized in the FY 2021 IPPS/LTCH PPS final rule (85 FR 58742)
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 July 1 prior to the
particular fiscal year for which the applicant applied for new
technology add-on payments, provided that the technology receives FDA
marketing authorization before July 1 of the 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 2024 IPPS/LTCH PPS proposed rule, for
applications under the alternative new technology add-on payment
pathway, in this proposed rule we are making a proposal to approve or
disapprove each of these 14 applications for FY 2025 new technology
add-on payments. Therefore, in this section of the preamble of this
proposed rule, we provide background information on each alternative
pathway application and propose whether or not each technology would be
eligible for the new technology add-on payment for FY 2025. We refer
readers to section II.H.8. of the preamble of the FY 2020 IPPS/LTCH PPS
final rule (84 FR 42292 through 42297) and FY 2021 IPPS/LTCH PPS final
rule (85 FR 58715 through 58733) for further discussion of the
alternative new technology add-on payment pathways for these
technologies.
a. Annalise Enterprise Computed Tomography Brain (CTB) Triage--
Obstructive Hydrocephalus (OH)
Annalise-Ai Pty Ltd submitted an application for new technology
add-on payments for the Annalise Enterprise CTB Triage--OH for FY 2025.
According to the applicant, the Annalise Enterprise CTB Triage--OH is a
medical device software application used to aid in the triage and
prioritization of studies with features suggestive of obstructive
hydrocephalus (OH). Per the applicant, the device analyzes studies
using an artificial intelligence (AI) algorithm to identify suspected
OH findings in non-contrast computed tomography (NCCT) brain scans and
makes study-level output available to an order and imaging management
system for worklist prioritization or triage.
Please refer to the online application posting for the Annalise
Enterprise CTB Triage--OH available at https://mearis.cms.gov/public/publications/ntap/NTP231017D5AA7, for additional detail describing the
technology and how it is used.
According to the applicant, the Annalise Enterprise CTB Triage--OH
received Breakthrough Device designation from FDA on February 17, 2023,
for use in the medical care environment to aid in triage and
prioritization of studies with features suggestive of OH. The device
analyzes studies using an AI algorithm to identify findings. It makes
study-level output available to an order and imaging management system
for worklist prioritization or triage. The applicant stated that the
technology received 510(k) clearance from FDA on August 15, 2023, for
the same indication consistent with the Breakthrough Device
designation. Per the applicant, the Annalise Enterprise CTB Triage--OH
was not immediately available for sale because there were additional
steps to be completed following 510(k) clearance prior to the product
becoming commercially available. According to the applicant, these
additional steps involved generating a new unique device identifier
(UDI) to incorporate the recently cleared finding for OH, integrating
this UDI into the device, and
[[Page 36107]]
releasing it. Per the applicant, the Annalise Enterprise CTB Triage--OH
became commercially available on October 10, 2023.
According to the applicant, there are currently no ICD-10-PCS
procedure codes to distinctly identify the Annalise Enterprise CTB
Triage--OH. The applicant submitted a request for approval for a unique
ICD-10-PCS procedure code for the Annalise Enterprise CTB Triage--OH
beginning in FY 2025. The applicant provided a list of diagnosis codes
that may be used to currently identify the indication for the Annalise
Enterprise CTB Triage--OH 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 three
analyses to demonstrate that the technology meets the cost criterion.
The applicant stated that for all three analyses, it used the 2021
Standard Analytic Files (SAF) Limited Data Set (LDS) to identify the
top admitting diagnosis codes for inpatient stays that were admitted
from the emergency room (ER) and included a non-contrast CT head scan.
Next, it searched the FY 2022 MedPAR data to identify applicable
inpatient stays based on different sets of admitting diagnosis codes
for each of the three analyses. The applicant explained that it used
admitting diagnosis codes from the inpatient stays, rather than
discharge diagnosis codes, because the Annalise Enterprise CTB Triage--
OH is an AI-based technology used to identify and prioritize patients
suspected of OH. As a result, it will commonly be used in the ER before
the doctor and/or the hospital has assigned the primary or secondary
diagnosis for the inpatient stay. The applicant stated that admitting
diagnosis codes may be better predictors for whether the Annalise
Enterprise CTB Triage--OH service will be used, rather than primary or
secondary diagnosis at discharge, which will likely represent
information known after the procedure is performed. Per the applicant,
for identifying the top admitting diagnosis codes, the inpatient stays
were further narrowed down to only those where the patient had a
physician claim during the inpatient stay or 1 day before for a non-
contrast CT head scan (defined as CPT codes 70450, 70480, 70486), or
had an outpatient claim for a non-contrast CT head scan the day of
admission or 1 day before. Each analysis followed the order of
operations described in the table that follows later in this section.
For the primary analysis, the applicant stated that it searched the
FY 2022 MedPAR file for cases with emergency room charges (that is,
emergency room charge amount greater than $0) and/or an inpatient
admission type code (IP_ADMSN_TYPE_CD) equal to 1 for emergency, and
reporting one of the top 25 diagnosis codes associated with 50% of all
identified inpatient stays in the 2021 SAF. According to the applicant,
it identified 2,206,036 claims mapping to 714 MS-DRGs, including MS-DRG
871 (Septicemia or Severe Sepsis without MV >96 Hours with MCC), which
represented 16% of identified cases. The applicant stated that it
calculated a final inflated average case-weighted standardized charge
per case of $80,407, which exceeded the average case-weighted threshold
amount of $69,892.
For the second analysis, the applicant stated that it conducted a
sensitivity analysis using cases with emergency room charges (that is,
emergency room charge amount greater than $0) and/or an inpatient
admission type code (IP_ADMSN_TYPE_CD) equal to 1 for emergency, and
reporting one of the top 186 admitting diagnosis codes associated with
80% of all identified inpatient stays in the 2021 SAF LDS. The
applicant noted that it identified 3,991,354 claims mapping to 739 MS-
DRGs, including MS-DRG 871 (Septicemia or Severe Sepsis without MV >96
Hours with MCC), which represented 11% of identified cases. The
applicant noted that it calculated a final inflated average case-
weighted standardized charge per case of $78,356, which exceeded the
average case-weighted threshold amount of $68,660.
For the third analysis, the applicant stated that it conducted a
sensitivity analysis that identified cases using the same criteria as
the primary analysis, and further limited it to cases that also
incurred CT charges. Per the applicant, it performed this sensitivity
analysis because although doctors are likely to order the Annalise AI
technology when a NCCT head scan is performed and the patient is
admitted through the emergency room, the MedPAR file variable for CT
charges does not differentiate between contrast and NCCTs, or the area
of the body where the CT is performed, and does not capture CT charges
billed by physicians during the inpatient stay. As a result, it further
limited the cases to those with charges for CT to assess if this would
impact whether the technology would meet the cost criterion. Per the
applicant, it identified 1,546,504 claims mapping to 702 MS-DRGs,
including MS-DRG 871 (Septicemia or Severe Sepsis without MV >96 Hours
with MCC), which represented 17% of identified cases. The applicant
stated that it calculated a final inflated average case-weighted
standardized charge per case of $89,176, which exceeded the average
case-weighted threshold amount of $71,344.
The applicant asserted that because the final inflated average
case-weighted standardized charge per case exceeded the average case-
weighted threshold amount in all scenarios, the Annalise Enterprise CTB
Triage--OH meets the cost criterion.
---------------------------------------------------------------------------
\117\ Lists referenced here may be found in the cost criterion
codes and MS-DRGs attachment included in the online posting for the
technology.
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[[Page 36108]]
[GRAPHIC] [TIFF OMITTED] TP02MY24.127
According to the applicant, the technology is used to aid in the
triage and prioritization of studies with features suggestive of OH.
However, the diagnosis codes that the applicant used to identify
eligible cases included non-neurologic diagnosis codes (for example,
U071, R0602, J189). We question whether these diagnosis codes are
applicable, and whether using neurologic diagnosis codes for diagnoses
that exhibit symptoms similar to OH would more accurately identify
eligible cases.
Subject to the applicant adequately addressing this concern, we
would agree that the technology meets the cost criterion and are
proposing to approve the Annalise Enterprise CTB Triage--OH for new
technology add-on payments for FY 2025.
Based on preliminary information from the applicant at the time of
this proposed rule, the applicant anticipated the total cost of the
Annalise Enterprise CTB Triage--OH to the hospital to be $371.37 per
patient. According to the applicant, hospitals acquire the Annalise
Enterprise CTB Triage--OH system on a subscription-based model, with an
annual cost of $180,000 per hospital. The applicant stated that the
average cost per patient per hospital will vary by the volume of the
NCCT cases for which the software is used. To determine the cost per
case, the applicant used the following methodology:
First, the applicant conducted market research to estimate the
percent of NCCT cases where this software would likely be ordered,
which was estimated at 50% of NCCT head scans for older patients (>65
years of age) and 30% of NCCT head scans for younger patients (<65
years of age).
Second, the applicant used the 2021 SAF LDS to identify total NCCT
scans by hospital. To represent the full Medicare fee-for-service
population, the applicant multiplied total NCCT head scans at each
hospital from the data by 20.
Third, to calculate the total number of NCCT head scans for each
hospital, the applicant assumed that 56.5% of all NCCT scans are for
Medicare beneficiaries, based on literature on trends in the
utilization of head CT scans in the United States.\118\
---------------------------------------------------------------------------
\118\ Selfi, A, Jafari, S, and Mirmoeeni, S et al. (June 16,
2022) Trends in inpatient utilization of head computerized
tomography scans in the United States: A brief cross-sectional
study. Cureus 14(6): e26018. DOI 10.7759/cureus.26018
---------------------------------------------------------------------------
Fourth, to calculate the cost per case for each hospital, the
applicant divided $180,000 by the estimated number of NCCT head scans
analyzed by the technology for each hospital. Per the applicant, the
average cost per case across all IPPS hospitals was then calculated at
$371.37.
The applicant asserted that calculating the cost per case across
all IPPS hospitals was reasonable. The applicant noted that given its
limited time on the market and low number of subscribers, it used all
IPPS hospitals to calculate cost per case rather than
[[Page 36109]]
limiting the analysis to current subscribers. The applicant mentioned
that for technologies that are commercially available for a longer
period of time and with more subscribers, it may make sense to limit
the cost per case analysis to hospitals that are current subscribers
rather than using all IPPS hospitals in the calculation.
As we noted in the FY 2021 IPPS/LTCH PPS final rule (85 FR 58630)
and in the FY 2022 IPPS/LTCH PPS final rule (86 FR 44983), we
understand that there are unique circumstances with respect to
determining a cost per case for a technology that utilizes a
subscription for its cost and we will continue to consider the issues
relating to calculation of the cost per unit of technologies sold on a
subscription basis as we gain more experience in this area. We continue
to welcome comments from the public as to the appropriate method to
determine a cost per case for such technologies, including comments on
whether the cost analysis should be updated based on the most recent
subscriber data for each year for which the technology may be eligible
for add-on payment.
We note that the cost information for this technology may be
updated in the final rule based on revised or additional information
CMS receives prior to the final rule. Under Sec. 412.88(a)(2), we
limit new technology add-on payments to the lesser of 65% of the
average cost of the technology, or 65% of the costs in excess of the
MS-DRG payment for the case. As a result, we are proposing that the
maximum new technology add-on payment for a case involving the use of
the Annalise Enterprise CTB Triage--OH would be $241.39 for FY 2025
(that is, 65% of the average cost of the technology).
We invite public comments on whether the Annalise Enterprise CTB
Triage--OH meets the cost criterion and our proposal to approve new
technology add-on payments for the Annalise Enterprise CTB Triage--OH
for FY 2025 for use in the medical care environment to aid in triage
and prioritization of studies with features suggestive of OH.
b. ASTar[supreg] System
Q-linea submitted an application for new technology add-on payments
for the ASTar[supreg] System for FY 2025. According to the applicant,
the ASTar[supreg] System is a fully automated system for rapid
antimicrobial susceptibility testing (AST). The applicant stated that
the proprietary AST technology is based on broth microdilution (BMD),
optimized for high sensitivity and short time-to-result, delivering
phenotypic AST with true minimum inhibitory concentration (MIC) results
in approximately six hours.
Please refer to the online application posting for the
ASTar[supreg] System, available at https://mearis.cms.gov/public/publications/ntap/NTP231013T7Y5F, for additional detail describing the
technology and how it is used.
According to the applicant, the ASTar[supreg] System consists of
the ASTar[supreg] Instrument and the ASTar[supreg] BC G-Kit. According
to the applicant, the ASTar[supreg] Instrument and ASTar[supreg] BC G-
Kit, which includes the ASTar[supreg] BC G-Consumable Kit and the ASTar
BC G-Frozen Insert, received Breakthrough Device designation from FDA
on April 7, 2022. The ASTar[supreg] BC G-Kit is a multiplexed, in
vitro, diagnostic test utilizing AST methods and is intended for use
with the ASTar[supreg] Instrument. The ASTar[supreg] BC G-Kit is
performed directly on positive blood cultures confirmed positive for
Gram-negative bacilli only by Gram stain, and tests antimicrobial
agents with nonfastidious and fastidious bacterial species. According
to the applicant, its marketing authorization request for the
ASTar[supreg] BC G-Kit has been accepted by FDA, and it anticipates a
510(k) decision from FDA for the same indication consistent with the
Breakthrough Device designation before May 1, 2024. The applicant
stated that it anticipates the technology will be available on the
market immediately after 510(k) clearance from FDA.
According to the applicant, there are currently no ICD-10-PCS
procedure codes to distinctly identify the ASTar[supreg] System. The
applicant submitted a request for approval for a unique ICD-10-PCS
procedure code for the ASTar[supreg] System beginning in FY 2025. The
applicant provided a list of diagnosis codes that may be used to
currently identify the indication for the ASTar[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 provided multiple
analyses to demonstrate that it meets the cost criterion. Each analysis
used different ICD-10-CM codes to identify potential cases in the FY
2022 MedPAR file representing patients who may be eligible for the
ASTar[supreg] System. According to the applicant, Cohort 1 comprised
patients with non-sepsis infections and Cohort 2 consisted of patients
with sepsis resulting from bacteria identifiable by the ASTar[supreg]
System. The applicant explained that these scenarios were separated as
the applicant believed that charges and MS-DRG assignments may differ
due to the resources required to treat sepsis patients compared to
those required for less severe infections. Finally, Cohort 3 included
all ICD-10-CM codes from Cohorts 1 and 2 because the applicant stated
that the ASTar[supreg] System may be used to identify any infection
caused by the bacteria listed in Cohorts 1 and 2. The applicant stated
that in all three cohorts, the patients mapped to a large number of MS-
DRGs based on the listed ICD-10-CM codes. Therefore, in the analyses,
the applicant only included the most common MS-DRGs, that is, the MS-
DRGs containing at least 1 percent of the potential case volume within
each of the three cohorts, as these are the MS-DRGs to which potential
ASTar[supreg] System cases would most closely map. The applicant used
the inclusion/exclusion criteria described in the table that follows
later in this section to identify claims for each cohort. Each analysis
followed the order of operations described in the table that follows
later in this section.
For Cohort 1, the applicant identified 440,838 claims mapping to 14
MS-DRGs, including MS-DRG 871 (Septicemia or Severe Sepsis with MV >96
Hours with MCC) representing 25% of identified cases, and calculated a
final inflated average case-weighted standardized charge per case of
$85,525, which exceeded the average case-weighted threshold amount of
$70,398.
For Cohort2, the applicant identified 224,825 claims mapping to 7
MS-DRGs, including MS-DRG 871 (Septicemia or Severe Sepsis with MV >96
Hours with MCC) representing 54% of identified cases, and calculated a
final inflated average case-weighted standardized charge per case of
$99,508, which exceeded the average case-weighted threshold amount of
$82,171.
For Cohort3, the applicant identified 603,877 claims mapping to 13
MS-DRGs, including MS-DRG 871 (Septicemia or Severe Sepsis with MV >96
Hours with MCC) representing 34% of identified cases, and calculated a
final inflated average case-weighted standardized charge per case of
$88,395
[[Page 36110]]
which exceeded the average case-weighted threshold amount of $73,727.
Because the final inflated average case-weighted standardized
charge per case exceeded the average case-weighted threshold amount in
all the three cohorts, the applicant asserted that the ASTar[supreg]
System meets the cost criterion.
---------------------------------------------------------------------------
\119\ Codes referenced here may be found in the cost criterion
codes and MS-DRGs attachment included in the online posting for the
technology.
[GRAPHIC] [TIFF OMITTED] TP02MY24.128
We agree with the applicant that the ASTar[supreg] System meets the
cost criterion and are therefore proposing to approve the ASTar[supreg]
System for new technology add-on payments for FY 2025, subject to the
technology receiving FDA marketing authorization as a Breakthrough
Device for the indication corresponding to the Breakthrough Device
designation by May 1, 2024.
Based on preliminary information from the applicant at the time of
this proposed rule, the applicant anticipated the operating cost of the
ASTar[supreg] System to the hospital to be $150 per patient, based on
the operating component ASTar[supreg] BC G-Kit (composed of the
ASTar[supreg] BC G-Consumable Kit ($141) and ASTar BC G-Frozen Insert
($9)). The applicant also noted a capital cost of $200,000 for the
ASTar[supreg] Instrument. Because section 1886(d)(5)(K)(i) of the Act
requires that the Secretary establish a mechanism to recognize the
costs of new medical services or technologies under the payment system
established under that subsection, which establishes the system for
payment of the operating costs of inpatient hospital services, we do
not include capital costs in the add-on payments for a new medical
service or technology or make new technology add-on payments under the
IPPS for capital-related costs (86 FR 45145). As noted, the applicant
stated that the cost of the ASTar[supreg] Instrument is a capital cost.
Therefore, it appears that this component is not eligible for new
technology add-on payment because, as discussed in prior rulemaking and
as noted, we only make new technology add-on payments for operating
costs (72 FR 47307 through 47308). We note that any new technology add-
on payment for the ASTar[supreg] System would include only the cost of
ASTar[supreg] BC G-Kit ($150). We note that the cost information for
this technology may be updated in the final rule based on revised or
additional information CMS receives prior to the final rule. Under
Sec. 412.88(a)(2), we limit
[[Page 36111]]
new technology add-on payments to the lesser of 65% of the average cost
of the technology, or 65% of the costs in excess of the MS-DRG payment
for the case. As a result, we are proposing that the maximum new
technology add-on payment for a case involving the use of the
ASTar[supreg] System would be $97.50 for FY 2025 (that is, 65% of the
average cost of the technology).
We invite public comments on whether the ASTar[supreg] System meets
the cost criterion and our proposal to approve new technology add-on
payments for the ASTar[supreg] System for FY 2025, subject to the
technology receiving FDA marketing authorization as a Breakthrough
Device for the indication corresponding to the Breakthrough Device
designation by May 1, 2024.
c. Cefepime-Taniborbactam
Venatorx Pharmaceuticals, Inc. submitted an application for new
technology add-on payments for cefepime-taniborbactam for FY 2025.
According to the applicant, cefepime-taniborbactam is an
investigational [beta]-lactam antibiotic/[beta]-lactamase inhibitor
combination under development for the treatment of complicated urinary
tract infections (cUTI), including pyelonephritis, melioidosis, and
hospital-acquired bacterial pneumonia (HABP)/ventilator-associated
bacterial pneumonia (VABP).
Please refer to the online application posting for cefepime-
taniborbactam, available at https://mearis.cms.gov/public/publications/ntap/NTP2310168RYEB, for additional detail describing the technology
and the disease treated by the technology.
According to the applicant, cefepime-taniborbactam received QIDP
designation from FDA on February 4, 2022, for cUTI, complicated intra-
abdominal infections (cIAI), HABP, VABP, and melioidosis. The applicant
stated that it is seeking approval from FDA for the treatment of
patients 18 years of age and older with cUTI, including pyelonephritis
caused by designated susceptible gram-negative bacteria, including
cases with concurrent bacteremia. According to the applicant, its
marketing request for cefepime-taniborbactam has been filed by FDA, and
it anticipates an NDA decision before July 1, 2024. According to the
applicant, cefepime-taniborbactam is not expected to be commercially
available immediately after FDA approval due to manufacturing readiness
activities and the expected commercial availability date is October 1,
2024. We note that, as an application submitted under the alternative
pathway for certain antimicrobial products at Sec. 412.87(d),
cefepime-taniborbactam is eligible for conditional approval for new
technology add-on payments if it does not receive FDA marketing
authorization by July 1, 2024, provided that the technology receives
FDA marketing authorization before July 1 of the fiscal year for which
the applicant applied for new technology add-on payments (that is, July
1, 2025), as provided in Sec. 412.87(f)(3). To estimate the average
dosage per patient, the applicant calculated a weighted average
duration of treatment. Per the applicant, based on the dosing schedule,
a patient receives approximately 3 doses per 24 hours. The applicant
noted for 48 patients with bacteremia, the average length of stay was
10.9 days, and for 392 patients without bacteremia, the average length
of stay was 7.2 days, which led to a weighted average treatment
duration of 7.5 days and 23 doses per average inpatient stay.
According to the applicant, there are currently no ICD-10-PCS
procedure codes to distinctly identify cefepime-taniborbactam. The
applicant submitted a request for approval for a unique ICD-10-PCS
procedure code for cefepime-taniborbactam beginning in FY 2025. The
applicant stated that ICD-10-CM diagnosis codes for the treatment of
cUTI may be used to currently identify the indication for cefepime-
taniborbactam 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, to identify potential cases
representing patients who may be eligible for cefepime-taniborbactam,
the applicant searched the FY 2022 MedPAR file for claims that had one
of the ICD-10-CM codes reflecting conditions that would be considered
an indication for cefepime-taniborbactam for the treatment of cUTI.
Using the inclusion/exclusion criteria described in the following
table, the applicant identified 833,530 claims mapping to 526 MS-DRGs,
including MS-DRG 871 (Septicemia or Severe Sepsis without MV >96 Hours
with MCC), 690 (Kidney and Urinary Tract Infections without MCC), and
689 (Kidney and Urinary Tract Infections with MCC). 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 $91,218, which exceeded the average case-weighted threshold
amount of $71,256. Because the final inflated average case-weighted
standardized charge per case exceeded the average case-weighted
threshold amount, the applicant asserted that cefepime-taniborbactam
meets the cost criterion.
---------------------------------------------------------------------------
\120\ Lists referenced here may be found in the cost criterion
codes and MS-DRGs attachment included in the online posting for the
technology.
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[[Page 36112]]
[GRAPHIC] [TIFF OMITTED] TP02MY24.129
We agree with the applicant that cefepime-taniborbactam meets the
cost criterion and are therefore proposing to approve cefepime-
taniborbactam for new technology add-on payments for FY 2025, subject
to the technology receiving FDA marketing authorization as a QIDP for
the indication corresponding to the QIDP designation by July 1, 2024.
As an application submitted under the alternative pathway for certain
antimicrobial products at Sec. 412.87(d), cefepime-taniborbactam is
eligible for conditional approval for new technology add-on payments if
it does not receive FDA marketing authorization by July 1, 2024,
provided that the technology receives FDA marketing authorization
before July 1 of the fiscal year for which the applicant applied for
new technology add-on payments (that is, July 1, 2025), as provided in
Sec. 412.87(f)(3). If cefepime-taniborbactam receives FDA marketing
authorization before July 1, 2025, 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, 2025, no new technology add-on payments would be made
for cases involving the use of cefepime-taniborbactam for FY 2025.
The applicant has not provided an estimate for the cost of
cefepime-taniborbactam at the time of this proposed rule. Per the
applicant, based on the dosing schedule, a patient receives
approximately 3 doses per 24 hours. The applicant noted for 48 patients
with bacteremia, the average length of stay was 10.9 days, and for 392
patients without bacteremia, the average length of stay was 7.2 days,
which led to a weighted average treatment duration of 7.5 days and 23
doses per average inpatient stay. We expect the applicant to submit
cost information prior to the final rule, and we will provide an update
regarding the new technology add-on payment amount for the technology,
if approved, in the final rule. Any new technology add-on payment for
cefepime-taniborbactam would be subject to our policy under Sec.
412.88(a)(2)(ii)(B) where we limit new technology add-on payment for
QIDPs to the lesser of 75% of the average cost of the technology, or
75% of the costs in excess of the MS-DRG payment for the case.
We invite public comments on whether cefepime-taniborbactam meets
the cost criterion and our proposal to approve new technology add-on
payments for cefepime-taniborbactam for FY 2025, subject to the
technology receiving FDA marketing authorization consistent with its
QIDP designation by July 1, 2024.
d. Edwards EVOQUE\TM\ Tricuspid Valve Replacement System (Transcatheter
Tricuspid Valve Replacement System)
Edwards Lifesciences LLC submitted an application for new
technology add-on payments for the Edwards EVOQUE\TM\ Tricuspid Valve
Replacement System (``EVOQUE\TM\ System'') for FY 2025. According to
the applicant, the EVOQUE\TM\ System is a new, transcatheter treatment
option for patients with at least severe tricuspid regurgitation. Per
the applicant, the EVOQUE\TM\ System is designed to replace the native
tricuspid valve and consists of a transcatheter bioprosthetic valve, a
catheter-based delivery system, and supporting accessories.
Please refer to the online application posting for the Edwards
EVOQUE\TM\ Tricuspid Valve Replacement System, available at https://mearis.cms.gov/public/publications/ntap/NTP231013MRRBG, for additional
detail describing the technology and the condition treated by the
technology.
According to the applicant, the EVOQUE\TM\ System received
Breakthrough Device designation from FDA on December 18, 2019, for the
treatment of patients with symptomatic moderate or above tricuspid
regurgitation. The applicant stated that the technology received
premarket approval from FDA on February 1, 2024 for a narrower
indication for use, for the improvement of health status in patients
with symptomatic severe tricuspid regurgitation despite optimal medical
[[Page 36113]]
therapy, for whom tricuspid valve replacement is deemed appropriate by
a heart team. Since the indication for which the applicant received
premarket approval is included within the scope of the Breakthrough
Device designation, it appears that the PMA indication is appropriate
for consideration for new technology add-on payment under the
alternative pathway criteria. According to the applicant, the
EVOQUE\TM\ System was commercially available immediately after FDA
approval.
According to the applicant, there are currently no ICD-10-PCS
procedure codes to distinctly identify the EVOQUE\TM\ System. The
applicant submitted a request for approval for a unique ICD-10-PCS
procedure code for the EVOQUE\TM\ System beginning in FY 2025. The
applicant stated that ICD-10-CM diagnosis codes I07.1 (Rheumatic
tricuspid insufficiency), I07.2 (Rheumatic tricuspid stenosis and
insufficiency), I36.1 (Nonrheumatic tricuspid (valve) insufficiency),
and I36.2 (Nonrheumatic tricuspid (valve) stenosis with insufficiency)
may be used to currently identify the indication for the EVOQUE\TM\
System under the ICD-10-CM coding system.
With respect to the cost criterion, the applicant provided two
analyses to demonstrate that the technology meets the cost criterion.
To identify potential cases representing patients who may be eligible
for the EVOQUE\TM\ System, each analysis used the same ICD-10-CM
diagnosis codes in different positions, with and without selected ICD-
10-PCS procedure codes, to identify relevant cases in the FY 2022
MedPAR file. Each analysis followed the order of operations described
in the table that follows later in this section.
For the first analysis, the applicant searched for cases assigned
to MS-DRGs 266 (Endovascular Cardiac Valve Replacement and Supplement
Procedures with MCC) and 267 (Endovascular Cardiac Valve Replacement
and Supplement Procedures without MCC) that included one of the four
ICD-10-CM diagnosis codes in any position, as listed in the table that
follows later in this section. The applicant used the inclusion/
exclusion criteria described in the table that follows later in this
section. Under this analysis, the applicant identified 2,728 claims
mapping to the two MS-DRGs and calculated a final inflated average
case-weighted standardized charge per case of $267,720, which exceeded
the average case-weighted threshold amount of $194,848.
For the second analysis, the applicant searched for the cases that
included any of the ICD-10-PCS codes for percutaneous repair or
replacement of the tricuspid valve in any position, in combination with
one of the four ICD-10-CM codes for tricuspid valve insufficiency as
the primary diagnosis, as listed in the table that follows later in
this section. The applicant used the inclusion/exclusion criteria
described in the table that follows later in this section. Under this
analysis, the applicant identified 198 claims mapping to 6 MS-DRGs and
calculated a final inflated average case-weighted standardized charge
per case of $327,236, which exceeded the average case-weighted
threshold amount of $219,225.
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 EVOQUE\TM\ System meets
the cost criterion.
[[Page 36114]]
[GRAPHIC] [TIFF OMITTED] TP02MY24.130
We agree with the applicant that the EVOQUE\TM\ System meets the
cost criterion and are therefore proposing to approve the EVOQUE\TM\
System for new technology add-on payments for FY 2025.
Based on preliminary information from the applicant at the time of
this proposed rule, the applicant anticipated the total cost of the
EVOQUE\TM\ System to the hospital to be $49,000 per patient, which
includes the following components: the EVOQUE\TM\ Tricuspid Delivery
System, the EVOQUE\TM\ Dilator Kit, the EVOQUE\TM\ Loading System, the
Stabilizer, Base, and Plate, and the EVOQUE\TM\ Valve. The applicant
noted that the listed
[[Page 36115]]
components of the EVOQUETM System are sold together as one
unit because they are all needed to perform the procedure, are all
single patient use, and are not sold separately. We note that the cost
information for this technology may be updated in the final rule based
on revised or additional information CMS receives prior to the final
rule. Under Sec. 412.88(a)(2), we limit new technology add-on payments
to the lesser of 65% of the average cost of the technology, or 65% of
the costs in excess of the MS-DRG payment for the case. As a result, we
are proposing that the maximum new technology add-on payment for a case
involving the use of the EVOQUE\TM\ System would be $31,850 for FY 2025
(that is, 65% of the average cost of the technology).
We invite public comments on whether the EVOQUE\TM\ System meets
the cost criterion and our proposal to approve new technology add-on
payments for the EVOQUE\TM\ System for FY 2025 for the improvement of
health status in patients with symptomatic severe tricuspid
regurgitation despite optimal medical therapy, for whom tricuspid valve
replacement is deemed appropriate by a heart team.
e. GORE[supreg] EXCLUDER[supreg] Thoracoabdominal Branch Endoprosthesis
(TAMBE Device)
W.L. Gore & Associates, Inc. submitted an application for new
technology add-on payments for the TAMBE Device for FY 2025. According
to the applicant, the TAMBE Device is used for endovascular repair in
patients with thoracoabdominal aortic aneurysms (TAAA) and high-
surgical risk patients with pararenal abdominal aortic aneurysms (PAAA)
who have appropriate anatomy. Per the applicant, the TAMBE Device is
comprised of multiple required components, including: (1) an Aortic
Component, (2) Branch Components, (3) a Distal Bifurcated Component,
and (4) Contralateral Leg Component. According to the applicant, these
components together comprise the TAMBE Device.
Please refer to the online application posting for the GORE[supreg]
EXCLUDER[supreg] Thoracoabdominal Branch Endoprosthesis (TAMBE Device),
available at https://mearis.cms.gov/public/publications/ntap/NTP231016DYQQX, for additional detail describing the technology and the
condition treated by the technology.
According to the applicant, the TAMBE Device received Breakthrough
Device designation from FDA on October 1, 2021, for endovascular repair
of thoracoabdominal and pararenal aneurysms in the aorta in patients
who have appropriate anatomy. According to the applicant, the TAMBE
Device received premarket approval (PMA) from FDA on January 12, 2024,
for a slightly narrower indication for use, namely, TAAA and high-
surgical risk patients with PAAA who have appropriate anatomy. Since
the indication for which the applicant received premarket approval is
included within the scope of the Breakthrough Device designation, it
appears that the PMA indication is appropriate for consideration for
new technology add-on payment under the alternative pathway criteria.
According to the applicant, the TAMBE Device is not yet available for
sale due to the required lead time to train physicians on the TAMBE
Device, and the first commercial device will only be implanted May 1,
2024 or later. We are interested in additional information regarding
the delay in the technology's market availability, as we question
whether the date the device first became available for sale would be
the same as the date the first commercial device is implanted.
According to the applicant, there are currently no ICD-10-PCS
procedure codes to distinctly identify the TAMBE Device. The applicant
submitted a request for approval for a unique ICD-10-PCS procedure code
for the TAMBE Device beginning in FY 2025. The applicant provided a
list of diagnosis codes that may be used to currently identify the
proposed indication for the TAMBE Device 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, to identify potential cases
representing patients who may be eligible for the TAMBE Device, the
applicant searched the FY 2022 MedPAR file for claims that had at least
one of the ICD-10-CM codes and at least one of the ICD-10-PCS codes as
listed in the following table. Using the inclusion/exclusion criteria
described in the following table, the applicant identified 1,005 claims
mapping to 19 MS-DRGs, including MS-DRG 269 (Aortic and Heart Assist
Procedures except Pulsation Balloon without MCC), which represented
54.5% of the identified 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
$448,347, which exceeded the average case-weighted threshold amount of
$185,799. Because the final inflated average case-weighted standardized
charge per case exceeded the average case-weighted threshold amount,
the applicant asserted that the TAMBE Device meets the cost criterion.
---------------------------------------------------------------------------
\121\ Lists referenced here may be found in the cost criterion
codes and MS-DRGs attachment included in the online posting for the
technology.
---------------------------------------------------------------------------
[[Page 36116]]
[GRAPHIC] [TIFF OMITTED] TP02MY24.131
We agree with the applicant that the TAMBE Device meets the cost
criterion and are therefore proposing to approve the TAMBE Device for
new technology add-on payments for FY 2025.
Based on preliminary information from the applicant at the time of
this proposed rule, the applicant anticipated the total cost of the
TAMBE Device to the hospital to be $72,675 per patient. Per the
applicant, the TAMBE Device has a number of required components,
including the aortic component ($29,000), branch components ($3,355),
distal bifurcated component (DBC) ($10,758), DBC extender component
($3,037), contralateral leg endoprosthesis ($4,390), and iliac extender
endoprosthesis ($3,037). The applicant stated that the actual type and
number of components used varies by patient depending on their anatomy
and the extent of the patient's aneurysm. The applicant determined the
number and types of components that were used in an average patient
based on a multicenter pivotal clinical trial conducted predominantly
in the U.S. and calculated the case cost per component. We note that
the cost information for this technology may be updated in the final
rule based on revised or additional information CMS receives prior to
the final rule. Under Sec. 412.88(a)(2), we limit new technology add-
on payments to the lesser of 65% of the average cost of the technology,
or 65% of the costs in excess of the MS-DRG payment for the case. As a
result, we are proposing that the maximum new technology add-on payment
for a case involving the use of the TAMBE Device would be $47,238.75
for FY 2025 (that is, 65% of the average cost of the technology).
We invite public comments on whether the TAMBE Device meets the
cost criterion and our proposal to approve new technology add-on
payments for the TAMBE Device for FY 2025, for endovascular repair in
patients with thoracoabdominal aortic aneurysms and high-surgical risk
patients with pararenal aortic aneurysms who have appropriate anatomy.
f. LimFlowTM System
LimFlow Inc. submitted an application for new technology add-on
payments for the LimFlowTM System for FY 2025. According to
the applicant, the LimFlowTM System is a single-use, medical
device system designed to treat patients who have chronic limb-
threatening ischemia with no suitable endovascular or surgical
revascularization options and are at risk of major amputation. Per the
applicant, the LimFlowTM System consists of LimFlow's
Cylindrical and Conical Stent Grafts that are used in conjunction with
a LimFlowTM Arterial Catheter, a LimFlowTM Venous
Catheter, and a LimFlowTM Valvulotome. According to
[[Page 36117]]
the applicant, the LimFlowTM System is used for
transcatheter arterialization of the deep veins, a minimally invasive
procedure that aims to restore blood flow to the ischemic foot by
diverting a stream of oxygenated blood through tibial veins in order to
permanently bypass heavily calcified and severely stenotic arteries
defined as unreconstructable. We note that LimFlow Inc. submitted an
application for new technology add-on payments for the
LimFlowTM System for FY 2024 as summarized in the FY 2024
IPPS/LTCH PPS proposed rule (88 FR 26938 through 26940), but the
technology did not meet the applicable deadline of July 1, 2023 for FDA
approval or clearance of the technology and, therefore, was not
eligible for consideration for new technology add-on payments for FY
2024 (88 FR 58919).
Please refer to the online application posting for the
LimFlowTM System, available at https://mearis.cms.gov/public/publications/ntap/NTP23101627LXC, for additional detail
describing the technology and the condition treated by the technology.
According to the applicant, the LimFlowTM System
received Breakthrough Device designation from FDA on October 3, 2017,
for the treatment of critical limb ischemia by minimally invasively
creating an arterio-venous bypass graft to produce the venous
arterialization procedure in the below-the-knee vasculature. The
applicant stated that the technology was granted premarket approval
from FDA on September 11, 2023, for patients who have chronic limb-
threatening ischemia with no suitable endovascular or surgical
revascularization options and are at risk of major amputation. Since
the indication for which the applicant received premarket approval is
considered equivalent to the Breakthrough Device designation, it
appears that the premarket approval indication is appropriate for
consideration for new technology add-on payment under the alternative
pathway criteria. Per the applicant, the LimFlowTM System
was not immediately available for sale because inventory build and ramp
for commercial sales was set to commence following FDA approval to
allow time for the conduct of surgeon training and medical education on
patient selection, indications, and surgical technique. The applicant
stated that the technology became commercially available on November 1,
2023.
The applicant provided a list of ICD-10-PCS codes that, effective
October 1, 2018, can be used to uniquely describe procedures involving
the use of the LimFlowTM System under the ICD-10-PCS coding
system. Please see the online posting for the LimFlowTM
System for the complete list of ICD-10-PCS codes provided by the
applicant. The applicant provided a list of diagnosis codes that may be
used to currently identify the indication for the LimFlowTM
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 provided three
analyses to demonstrate that it meets the cost criterion. Each analysis
used the same ICD-10-PCS codes to identify potential cases representing
patients who may be eligible for the LimFlowTM System. The
applicant stated that the selected claims represent the exact
situations in which the LimFlowTM System would be used and
represent the cost of care associated with the use of the
LimFlowTM System. The applicant utilized a different year of
MedPAR data in each analysis. According to the applicant, it used
multiple years of data because the case count in each individual year
was low. The applicant imputed a value of 11 cases for MS-DRGs with
less than 11 cases. Each analysis followed the order of operations
described in the table that follows later in this section.
For the first analysis, the applicant searched FY 2022 MedPAR data
for claims reporting at least one of the ICD-10-PCS codes listed in the
table that follows later in this section to identify cases that may be
eligible for the LimFlowTM System. The applicant used the
inclusion/exclusion criteria described in the table that follows later
in this section. Under this analysis, the applicant identified 88
claims mapping to 8 MS-DRGs, with none exceeding more than 13% of the
total identified cases. The applicant calculated a final inflated
average case-weighted standardized charge per case of $307,461 which
exceeded the average case-weighted threshold amount of $124,971.
For the second analysis, the applicant searched FY 2021 MedPAR data
for claims reporting at least one of the ICD-10-PCS codes listed in the
table that follows later in this section to identify cases that may be
eligible for the LimFlowTM System. The applicant used the
inclusion/exclusion criteria described in the table that follows later
in this section. Under this analysis, the applicant identified 111
claims mapping to 10 MS-DRGs, with none exceeding more than 11% of the
total identified cases. The applicant calculated a final inflated
average case-weighted standardized charge per case of $277,454, which
exceeded the average case-weighted threshold amount of $116,278.
For the third analysis, the applicant searched FY 2020 MedPAR data
for claims reporting at least one of the ICD-10-PCS codes listed in the
table that follows later in this section to identify cases that may be
eligible for the LimFlowTM System. The applicant used the
inclusion/exclusion criteria described in the table that follows later
in this section. Under this analysis, the applicant identified 99
claims mapping to 9 MS-DRGs, with none exceeding more than 12% of the
total identified cases. The applicant calculated a final inflated
average case-weighted standardized charge per case of $273,638 which
exceeded the average case-weighted threshold amount of $125,153.
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 LimFlowTM
System meets the cost criterion.
---------------------------------------------------------------------------
\122\ Lists referenced here may be found in the cost criterion
codes and MS-DRGs attachment included in the online posting for the
technology.
---------------------------------------------------------------------------
[[Page 36118]]
[GRAPHIC] [TIFF OMITTED] TP02MY24.132
We agree with the applicant that the LimFlowTM System
meets the cost criterion and are therefore proposing to approve the
LimFlowTM System for new technology add-on payments for FY
2025.
Based on preliminary information from the applicant at the time of
this proposed rule, the applicant anticipated the total cost of the
LimFlowTM System to the hospital to be $25,000 per patient.
According to the applicant, the LimFlowTM System is sold as
a system, as such, the components of the LimFlowTM System
are not priced or sold to hospitals independently. The applicant stated
that all components of the LimFlowTM System are single-use
and the entire system is an operating cost. We note that the cost
information for this technology may be updated in the final rule based
on revised or additional information CMS receives prior to the final
rule. Under Sec. 412.88(a)(2), we limit new technology add-on payments
to the lesser of 65% of the average cost of the technology, or 65% of
the costs in excess of the MS-DRG payment for the case. As a result, we
are proposing that the maximum new technology add-on payment for a case
involving the use of the LimFlowTM System would be $16,250
for FY 2025 (that is, 65% of the average cost of the technology).
We invite public comments on whether the LimFlowTM
System meets the cost criterion and our proposal to approve new
technology add-on payments for the LimFlowTM System for FY
2025 for patients who have chronic limb-threatening ischemia with no
suitable endovascular or surgical revascularization options and are at
risk of major amputation.
g. ParadiseTM Ultrasound Renal Denervation System
ReCor Medical submitted an application for new technology add-on
[[Page 36119]]
payments for the ParadiseTM Ultrasound Renal Denervation
System for FY 2025. According to the applicant, the
ParadiseTM Ultrasound Renal Denervation System is an
endovascular catheter-based system that delivers SonoWave360\TM\
ultrasound energy circumferentially, thermally ablating and disrupting
overactive renal sympathetic nerves to lower blood pressure in adult
(>=22 years of age) patients with uncontrolled hypertension who may be
inadequately responsive to or who are intolerant to anti-hypertensive
medications.
Please refer to the online application posting for the
ParadiseTM Ultrasound Renal Denervation System, available at
https://mearis.cms.gov/public/publications/ntap/NTP23101772HBQ, for
additional detail describing the technology and the condition treated
by the technology.
According to the applicant, the ParadiseTM Ultrasound
Renal Denervation System received Breakthrough Device designation from
FDA on December 4, 2020, for reducing blood pressure in adult (>=22
years of age) patients with uncontrolled hypertension, who may be
inadequately responsive to, or who are intolerant to anti-hypertensive
medications. The applicant received FDA premarket approval for the
technology on November 7, 2023, for reducing blood pressure as an
adjunctive treatment in hypertension patients in whom lifestyle
modifications and antihypertensive medications do not adequately
control blood pressure. Because we consider the indication for which
the applicant received premarket approval to be within the scope of the
Breakthrough Device designation, and FDA considers this marketing
authorization to be for the Breakthrough Device designation,\123\ it
appears that the premarket approval indication is appropriate for
consideration for new technology add-on payment under the alternative
pathway criteria. According to the applicant, the technology was
commercially available immediately after FDA approval.
---------------------------------------------------------------------------
\123\ List of Breakthrough Devices with Marketing Authorization:
https://www.fda.gov/medical-devices/how-study-and-market-your-device/breakthrough-devices-program.
---------------------------------------------------------------------------
The applicant stated that effective October 1, 2023, the following
ICD-10-PCS code may be used to uniquely describe procedures involving
the use of the ParadiseTM Ultrasound Renal Denervation
System: X051329 (Destruction of renal sympathetic nerve(s) using
ultrasound ablation, percutaneous approach, new technology group 9).
The applicant stated that ICD-10-CM codes I10 (Essential (primary)
hypertension), I15.1 (Hypertension secondary to other renal disorders),
I15.8 (Other secondary hypertension), I15.9 (Secondary hypertension,
unspecified), and I1A.0 (Resistant hypertension) may be used to
currently identify the indication for the ParadiseTM
Ultrasound Renal Denervation System under the ICD-10-CM coding system.
With respect to the cost criterion, the applicant provided multiple
analyses to demonstrate that it meets the cost criterion. Each analysis
used different MS-DRGs and/or ICD-10-CM codes to identify potential
cases representing patients who may be eligible for the
ParadiseTM Ultrasound Renal Denervation System. 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 table that
follows later in this section.
For the first analysis, the applicant searched the FY 2022 MedPAR
file for all cases that map to MS-DRG 264 (Other Circulatory System
O.R. Procedures). The applicant stated that medical MS-DRGs 304 and 305
(Hypertension with MCC and without MCC) are specific to hypertension.
However, given the nature of the procedure, the applicant's expectation
is that the DRG Grouper logic would assign potential cases representing
patients who may be eligible for the ParadiseTM Ultrasound
Renal Denervation System to a surgical MS-DRG. To identify the surgical
MS-DRG, the applicant identified ICD-10-PCS code 015M3ZZ (Destruction
of abdominal sympathetic nerve, percutaneous approach) as the procedure
most similar to the procedure performed using the ParadiseTM
Ultrasound Renal Denervation System, and determined the specific MS-DRG
to which that ICD-10-PCS code maps. The applicant used the inclusion/
exclusion criteria described in the table that follows later in this
section. Under this analysis, the applicant identified 7,064 claims
mapping to MS-DRG 264 (Other Circulatory System O.R. Procedures) and
calculated a final inflated average case-weighted standardized charge
per case of $357,807, which exceeded the average case-weighted
threshold amount of $98,708.
For the second analysis, as a sensitivity analysis the applicant
searched the FY 2022 MedPAR file for all cases that map to MS-DRGs 304
or 305 (Hypertension with MCC and without MCC), which are specific to
hypertension. The applicant used the inclusion/exclusion criteria
described in the table that follows later in this section. Under this
analysis, the applicant identified 32,433 claims mapping to MS-DRG 304
(Hypertension with MCC) or 305 (Hypertension without MCC) and
calculated a final inflated average case-weighted standardized charge
per case of $268,298, which exceeded the average case-weighted
threshold amount of $46,986.
For the third analysis, the applicant provided a sensitivity
analysis that combined the first and second scenario together for a
broader list of MS-DRGs. The applicant used the inclusion/exclusion
criteria described in the table that follows later in this section.
Under this analysis, the applicant identified 39,497 claims mapping to
MS-DRGs 264 (Other Circulatory System O.R. Procedures), 304
(Hypertension with MCC), or 305 (Hypertension without MCC) and
calculated a final inflated average case-weighted standardized charge
per case of $284,306, which exceeded the average case-weighted
threshold amount of $56,237.
For the fourth analysis, the applicant performed a sensitivity
analysis to subset the cases assigned to MS-DRG 264 (Other Circulatory
System O.R. Procedures) to those reporting the following ICD-10-CM
codes: I10 (Essential (primary) hypertension), I15.1 (Hypertension
secondary to other renal disorders), I15.8 (Other secondary
hypertension), or I15.9 (Secondary hypertension, unspecified) in any
position. The applicant used the inclusion/exclusion criteria described
in the table that follows later in this section. Under this analysis,
the applicant identified 1,477 claims mapping to MS-DRG 264 (Other
Circulatory System O.R. Procedures) and calculated a final inflated
average case-weighted standardized charge per case of $325,810, which
exceeded the average case-weighted threshold amount of $98,708.
For the fifth analysis, the applicant performed a sensitivity
analysis to subset the cases assigned to MS-DRGs 264 (Other Circulatory
System O.R. Procedures), 304 (Hypertension with MCC), or 305
(Hypertension without MCC) to those reporting the following ICD-10-CM
codes: I10 (Essential (primary) hypertension), I15.1 (Hypertension
secondary to other renal disorders), I15.8 (Other secondary
hypertension), or I15.9 (Secondary hypertension, unspecified) in any
position. The applicant used the inclusion/exclusion criteria described
in the table that follows later in this
[[Page 36120]]
section. Under this analysis, the applicant identified 14,415 claims
mapping to MS-DRGs 264 (Other Circulatory System O.R. Procedures), 304
(Hypertension with MCC), or 305 (Hypertension without MCC) and
calculated a final inflated average case-weighted standardized charge
per case of $272,701, which exceeded the average case-weighted
threshold amount of $50,817.
Because the final inflated average case-weighted standardized
charge per case exceeded the average case-weighted threshold amount in
all analyses, the applicant asserted that the ParadiseTM
Ultrasound Renal Denervation System meets the cost criterion.
---------------------------------------------------------------------------
\124\ Lists referenced here may be found in the cost criterion
codes and MS-DRGs attachment included in the online posting for the
technology.
[GRAPHIC] [TIFF OMITTED] TP02MY24.133
[[Page 36121]]
We agree with the applicant that the ParadiseTM
Ultrasound Renal Denervation System meets the cost criterion and are
therefore proposing to approve the ParadiseTM Ultrasound
Renal Denervation System for new technology add-on payments for FY
2025.
Based on preliminary information from the applicant at the time of
this proposed rule, the applicant anticipated the total cost of the
ParadiseTM Ultrasound Renal Denervation System to the
hospital to be $23,000 per patient, based on single-use components
including the operating costs of the catheter kit ($22,000), cable
($250), and cartridge ($750). We note that the cost information for
this technology may be updated in the final rule based on revised or
additional information CMS receives prior to the final rule. Under
Sec. 412.88(a)(2), we limit new technology add-on payments to the
lesser of 65% of the average cost of the technology, or 65% of the
costs in excess of the MS-DRG payment for the case. As a result, we are
proposing that the maximum new technology add-on payment for a case
involving the use of the ParadiseTM Ultrasound Renal
Denervation System would be $14,950 for FY 2025 (that is, 65% of the
average cost of the technology).
We invite public comments on whether the ParadiseTM
Ultrasound Renal Denervation System meets the cost criterion and our
proposal to approve new technology add-on payments for the
ParadiseTM Ultrasound Renal Denervation System for FY 2025
for reducing blood pressure as an adjunctive treatment in hypertension
patients in whom lifestyle modifications and antihypertensive
medications do not adequately control blood pressure, which corresponds
to the Breakthrough Device designation.
h. PulseSelectTM Pulsed Field Ablation (PFA) Loop Catheter
Medtronic, Inc. submitted an application for new technology add-on
payments for the PulseSelectTM PFA Loop Catheter for FY
2025. According to the applicant, the PulseSelectTM PFA Loop
Catheter is used to perform pulmonary vein isolation in cardiac
catheter ablation to treat atrial fibrillation. Per the applicant,
unlike existing methods that rely on thermal energy (either
radiofrequency or cryoablation), PulseSelectTM employs non-
thermal irreversible electroporation to induce cell death in cardiac
tissue at the target site. According to the applicant,
PulseSelectTM technology's non-thermal approach can avoid
risks associated with existing thermal cardiac catheter ablation
technologies.
Please refer to the online application posting for the
PulseSelectTM PFA Loop Catheter, available at https://mearis.cms.gov/public/publications/ntap/NTP231017BMQKQ, for additional
detail describing the technology and the disease treated by the
technology.
According to the applicant, the PulseSelectTM PFA
System, which includes a compatible Medtronic multi-electrode cardiac
ablation catheter (the PulseSelectTM PFA Loop Catheter),
received Breakthrough Device designation from FDA on September 27,
2018, for the treatment of drug refractory recurrent symptomatic atrial
fibrillation. The Medtronic multi-electrode cardiac ablation catheter
is also intended to be used for cardiac electrophysiological (EP)
mapping and measuring of intracardiac electrograms, delivery of
diagnostic pacing stimuli and verifying electrical isolation post-
treatment. According to the applicant, the PulseSelectTM PFA
System received premarket approval on December 13, 2023 for the
following indication that reflects a slightly narrower patient
population compared to the Breakthrough Device designation: for cardiac
electrophysiological mapping (stimulation and recording) and for
treatment of drug refractory, recurrent, symptomatic paroxysmal atrial
fibrillation or persistent atrial fibrillation (episode duration less
than 1 year). The applicant noted that the PulseSelectTM PFA
System consists of two primary elements: the PulseSelectTM
PFA Loop Catheter and the PulseSelectTM PFA Generator
system, but that as capital equipment, the PulseSelectTM PFA
Generator system is not the subject of this new technology add-on
payment application. According to the applicant, the technology was
commercially available immediately after FDA approval.
The applicant submitted a request for approval for a unique ICD-10-
PCS procedure code for the PulseSelectTM PFA System and was
granted approval for the following procedure code effective April 1,
2024: 02583ZF (Destruction of conduction mechanism using irreversible
electroporation, percutaneous approach). The applicant provided a list
of diagnosis codes that may be used to currently identify the
indication for the PulseSelectTM PFA Loop Catheter 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. The applicant
stated that there is an expectation the PulseSelectTM PFA
Loop Catheter will predominantly be used when both indicated uses are
employed in a single patient case. Each analysis used different ICD-10-
CM codes to identify potential cases representing patients who may be
eligible for the PulseSelectTM PFA Loop Catheter. 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 table that
follows later in this section.
For the first analysis, the applicant searched the FY 2022 MedPAR
file for claims that had the ICD-10-PCS code 02583ZZ (Destruction of
conduction mechanism, percutaneous approach) in any procedure code
position on the claim and identified 98 MS-DRGs. The applicant limited
the cost analysis to the top six MS-DRGs that had over 2% of cases in
each MS-DRG (see the table that follows later in this section for a
complete list of MS-DRGs provided by the applicant). According to the
applicant, these six MS-DRGs represented 86% of all cardiac catheter
ablation cases. Using the inclusion/exclusion criteria described in the
table that follows later in this section, the applicant identified
14,695 claims mapping to these 6 MS-DRGs. The applicant followed the
order of operations described in the table that follows later in this
section and calculated a final inflated average case-weighted
standardized charge per case of $176,942, which exceeded the average
case-weighted threshold amount of $136,813.
For the second analysis, the applicant searched the FY 2022 MedPAR
file for claims that had the ICD-10-PCS code 02583ZZ (Destruction of
conduction mechanism, percutaneous approach) in any procedure code
position on the claim, and had one of the ICD-10-CM codes for atrial
fibrillation listed in the table that follows later in this section.
The applicant used the inclusion/exclusion criteria described in the
table that follows later in this section. Under this analysis, the
applicant identified 12,088 claims mapping to the top six MS-DRGs
(representing 82.3% of all cases) and calculated a final inflated
average case-weighted standardized charge per case of $179,931, which
exceeded the average case-weighted threshold amount of $136,782.
For the third analysis, the applicant searched the FY 2022 MedPAR
file for claims that had the ICD-10-PCS code 02583ZZ (Destruction of
conduction mechanism, percutaneous approach) in
[[Page 36122]]
any procedure code position on the claim and had one of the ICD-10-CM
codes for paroxysmal or persistent atrial fibrillation listed in the
table that follows later in this section. The applicant used the
inclusion/exclusion criteria described in the table that follows later
in this section. Under this analysis, the applicant identified 9,446
claims mapping to the top six MS-DRGs (representing 64.3% of all cases)
and calculated a final inflated average case-weighted standardized
charge per case of $180,114, which exceeded the average case-weighted
threshold amount of $136,193.
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 PulseSelectTM
PFA Loop Catheter meets the cost criterion.
---------------------------------------------------------------------------
\125\ Lists referenced here may be found in the cost criterion
codes and MS-DRGs attachment included in the online posting for the
technology.
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BILLING CODE 4120-01-P
[[Page 36123]]
[GRAPHIC] [TIFF OMITTED] TP02MY24.134
BILLING CODE 4120-01-C
We agree with the applicant that the PulseSelectTM PFA
Loop Catheter meets the cost criterion and are therefore proposing to
approve the PulseSelectTM
[[Page 36124]]
PFA Loop Catheter for new technology add-on payments for FY 2025.
Based on preliminary information from the applicant at the time of
this proposed rule, the applicant anticipated the cost of the
PulseSelectTM PFA Loop Catheter to the hospital to be $9,750
per patient, and for the PulseSelectTM PFA Catheter
Interface Cable to be $800 per patient, totaling $10,550 per inpatient
stay. We note that the cost information for this technology may be
updated in the final rule based on revised or additional information
CMS receives prior to the final rule. We note that the applicant stated
that the PulseSelectTM Pulsed Field Ablation (PFA) Interface
Cable is listed as a component of the PulseSelectTM Pulsed
Field Ablation (PFA) Generator Reusable Accessories. However, we note
the submitted new technology add-on payment application is for the
PulseSelectTM PFA Loop Catheter, and that the applicant had
specified in its application that the PulseSelectTM PFA
Generator System is not the subject of this new technology add-on
payment application. Therefore, we believe the total cost per inpatient
stay should be based only on the cost of the PulseSelectTM
PFA Loop Catheter, which is $9,750 per the applicant. Under Sec.
412.88(a)(2), we limit new technology add-on payments to the lesser of
65% of the average cost of the technology, or 65% of the costs in
excess of the MS-DRG payment for the case. As a result, we are
proposing that the maximum new technology add-on payment for a case
involving the use of the PulseSelectTM PFA Loop Catheter
would be $6,337.50 for FY 2025 (that is, 65% of the average cost of the
technology).
We invite public comments on whether the PulseSelectTM
PFA Loop Catheter meets the cost criterion and our proposal to approve
new technology add-on payments for the PulseSelectTM PFA
Loop Catheter for FY 2025 for cardiac electrophysiological mapping
(stimulation and recording) and for treatment of drug refractory,
recurrent, symptomatic paroxysmal atrial fibrillation or persistent
atrial fibrillation (episode duration less than 1 year).
i. Restor3d TIDALTM Fusion Cage
Restor3d submitted an application for new technology add-on
payments for the restor3d TIDALTM Fusion Cage for FY 2025.
According to the applicant, the TIDALTM Fusion Cages are
porous cages that vary in shape and size to accommodate individual
patient anatomy. Per the applicant, the TIDALTM Fusion Cage
is comprised of a single, continuous piece of titanium alloy fabricated
by laser powder bed fusion, an additive manufacturing technology.
According to the applicant, the TIDALTM Fusion Cage is an
accessory to the intramedullary nail for TTC Fusion and has a central
clearance hole to contain the intramedullary nail. Per the applicant,
the restor3d TIDALTM Fusion Cage can be used to aid in
healing for fractures, bone voids, absent bone, or surgical resections
in conjunction with an intramedullary nail for TTC fusion. The
applicant noted that the restor3d TIDALTM Fusion Cages also
serve to support and contain bone graft materials that aid in
arthrodesis.
Please refer to the online application posting for the restor3d
TIDALTM Fusion Cage, available at https://mearis.cms.gov/public/publications/ntap/NTP2310167MCW9, for additional detail
describing the technology and the disease treated by the technology.
According to the applicant, the restor3d TIDALTM Fusion
Cage System received Breakthrough Device designation from FDA on June
26, 2023 for the indication of tibiotalocalcaneal arthrodesis (fusion)
to provide stabilization of the hindfoot and ankle with critical size
bone defect, in lieu of bulk allograft in procedures such as: post-
traumatic and degenerative arthritis; post-traumatic or primary
arthrosis involving both ankle and subtalar joints; revision after
failed ankle arthrodesis with subtalar involvement; failed total ankle
arthroplasty; non-union ankle arthrodesis; rheumatoid hindfoot;
talectomy; avascular necrosis of the talus; neuroarthropathy;
neuromuscular disease and severe deformity; osteoarthritis; Charcot
foot; and previously infected arthrosis, second degree. The restor3d
Fusion Cage System is intended to provide stabilization in long bones
of skeletally mature patients, including tibia, femur and humerus, in
the presence of critical sized bone defects in lieu of bulk allograft,
bone transport or other treatment for segmental defects in procedures
such as: stabilization of fractures of the diaphyseal or metaphyseal
regions of long bones; malunions and nonunion; osteomyelitis;
periprosthetic fractures. According to the applicant, its marketing
authorization request for the restor3d TIDALTM Fusion Cage
System has been accepted by FDA, and it anticipates a 510(k) decision
from FDA for the same indication consistent with the Breakthrough
Device designation before May 1, 2024. The applicant anticipates that
the technology will be commercially available immediately after 510(k)
clearance from FDA.
According to the applicant, there are currently no ICD-10-PCS
procedure codes to distinctly identify the restor3d TIDALTM
Fusion Cage. The applicant submitted a request for approval for a
unique ICD-10-PCS procedure code for the restor3d TIDALTM
Fusion Cage beginning in FY 2025. The applicant provided a list of
diagnosis codes that may be used to currently identify the indication
for the restor3d TIDALTM Fusion Cage 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, to identify potential cases
representing patients who may be eligible for the restor3d
TIDALTM Fusion Cage, the applicant searched the FY 2022
MedPAR file for claims that had one of the ICD-10-PCS codes
corresponding to fusion procedures or claims that had one of the other
ICD-10-PCS codes in combination with one of the selected admitting
diagnosis ICD-10-CM codes. According to the applicant, the selected
claims represented potential candidates for the technology, who have
undergone tibiotalocalcaneal arthrodesis (fusion) and require
stabilization of the hindfoot and ankle due to a critical size bone
defect. Using the inclusion/exclusion criteria described in the
following table, the applicant identified 14,247 claims mapping to 24
MS-DRGs, including MS-DRG 617 (Amputation of Lower Limb for Endocrine,
Nutritional and Metabolic Disorders with CC) and MS-DRG 853 (Infectious
and Parasitic Diseases with O.R. Procedures with MCC), each
representing 16% of the identified 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
$303,575, which exceeded the average case-weighted threshold amount of
$109,972.
Because the final inflated average case-weighted standardized
charge per case exceeded the average case-weighted threshold amount,
the applicant asserted that the restor3d TIDALTM Fusion Cage
meets the cost criterion.
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\126\ Lists referenced here may be found in the cost criterion
codes and MS-DRGs attachment included in the online posting for the
technology.
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BILLING CODE 4120-01-P
[[Page 36125]]
[GRAPHIC] [TIFF OMITTED] TP02MY24.135
BILLING CODE 4120-01-C
We agree with the applicant that the restor3d TIDALTM
Fusion Cage meets the cost criterion and are therefore proposing to
approve the restor3d TIDALTM Fusion Cage for new technology
add-on payments for FY 2025, subject to the technology receiving FDA
marketing authorization as a Breakthrough Device for the indication
corresponding to the Breakthrough Device designation by May 1, 2024.
Based on preliminary information from the applicant at the time of
this proposed rule, the applicant anticipated the cost of the restor3d
TIDALTM Fusion Cage for each patient to be $27,995. In
addition, the applicant noted the costs related to the technology for
required supporting instruments and materials consist of one unit each
of the Instrument Kit ($6,995), TTC Fusion Nail ($7,500), and Bone
Graft ($1,500). The applicant estimated the total cost to the hospital
to be $43,990 for each procedure per patient, including the related
cost of the technology. As we have discussed in prior rulemaking, when
determining a new technology add-on payment, we provide payment based
on the cost of the actual technology (such as the drug or device
itself) and not for additional costs related to the use of the device
(86 FR 45146). Based on the information provided by the applicant, the
cost of the Instrument Kit is included in the costs of the supporting
instruments and materials for each procedure related to the use of the
technology, rather than a cost of the technology itself. In addition,
the TTC Fusion Nail and Bone Graft are not new and unique components
for this technology, and can be purchased separately in support of
other technologies. Furthermore, we note that the Instrument Kit is not
included in the Breakthrough Device designation, and it therefore
appears that only the restor3d TIDALTM Fusion Cage would be
designated as the Breakthrough Device once market authorized and would
be eligible for new technology add-on payments under the alternative
pathway. Therefore, it appears any add-on payment for the restor3d
TIDALTM Fusion Cage would include only the cost of the
restor3d TIDALTM Fusion Cage ($27,995).
We note that the cost information for this technology may be
updated in the final rule based on revised or additional information
CMS receives prior to the final rule. Under Sec. 412.88(a)(2), we
limit new technology add-on payments to the lesser of 65% of the
average cost of the technology, or 65% of the costs in excess of the
MS-DRG payment for the case. As a result, we are proposing that the
maximum new technology add-on payment for a case involving the use of
the restor3d TIDALTM Fusion Cage would be $18,196.75 for FY
2025 (that is, 65% of the average cost of the technology).
We invite public comments on whether the restor3d
TIDALTM Fusion Cage meets the cost criterion and our
proposal to approve new technology add-on payments for the restor3d
TIDALTM Fusion Cage for FY 2025, subject to the technology
receiving FDA marketing authorization as a Breakthrough Device for the
indication corresponding to the Breakthrough Device designation by May
1, 2024.
[[Page 36126]]
j. Symplicity SpyralTM Multi-Electrode Renal Denervation
Catheter
Medtronic submitted an application for new technology add-on
payments for the Symplicity Spyral\TM\ Multi-Electrode Renal
Denervation Catheter for FY 2025. According to the applicant, the
Symplicity Spyral\TM\ Multi-Electrode Renal Denervation Catheter
provides a treatment option for patients with uncontrolled
hypertension, when used with the Symplicity G3TM Generator,
by delivering targeted radiofrequency energy to the renal nerves,
safely disrupting overactive sympathetic signaling between the kidneys
and brain, as a treatment for uncontrolled hypertension.
Please refer to the online application posting for the Symplicity
Spyral\TM\ Multi-Electrode Renal Denervation Catheter, available at
https://mearis.cms.gov/public/publications/ntap/NTP2310161U617, for
additional detail describing the technology and the condition treated
by the technology.
According to the applicant, the Symplicity Spyral\TM\ Multi-
Electrode Renal Denervation System received Breakthrough Device
designation from FDA on March 27, 2020, for the reduction of blood
pressure in patients with uncontrolled hypertension despite the use of
anti-hypertensive medications or in patients who may have documented
intolerance to anti-hypertensive medications. The applicant received
premarket approval for the technology on November 17, 2023, for
reducing blood pressure as an adjunctive treatment in patients with
hypertension in whom lifestyle modifications and antihypertensive
medications do not adequately control blood pressure. Because we
consider the indication for which the applicant received premarket
approval to be within the scope of the Breakthrough Device designation,
and FDA considers this marketing authorization to be for the
Breakthrough Device,\127\ it appears that the premarket approval
indication is appropriate for consideration for new technology add-on
payment under the alternative pathway criteria. According to the
applicant, the technology was commercially available immediately after
FDA approval.
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\127\ List of Breakthrough Devices with Marketing Authorization:
https://www.fda.gov/medical-devices/how-study-and-market-your-device/breakthrough-devices-program.
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According to the applicant, there are currently no ICD-10-PCS
procedure codes to distinctly identify the Symplicity Spyral\TM\ Multi-
Electrode Renal Denervation Catheter. The applicant submitted a request
for approval for a unique ICD-10-PCS procedure code for the Symplicity
Spyral\TM\ Multi-Electrode Renal Denervation Catheter beginning in FY
2025. The applicant provided a list of diagnosis codes that may be used
to currently identify the indication for the Symplicity Spyral\TM\
Multi-Electrode Renal Denervation Catheter 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 two
analyses and two sensitivity analyses to demonstrate that it meets the
cost criterion. Each analysis used a common set of ICD-10-CM codes but
different criteria for the inclusion/exclusion of MS-DRGs and outlier
cases to identify potential cases representing patients who may be
eligible for the Symplicity Spyral\TM\ Multi-Electrode Renal
Denervation Catheter. 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 table that follows later in this section.
For the first scenario (Cost Analysis #1), the applicant searched
the FY 2022 MedPAR file for cases where essential (primary)
hypertension was the reason for the admission, using at least one of
the ICD-10-CM diagnosis codes in the table that follows later in this
section. The applicant used the inclusion/exclusion criteria described
in the table that follows later in this section. Under this analysis,
the applicant identified 490,387 claims mapping to 99 MS-DRGs,
including MS-DRG 291 (Heart Failure and Shock With MCC) representing
67% of identified cases. The applicant calculated a final inflated
average case-weighted standardized charge per case of $136,450, which
exceeded the average case-weighted threshold amount of $62,312.
The second scenario (Cost Analysis #1 with Outliers) was a
sensitivity analysis that mirrored the first scenario, except that
cases with outlier payments were included. The applicant used the
inclusion/exclusion criteria described in the table that follows later
in this section. Under this analysis, the applicant identified 501,760
claims mapping to 101 MS-DRGs, including MS-DRG 291 (Heart Failure and
Shock With MCC) representing 66.7% of identified cases. The applicant
calculated a final inflated average case-weighted standardized charge
per case of $145,001, which exceeded the average case-weighted
threshold amount of $63,789.
For the third scenario (Cost Analysis #2), the applicant searched
the FY 2022 MedPAR file for claims reporting any of the ICD-10-CM
diagnosis codes listed in the table that follows later in this section
but limited the case selection to MS-DRGs where the principal diagnosis
was essential hypertension, and no procedures were performed. Per the
applicant, this list represents a subset of cases that were most likely
to benefit from the new procedural treatment option for primary
hypertension. The applicant used the inclusion/exclusion criteria
described in the table that follows later in this section. Under this
analysis, the applicant identified 390,384 claims mapping to 8 MS-DRGs,
including MS-DRG 291 (Heart Failure and Shock With MCC) representing
84.4% of identified cases. The applicant calculated a final inflated
average case-weighted standardized charge per case of $124,525, which
exceeded the average case-weighted threshold amount of $52,861.
The fourth scenario (Cost Analysis #2 with Outliers) mirrored the
third scenario, except that cases with outlier payments were included.
The applicant used the inclusion/exclusion criteria described in the
table that follows later in this section. Under this analysis, the
applicant identified 395,634 claims mapping to 8 MS-DRGs, including MS-
DRG 291 (Heart Failure and Shock With MCC) representing 84.5% of
identified cases. The applicant calculated a final inflated average
case-weighted standardized charge per case of $128,356, which exceeded
the average case-weighted threshold amount of $52,873.
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 Symplicity Spyral\TM\
Multi-Electrode Renal Denervation Catheter meets the cost criterion.
---------------------------------------------------------------------------
\128\ Lists referenced here may be found in the cost criterion
codes and MS-DRGs attachment included in the online posting for the
technology.
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BILLING CODE 4120-01-P
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[[Page 36128]]
[GRAPHIC] [TIFF OMITTED] TP02MY24.137
BILLING CODE 4120-01-C
We agree with the applicant that the Symplicity Spyral\TM\ Multi-
Electrode Renal Denervation Catheter meets the cost criterion and are
therefore proposing to approve the Symplicity Spyral\TM\ Multi-
Electrode Renal Denervation Catheter for new technology add-on payments
for FY 2025.
An estimate for the cost of the Symplicity Spyral\TM\ Multi-
Electrode Renal Denervation Catheter is not available for publication
at the time of this proposed rule. We expect the applicant to release
cost information prior to the final rule, and we will provide an update
regarding the new technology add-on payment amount for the technology,
if approved, in the final rule. The applicant stated that there would
be two components for the cost of the technology, including operating
costs for the Symplicity Spyral\TM\ Multi-Electrode Renal Denervation
Catheter and capital costs for the Symplicity G3TM
Generator. Because section 1886(d)(5)(K)(i) of the Act requires that
the Secretary establish a mechanism to recognize the costs of new
medical services or technologies under the payment system established
under that subsection, which establishes the system for payment of the
operating costs of inpatient hospital services, we do not include
capital costs in the add-on payments for a new medical service or
technology or make new technology add-on payments under the IPPS for
capital-related costs (86 FR 45145). Based on the information from the
applicant, it appears that the Symplicity G3TM Generator is
a capital cost. Therefore, it appears that this component is not
eligible for new technology add-on payment because, as discussed in
prior rulemaking and as noted, we only make new technology add-on
payments for operating costs (72 FR 47307 through 47308). Any new
technology add-on payment for the Symplicity Spyral\TM\ Multi-Electrode
Renal Denervation Catheter would be subject to our policy under Sec.
412.88(a)(2) where we limit new technology add-on payment to the lesser
of 65% of the average cost of the technology, or 65% of the costs in
excess of the MS-DRG payment for the case.
We invite public comments on whether the Symplicity Spyral\TM\
Multi-Electrode Renal Denervation Catheter meets the cost criterion and
our proposal to approve new technology add-on payments for the
Symplicity Spyral\TM\ Multi-Electrode Renal Denervation Catheter for FY
2025 for reducing blood pressure as an adjunctive treatment in patients
with hypertension in whom lifestyle modifications and antihypertensive
medications do not adequately control blood pressure, which corresponds
to the Breakthrough Device designation
k. Transdermal Glomerular Filtration Rate (GFR) Measurement System
Utilizing Lumitrace
MediBeacon, Inc. submitted an application for new technology add-on
payments for the Transdermal GFR Measurement System utilizing Lumitrace
for FY 2025. According to the applicant, the Transdermal GFR
Measurement System utilizing Lumitrace is a three-component system: (1)
an optical skin sensor, (2) a monitor, and (3) Lumitrace
(relmapirazin), which is a proprietary fluorescent tracer agent
[[Page 36129]]
that glows in the presence of light and is removed from the blood
exclusively by the GFR mechanism of the kidney. The technology is
intended to measure GFR in patients with impaired or normal renal
function during clinical conditions where the real time measurement of
GFR (versus estimated measures) is clinically useful in the
understanding of kidney function. We note that MediBeacon, Inc.
submitted an application for new technology add-on payments for the
Transdermal GFR Measurement System utilizing Lumitrace for FY 2024, as
summarized in the FY 2024 IPPS/LTCH PPS proposed rule (88 FR 26954
through 26955), that it withdrew prior to the issuance of the FY 2024
IPPS/LTCH PPS final rule (88 FR 58919).
Please refer to the online application posting for the Transdermal
GFR Measurement System utilizing Lumitrace, available at https://mearis.cms.gov/public/publications/ntap/NTP23101671HAA, for additional
detail describing the technology.
According to the applicant, the Transdermal GFR Measurement System
utilizing Lumitrace received Breakthrough Device designation from FDA
on October 16, 2018, for measuring GFR in patients with impaired or
normal renal function. According to the applicant, its marketing
authorization request for the Transdermal GFR Measurement System
utilizing Lumitrace has been filed by FDA, and it anticipates a
premarket approval decision from FDA for the same indication consistent
with the Breakthrough Device designation before May 1, 2024. According
to the applicant, the Transdermal GFR Measurement System will not be
immediately available for sale because it is waiting for premarket
approval from FDA before producing large volumes of the agent, sensor,
and monitor, and anticipates a limited launch prior to widespread
availability.
The applicant stated that effective October 1, 2019, the following
ICD-10-PCS code may be used to uniquely describe procedures involving
the use of the Transdermal GFR Measurement System utilizing Lumitrace:
XT25XE5 (Monitoring of kidney using fluorescent pyrazine, external
approach, new technology group 5).
With respect to the cost criterion, to identify potential cases
representing patients who may be eligible for the Transdermal GFR
Measurement System utilizing Lumitrace, the applicant searched the FY
2022 MedPAR file for claims that had one of the ICD-10-CM codes or the
ICD-10-PCS codes representing patients who are likely to require and/or
benefit from real-time kidney function monitoring during the inpatient
hospital stay. Using the inclusion/exclusion criteria described in the
following table, the applicant identified 470,171 claims mapping to 697
MS-DRGs, including MS-DRG 871 (Septicemia or Severe Sepsis without MV
>96 Hours with MCC) representing 15% of the identified 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 $231,117, which exceeded the average
case-weighted threshold amount of $134,438.
Because the final inflated average case-weighted standardized
charge per case exceeded the average case-weighted threshold amount,
the applicant asserted that the Transdermal GFR Measurement System
utilizing Lumitrace meets the cost criterion.
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\129\ Lists referenced here may be found in the cost criterion
codes and MS-DRGs attachment included in the online posting for the
technology.
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[[Page 36130]]
[GRAPHIC] [TIFF OMITTED] TP02MY24.138
We agree with the applicant that the Transdermal GFR Measurement
System utilizing Lumitrace meets the cost criterion and are therefore
proposing to approve the Transdermal GFR Measurement System utilizing
Lumitrace for new technology add-on payments for FY 2025, subject to
the technology receiving FDA marketing authorization as a Breakthrough
Device for the indication corresponding to the Breakthrough Device
designation by May 1, 2024.
The applicant has not provided an estimate for the cost of the
Transdermal GFR Measurement System utilizing Lumitrace at the time of
this proposed rule. The applicant stated that there would be three
components for the cost of the technology: the operating cost of the
Transdermal GFR Measurement System Sensor, the operating cost of
Lumitrace (relmapirazin) that glows in the presence of light and is
removed from the blood exclusively by the GFR mechanism of the kidney,
and the capital cost of the Transdermal GFR Measurement System Monitor
that displays fluorescence collected by the Transdermal GFR Measurement
System Sensor to provide an indication of changes in transdermal GFR
over time. Because section 1886(d)(5)(K)(i) of the Act requires that
the Secretary establish a mechanism to recognize the costs of new
medical services or technologies under the payment system established
under that subsection, which establishes the system for payment of the
operating costs of inpatient hospital services, we do not include
capital costs in the add-on payments for a new medical service or
technology or make new technology add-on payments under the IPPS for
capital-related costs (86 FR 45145). As noted, the applicant stated
that the cost of the Transdermal GFR Measurement System Monitor is a
capital cost. Therefore, it appears that this component is not eligible
for new technology add-on payment because, as discussed in prior
rulemaking and as noted, we only make new technology add-on payments
for operating costs (72 FR 47307 through 47308). We expect the
applicant to submit cost information prior to the final rule, and we
will provide an update regarding the new technology add-on payment
amount for the technology, if approved, in the final rule. Any new
technology add-on payment for the Transdermal GFR Measurement System
utilizing Lumitrace would be subject to our policy under Sec.
412.88(a)(2) where we limit new technology add-on payments to the
lesser of 65% of the average cost of the technology, or 65% of the
costs in excess of the MS-DRG payment for the case.
We invite public comments on whether the Transdermal GFR
Measurement System utilizing Lumitrace meets the cost criterion and our
proposal to approve new technology add-on payments for the Transdermal
GFR Measurement System utilizing Lumitrace for FY 2025, subject to the
technology receiving FDA marketing authorization as a Breakthrough
Device for the indication corresponding to the Breakthrough Device
designation by May 1, 2024.
l. TriClipTM G4
Abbott submitted an application for new technology add-on payments
for TriClip\TM\ G4 for FY 2025. According to the applicant, TriClip\TM\
G4 is intended for reconstruction of the insufficient tricuspid valve
through tissue approximation via a transcatheter approach. The
TriClip\TM\ G4 System consists of the TriClip\TM\ G4 Implant,
[[Page 36131]]
Clip Delivery System and Steerable Guide. The applicant explained that
the TriClip\TM\ G4 Implant is a percutaneously delivered mechanical
implant that helps close the tricuspid valve leaflets resulting in
fixed tricuspid leaflet approximation throughout the cardiac cycle.
According to the applicant, TriClip\TM\ G4 is intended for the
treatment of patients with symptomatic, severe tricuspid valve
regurgitation, whose symptoms and tricuspid regurgitation (TR) severity
persist despite being treated optimally with medical therapy.
Please refer to the online application posting for TriClip\TM\ G4,
available at https://mearis.cms.gov/public/publications/ntap/NTP231016N52MH, for additional detail describing the technology and the
disease treated by the technology.
According to the applicant, the TriClip\TM\ G4 System received
Breakthrough Device designation from FDA on November 19, 2020, for the
treatment of patients with symptomatic, severe tricuspid valve
regurgitation, whose symptoms and TR severity persist despite being
treated optimally with medical therapy. According to the applicant, its
marketing authorization request has been filed by FDA, and it
anticipates a premarket approval (PMA) decision from FDA for the same
indication consistent with the Breakthrough Device designation before
May 1, 2024. According to the applicant, the technology is expected to
be commercially available immediately after FDA approval.
According to the applicant, the following ICD-10-PCS code may be
used to describe procedures involving the use of TriClip\TM\ G4:
02UJ3JZ (Supplement tricuspid valve with synthetic substitute,
percutaneous approach). The applicant noted that there are no FDA-
approved technologies using this procedure code. The applicant stated
that ICD-10-CM diagnosis codes I07.1 (Rheumatic tricuspid
insufficiency) and I36.1 (Nonrheumatic tricuspid (valve) insufficiency)
may be used to currently identify the indication for TriClip\TM\ G4
under the ICD-10-CM coding system.
With respect to the cost criterion, to identify potential cases
representing patients who may be eligible for TriClip\TM\ G4, the
applicant searched the 2022 Medicare Inpatient Hospital Standard
Analytical File (100%) for claims that had one of the following ICD-10-
CM codes, I07.1 (Rheumatic tricuspid insufficiency) or I36.1
(Nonrheumatic tricuspid (valve) insufficiency) in the primary position,
in combination with ICD-10-PCS code 02UJ3JZ (Supplement tricuspid valve
with synthetic substitute, percutaneous approach). Using the inclusion/
exclusion criteria described in the following table, the applicant
identified 235 claims mapping to two MS-DRGs, MS-DRG 266 (Endovascular
Cardiac Valve Replacement and Supplement Procedures, with MCC), and 267
(Endovascular Cardiac Valve Replacement and Supplement Procedures,
without MCC). 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 $313,389 which exceeded the
average case-weighted threshold amount of $192,861.
Because the final inflated average case-weighted standardized
charge per case exceeded the average case-weighted threshold amount,
the applicant asserted that TriClip\TM\ G4 meets the cost criterion.
[GRAPHIC] [TIFF OMITTED] TP02MY24.139
[[Page 36132]]
We agree with the applicant that TriClip\TM\ G4 meets the cost
criterion and are therefore proposing to approve TriClip\TM\ G4 for new
technology add-on payments for FY 2025, subject to the technology
receiving FDA marketing authorization as a Breakthrough Device for the
indication corresponding to the Breakthrough Device designation by May
1, 2024.
Based on preliminary information from the applicant at the time of
this proposed rule, the applicant anticipated the total cost of
TriClip\TM\ G4 to the hospital to be $40,000 per procedure. According
to the applicant, the TriClip\TM\ System is composed of multiple
components: the TriClip\TM\ G4 Implant, Clip Delivery System, and
Steerable Guide Catheter. The applicant stated that all the components
typically required for a single procedure are sold together for a
single operating cost (for example, it is the same cost per procedure
whether the patient requires one or two implants). We note that the
cost information for this technology may be updated in the final rule
based on revised or additional information CMS receives prior to the
final rule. Under Sec. 412.88(a)(2), we limit new technology add-on
payments to the lesser of 65% of the average cost of the technology, or
65% of the costs in excess of the MS-DRG payment for the case. As a
result, we are proposing that the maximum new technology add-on payment
for a case involving the use of TriClip\TM\ G4 would be $26,000 for FY
2025 (that is, 65% of the average cost of the technology).
We invite public comments on whether TriClip\TM\ G4 meets the cost
criterion and our proposal to approve new technology add-on payments
for TriClip\TM\ G4 for FY 2025, subject to the technology receiving FDA
marketing authorization as a Breakthrough Device for the indication
corresponding to the Breakthrough Device designation by May 1, 2024.
m. VADER[supreg] Pedicle System
Icotec Medical, Inc. submitted an application for new technology
add-on payments for the VADER[supreg] Pedicle System for FY 2025.
According to the applicant, the VADER[supreg] Pedicle System is a
pedicle screw system for standard posterior fixation of the spinal
column used to provide stabilization of infected spinal segments after
debridement of infectious tissues. According to the applicant, the
VADER[supreg] Pedicle System is made from high strength carbon fiber
reinforced polyether ether ketone, which provides low artifact imaging
to allow for post-operative surveillance of the healing of the infected
spinal segment.
Please refer to the online application posting for the
VADER[supreg] Pedicle System, available at https://mearis.cms.gov/public/publications/ntap/NTP231016CMGH3, for additional detail
describing the technology and the condition treated by the technology.
According to the applicant, the VADER[supreg] Pedicle System
received Breakthrough Device designation from FDA on July 31, 2023 for
stabilizing the thoracic and/or lumbar spinal column as an adjunct to
fusion in patients diagnosed with an active spinal infection (for
example, spondylodiscitis, osteomyelitis) who are at risk of spinal
instability, progressive spinal deformity, or neurologic compromise,
following surgical debridement. The applicant stated that the
technology received 510(k) clearance from FDA on February 26, 2024, for
the following indication, which is the subject of the new technology
add-on payment application, and is consistent with the Breakthrough
Device designation: to stabilize the thoracic and/or lumbar spinal
column in patients who are or will be receiving concurrent medical
treatment for an active spinal infection (for example,
spondylodiscitis, osteomyelitis) that, without stabilization, could
lead to deterioration of bony structures and misalignment with
neurological compromise. We note that the VADER[supreg] Pedicle System
has received FDA 510(k) clearance for multiple indications since
2019.\130\ We also note that, under the eligibility criteria for
approval under the alternative pathway for certain transformative new
devices, only the use of the VADER[supreg] Pedicle System to stabilize
the thoracic and/or lumbar spine as an adjunct to fusion in patients
with spinal infection, 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 2025. According to the applicant, the
technology was commercially available immediately after 510(k)
clearance from FDA.
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\130\ K222789, January 9, 2023; K200596, October 13, 2020;
K193423, May 22, 2020; and K190545, June 20, 2019.
---------------------------------------------------------------------------
According to the applicant, there are currently no ICD-10-PCS
procedure codes to distinctly identify the VADER[supreg] Pedicle
System. The applicant submitted a request for approval for a unique
ICD-10-PCS procedure code for the VADER[supreg] Pedicle System
beginning in FY 2025. The applicant provided a list of diagnosis codes
that may be used to currently identify the indication for the
VADER[supreg] Pedicle System under the ICD-10-CM coding system,
describing spinal infections including osteomyelitis, discitis, and
spondylopathies of various vertebral spine body parts including the
cervical, thoracic, and lumbar regions. Please refer to the online
application posting for the complete list of ICD-10-CM codes provided
by the applicant. As previously noted, only use of the technology for
the indications corresponding to the Breakthrough Device designation
would be relevant for new technology add-on payment purposes. We
believe the relevant ICD-10-CM codes to identify the Breakthrough
Device-designated indication would be the codes included in category
M46 (Other inflammatory spondylopathies) under the ICD-10-CM
classification in subcategories: M46.2- (Osteomyelitis of vertebra),
M46.3- (Infection of intervertebral disc (pyogenic)), M46.4- (Discitis,
unspecified), M46.5- (Other infective spondylopathies), M46.8- (Other
specified inflammatory spondylopathies), and M46.9- (Unspecified
inflammatory spondylopathy). We are inviting public comment on the use
of these ICD-10-CM diagnosis codes to identify the Breakthrough Device-
designated indication for purposes of the new technology add-on
payment, if approved.
With respect to the cost criterion, to identify potential cases
representing patients who may be eligible for the VADER[supreg] Pedicle
System, the applicant searched the FY 2022 MedPAR file for claims
reporting a combination of ICD-10-CM/PCS codes as listed in the online
posting for the VADER[supreg] Pedicle System. The applicant believes
these cases represent patients who have undergone fusion procedures and
have been diagnosed with an active spinal infection (such as
spondylodiscitis or osteomyelitis), and these patients are at risk of
spinal instability, progressive spinal deformity, or neurologic
compromise following surgical debridement, making them suitable
candidates for the use of the technology. Using the inclusion/exclusion
criteria described in the following table, the applicant identified
2,116 claims mapping to 22 MS-DRGs, with none exceeding more than 15%
of the total identified 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
$473,636, which exceeded the average case-weighted threshold amount of
[[Page 36133]]
$197,922. Because the final inflated average case-weighted standardized
charge per case exceeded the average case-weighted threshold amount,
the applicant asserted that the VADER[supreg] Pedicle System meets the
cost criterion.
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\131\ Lists referenced here may be found in the cost criterion
codes and MS-DRGs attachment included in the online posting for the
technology.
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BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TP02MY24.140
BILLING CODE 4120-01-C
We agree with the applicant that the VADER[supreg] Pedicle System
meets the cost criterion and are therefore proposing to approve the
VADER[supreg] Pedicle System for new technology add-on payments for FY
2025.
Based on preliminary information from the applicant at the time of
this proposed rule, the applicant anticipated the total cost of the
VADER[supreg] Pedicle System to the hospital to be $43,450 per patient.
According to the applicant, the unit prices are $6,500 for a pedicle
screw, $4,600 for a rod, and $350 for a set screw. The applicant stated
that an average of five pedicle screws, two rods, and five set screws
would be used for a spinal fusion procedure. The applicant calculated
the total cost of the technology by multiplying the unit price of each
component by the average number of that component used in the
procedure. We note that the cost information for this technology may be
updated in the final rule based on revised or additional information
CMS receives prior to the final rule. Under Sec. 412.88(a)(2), we
limit new technology add-on payments to the lesser of 65% of the
average cost of the technology, or 65% of the costs in excess of the
MS-DRG payment for the case. As a result, we are proposing that the
maximum new technology add-on payment for a case involving the use of
the VADER[supreg] Pedicle System would be $28,242.50 for FY 2025 (that
is, 65% of the average cost of the technology).
We invite public comments on whether the VADER[supreg] Pedicle
System meets the cost criterion and our proposal to approve new
technology add-on payments for the VADER[supreg] Pedicle System for FY
2025, when used
[[Page 36134]]
to stabilize the thoracic and/or lumbar spinal column in patients who
are or will be receiving concurrent medical treatment for an active
spinal infection (for example, spondylodiscitis, osteomyelitis) that,
without stabilization, could lead to deterioration of bony structures
and misalignment with neurological compromise.
n. ZEVTERATM (Ceftobiprole Medocaril)
Basilea Pharmaceutica International Ltd, Allschwil submitted an
application for new technology add-on payments for ZEVTERA\TM\
(ceftobiprole medocaril) for FY 2025. According to the applicant,
ZEVTERA\TM\ is an advanced intravenous cephalosporin antibiotic
designed to combat infections caused by antibiotic resistant pathogens.
The applicant stated that ZEVTERATM targets a wide range of
Gram-positive and Gram-negative bacteria, including methicillin-
resistant Staphylococcus aureus (MRSA), Streptococcus pneumoniae,
including penicillin-non-susceptible pneumococci (PNSP) and
Enterococcus faecalis, as well as non-Extended Spectrum Beta-Lactamase
(non-ESBL) producing Enterobacterales. The applicant noted that
ZEVTERA\TM\'s bactericidal activity is achieved by binding to essential
penicillin-binding proteins, disrupting the synthesis of the bacterial
cell wall's peptidoglycan layer and leading to bacterial cell death,
which differentiates it from other beta-lactams by effectively
addressing MRSA. Per the applicant, ZEVTERA\TM\ is stable against
certain beta-lactamases in both gram-positive and gram-negative
bacteria. The applicant stated that Phase 3 studies submitted to the
FDA demonstrate its non-inferiority compared to standard treatments in
various infections, including Staphylococcus aureus bacteremia (SAB),
acute bacterial skin and skin structure infections (ABSSSI), and
community-acquired bacterial pneumonia (CABP).
Please refer to the online application posting for ZEVTERA\TM\,
available at https://mearis.cms.gov/public/publications/ntap/NTP2310161DBB8, for additional detail describing the technology and the
disease treated by the technology.
According to the applicant, ZEVTERA\TM\ received QIDP designations
for CABP on July 20, 2015, for ABSSI on August 7, 2015, and for SAB on
December 8, 2017. According to the applicant, its marketing
authorization request for ZEVTERATM has been filed by FDA,
and it anticipates an NDA decision from FDA for the same indications
consistent with the QIDP designations by July 1, 2024. According to the
applicant, ZEVTERA\TM\ will be commercially available immediately after
FDA approval. We note that, as an application submitted under the
alternative pathway for certain antimicrobial products at Sec.
412.87(d), ZEVTERA\TM\ is eligible for conditional approval for new
technology add-on payments if it does not receive FDA marketing
authorization by July 1, 2024, provided that the technology receives
FDA marketing authorization before July 1 of the fiscal year for which
the applicant applied for new technology add-on payments (that is, July
1, 2025), as provided in Sec. 412.87(f)(3). According to the
applicant, for CABP and ABSSSI, ZEVTERA\TM\ is dosed at 500mg and
administered three times daily (Q8h) as a 2-hour intravenous infusion
for 5-14 days. For SAB, it is administered four times daily (Q6h) for
the first 8 days, followed by Q8h daily infusion for the subsequent
days, up to a total of 42 days.
According to the applicant, there are currently no ICD-10-PCS
procedure codes to distinctly identify ZEVTERA\TM\. We note that the
applicant submitted a request for approval for a unique ICD-10-PCS
procedure code for ZEVTERA\TM\ beginning in FY 2025. The applicant
provided a list of diagnosis codes that may be used to currently
identify the indication for ZEVTERA\TM\ under the ICD-10-CM coding
system, describing SAB, ABSSSI, and CABP. Please refer to the online
application posting for the complete list of ICD-10-CM (and PCS) codes
provided by the applicant. We believe the relevant combination of ICD-
10-CM codes to identify the indication of SAB would be: R78.81
(Bacteremia) in combination with B95.61 (Methicillin susceptible
Staphylococcus aureus infection as the cause of diseases classified
elsewhere) or B95.62 (Methicillin resistant Staphylococcus aureus
infection as the cause of diseases classified elsewhere). We are
inviting public comments on the use of these ICD-10-CM diagnosis codes
to identify the indication of SAB for purposes of the new technology
add-on payment, if approved.
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 2022 MedPAR file using
different sets of ICD-10-CM codes in the first five diagnosis positions
to identify potential cases representing different cohorts of patients
who may be eligible for ZEVTERA\TM\. The applicant performed the same
analysis on ABSSSI, CABP, and SAB cases individually and for all
indications combined.
For the first analysis, the applicant searched for claims with a
diagnosis code for ABSSSI using the ICD-10-CM codes listed in the
online posting for ZEVTERA\TM\. The applicant used the inclusion/
exclusion criteria described in the table that follows later in this
section. Under this analysis, the applicant identified 261,397 claims
mapping to 663 MS-DRGs and calculated a final inflated average case-
weighted standardized charge per case of $114,279, which exceeded the
average case-weighted threshold amount of $63,767.
For the second analysis, the applicant searched for claims with a
diagnosis code for CABP using the ICD-10-CM codes listed in the online
posting for ZEVTERA\TM\. The applicant used the inclusion/exclusion
criteria described in the table that follows later in this section.
Under this analysis, the applicant identified 635,628 claims mapping to
611 MS-DRGs and calculated a final inflated average case-weighted
standardized charge per case of $143,456, which exceeded the average
case-weighted threshold amount of $78,778.
For the third analysis, the applicant searched for claims with a
diagnosis code for SAB using the ICD-10-CM codes listed in the online
posting for ZEVTERA\TM\. The applicant used the inclusion/exclusion
criteria described in the table that follows later in this section.
Under this analysis, the applicant identified 105,068 claims mapping to
626 MS-DRGs and calculated a final inflated average case-weighted
standardized charge per case of $165,809, which exceeded the average
case-weighted threshold amount of $82,238.
For the fourth analysis, the applicant searched for claims with
diagnosis codes for ABSSSI, CABP, or SAB in the first five positions on
a claim, using the ICD-10-CM codes listed in the online posting for
ZEVTERA\TM\. The applicant used the inclusion/exclusion criteria
described in the table that follows later in this section. Under this
analysis, the applicant identified 958,104 claims mapping to 680 MS-
DRGs and calculated a final inflated average case-weighted standardized
charge per case of $137,861, which exceeded the average case-weighted
threshold amount of $75,097.
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 ZEVTERA\TM\ meets the cost
criterion.
---------------------------------------------------------------------------
\132\ Lists referenced here may be found in the cost criterion
codes and MS-DRGs attachment included in the online posting for the
technology.
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BILLING CODE 4120-01-P
[[Page 36135]]
[GRAPHIC] [TIFF OMITTED] TP02MY24.141
BILLING CODE 4120-01-C
We agree with the applicant that ZEVTERA\TM\ meets the cost
criterion and are therefore proposing to approve ZEVTERA\TM\ for new
technology add-on payments for FY 2025, subject to the technology
receiving FDA marketing authorization for the indication corresponding
to the QIDP designation by July 1, 2024. As an application submitted
under the alternative pathway for certain antimicrobial products at
Sec. 412.87(d), ZEVTERA\TM\ is eligible for conditional approval for
new technology add-on payments if it does not receive FDA marketing
authorization by July 1, 2024, provided that the technology receives
FDA marketing authorization before July 1 of the fiscal year for which
the applicant applied for new technology add-on payments (that is, July
1, 2025), as provided in Sec. 412.87(f)(3). If ZEVTERA\TM\ receives
FDA marketing authorization before July 1, 2025, 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, 2025, no new technology add-on payments
would be made for cases involving the use of ZEVTERA\TM\ for FY 2025.
Based on preliminary information from the applicant at the time of
this proposed rule, the pricing for this treatment is set at $125 per
vial, and the recommended dosage varies depending on the condition
being treated. The applicant stated that for ABSSSI and CABP, the
suggested daily dose is 3 vials per day for a duration of 5-14 days,
resulting in an estimated average cost of $3,750 for a 10-day therapy.
The applicant noted that for SAB, the recommended dose is every 6 hours
for the first 8 days, followed by every 8 hours for up to 42 days. The
applicant made the assumption that patients would be inpatient for 28
days and then continue the therapy as an outpatient for up to 42 days,
which resulted in an average inpatient cost of $11,500. We note that
the cost information for this technology may be updated in the final
rule based on revised or additional information CMS receives prior to
the final rule. Under Sec. 412.88(a)(2), we limit new technology add-
on payments for technologies designated as QIDPs to the lesser of 75%
of the average cost of the technology, or 75% of the costs in excess of
the MS-DRG payment for the case. As a result, we are proposing that the
maximum new technology add-on payment for a case involving the use of
ZEVTERA\TM\ for FY 2025 would be $8,625.00 for the indication of SAB
and $2,812.50 for the indications of ABSSSI and CABP (that is, 75% of
the average cost of the technology).
We invite public comments on whether ZEVTERA\TM\ meets the cost
criterion and our proposal to approve new technology add-on payments
for ZEVTERA\TM\ for FY 2025 for SAB, ABSSSI, and CABP, subject to the
technology receiving FDA marketing
[[Page 36136]]
authorization consistent with its QIDP designations by July 1, 2024.
7. Proposed Change to the Method for Determining Whether a Technology
Would Be Within Its 2- to 3-Year Newness Period When Considering
Eligibility for New Technology Add-On Payments
As discussed previously in this rule, section 1886(d)(5)(K)(i) of
the Act requires the Secretary to establish (after notice and
opportunity for public comment) a mechanism to recognize the costs of
new medical services and 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. The
regulations at 42 CFR 412.87 implement these provisions. As further
discussed in FY 2005 IPPS final rule (69 FR 49002), the intent of
section 1886(d)(5)(K) of the Act and regulations under Sec.
412.87(b)(2) is to pay for new medical services and technologies for
the first 2 to 3 years that a product comes on the market, during the
period when the costs of the new technology are not yet fully reflected
in the DRG weights. Generally, we use the FDA marketing authorization
date as the indicator of the time when a technology begins to become
available on the market and data reflecting the costs of the technology
begin to become available for recalibration of the DRG weights. In
specific circumstances, we have recognized a date later than the FDA
marketing authorization date as the appropriate starting point for the
2- to 3-year newness period. For example, we have recognized a later
date where an applicant could prove a delay in actual availability of a
product after FDA approval or clearance. The costs of the new medical
service or technology, once paid for by Medicare for this 2- to 3-year
period, are accounted for in the MedPAR data that are used to
recalibrate the DRG weights on an annual basis. Therefore, we stated it
is appropriate to limit the add-on payment window for technologies that
have passed this 2- to 3-year timeframe.
As discussed previously in this rule, 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 three-year
anniversary date of the product's entry onto the U.S. market occurs in
the latter half of the fiscal year, that is, after April 1 (70 FR
47362).
We have not implemented a policy to stop new technology add-on
payment in the middle of the fiscal year (for example, during the month
that a technology reaches its three-year anniversary date of entry onto
the U.S. market) because, as we discussed in the FY 2005 IPPS final
rule, we believe that predictability is an important aspect of the
prospective payment system methodology. Accordingly, we believe that it
is appropriate to apply a consistent payment methodology for new
technologies throughout the fiscal year (69 FR 49016).
As previously discussed, in the FY 2024 IPPS/LTCH PPS final rule
(88 FR 58948 through 58958), we finalized that beginning with the new
technology add-on payment applications for FY 2025, for technologies
that are not already FDA market authorized for the indication that is
the subject of the new technology add-on payment application,
applicants must have a complete and active FDA marketing authorization
request at the time of new technology add-on payment application
submission and must provide documentation of FDA acceptance or filing
to CMS at the time of application submission, consistent with the type
of FDA marketing authorization application the applicant has submitted
to FDA. We also finalized that, beginning with FY 2025 applications, in
order to be eligible for consideration for 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).
As we summarized in the FY 2024 IPPS/LTCH PPS final rule,
commenters raised concerns that this policy would adversely impact
their ability to receive maximum flexibility with respect to when to
apply to FDA and when they apply for new technology add-on payment (88
FR 58953). Many commenters expressed specific concerns regarding moving
the FDA marketing authorization deadline to May 1 and the impact it
would have on how long technologies may be eligible for 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 be eligible for 3 years of new
technology add-on payments, shortening the window from 3 months under
the former policy (April 1 until July 1) to just 1 month (April 1 until
May 1) (88 FR 58954). In response, we noted in that even under the
former policy, not all applicants receive the full 3 years of new
technology add on payments, and that 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
technology's ability to receive the full 3 years of payment. However,
we also noted the commenters' concerns regarding the shortened time
period between April 1 and May 1 under the new policy and stated that
we would consider for future rulemaking how we assess new technology
add-on payment eligibility in the third year of newness, such as
consideration of adjusting the April 1 cutoff to allow for a longer
window of eligibility (88 FR 58955).
After further consideration of commenters' concerns that the policy
we finalized in the FY 2024 IPPS/LTCH PPS final rule may limit the
ability of new technology add-on payment applicants to be eligible for
a third year of new technology add-on payments due to the shortened
timeframe between April 1 and May 1, we agree that there may be merit
to modifying our current 6-month guideline to provide additional
flexibility for applications submitted in accordance with this new
policy. While technologies that are FDA approved or cleared in April,
and technologies with a documented delay in availability on the U.S.
market such that the product's entry onto the U.S. market falls within
the second half of the fiscal year, would still be eligible for a third
year of new technology add-on payments under current policy, we agree
that the change in the FDA marketing authorization deadline from July 1
to May 1 may limit the ability of new technology add-on payment
applicants to be eligible for 3 years of new technology add-on
payments. Therefore, we are proposing to change the April 1 cutoff for
determining whether a technology would be within its 2- to 3-year
newness period when considering eligibility for
[[Page 36137]]
new technology add-on payments. We believe this proposed change would
continue the flexibility applicants had with respect to when they apply
to FDA and when they apply for new technology add-on payment, while
preserving a predictable and consistent payment methodology for new
technologies throughout the fiscal year.
Specifically, we are proposing that beginning with new technology
add-on payments for FY 2026, in assessing whether to continue the new
technology add-on payments for those technologies that are first
approved for new technology add-on payments in FY 2025 or a subsequent
year, we would extend new technology add-on payments for an additional
fiscal year when the three-year anniversary date of the product's entry
onto the U.S. market occurs on or after October 1 of that fiscal year.
We are proposing that this policy change would become effective
beginning with those technologies that are initially approved for new
technology add-on payments in FY 2025 or a subsequent year to allow
additional flexibility for those applications for new technologies
which were first subject to the change in the deadline for FDA
marketing authorization from July 1 to May 1. Therefore, for
technologies that were first approved for new technology add-on
payments prior to FY 2025, including for technologies we determine to
be substantially similar to those technologies, we would continue to
use the midpoint of the upcoming fiscal year (April 1) when determining
whether a technology would still be considered ``new'' for purposes of
new technology add-on payments. Similarly, we are also proposing that
beginning with applications for new technology add-on payments for FY
2026, we would use the start of the fiscal year (October 1) instead of
April 1 to determine whether to approve new technology add-on payment
for that fiscal year.
We are seeking public comment on our proposal to change the April 1
cutoff to October 1 for determining whether a technology would be
within its 2- to 3-year newness period when considering eligibility for
new technology add-on payments, beginning in FY 2026, effective for
those technologies that are approved for new technology add-on payments
starting in FY 2025 or a subsequent year.
8. Proposed Change to the Requirements Defining an Active FDA Marketing
Application for the Purpose of New Technology Add-On Payment
Application Eligibility
As previously discussed, in the FY 2024 IPPS/LTCH PPS final rule
(88 FR 58948 through 58958), we finalized that beginning with the new
technology add-on payment applications for FY 2025, for technologies
that are not already FDA market authorized for the indication that is
the subject of the new technology add-on payment application,
applicants must have a complete and active FDA market authorization
request at the time of new technology add-on payment application
submission, and must provide documentation of FDA acceptance or filing
to CMS at the time of application submission, consistent with the type
of FDA marketing authorization application the applicant has submitted
to FDA. See Sec. 412.87(e) and further discussion in the FY 2024 IPPS/
LTCH PPS final rule (88 FR 58948 through 58958).
As we discussed further in the FY 2024 IPPS/LTCH PPS final rule,
the documentation of FDA acceptance or filing of a marketing
authorization request must be provided at the time of new technology
add-on payment application, and be consistent with the type of FDA
marketing authorization the applicant has submitted to FDA. We stated
that we only accept new technology add-on payment applications once FDA
has received all of the information necessary to determine whether it
will accept (such as in the case of a 510(k) premarket submission or De
Novo Classification request) or file (such as in the case of a PMA,
NDA, or BLA) the application as demonstrated by documentation of the
acceptance/filing that is provided by FDA. The applicant is required to
submit documentation with its new technology add-on payment application
to demonstrate that FDA has determined that the application is
sufficiently complete to allow for substantive review by the FDA (88 FR
58955).
We also explained that, for the purposes of new technology add-on
payment applications, we consider an FDA marketing authorization
application to be in an active status when it has not been withdrawn,
is not the subject of a Complete Response Letter or final decision from
FDA to refuse to approve the application, and is not on hold (88 FR
58955 through 58956).
As noted in the FY 2024 final rule, we collaborated with FDA in
developing the terminology used for purposes of this policy, and the
intent behind using the terms we did was to ensure that the requirement
could apply to and be inclusive of the various FDA applications and
approval pathways for different types of drugs and devices. As such, we
did not use terms defined in statute or existing regulations or terms
defined by FDA (88 FR 58955). While FDA may consider an application for
an FDA marketing authorization to be under active review despite a hold
status, under our current policy we do not consider marketing
authorization applications in a hold status with FDA to be in an active
status for the purposes of new technology add-on payment application
eligibility. As discussed in the FY 2024 IPPS/LTCH PPS final rule (88
FR 58956) our intent with respect to considering applications that are
on hold at the time of new-technology add-on payment application
submission to be inactive was 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 new technology
add on payment 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. As noted in the FY 2024 final rule (88 FR 58956), we
have received applications over the years for technologies that are in
a hold status with up to 360 days allowed for submission of additional
information.
We also recognize that applications for FDA marketing authorization
may go in and out of a hold status at various stages during the FDA
application process and for various reasons. The maximum length of a
hold status can vary based on the FDA approval pathway, such that the
time remaining for an applicant to resolve the hold may vary from days
to several months after the start of the new technology add-on payment
application cycle, depending on the FDA pathway, reason(s) for the hold
status, and how the timing of the hold coincides with the annual new
technology add-on payment application submission date. Additionally,
FDA may need to issue secondary letters of request for additional
information, often depending on the quality of initial response from
the applicant. Accordingly, while we continue to believe that an
application that is in a hold status with FDA pending additional
information may lack critical information that is needed to evaluate
whether the technology meets the eligibility criteria, we also
recognize the
[[Page 36138]]
variability in the reasons for a hold status and the varying lengths of
time for which an application can be on hold with FDA, such that some
applicants may be farther along in the process to obtain FDA marketing
authorization at the time of the hold.
After further consideration, based on the variability in the timing
of and reasons underlying hold statuses with FDA, we believe it is
appropriate to propose to update our policy. Specifically, we are
proposing, beginning with new technology add-on payment applications
for FY 2026, to no longer consider a hold status to be an inactive
status for the purposes of eligibility for the new technology add-on
payment. We would continue to consider an application to be in an
inactive status where it is withdrawn, the subject of a Complete
Response Letter, or the subject of a final decision from FDA to refuse
to approve the application. Because of the variety of circumstances for
which a technology may be in a hold status, as previously discussed, we
note that we may reassess this policy for future years, if finalized,
based on ongoing experience.
We invite public comments on our proposal to no longer consider a
hold status to be an inactive status for the purposes of eligibility
for new technology add-on payment, beginning with new technology add-on
payment applications for FY 2026.
9. Proposed Change to the Calculation of the Inpatient New Technology
Add-On Payment for Gene Therapies Indicated for Sickle Cell Disease
As discussed previously in this section, section
1886(d)(5)(K)(ii)(I) of the Act specifies that a new medical service or
technology may be considered for a new technology add-on payment if,
based on the estimated costs incurred with respect to discharges
involving such service or technology, the DRG prospective payment rate
otherwise applicable to such discharges under this subsection is
inadequate. Under our current policy, 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 a medical product designated
by the FDA as a Qualified Infectious Disease Product [QIDP] or approved
under FDA's Limited Population Pathway for Antibacterial and Antifungal
Drugs [LPAD]) of the estimated costs of the new technology or medical
service.
Since establishing the new technology add-on payment, we have been
cautious about increasing the new technology add-on payment percentage.
As stated in the May 4, 2001 proposed rule (66 FR 22695), we believe
limiting the new technology add-on payment percentage would provide
hospitals an incentive for continued cost-effective behavior in
relation to the overall costs of the case. In the FY 2020 IPPS/LTCH PPS
final rule, in adopting the general increase in the new technology add-
on payment percentage from 50 percent to 65 percent, we stated that we
believed that 65 percent would be an incremental increase that would
reasonably balance the need to maintain the incentives inherent to the
prospective payment system while also encouraging the development and
use of new technologies. We continue to believe that it is important to
balance these incentives in assessing any potential change to the new
technology add-on payment calculation.
In the FY 2020 IPPS/LTCH PPS final rule, we also finalized an
increase in the new technology add-on payment percentage for QIDPs from
65 percent to 75 percent. We stated that we shared commenters' concerns
related to antimicrobial resistance and its serious impact on Medicare
beneficiaries and public health overall. We noted that the Centers for
Disease Control and Prevention (CDC) described antimicrobial resistance
as ``one of the biggest public health challenges of our time.'' We
stated that we believe that Medicare beneficiaries may be
disproportionately impacted by antimicrobial resistance due in large
part to the unique vulnerability to drug-resistant infections (for
example, due to age-related and/or disease-related immunosuppression,
greater pathogen exposure from via catheter use) among individuals aged
65 or older. We further stated that antimicrobial resistance results in
a substantial number of additional hospital days for Medicare
beneficiaries, resulting in significant unnecessary health care
expenditures.
To address the continued issues related to antimicrobial resistance
resulting in a substantial number of increased hospital days and
significant unnecessary health care expenditures for Medicare
beneficiaries, in the FY 2021 IPPS/LTCH PPS final rule, we finalized a
proposal to expand the alternative new technology add-on payment
pathway for QIDPs to include products approved under the LPAD pathway
and to increase the maximum new technology add-on payment percentage
for a product approved under FDA's LPAD pathway, from 65 percent to 75
percent, consistent with the new technology add-on payment percentage
for a product that is designated by FDA as a QIDP, beginning with
discharges occurring on or after October 1, 2020 (85 FR 58739).
Since finalizing our current policy for QIDPs and LPADs, we
continue to receive feedback from interested parties regarding the
adequacy of new technology add-on payments for certain categories of
technologies, including cell and gene therapies to treat sickle cell
disease (SCD). Although we still believe it is prudent to proceed
cautiously with increasing the new technology add-on payment
percentage, we recognize that SCD, the most common inherited blood
disorder, has historically had limited treatment options. In addition,
hospitalizations and other health episodes related to SCD cost the
health system $3 billion per year.\133\ We further note that the
administration has identified a need to address SCD and has made a
commitment to improving outcomes for patients with SCD by facilitating
access to cell and gene therapies that treat SCD.\134\
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\133\ Biden-Harris Administration Announces Action to Increase
Access to Sickle Cell Disease Treatments https://www.hhs.gov/about/news/2024/01/30/biden-harris-administration-announces-action-increase-access-sickle-cell-disease-treatments.html.
\134\ Biden-Harris Administration Announces Action to Increase
Access to Sickle Cell Disease Treatments https://www.hhs.gov/about/news/2024/01/30/biden-harris-administration-announces-action-increase-access-sickle-cell-disease-treatments.html.
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Accordingly, we believe that further facilitating access to these
gene therapies for Medicare beneficiaries with SCD may have the
potential to simultaneously improve the health of impacted Medicare
beneficiaries and potentially lead to long-term savings in the Medicare
program. We also note that some gene therapies that treat SCD are among
the costliest treatments to date, and we are concerned about a
hospital's ability to sustain a potential financial loss to provide
access to such treatments. As we discussed when we increased the new
technology add-on payment for QIDPs in the FY 2020 IPPS/LTCH PPS final
rule and products approved under FDA's LPAD in the FY 2021 IPPS/LTCH
PPS final rule from 65 percent to 75 percent, we believe that it may be
appropriate to increase the maximum add-on amount in limited cases
where the current new technology add-on payment does not provide a
sufficient incentive for the use of a new technology, which we believe
may be the case for gene therapies that treat SCD. Accordingly, and
consistent with our new technology add-on payment policy for products
designated by the FDA as a QIDP or LPAD, we believe
[[Page 36139]]
there would be merit in also increasing the new technology add-on
payment percentage for gene therapies that are indicated and used for
the treatment of SCD to 75 percent.
Therefore, we are proposing that, subject to our review of the new
technology add-on payment eligibility criteria, for certain gene
therapies approved for new technology add-on payments in the FY 2025
IPPS/LTCH PPS final rule for the treatment of SCD, effective with
discharges on or after October 1, 2024 and concluding at the end of the
2- to 3-year newness period for such therapy, if the costs of a
discharge (determined by applying CCRs as described in Sec. 412.84(h))
involving the use of such therapy for the treatment of SCD exceed the
full DRG payment (including payments for IME and DSH, but excluding
outlier payments), Medicare would 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. We note that, if finalized, these
payment amounts would only apply to any gene therapy indicated and used
specifically for the treatment of SCD that CMS determines in the FY
2025 IPPS/LTCH PPS final rule meets the criteria for approval for new
technology add-on payment. We are also proposing to add new Sec.
412.88(a)(2)(ii)(C) and Sec. 412.88(b)(2)(iv) to reflect this proposed
change to the calculation of the new technology add-on payment amount,
beginning in FY 2025 and concluding at the end of the 2- to 3-year
newness period for each such therapy. With this incremental increase,
we believe hospitals would continue to have an incentive to balance the
desirability of using the new technology for patients as medically
appropriate while also maintaining an incentive for continued cost-
effective behavior in relation to the overall costs of the case.
We invite public comments on this proposal to temporarily increase
the new technology add-on payment percentage to 75 percent for a gene
therapy that is indicated and used for the treatment of SCD as
described previously. We also seek comment on whether we should make
this proposed 75 percent add-on payment percentage available only to
applicants that meet certain additional criteria, such as attesting to
offering and/or participating in outcome-based pricing arrangements
with purchasers (without regard to whether the specific purchaser
availed itself of the outcome-based arrangements), or otherwise
engaging in behaviors that promote access to these therapies at lower
cost.
III. Proposed Changes to the Hospital Wage Index for Acute Care
Hospitals
A. Background
1. Legislative Authority
Section 1886(d)(3)(E) of the Act requires that, as part of the
methodology for determining prospective payments to hospitals, the
Secretary adjust the standardized amounts for area differences in
hospital wage levels by a factor (established by the Secretary)
reflecting the relative hospital wage level in the geographic area of
the hospital compared to the national average hospital wage level. We
currently define hospital labor market areas based on the delineations
of statistical areas established by the Office of Management and Budget
(OMB). A discussion of the proposed FY 2025 hospital wage index based
on the statistical areas appears under section III.B. of the preamble
of this proposed rule.
Section 1886(d)(3)(E) of the Act requires the Secretary to update
the wage index annually and to base the update on a survey of wages and
wage-related costs of short-term, acute care hospitals. CMS collects
these data on the Medicare cost report, CMS Form 2552-10, Worksheet S-
3, Parts II, III, IV. The OMB control number for this information
collection request is 0938-0050, which 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 proposed adjustment for FY 2025 is discussed in section
II.B. of the Addendum to this proposed rule.
As discussed in section III.I. of the preamble of this proposed
rule, we also take into account the geographic reclassification of
hospitals in accordance with sections 1886(d)(8)(B) and 1886(d)(10) of
the Act when calculating IPPS payment amounts. Under section
1886(d)(8)(D) of the Act, the Secretary is required to adjust the
standardized amounts so as to ensure that aggregate payments under the
IPPS after implementation of the provisions of sections 1886(d)(8)(B),
1886(d)(8)(C), and 1886(d)(10) of the Act are equal to the aggregate
prospective payments that would have been made absent these provisions.
The proposed budget neutrality adjustment for FY 2025 is discussed in
section II.A.4.b. of the Addendum to this proposed rule.
Section 1886(d)(3)(E) of the Act also provides for the collection
of data every 3 years on the occupational mix of employees for short-
term, acute care hospitals participating in the Medicare program, in
order to construct an occupational mix adjustment to the wage index.
(The OMB control number for approved collection of this information is
0938-0907, which expires on January 31, 2026.) A discussion of the
occupational mix adjustment that we are proposing to apply to the FY
2025 wage index appears under section III.E. of the preamble of this
proposed rule.
2. Proposed Core-Based Statistical Areas (CBSAs) for the FY 2025
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 (69 FR 49026
through 49032), 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 2021) are
based on revised OMB delineations issued on Sept 14, 2018, in OMB
Bulletin No. 18-04.\135\ OMB Bulletin No. 18-04 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 the American Community
Survey (ACS) and Census Bureau population estimates for 2015.
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\135\ We note that while OMB Bulletin 20-01 superseded Bulletin
No. 18-04, it included no changes that required CMS to formally
adopt the revisions.
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Historically, OMB issued major revisions to statistical areas every
10 years, based on the results of the decennial census and occasionally
issues minor updates and revisions to statistical areas in the years
between the decennial censuses through OMB Bulletins. On February 28,
2013, OMB issued Bulletin No. 13-01. CMS adopted these delineations,
based on the results of the 2010 census, effective beginning with the
FY 2015 IPPS wage index (79 FR 49951 through 49957). OMB subsequently
issued Bulletin No. 15-01 on July 15, 2015, followed by OMB Bulletin
No. 17-01 on August 15, 2017, which provided updates to and superseded
OMB Bulletin No. 15-01. 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
[[Page 36140]]
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. OMB Bulletin No. 17-01 was superseded by the April 10,
2018 OMB Bulletin No. 18-03, and then by the September 14, 2018 OMB
Bulletin No. 18-04. These bulletins established revised delineations
for Metropolitan Statistical Areas, Micropolitan Statistical Areas, and
Combined Statistical Areas, and provided guidance on the use of the
delineations of these statistical areas. In FY 2021, we adopted the
updates set forth in OMB Bulletin No. 18-04 (85 FR 58743 through
58753). Thus, most recently in the FY 2024 IPPS/LTCH PPS final rule, 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, 17-01, and 18-04.
In the July 16, 2021 Federal Register (86 FR 37777), OMB finalized
a schedule for future updates based on results of the decennial Census
updates to commuting patterns from the ACS. In accordance with that
schedule, on July 21, 2023, OMB released Bulletin No. 23-01. A copy of
OMB Bulletin No. 23-01 may be obtained at https://www.whitehouse.gov/wp-content/uploads/2023/07/OMB-Bulletin-23-01.pdf. According to OMB,
the delineations reflect the 2020 Standards for Delineating Core Based
Statistical Areas (``the 2020 Standards''), which appeared in the
Federal Register on July 16, 2021 (86 FR 37770 through 37778), and the
application of those standards to Census Bureau population and journey-
to-work data (that is, 2020 Decennial Census, American Community
Survey, and Census Population Estimates Program data).
B. Proposed Implementation of Revised Labor Market Area Delineations
We believe that using the revised delineations based on OMB
Bulletin No. 23-01 will increase the integrity of the IPPS wage index
system by creating a more accurate representation of current geographic
variations in wage levels. Therefore, we are proposing to implement the
revised OMB delineations as described in the July 21, 2023 OMB Bulletin
No. 23-01, beginning with the FY 2025 IPPS wage index. We are proposing
to use these revised delineations to calculate area wage indexes in a
manner that is generally consistent with the CMS' implementation of
CBSA-based wage index methodologies.
CMS has recognized that hospitals in certain areas may experience a
negative impact on their IPPS payment due to the proposed adoption of
the revised OMB delineations and has finalized transition policies to
mitigate negative financial impacts and provide stability to year-to-
year wage index variations. We refer readers to the FY 2015 IPPS final
rule (79 FR 49956 through 49962) for discussion of the transition
period finalized the last time CMS adopted revised OMB delineations
after a decennial census. In the FY 2020 final rule (84 FR 42336-
42337), CMS finalized a wage index transition policy to apply a 5
percent cap on any decrease that hospitals may experience in their
final wage index from the prior fiscal year. In FY 2023, the 5 percent
cap policy was made permanent for all acute care hospitals. This 5
percent cap on reductions policy is discussed in further detail in
section III.G.6 of the preamble of this proposed rule. We believe it is
important for the IPPS to use the updated labor market area
delineations in order to maintain a more accurate and up-to date
payment system that reflects the reality of current labor market
conditions. We believe the 5 percent cap policy will sufficiently
mitigate significant disruptive financial impacts on hospitals that are
negatively affected by the proposed adoption of the revised OMB
delineations and thus, we are not proposing a transition period for
these hospitals.
1. Micropolitan Statistical Areas
The OMB ``2020 Standards'' define a ``Micropolitan Statistical
Area'' as being associated with at least one urban area that has a
population of at least 10,000, but less than 50,000. A Micropolitan
Statistical Area comprises the central county or counties containing
the core, plus adjacent outlying counties having a high degree of
social and economic integration with the central county or counties as
measured through commuting (86 FR 37778). We refer to these areas as
Micropolitan Areas. Since FY 2005, we have treated Micropolitan Areas
as rural and included hospitals located in Micropolitan Areas in each
State's rural wage index. We refer readers to the FY 2005 IPPS final
rule (69 FR 49029 through 49032) and the FY 2015 IPPS/LTCH PPS final
rule (79 FR 49952) for a complete discussion regarding this policy and
our rationale for treating Micropolitan Areas as rural. Based upon the
new 2020 Decennial Census data, a number of urban counties have
switched status and have joined or became Micropolitan Areas, and some
counties that once were part of a Micropolitan Area, under current OMB
delineations, have become urban. Overall, there are a similar number of
Micropolitan Areas (542) under the new OMB delineations based on the
2020 Census as existed under the latest data from the 2010 Census
(541). We believe that the best course of action would be to continue
the policy established in the FY 2005 IPPS final rule and include
hospitals located in Micropolitan Areas in each State's rural wage
index. These areas continue to be defined as having relatively small
urban cores (populations of 10,000-49,999). We do not believe it would
be appropriate to calculate a separate wage index for areas that
typically may include only a few hospitals for the reasons set forth in
the FY 2005 IPPS/LTCH PPS final rule (69 FR 49029 through 49032) and
the FY 2015 IPPS final rule (79 FR 49952). Therefore, in conjunction
with our proposal to implement the new OMB statistical area
delineations beginning in FY 2025, we are proposing to continue to
treat Micropolitan Areas as ``rural'' and to include Micropolitan Areas
in the calculation of each state's rural wage index.
2. Metropolitan Divisions
According to OMB's ``2020 Standards'' (86 FR 37776), a metropolitan
division is a county or group of counties within a metropolitan
statistical area (MSA) with a population of at least 2.5 million. Thus,
MSAs may be subdivided into metropolitan divisions. A county qualifies
as a ``main county'' of a metropolitan division if 65 percent or more
of workers living in the county also work within the county and the
ratio of the number of workers working in the county to the number of
workers living in the county is at least 0.75. A county qualifies as a
``secondary county'' if 50 percent or more, but less than 65 percent,
of workers living in the county also work within the county and the
ratio of the number of workers working in the county to the number of
workers living in the county is at least 0.75. After all the main and
secondary counties are identified and grouped, each additional county
that already has qualified for inclusion in the MSA falls within the
metropolitan division associated with the main/secondary county or
counties with which the county at issue has the highest employment
interchange measure. Counties in a metropolitan division must be
contiguous. In the FY 2005
[[Page 36141]]
IPPS final rule (69 FR 49029), CMS finalized our policy to use the
metropolitan divisions where applicable under the CBSA definitions. CMS
concluded that including the metropolitan divisions in the CBSA
definitions most closely approximated the labor market delineation from
the ``Primary Metropolitan Statistical Areas'' delineations in place
prior to FY 2005.
Under the current delineations, 11 MSAs are subdivided into a total
of 31 metropolitan divisions. The revised OMB delineations have
subdivided two additional existing MSAs into metropolitan divisions
relative to the previous delineations. Under the proposed delineations,
13 MSAs (the 11 currently subdivided MSAs plus two additional MSAs) are
subdivided into 37 metropolitan divisions. Since the configurations of
most subdivided MSAs remain substantially similar in the revised
delineations compared to those used in FY 2024, in order to maintain
continuity and predictability in labor market delineations, we are
proposing to continue our policy to include metropolitan divisions as
separate CBSAs for wage index purposes.
3. Change to County-Equivalents in the State of Connecticut
In a June 6, 2022 Notice (87 FR 34235 through 34240), the Census
Bureau announced that it was implementing the State of Connecticut's
request to replace the 8 counties in the State with 9 new ``Planning
Regions.'' Planning regions now serve as county-equivalents within the
CBSA system. OMB Bulletin No. 23-01 is the first set of revised
delineations that referenced the new county-equivalents for
Connecticut. We have evaluated the change in hospital assignments for
Connecticut hospitals and are proposing to adopt the planning regions
as county equivalents for wage index purposes. As all forthcoming
county-based delineation data will utilize these new county-equivalent
definitions for the Connecticut, we believe it is necessary to adopt
this migration from counties to planning region county-equivalents in
order to maintain consistency with OMB Bulletin No. 23-01 and future
OMB updates. We are providing the following crosswalk for each hospital
in Connecticut with the current and proposed FIPS county and county-
equivalent codes and CBSA assignments.
BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TP02MY24.142
[[Page 36142]]
[GRAPHIC] [TIFF OMITTED] TP02MY24.143
We note that we are proposing that the remote location currently
indicated with 07B033 will be located in the same CBSA as the main
provider 070033. Therefore, consistent with the policy for remote
locations of multicampus hospitals discussed in FY 2019 IPPS/LTCH PPS
final rule (83 FR 41369 through 41374), it will no longer be necessary
to identify this remote location separately from the main provider for
wage index purposes.
We also note, as discussed in Section III.B.3 of the preamble of
this proposed rule, we propose to add both of the newly proposed rural
planning areas in Connecticut to the list of ``Lugar'' counties.
4. Urban Counties That Would Become Rural Under the Revised OMB
Delineations
As previously discussed, we are proposing to implement the revised
OMB statistical area delineations (based upon OMB Bulletin No. 23-01)
beginning in FY 2025. Our analysis shows that a total of 53 counties
(and county equivalents) and 33 hospitals that were once considered
part of an urban CBSA would be considered to be located in a rural
area, beginning in FY 2025, under these revised OMB delineations. The
following chart lists the 53 urban counties that would be rural if we
finalize our proposal to implement the revised OMB delineations. We
note that there are four cases (CBSA 14100 [Bloomsburg-Berwick, PA],
CBSA 19180 [Danville, IL], CBSA 20700 [East Stroudsburg, PA], and CBSA
35100 [New Bern, NC]) where all constituent counties in an urban CBSA
would become rural under the revised OMB delineations.
[[Page 36143]]
[GRAPHIC] [TIFF OMITTED] TP02MY24.144
[[Page 36144]]
[GRAPHIC] [TIFF OMITTED] TP02MY24.145
BILLING CODE 4120-01-C
We are proposing that the wage data for all hospitals located in
the counties listed here would now be considered when calculating their
respective State's rural wage index. We further refer readers to
section III.G.6 of the preamble of this proposed rule for a discussion
of the 5 percent cap policy. We believe that this policy, which caps
any reduction in wage index values at 5 percent of the hospital's prior
year wage index value, provides an adequate transition to mitigate
sudden negative financial impacts due to the adoption of wage index
policies, including the adoption of revised OMB labor market
delineations.
We are also proposing revisions to the list of counties deemed
urban under section 1886(d)(8)(B) of the Act, which will affect a
number the hospitals located in these proposed rural counties. We note
that we are proposing to add 17 of the 53 counties listed here to the
list of ``Lugar'' counties whose hospitals, pursuant to 1886(d)(8)(B),
are deemed to be in an urban area. We refer readers to section
III.F.4.b for further discussion.
In addition, we note the provisions of Sec. 412.102 of our
regulations would continue to apply with respect to determining DSH
payments. Specifically, in the first year after a hospital loses urban
status, the hospital will receive an adjustment to its DSH payment that
equals two-thirds of the difference between the urban DSH payments
applicable to the hospital before its redesignation from urban to rural
and the rural DSH payments applicable to the hospital subsequent to its
redesignation from urban to rural. In the second year after a hospital
loses urban status, the hospital will receive an adjustment to its DSH
payment that equals one third of the difference between the urban DSH
payments applicable to the hospital before its redesignation from urban
to rural and the rural DSH payments applicable to the hospital
subsequent to its redesignation from urban to rural.
5. Rural Counties That Would Become Urban Under the Revised OMB
Delineations
As previously discussed, we are proposing to implement the revised
OMB statistical area delineations (based upon OMB Bulletin No. 23-01)
beginning in FY 2025. Analysis of these OMB statistical area
delineations shows that a total of 54 counties (and county equivalents)
and 24 hospitals that were located in rural areas would be located in
urban areas under the revised OMB delineations. The following chart
lists the 54 rural counties that would be urban if we finalize our
proposal to implement the revised OMB delineations.
[[Page 36145]]
[GRAPHIC] [TIFF OMITTED] TP02MY24.146
[[Page 36146]]
[GRAPHIC] [TIFF OMITTED] TP02MY24.147
We are proposing that when calculating the area wage index, the
wage data for hospitals located in these counties would be included in
their new respective urban CBSAs. We also note that due to the proposed
adoption of the revised OMB delineations, some CAHs that were
previously located in rural areas may be located in urban areas. The
regulations at Sec. Sec. 412.103(a)(6) and 485.610(b)(5) provide
affected CAHs with a two-year transition period that begins from the
date the redesignation becomes effective. The affected CAHs must
[[Page 36147]]
reclassify as rural during this transition period in order to retain
their CAH status after the two-year transition period ends. We refer
readers to the FY 2015 IPPS/LTCH final rule (79 FR 50162 through 50163)
for further discussion of the two-year transition period for CAHs. We
also note that special statuses limited to hospitals located in rural
areas (such as MDH or SCH status) may be terminated if hospitals are
located in proposed urban counties. In these cases, affected hospitals
should apply for rural reclassification status under Sec. 412.103
prior to October 1, 2024 to ensure no disruption in status.
6. Urban Counties That Would Move to a Different Urban CBSA Under the
Revised OMB Delineations
In addition to rural counties becoming urban and urban counties
becoming rural, some urban counties would shift from one urban CBSA to
a new or existing urban CBSA under our proposal to adopt the new OMB
delineations.
In some cases, the change in CBSA would extend only to a change in
name. Revised CBSA names can be found in Table 3 of the addendum of the
proposed rule. In other cases, the CBSA number also would change. For
these CBSAs, the list of constituent urban counties in FY 2024 and FY
2025 would be the same (except in instances where an urban county
became rural, or a rural county became urban; as discussed in the
previous section). The following table lists the CBSAs where, under the
proposed delineations, the CBSA name and number would change but the
constituent counties would not change (not including instances where an
urban county became rural, or a rural county became urban).
[GRAPHIC] [TIFF OMITTED] TP02MY24.148
In some cases, all of the urban counties from a FY 2024 CBSA would
be moved and subsumed by another CBSA in FY 2025. The following table
lists the CBSAs that, under the proposed delineations, would be
subsumed by an another CBSA.
[GRAPHIC] [TIFF OMITTED] TP02MY24.149
In other cases, if we adopt the revised OMB delineations, some
counties would shift between existing and new CBSAs, changing the
constituent makeup of the CBSAs. For example, Calvert County, MD would
move from the current CBSA 12580 (Washington-Arlington-Alexandria, DC-
VA-MD-WV) into proposed CBSA 30500 (Lexington Park, MD). The other
constituent counties of CBSA 12580 would be split into urban CBSAs
47664 (Washington, DC-MD) and 11694 (Arlington-Alexandria-Reston, VA-
WV). The following chart lists the urban counties that would split off
from one urban CBSA and move to a newly proposed or modified urban CBSA
if we adopt the revised OMB delineations.
[[Page 36148]]
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If hospitals located in these counties move from one CBSA to
another under the revised OMB delineations, there may be impacts, both
negative and positive, upon their specific wage index values. We refer
readers to section III.F.3. of the preamble of this proposed rule for
discussion of our proposals to address the reassignment of MGCRB wage
index reclassifications for hospitals currently assigned to these
modified CBSAs.
7. Transition
Overall, we believe implementing the new OMB labor market area
delineations would result in wage index values being more
representative of the actual current costs of labor in a given area.
However, we recognize that some hospitals would experience decreases in
wage index values as a result of our proposed implementation of the new
labor market area delineations. We also realize that some hospitals
would have higher wage index values due to our proposed implementation
of the new labor market area delineations.
In the past, we have provided for transition periods when adopting
changes that have significant payment implications, particularly large
negative impacts. When adopting new OMB delineations based on the
decennial census for the 2005 and 2015 wage indexes, we applied a 3-
year transition for urban hospitals that became rural under the new
delineations and a 50/50 blended wage index adjustment for all
hospitals that would experience any decrease in their actual payment
wage index (69 FR 49032 through 49034 and 79 FR 28060 through 28062).
In connection with our adoption in FY 2021 of the updates in OMB
Bulletin 18-04, which included more modifications to the CBSAs than are
typical for OMB bulletins issued between decennial censuses, we adopted
a policy to place a 5-percent cap on any decrease in a hospital's wage
index from the hospital's final wage index in FY 2020 so that a
hospital's final wage index for FY 2021 would not be less than 95
percent of its final wage index for FY 2020 (85 FR 58753 through
58755). Given the unprecedented nature of the COVID-19 public health
emergency (PHE), we adopted a policy in the FY 2022 IPPS/LTCH PPS final
rule (86 FR 45164 through 45165) to apply an extended transition to the
FY 2022 wage index for hospitals affected by the transition in FY 2021
to mitigate significant negative impacts of, and provide additional
time for hospitals to adapt to, the CMS decision to adopt the revised
OMB delineations. In the FY 2023 IPPS/LTCH PPS final rule (87 FR 49018
through 49021), under the authority at sections 1886(d)(3)(E) and
1886(d)(5)(I)(i) of the Act, we finalized a policy for FY 2023 and
subsequent years to apply a 5 percent cap on any decrease to a
hospital's wage index from its wage index in the prior FY, regardless
of the circumstances causing the decline.
We believe that this permanent cap policy, reflected at 42 CFR
412.64(h)(7) and discussed in section in III.G.6. of the preamble of
this proposed rule, sufficiently mitigates any large negative impacts
of adopting the new delineations. As we stated when finalizing the
permanent 5-percent cap policy in the FY 2023 IPPS/LTCH PPS final rule
(87 FR 49018 through 49021), we further considered the comments we
received during the FY 2022 rulemaking recommending a permanent 5
percent cap policy to prevent large year-to-year variations in wage
index values as a means to reduce overall volatility for hospitals. We
do not believe any additional transition period is necessary
considering that the current cap on wage index decreases, which was not
in place when we implemented the decennial census updates in FY 2005
and FY 2015, ensures that a hospital's wage index would not be less
than 95 percent of its final wage index for the prior year.
C. Worksheet S-3 Wage Data for the Proposed FY 2025 Wage Index
1. Cost Reporting Periods Beginning in FY 2021 for FY 2025 Wage Index
The proposed FY 2025 wage index values are based on the data
collected from the Medicare cost reports submitted by hospitals for
cost reporting periods beginning in FY 2021 (the FY 2024 wage indexes
were based on data from cost reporting periods beginning during FY
2020).
The FY 2025 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.
Consistent with the wage index methodology for FY 2024, the
proposed wage index for FY 2025 excludes the direct and overhead
salaries and hours for services not subject to IPPS payment, such as
skilled nursing facility (SNF) services, home health services, costs
related to GME (teaching physicians and residents) and certified
registered nurse anesthetists (CRNAs), and other subprovider components
that are not paid under the IPPS. The proposed FY 2025 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). Similar to our
treatment of CAHs, as discussed below, we are proposing to exclude
Rural Emergency Hospitals (REHs) from the wage index.
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.
[[Page 36151]]
2. 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.
3. Verification of Worksheet S-3 Wage Data
The wage data for the FY 2025 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, 2020, and before October 1, 2021. For wage index purposes,
we refer to cost reports beginning on or after October 1, 2020, and
before October 1, 2021, as the ``FY 2021 cost report,'' the ``FY 2021
wage data,'' or the ``FY 2021 data.'' Instructions for completing the
wage index sections of Worksheet S-3 are included in the Provider
Reimbursement Manual (PRM), Part 2 (Pub. 15-2), Chapter 40, Sections
4005.2 through 4005.4. The data file used to construct the proposed FY
2025 wage index includes FY 2021 data submitted to us as of January 26,
2024. 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 2023 wage index we used cost report
data from FY 2019). We stated in the FY 2023 IPPS/LTCH 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 2025 wage index, the best available data
typically would be from the FY 2021 wage data.
In considering the impacts of the COVID-19 PHE on the FY 2021 wage
data, we compared that data with recent historical data. Based on pre
reclassified wage data, the changes in the wage data from FY 2020 to FY
2021 show the following compared to the annual changes for the most
recent 3 fiscal year periods (that is, FY 2017 to FY 2018, FY 2018 to
FY 2019 and FY 2019 to FY 2020):
Approximately 91 percent of hospitals have an increase in
their average hourly wage (AHW) from FY 2020 to FY 2021 compared to a
range of 76-86 percent of hospitals for the most recent 3 fiscal year
periods.
Approximately 97 percent of all CBSA AHWs are increasing
from FY 2020 to FY 2021 compared to a range of 84-91 percent of all
CBSAs for the most recent 3 fiscal year periods.
Approximately 51 percent of all urban areas have an
increase in their area wage index from FY 2020 to FY 2021 compared to a
range of 36-43 percent of all urban areas for the most recent 3 fiscal
year periods.
Approximately 55 percent of all rural areas have an
increase in their area wage index from FY 2020 to FY 2021 compared to a
range of 31-46 percent of all rural areas for the most recent 3 fiscal
year periods.
The unadjusted national average hourly wage increased by a
range of 2.4-5.4 percent per year from FY 2017-FY 2020. For FY 2021,
the unadjusted national average hourly increased by 8.7 percent from FY
2020.
Similar to the FY 2024 wage index, it is not readily apparent even
if the comparison with the historical trends had indicated greater
differences at a national level in this context, how any changes due to
the COVID-19 PHE differentially impacted the wages paid by individual
hospitals. Furthermore, even if changes due to the COVID-19 PHE did
differentially impact the wages paid by individual hospitals over time,
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 to account for the effects of the COVID-19 PHE.
Lastly, we also note that we have not identified any significant
issues with the FY 2021 wage data itself in terms of our audits of this
data. As usual, the data was audited by the Medicare Administrative
Contractors (MACs), and there were no significant issues reported
across the data for all hospitals.
Taking all of these factors into account, we believe the FY 2021
wage data is the best available wage data to use for FY 2025 and are
proposing to use the FY 2021 wage data for FY 2025.
We welcome comment from the public with regard to the FY 2021 wage
data. We note, AHW data by provider and CBSA, including the data upon
which the comparisons provided above 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/payment/prospective-payment-systems/acute-inpatient-pps/wage-index-files.
We requested that our MACs revise or verify data elements that
resulted in specific edit failures. For the proposed FY 2025 wage
index, we identified and excluded 69 providers with aberrant data that
should not be included in the wage index. If data elements for some of
these providers are corrected, we intend to include data from those
providers in the final FY 2025 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 verification of questionable data elements and to
transmit any changes to the wage data no later than March 20, 2024.
In constructing the proposed FY 2025 wage index, we included the
wage data for facilities that were IPPS hospitals in FY 2021, inclusive
of those facilities that have since terminated their participation in
the program as hospitals, as long as those data did not fail any of our
edits for reasonableness. We believe that including the wage data for
these hospitals is, in general, appropriate to reflect the economic
conditions in the various labor market areas during the relevant past
period and to ensure that the current wage index represents the labor
market area's current wages as compared to the national average of
wages. However, we excluded the wage data for CAHs as discussed in the
FY 2004 IPPS final rule (68 FR 45397 through 45398); that is, any
hospital that is designated as a CAH by 7 days prior to the publication
of the preliminary wage index public use file (PUF) is excluded from
the calculation of the wage index. For the proposed rule, we removed 8
hospitals that converted to CAH status on or after January 23, 2023,
the cut-off date for
[[Page 36152]]
CAH exclusion from the FY 2024 wage index, and through and including
January 24, 2024, the cut-off date for CAH exclusion from the FY 2025
wage index. We note, we also removed 2 hospitals that converted to CAH
status prior to January 23, 2023.
The Consolidated Appropriations Act (CAA), 2021, was signed into
law on December 27, 2020. Section 125 of Division CC (section 125)
established a new rural Medicare provider type: Rural Emergency
Hospitals (REHs). (We refer the reader to the CMS website at https://www.cms.gov/medicare/health-safety-standards/guidance-for-laws-regulations/hospitals/rural-emergency-hospitals for additional
information on REHs.) In doing so, section 125 amended section 1861(e)
of the Act, which provides the definition of a hospital and states that
the term ``hospital'' does not include, unless the context otherwise
requires, a critical access hospital (as defined in subsection (mm)(1))
or a rural emergency hospital (as defined in subsection (kkk)(2)).
Section 125 also added section 1861(kkk) to the Act, which sets forth
the requirements for REHs. Per section 1861(kkk)(2) of the Act, one of
the requirements for an REH is that it does not provide any acute care
inpatient services (other than post-hospital extended care services
furnished in a distinct part unit licensed as a skilled nursing
facility (SNF)). Similar to CAHs, we believe hospitals that have
subsequently converted to REH status should be removed from the wage
index calculation, because they are a separately certified Medicare
provider type and are not comparable to other short-term, acute care
hospitals as they do not provide inpatient hospital services. For FY
2025, we are proposing to treat REHs the same as CAHs and exclude 15
REHs from the wage index. Accordingly, similar to our policy on CAHs,
any hospital that is designated as a REH 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. In summary, we
calculated the FY 2025 wage index using the Worksheet S-3, Parts II and
III wage data of 3,075 hospitals.
For the proposed FY 2025 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 2025 wage
index associated with this proposed rule (available via the internet on
the CMS website), includes separate wage data for the campuses of 27
multicampus hospitals. The following chart lists the multicampus
hospitals by CMS certification number (CCN) and the FTE percentages on
which the wages and hours of each campus were allotted to their
respective labor market areas:
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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.
4. Process for Requests for Wage Index Data Corrections
a. Process for Hospitals To Request Wage Index Data Corrections
The preliminary, unaudited Worksheet S-3 wage data files for the
proposed FY 2025 wage index were made available on May 23, 2023,
through the internet on the CMS website at https://www.cms.gov/medicare/medicare-fee-service-payment/acuteinpatientpps/wage-index-files/fy-2025-wage-index-home-page. We subsequently identified some
providers that were inadvertently omitted from the FY 2025 preliminary
Worksheet S-3 wage data file originally posted on May 23, 2023.
Therefore, on July 12, 2023, we posted an updated FY 2025 preliminary
Worksheet S-3 wage data file to include these missing providers. In
addition, the Calendar Year (CY) 2022 occupational mix survey data was
made available on July 12, 2023, through the internet on the CMS
website at https://www.cms.gov/medicare/medicare-fee-service-payment/acuteinpatientpps/wage-index-files/fy-2025-wage-index-home-page. On
August 14, 2023, we posted an updated CY 2022 Occupational Mix survey
data file that includes survey data for providers that were
inadvertently omitted from the file posted on July 12, 2023.
On January 31, 2024, we posted a public use file (PUF) at https://www.cms.gov/medicare/medicare-fee-service-payment/acuteinpatientpps/wage-index-files/fy-2025-wage-index-home-page containing FY 2025 wage
index data available as of January 31, 2024. 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, 2020, through September 30, 2021; that is, FY 2021 wage
data), a tab with the occupational mix data (which includes data from
the CY 2022 occupational mix survey, Form CMS-10079), a tab containing
the Worksheet S-3 wage data
[[Page 36154]]
of hospitals deleted from the January 31, 2024 wage data PUF, and a tab
containing the CY 2022 occupational mix data of the hospitals deleted
from the January 31, 2024 occupational mix PUF. In a memorandum dated
January 31, 2024, we instructed all MACs to inform the IPPS hospitals
that they service of the availability of the January 31, 2024, wage
index data PUFs, and the process and timeframe for requesting revisions
in accordance with the FY 2025 Hospital Wage Index Development Time
Table available at https://www.cms.gov/files/document/fy2025-hospital-wage-index-development-timetable.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 4, 2023, 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 2022 occupational mix
survey data files posted on May 23, 2023, 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, 2023, 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 1, 2023. 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 3, 2023 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 2024. CMS published the wage
index PUFs that included hospitals' revised wage index data on January
31, 2024. Hospitals had until February 16, 2024, to submit requests to
the MACs to correct errors in the January 31, 2024, PUF due to CMS or
MAC mishandling of the wage index data, or to revise desk review
adjustments to their wage index data as included in the January 31,
2024, PUF. Hospitals also were required to submit sufficient
documentation to support their requests. Hospitals' requests and
supporting documentation must have been received by the MAC by the
February deadline (that is, by February 16, 2024, for the FY 2025 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, 2024. 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) is April 3,
2024. Data that were incorrect in the preliminary or January 31, 2024,
wage index data PUFs, but for which no correction request was received
by the February 16, 2024, deadline, are not considered for correction
at this stage. In addition, April 3, 2024, is the deadline for
hospitals to dispute data corrections made by CMS of which the hospital
was notified after the January 31, 2024, PUF and at least 14 calendar
days prior to April 3, 2024 (that is, March 20, 2024), 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, 2024,
for the FY 2025 wage index). We refer readers to the FY 2025 Hospital
Wage Index Development Time Table for complete details. Hospitals are
given the opportunity to examine Table 2 associated with this proposed
rule, which is listed in section VI. of the Addendum to the proposed
rule and available via the internet on the CMS website at https://www.cms.gov/medicare/medicare-fee-service-payment/acuteinpatientpps/wage-index-files/fy-2025-wage-index-home-page. Table 2 associated with
the proposed rule contains each hospital's proposed adjusted average
hourly wage used to construct the wage index values for the past 3
years, including the proposed FY 2025 wage index, which was constructed
from FY 2021 data. We note that the proposed hospital average hourly
wages shown in Table 2 only reflect changes made to a hospital's data
that were transmitted to CMS by early February 2024.
We plan to post the final wage index data PUFs on April 29, 2024,
on the CMS website at https://www.cms.gov/medicaremedicare-fee-service-paymentacuteinpatientppswage-index-files/fy-2024-wage-index-home-page.
The April 2024 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, 2024, 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 2024 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, 2024.
Requests for correction of errors that were not, but could
have been, identified during the hospital's review of the January 31,
2024, 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 2024 final wage index data PUFs, a
hospital believes that its wage or occupational mix data are incorrect
due to a MAC or CMS error in the entry or tabulation of the final data,
the hospital is given the opportunity to notify both its MAC and CMS
regarding why the hospital believes an error exists and provide all
supporting information, including relevant dates (for example, when it
first became aware of the error). The hospital is required to send its
request to CMS and to the MAC so that it is received no later than May
29, 2024. May 29, 2024, is also the deadline for hospitals to dispute
data corrections made by CMS of which the hospital is notified on or
after 13 calendar days prior to April 3, 2024 (that is, March 21,
2024), and at least 14 calendar days prior to May 29, 2024 (that is,
May 15, 2024), that did not arise from a hospital's request for
[[Page 36155]]
revisions. (Data corrections made by CMS of which a hospital is
notified on or after 13 calendar days prior to May 29, 2024 (that is,
May 16, 2024), may be appealed to the Provider Reimbursement Review
Board (PRRB)). In accordance with the FY 2025 Hospital Wage Index
Development Time Table posted on the CMS website at https://www.cms.gov/files/document/fy2025-hospital-wage-index-development-timetable.pdf, the May appeals are required to be submitted to CMS
through an online submission process or through email. We refer readers
to the FY 2025 Hospital Wage Index Development Time Table for complete
details.
Verified corrections to the wage index data received timely (that
is, by May 29, 2024) by CMS and the MACs will be incorporated into the
final FY 2025 wage index, which will be effective October 1, 2024.
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 2025 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 2024, 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 2025 wage index by August
2024, and the implementation of the FY 2025 wage index on October 1,
2024. 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 29,
2024, we retain the right to make midyear changes to the wage index
under very limited circumstances.
Specifically, in accordance with Sec. 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 29, 2024, for the FY 2025
wage index). This provision is not available to a hospital seeking to
revise another hospital's data that may be affecting the requesting
hospital's wage index for the labor market area. As indicated earlier,
because CMS makes the wage index data available to hospitals on the CMS
website prior to publishing both the proposed and final IPPS rules, and
the MACs notify hospitals directly of any wage index data changes after
completing their desk reviews, we do not expect that midyear
corrections will be necessary. However, under our current policy, if
the correction of a data error changes the wage index value for an
area, the revised wage index value will be effective prospectively from
the date the correction is made.
In the FY 2006 IPPS final rule (70 FR 47385 through 47387 and
47485), we revised Sec. 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 29, 2024, deadline for the
FY 2025 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 29, 2024 deadline for the FY 2025 wage index), and CMS
acknowledges that the error in the hospital's wage index data was
caused by CMS' or the MAC's mishandling of the data, we believe that
the hospital should not be penalized by our delay in publishing or
implementing the correction. As with our current policy, we indicated
that the provision is not available to a hospital seeking to revise
another hospital's data. In addition, the provision cannot be used to
correct prior years' wage index data; it can only be used for the
current Federal fiscal year. In situations where our policies would
allow midyear corrections other than those specified in Sec.
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.
b. Process for Data Corrections by CMS After the January 31 Public Use
File (PUF)
The process set forth with the wage index timetable discussed in
section III.C.4. of the preamble of this proposed rule allows hospitals
to request corrections to their wage index data within prescribed
timeframes. In addition to hospitals' opportunity to request
corrections of wage index data errors or MACs' mishandling of data, CMS
has the authority under section 1886(d)(3)(E) of the Act to make
corrections to hospital wage index and occupational mix data in order
to ensure the accuracy of the wage index. As we explained in the FY
2016 IPPS/LTCH PPS final rule (80 FR 49490 through
[[Page 36156]]
49491) and the FY 2017 IPPS/LTCH PPS final rule (81 FR 56914), section
1886(d)(3)(E) of the Act requires the Secretary to adjust the
proportion of hospitals' costs attributable to wages and wage-related
costs for area differences reflecting the relative hospital wage level
in the geographic areas of the hospital compared to the national
average hospital wage level. We believe that, under section
1886(d)(3)(E) of the Act, we have discretion to make corrections to
hospitals' data to help ensure that the costs attributable to wages and
wage-related costs in fact accurately reflect the relative hospital
wage level in the hospitals' geographic areas.
We have an established multistep, 15-month process for the review
and correction of the hospital wage data that is used to create the
IPPS wage index for the upcoming fiscal year. Since the origin of the
IPPS, the wage index has been subject to its own annual review process,
first by the MACs, and then by CMS. As a standard practice, after each
annual desk review, CMS reviews the results of the MACs' desk reviews
and focuses on items flagged during the desk review, requiring that, if
necessary, hospitals provide additional documentation, adjustments, or
corrections to the data. This ongoing communication with hospitals
about their wage data may result in the discovery by CMS of additional
items that were reported incorrectly or other data errors, even after
the posting of the January 31 PUF, and throughout the remainder of the
wage index development process. In addition, the fact that CMS analyzes
the data from a regional and even national level, unlike the review
performed by the MACs that review a limited subset of hospitals, can
facilitate additional editing of the data the need for which may not be
readily apparent to the MACs. In these occasional instances, an error
may be of sufficient magnitude that the wage index of an entire CBSA is
affected. Accordingly, CMS uses its authority to ensure that the wage
index accurately reflects the relative hospital wage level in the
geographic area of the hospital compared to the national average
hospital wage level, by continuing to make corrections to hospital wage
data upon discovering incorrect wage data, distinct from instances in
which hospitals request data revisions.
We note that CMS corrects errors to hospital wage data as
appropriate, regardless of whether that correction will raise or lower
a hospital's average hourly wage. For example, as discussed in section
III.C. of the preamble of the FY 2019 IPPS/LTCH PPS final rule (83 FR
41364), in situations where a hospital did not have documentable
salaries, wages, and hours for housekeeping and dietary services, we
imputed estimates, in accordance with policies established in the FY
2015 IPPS/LTCH PPS final rule (79 FR 49965 through 49967). Furthermore,
if CMS discovers after conclusion of the desk review, for example, that
a MAC inadvertently failed to incorporate positive adjustments
resulting from a prior year's wage index appeal of a hospital's wage-
related costs such as pension, CMS would correct that data error, and
the hospital's average hourly wage would likely increase as a result.
While we maintain CMS' authority to conduct additional review and
make resulting corrections at any time during the wage index
development process, in accordance with the policy finalized in the FY
2018 IPPS/LTCH PPS final rule (82 FR 38154 through 38156) and as first
implemented with the FY 2019 wage index (83 FR 41389), hospitals are
able to request further review of a correction made by CMS that did not
arise from a hospital's request for a wage index data correction.
Instances where CMS makes a correction to a hospital's data after the
January 31 PUF based on a different understanding than the hospital
about certain reported costs, for example, could potentially be
resolved using this process before the final wage index is calculated.
We believe this process and the timeline for requesting review of such
corrections (as described earlier and in the FY 2018 IPPS/LTCH PPS
final rule) promote additional transparency in instances where CMS
makes data corrections after the January 31 PUF and provide
opportunities for hospitals to request further review of CMS changes in
time for the most accurate data to be reflected in the final wage index
calculations. These additional appeals opportunities are described
earlier and in the FY 2025 Hospital Wage Index Development Time Table,
as well as in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38154 through
38156).
D. Method for Computing the Proposed FY 2025 Unadjusted Wage Index
The method used to compute the proposed FY 2025 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 58758-58761), and we
are not proposing any changes to this methodology. We have restated our
methodology in this section of this rule.
Step 1.--We gathered data from each of the non-Federal, short-term,
acute care hospitals for which data were reported on the Worksheet S-3,
Parts II and III of the Medicare cost report for the hospital's cost
reporting period relevant to the wage index (in this case, for FY 2025,
these were data from cost reports for cost reporting periods beginning
on or after October 1, 2020, and before October 1, 2021). In addition,
we included data from hospitals that had cost reporting periods
beginning prior to the October 1, 2020 begin date and extending into FY
2021 but that did not have any cost report with a begin date on or
after October 1, 2020 and before October 1, 2021. We include this data
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 data
applicable to the fiscal year wage data being used to compute the wage
index for those hospitals. We note that, if a hospital had more than
one cost reporting period beginning during FY 2021 (for example, a
hospital had two short cost reporting periods beginning on or after
October 1, 2020, and before October 1, 2021), 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
[[Page 36157]]
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, 2020, through April 15,
2022, for private industry hospital workers from data obtained from the
Bureau of Labor Statistics' (BLS') Office of Compensation and Working
Conditions. We use the ECI because it reflects the price increase
associated with total compensation (salaries plus fringes) rather than
just the increase in salaries. In addition, the ECI includes managers
as well as other hospital workers. This methodology to compute the
monthly update factors uses actual quarterly ECI data and assures that
the update factors match the actual quarterly and annual percent
changes. We also note that, since April 2006 with the publication of
March 2006 data, the BLS' ECI uses a different classification system,
the North American Industrial Classification System (NAICS), instead of
the Standard Industrial Codes (SICs), which no longer exist. We have
consistently used the ECI as the data source for our wages and salaries
and other price proxies in the IPPS market basket, and we are not
proposing to make any changes to the usage of the ECI for FY 2025. 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.
[[Page 36158]]
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 CBSAs' 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,).
We stated that we believe that, in the absence of wage data for an
urban labor market area, it is reasonable to use a statewide urban
average, which is based on actual, acceptable wage data of hospitals in
that State, rather than impute some other type of value using a
different methodology. For calculation of the proposed FY 2025 wage
index, we note there is one urban CBSA for which we do not have IPPS
hospital wage data. In Table 3 (which is available via the internet on
the CMS website), which contains the area wage indexes, we include a
footnote to indicate to which CBSA this policy applies. This CBSA's
wage index would be calculated as described, based on the FY 2020 IPPS/
LTCH PPS final rule methodology (84 FR 42305). 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 proposed rule.
We refer readers to section II. of the Appendix of the proposed
rule for the policy regarding rural areas that do not have IPPS
hospitals.
Step 11.--Section 4410 of Public Law 105-33 provides that, for
discharges on or after October 1, 1997, the area wage index applicable
to any hospital that is located in an urban area of a State may not be
less than the area wage index applicable to hospitals located in rural
areas in that State. The areas affected by this provision are
identified in Table 2 listed in section VI. of the Addendum to the
proposed rule and available via the internet on the CMS website.
Following is our policy with regard to rounding of the wage data
(dollar amounts, hours, and other numerical values) in the calculation
of the unadjusted and adjusted wage index, as finalized in the FY 2020
IPPS/LTCH final rule (84 FR 42306). 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 ECI for compensation for each 30-day increment
from October 14, 2020, through April 15, 2022, for private industry
hospital workers from the BLS' Office of Compensation and Working
Conditions data. We have consistently used the ECI as the data source
for our wages and salaries and other price proxies in the IPPS market
basket, and we are not proposing any changes to the usage of the ECI
for FY 2025. The factors used to adjust the hospital's data were based
on the midpoint of the cost reporting period, as indicated in the
following table.
[[Page 36159]]
[GRAPHIC] [TIFF OMITTED] TP02MY24.154
For example, the midpoint of a cost reporting period beginning
January 1, 2021, and ending December 31, 2021, is June 30, 2021. An
adjustment factor of 1.03606 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 Division O, Title VI (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 2025,
there is no Puerto Rico-specific overall average hourly wage or wage
index.
Based on the previously discussed methodology, the proposed FY 2025
unadjusted national average hourly wage is the following:
[GRAPHIC] [TIFF OMITTED] TP02MY24.155
E. Proposed Occupational Mix Adjustment to the FY 2025 Wage Index
As stated earlier, section 1886(d)(3)(E) of the Act provides for
the collection of data every 3 years on the occupational mix of
employees for each short-term, acute care hospital participating in the
Medicare program, in order to construct an occupational mix adjustment
to the wage index, for application beginning October 1, 2004 (the FY
2005 wage index). The purpose of the occupational mix adjustment is to
control for the effect of hospitals' employment choices on the wage
index. For example, hospitals may choose to employ different
combinations of registered nurses, licensed practical nurses, nursing
aides, and medical assistants for the purpose of providing nursing care
to their patients. The varying labor costs associated with these
choices reflect hospital management decisions rather than geographic
differences in the costs of labor.
1. Use of New 2022 Medicare Wage Index Occupational Mix Survey for the
FY 2025 Wage Index
Section 304(c) of Appendix F, Title III 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
[[Page 36160]]
short-term, acute care hospital participating in the Medicare program
and to measure the earnings and paid hours of employment for such
hospitals by occupational category. 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. A new
measurement of occupational mix is required for FY 2025.
The FY 2025 occupational mix adjustment is based on a new calendar
year (CY) 2022 survey. Hospitals were required to submit their
completed 2022 surveys (Form CMS-10079, OMB Number 0938-0907,
expiration date January 31, 2026) to their MACs by July 1, 2023. The
preliminary, unaudited CY 2022 survey data were posted on the CMS
website on July 12, 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 revised or verified data elements in hospitals' occupational mix
surveys that resulted in certain edit failures.
Consistent with the IPPS and LTCH PPS ratesettings, our policy
principles with regard to the occupational mix adjustment include
generally using the most current data and information available, which
is usually occupational mix data on a 3-year lag in the first year of
the use of the occupational mix survey (for example, for the FY 2022
wage index we used occupational mix data from 2019; we also used this
data for the FY 2023 and FY 2024 wage indexes). In the FY 2024 IPPS/
LTCH final rule (88 FR 58969-58970), one commenter had concerns that
the 2025 occupational mix data may be skewed due to the COVID-19 PHE,
and we stated that we plan to assess the CY 2022 Occupational Mix
Survey data in the FY 2025 IPPS proposed rule.
Based on pre-reclassified wage data, we computed the unadjusted and
adjusted wage indexes for FY 2025 using the 2022 occupational mix
survey data. We then measured the increases and decreases by CBSA as a
result of the 2022 occupational mix survey data. We compared this table
to the same table for the FY 2024 wage indexes, which used the 2019
occupational mix data, as well as the FY 2021 wage indexes, which used
the 2016 occupational mix data. This table demonstrates the impact of
the occupational mix adjusted wage data compared to unadjusted wage
data for the most recent three occupational mix surveys using the 2022
survey data compared to the 2019 survey data and the 2016 survey data.
That is, it shows whether hospitals' wage indexes will increase or
decrease under the 2022 survey data as compared to the most recent
years using the prior 2019 survey data and 2016 survey data
respectively.
[[Page 36161]]
[GRAPHIC] [TIFF OMITTED] TP02MY24.156
Based on the table, increases and decreases by CBSA are alike
across each year of occupational mix data. For example, 60.19 percent
of urban areas' wage indexes are increasing in FY 2025 due to the CY
2022 occupational mix data compared to 56.07 percent in FY 2024 using
CY 2019 occupational mix data. Similarly, 59.57 percent of rural areas'
wage indexes are increasing in FY 2025 due to the CY 2022 occupational
mix data compared to 57.45 percent in FY 2024 using CY 2019
occupational mix data. We also note that similar to the wage data, it
is not readily apparent, even if the comparison with the historical
trends had indicated greater differences by CBSA in this context, how
any changes due to the COVID-19 PHE differentially impacted the
occupational mix adjusted wages paid in each CBSA. Furthermore, even if
hypothetically changes due to the COVID-19 PHE did differentially
impact the occupational mix adjusted wage index over time, 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 accordingly.
Lastly, we also note that we have not identified any significant
issues with the 2022 occupational mix 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 these factors into account, we believe the CY 2022
occupational mix data is the best available data to use for FY 2025 and
are proposing to use the CY 2022 occupational mix data for FY 2025.
2. Calculation of the Occupational Mix Adjustment for FY 2025
For FY 2025, we are proposing to calculate the occupational mix
adjustment factor using the same methodology that we have used since
the FY 2012 wage index (76 FR 51582 through 51586) and to apply the
occupational mix adjustment to 100 percent of the FY 2025 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
[[Page 36162]]
Worksheets S-3, Parts II and III, and the occupational mix survey data,
we continue to use these data ``as is'', and not round any of the
individual line items or fields. However, for any dollar amounts within
the wage index calculations, including any type of summed wage amount,
average hourly wages, and the national average hourly wage (both the
unadjusted and adjusted for occupational mix), we round such dollar
amounts to 2 decimals. We round any hour amounts within the wage index
calculations to the nearest whole number. We round any numbers not
expressed as dollars or hours in the wage index calculations, which
could include ratios, percentages, or inflation factors, to 5 decimals.
However, we continue rounding the actual unadjusted and adjusted wage
indexes to 4 decimals, as we have done historically.
Similar to the method we use for the calculation of the wage index
without occupational mix, salaries and hours for a multicampus hospital
are allotted among the different labor market areas where its campuses
are located. Table 2 associated with this proposed rule (which is
available via the internet on the CMS website), which contains the
proposed FY 2025 occupational mix adjusted wage index, includes
separate wage data for the campuses of multicampus hospitals. We refer
readers to section III.C. of the preamble of this proposed rule for a
chart listing the multicampus hospitals and the FTE percentages used to
allot their occupational mix data.
Because the statute requires that the Secretary measure the
earnings and paid hours of employment by occupational category not less
than once every 3 years, all hospitals that are subject to payments
under the IPPS, or any hospital that would be subject to the IPPS if
not granted a waiver, must complete the occupational mix survey, unless
the hospital has no associated cost report wage data that are included
in the proposed FY 2025 wage index. For the proposed FY 2025 wage
index, we are using the Worksheet S-3, Parts II and III wage data of
3,075 hospitals, and we used the occupational mix surveys of 2,950
hospitals for which we also had Worksheet S-3 wage data, which
represented a ``response'' rate of 96 percent (2,950/3,075). For the
proposed FY 2025 wage index, we are applying proxy data for
noncompliant hospitals, new hospitals, or hospitals that submitted
erroneous or aberrant data in the same manner that we applied proxy
data for such hospitals in the FY 2012 wage index occupational mix
adjustment (76 FR 51586). As a result of applying this methodology, the
proposed FY 2025 occupational mix adjusted national average hourly wage
is the following:
[GRAPHIC] [TIFF OMITTED] TP02MY24.157
3. Implementation of the Proposed Occupational Mix Adjustment and the
Proposed FY 2025 Occupational Mix Adjusted Wage Index
As discussed in section III.E. of the preamble of this proposed
rule, for FY 2025, we are applying the occupational mix adjustment to
100 percent of the FY 2025 wage index. We calculated the occupational
mix adjustment using data from the 2022 occupational mix survey, using
the methodology described in the FY 2012 IPPS/LTCH PPS final rule (76
FR 51582-51586).
Based on the 2022 occupational mix survey data, the proposed FY
2025 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] TP02MY24.158
The proposed national average hourly wage for the entire nurse
category is computed in Step 5 of the occupational mix calculation.
Hospitals with a nurse category average hourly wage (as calculated in
Step 4) of greater than the national nurse category average hourly wage
receive an occupational mix adjustment factor (as calculated in Step 6)
of less than 1.0. Hospitals with a nurse category average hourly wage
(as calculated in Step 4) of less than the national nurse category
average hourly wage receive an occupational mix adjustment factor (as
calculated in Step 6) of greater than 1.0.
Based on the 2022 occupational mix survey data, we determined (in
Step 7 of the occupational mix calculation) the following:
[GRAPHIC] [TIFF OMITTED] TP02MY24.159
[[Page 36163]]
III. Proposed Changes to the Hospital Wage Index for Acute Care
Hospitals
F. Hospital Redesignations and Reclassifications
The following sections III.F.1 through III.F.4 discuss revisions to
the wage index based on hospital redesignations and reclassifications.
Specifically, hospitals may have their geographic area changed for wage
index payment by applying for urban to rural reclassification under
section 1886(d)(8)(E) of the Act (implemented at Sec. 412.103),
reclassification by the Medicare Geographic Classification Review Board
(MGCRB) under section 1886(d)(10) of the Act, Lugar status
redesignations under section 1886(d)(8)(B) of the Act, or a combination
of the foregoing.
1. Urban to Rural Reclassification Under Section 1886(d)(8)(E) of the
Act, Implemented at Sec. 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 Sec. 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 (such
hospitals are referred to herein as ``Sec. 412.103 hospitals''). 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 2024 IPPS/LTCH final
rule (88 FR 58971 through 58977) for a review of our policy finalized
in the FY 2023 IPPS/LTCH PPS final rule (87 FR 49004) to calculate the
rural floor with the wage data of urban hospitals reclassifying to
rural areas under Sec. 412.103, and discussion of our modification to
the calculation of 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 Sec. Sec. 412.92, 412.96, 412.103, and 412.108. We
stated that reclassifications from urban to rural under Sec. 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 Sole Community Hospital (SCH), Rural Referral Center (RRC), or
Medicare Dependent Hospital (MDH) status, or rural reclassification
under Sec. 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 Sec. 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' 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 CBSAs on Worksheet S-2, Part I, Lines
165 and 166 of form CMS-2552-10. In calculating wage index values, CMS
identifies the allocated wage data for these remote locations in Table
2 with a ``B'' in the 3rd position of the CCN. These remote locations
of hospitals with Sec. 412.103 rural reclassification status in a
different CBSA are identified in Table 2, and hospitals should evaluate
potential wage index outcomes for their remote location(s) when
withdrawing or terminating MGCRB reclassification, or canceling Sec.
412.103 rural reclassification status.
We also note that in the FY 2024 IPPS/LTCH PPS final rule (88 FR
59038 through 59039), we changed 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 finalized that in these
circumstances, and subject to the hospital meeting the requirements set
forth at Sec. 412.92(b)(2)(vi), the effective date for rural
reclassification will be the effective date set forth in Sec.
412.92(b)(2)(vi).
Finally, we remind hospitals currently located in rural areas
becoming urban under the proposed adoption of the revised OMB
delineations in this proposed rule that if they have SCH, MDH, or RRC
status, they may choose to apply for a Sec. 412.103 urban to rural
reclassification if qualifying criteria are met in order to maintain
the SCH, MDH, or RRC status. We advise hospitals to evaluate their
options and if desired, apply for Sec. 412.103 urban to rural
reclassification before the beginning of FY 2025, to avoid a lapse in
SCH, MDH, or RRC status at the beginning of FY 2025 should we finalize
our proposal to adopt the revised OMB delineations.
a. Proposed Update to Rural Criteria at Sec. 412.103(a)(1)
Section 1886(d)(8)(E) of the Act describes criteria for hospitals
located in urban areas to be treated as being located in a rural area
of their state. The criterion at section 1886(d)(8)(E)(ii)(I) of the
Act requires that the hospital be located in a rural census tract of a
metropolitan statistical area (as determined under the most recent
modification of the Goldsmith Modification, originally published in the
Federal Register on February 27, 1992 (57 FR 6725)).
This condition is implemented in the regulation at Sec.
412.103(a)(1), which currently states: ``the hospital is located in a
rural census tract of a Metropolitan Statistical Area (MSA) as
determined under the most recent version of the Goldsmith Modification,
the Rural-Urban Commuting Area codes, as determined by the Office of
Rural Health Policy (ORHP) of the Health Resources and Services
Administration (HRSA), which is available via the ORHP website at:
http://www.ruralhealth.hrsa.gov or from the U.S. Department of Health
and Human Services, Health Resources and Services Administration,
Office of Rural Health Policy, 5600 Fishers Lane, Room 9A-55,
Rockville, MD 20857.''
The Goldsmith Modification \136\ was originally designed to
identify rural census tracts located in Metropolitan counties for
purposes of grant eligibility unrelated to the hospital IPPS but were
incorporated by section 1886(d)(8)(E)(ii)(I) of the Act for
[[Page 36164]]
purposes related to the hospital wage index.
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\136\ Known as the ``Goldsmith Modification'' for its principal
developer, Harold F. Goldsmith, this method is described in detail
in the paper ``Improving the Operational Definition of ``Rural
Areas'' for Federal Programs'' available at https://www.ruralhealthinfo.org/pdf/improving-the-operational-definition-of-rural-areas.pdf.
---------------------------------------------------------------------------
The Federal Office of Rural Health Policy (FORHP) (known as ORHP in
Sec. 412.103) later funded development of Rural-Urban Commuting Area
(RUCA) codes via the U.S. Department of Agriculture's (USDA) Economic
Research Service as the latest version of the Goldsmith Modification,
described in a May 3, 2007 Federal Register notice (72 FR 24589), to
address limitations of the original Goldsmith Modification. RUCAs, like
the Goldsmith Modification, are based on a sub-county unit, the census
tract, permitting a finer delineation of what constitutes rural areas
inside Metropolitan areas (72 FR 24590). In that notice, HRSA stated it
believes that the use of RUCAs allows more accurate targeting of
resources intended for the rural population to determine programmatic
eligibility for rural areas inside of Metropolitan counties. Using data
from the Census Bureau, every census tract in the United States is
assigned a RUCA code. In the May 3, 2007 Federal Register, HRSA stated
that ORHP considers all census tracts with RUCA codes 4-10 to be rural,
plus an additional 132 large area census tracts with RUCA codes 2 or 3
(72 FR 24591). They also stated that ORHP will continue to seek
refinements in the use of RUCAs.
FORHP has since published a revised definition of eligibility for
rural health grants for FY 2022 in a January, 12, 2021 Federal Register
Notice (86 FR 2418 through 2420). Specifically, FORHP added
Metropolitan Statistical Area (MSA) counties that contain no Urbanized
Area (UA) \137\ to the areas eligible for the rural health grant
programs. FORHP did not remove any areas from the rural definition in
the FY 2022 Federal Register Notice.
---------------------------------------------------------------------------
\137\ UAs are defined by the Census Bureau as densely settled
areas with a total population of at least 50,000 people (86 FR
2418).
---------------------------------------------------------------------------
It has come to our attention that our current regulation text at
Sec. 412.103(a)(1) does not describe FORHP's expanded definition of a
``rural area'' from the FY 2022 Federal Register Notice. In addition,
Sec. 412.103(a)(1) contains a web link that is no longer active and
requires updating. We believe the current rural definition used by
FORHP for purposes of the rural health grant program constitutes ``the
most recent modification of the Goldsmith Modification'' referred to in
the statute, since the expanded definition of rural constitutes a
refinement to the use of RUCA codes, which were developed as the latest
version of the Goldsmith Modification. As stated in the FY 2022 Federal
Register Notice (86 FR 2420), the expanded criteria reflect FORHP's
desire to accurately identify areas that are rural in character using a
data-driven methodology that relies on existing geographic identifiers
and utilizes standard, national level data sources. We are therefore
proposing to amend our regulation text at Sec. 412.103(a)(1) to
provide a reference to the most recent Federal Register notice issued
by HRSA defining ``rural areas.'' In this way, there will be no need to
update the Medicare regulations if FORHP develops a further
modification of the Goldsmith Modification or if the weblink changes.
FORHP has published the current link in the Federal Register notice (86
FR 2418-2420) along with the most recent revisions to the current
complete rural definition, and it is available via the Rural Health
Grants Eligibility Analyzer at https://data.hrsa.gov/tools/rural-health.
We are proposing to amend the regulation text at 412.103(a)(1) to
read: the hospital is located in a rural census tract of a Metropolitan
Statistical Area (MSA) as determined under the most recent version of
the Goldsmith Modification, using the Rural-Urban Commuting Area codes
and additional criteria, as determined by the Federal Office of Rural
Health Policy (FORHP) of the Health Resources and Services
Administration (HRSA), which is available at the web link provided in
the most recent Federal Register notice issued by HRSA defining rural
areas.
b. Proposed Policy for Canceling Sec. 412.103 Reclassifications of
Terminated Providers
In the FY 2016 IPPS/LTCH PPS final rule (80 FR 49499 through
49500), CMS discussed its longstanding policy to terminate the Sec.
1886(d)(10) MGCRB wage index reclassification status for hospitals with
terminated CMS certification numbers (CCN). We determined that it would
be appropriate to terminate the MGCRB reclassification status for these
hospitals (with a limited exception for certain locations acquired by
another hospital in a different CBSA), as the hospital may no longer be
able to make timely and informed decisions regarding reclassification
statuses.
At the time, we did not articulate a similar policy for hospitals
reclassified as rural under Sec. 412.103. While policies regarding
MGCRB reclassification were adopted for purposes related to the
hospital wage index, Sec. 412.103 reclassifications may have broader
implications. At the time the policy to terminate MGCRB
reclassifications for hospitals with terminated CCNs was implemented,
Sec. 412.103 reclassifications were less common, and generally had
negligible effects on State rural wage index values. Prior to FY 2024,
as a result of various wage index value hold-harmless policies,
discussed in detail in the FY 2024 IPPS/LTCH PPS final rule (88 FR
58973-58974), Sec. 412.103 hospital data rarely affected a state's
final rural wage index value. Under the current policy first
implemented in FY 2024, however, Sec. 412.103 hospital data is only
excluded from the rural wage index when indicated by the hold harmless
provision at section 1886(d)(8)(C)(ii) of the Act. Hospitals
reclassified under Sec. 412.103 now impact the rural wage index value
of most states. We refer readers to the FY 2024 IPPS/LTCH final rule
(88 FR 58973 through 58977) for discussion on how CMS finalized the
current policy to include the wage index data for Sec. 412.103
hospitals in more iterations of the rural wage index calculation.
Furthermore, following the policy implemented in the April 21, 2016
interim final rule with comment period (IFC) (81 FR 23428 through
23438), which allowed hospitals to maintain dual Sec. 412.103 and
MGCRB reclassification status, the number of rural reclassifications
has grown significantly. We now believe it is appropriate to propose a
policy regarding terminated or ``tied-out'' hospitals, effective for FY
2025, to address our concerns regarding the impacts these hospitals
would have on rural wage index values. Therefore, we are proposing that
Sec. 412.103 reclassifications will be considered cancelled for the
purposes of calculating area wage index for any hospital with a CCN
listed as terminated or ``tied-out'' as of the date that the hospital
ceased to operate with an active CCN. We propose to obtain and review
the best available CCN termination status lists as of the Sec.
412.103(b)(6) ``lock-in'' date (60 days after the proposed rule for the
FY is displayed in the Federal Register). The lock-in date is used to
determine whether a hospital has been approved for Sec. 412.103
reclassification in time for that status to be included in the upcoming
year's wage index development. We believe using this date for
evaluating CCN terminations would be consistent with the wage index
development timeline.
As stated previously, Sec. 412.103 reclassification may have other
implications for hospital status and payment. Hospitals may obtain
rural reclassification for several reasons, such as in order to convert
to a Critical Access Hospital (CAH), or to obtain Sole-Community
Hospital (SCH) status.
[[Page 36165]]
Eligibility requirements for Rural Emergency Hospital (REH)
qualification under section 1861(kkk)(3) of the Act included a
reference to reclassification under section 1886(d)(8)(E) (implemented
by Sec. 412.103). We note that our proposal to consider Sec. 412.103
reclassifications cancelled for the purposes of calculating area wage
index for any hospital with a CCN listed as terminated or ``tied-out''
is not intended to alter or affect the qualification for such statuses
or to have other effects unrelated to hospital wage index calculations.
The rural reclassification status would remain in effect for any period
that the original PPS hospital remains in operation with an active CCN.
For REH qualification requirement purposes, this would include the date
of enactment of the Consolidated Appropriations Act, 2021 (Pub. L. 116-
260), which was December 27, 2020. We believe this policy provides
consistency and predictability in wage index values.
2. General Policies and Effects of MGCRB Reclassification and Treatment
of Dual Reclassified Hospitals
Under section 1886(d)(10) of the Act, the MGCRB considers
applications by hospitals for geographic reclassification for purposes
of payment under the IPPS. Hospitals must apply to the MGCRB to
reclassify not later than 13 months prior to the start of the fiscal
year for which reclassification is sought (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 Sec. Sec. 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 Sec. 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 Sec. 412.103
from the calculation of the rural floor, but we reverted 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 Sec. 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 for
other purposes.
We discussed that when there is both a Sec. 412.103 redesignation
and an MGCRB reclassification, the MGCRB reclassification controls for
wage index calculation and payment purposes. 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 the FY 2024 IPPS/LTCH PPS
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 (88 FR 58971 through 58977).
a. Proposed Revision To Allow Sec. 412.103 Hospitals To Use Geographic
Area or Rural Area for Reclassification
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 purposes of applying 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.
In a comment on the May 10, 2021 IFC (86 FR 24735 through 24739), a
commenter noted that the IFC states that a hospital reclassified under
Sec. 412.103 could potentially reclassify to any area with a pre-
reclassified average hourly wage that is higher than the pre-
reclassified average hourly wage for the rural area of the State for
purposes of the regulation at Sec. 412.230(a)(5)(i). The commenter
asserted that CMS' use of the word ``could'' in this context seems to
suggest that CMS would allow the hospital to use either its home
average hourly wage or the rural average hourly wage for purposes of
the regulation at Sec. 412.230(a)(5)(i). The commenter suggested that
CMS allow both comparison options, because the rural average hourly
wage may occasionally be higher than the hospital's home urban area's
average hourly wage.
[[Page 36166]]
In response, we clarified that the commenter's interpretation of
our policy is correct. We stated that while the court's decision in
Bates County Memorial Hospital v. Azar requires CMS to permit hospitals
to reclassify to any area with a pre-reclassified average hourly wage
that is higher than the pre-reclassified average hourly wage for the
rural area of the state, we do not believe that we are required to
limit hospitals from using their geographic home area for purposes of
the regulation at Sec. 412.230(a)(5)(i). Therefore, we clarified that
we would allow hospitals to reclassify to an area with an average
hourly wage that is higher than the average hourly wage of either the
hospital's geographic home area or the rural area (86 FR 45189).
While we clarified our policy in response to the aforementioned
comment, the regulation text was not similarly clarified to reflect
this policy inadvertently. We are therefore proposing to revise the
regulation text at Sec. 412.230(a)(5)(i) to reflect our policy
clarified in the FY 2022 IPPS/LTCH PPS final rule (86 FR 45189). While
it has been CMS' policy to allow a Sec. 412.103 hospital to use either
its geographic area or the rural area of the State for purposes of
Sec. 412.230(a)(5)(i), we believe that synchronizing the regulation
text with our policy clarified in the FY 2022 IPPS/LTCH PPS final rule
(86 FR 45189) is necessary for consistency and to reduce unnecessary
Administrative appeals.
Specifically, we are proposing to replace the phrase in the
regulation at Sec. 412.230(a)(5)(i) that reads ``in the rural area of
the state'' with the phrase ``either in its geographic area or in the
rural area of the state.'' Section 412.230(a)(5)(i) with this proposed
revision would read: An individual hospital may not be redesignated to
another area for purposes of the wage index if the pre-reclassified
average hourly wage for that area is lower than the pre-reclassified
average hourly wage for the area in which the hospital is located. An
urban hospital that has been granted redesignation as rural under Sec.
412.103 is considered to be located either in its geographic area or in
the rural area of the State for the purposes of this paragraph
(a)(5)(i).
3. MGCRB Reclassification Issues for FY 2025
a. FY 2025 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 610 hospitals approved for wage index
reclassifications by the MGCRB starting in FY 2025. Because MGCRB wage
index reclassifications are effective for 3 years, for FY 2025,
hospitals reclassified beginning in FY 2023 or FY 2024 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 237 hospitals approved for wage index reclassifications in
FY 2023 that will continue for FY 2025, and 316 hospitals approved for
wage index reclassifications in FY 2024 that will continue for FY 2025.
Of all the hospitals approved for reclassification for FY 2023, FY
2024, and FY 2025, 1,163 (approximately 32.5 percent) hospitals are in
a MGCRB reclassification status for FY 2025 (with 248 of these
hospitals reclassified back to their geographic location). We refer
readers to Section III.F.3.b of this proposed rule for information on
the effects of implementation of new OMB labor market area delineations
on reclassified hospitals.
Under the regulations at Sec. 412.273, hospitals that have been
reclassified by the MGCRB are permitted to withdraw their applications
if the request for withdrawal is received by the MGCRB any time before
the MGCRB issues a decision on the application, or after the MGCRB
issues a decision, provided the request for withdrawal is received by
the MGCRB within 45 days of the date that CMS' annual notice of
proposed rulemaking is issued in the Federal Register concerning
changes to the inpatient hospital prospective payment system and
proposed payment rates for the fiscal year for which the application
has been filed. Please note that Section III.F.3.c. of this proposed
rule contains a proposal to change the deadline for the withdrawal
requests to 45 days from the date of filing for public inspection of
the proposed rule at the website of the Office of the Federal Register.
For information about the current process for 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).
Applications for FY 2026 reclassifications are due to the MGCRB by
September 1, 2024. This is also the current deadline for canceling a
previous wage index reclassification withdrawal or termination under
Sec. 412.273(d) for the FY 2025 cycle.
Applications and other information about MGCRB reclassifications
may be obtained beginning in mid-July 2024 via the internet on the CMS
website at https://www.cms.gov/medicare/regulations-guidance/geographic-classification-review-board. This collection of information
was previously approved under OMB Control Number 0938-0573, which
expired on January 31, 2021. A reinstatement of this PRA package is
currently being developed. The public will have an opportunity to
review and submit comments regarding the reinstatement of this PRA
package through a public notice and comment period separate from this
rulemaking.
b. Effects of Implementation of Proposal To Adopt Revised OMB Labor
Market Area Delineations on Reclassified Hospitals
(1) Background
Reclassifications granted under section 1886(d)(10) of the Act are
effective for 3 fiscal years, so that a hospital or county group of
hospitals would be assigned a wage index based upon the wage data of
hospitals in the labor market area to which it reclassified for a 3-
year period. Because hospitals that have been reclassified beginning in
FY 2023, 2024, or 2025 were reclassified based on the current labor
market delineations, if we adopt the revised OMB delineations based on
the OMB Bulletin No. 23-01 beginning in FY 2025 the CBSAs to which they
have been reclassified, or the CBSAs where they are located, may
change. Hospitals with current reclassifications are encouraged to
verify area wage indexes in Table 2 in the appendix of the proposed
rule, and to confirm that the CBSAs to which they have been
reclassified for FY 2025 would continue to provide a higher wage index
than their geographic area wage index. Hospitals may withdraw or
terminate their FY 2025 reclassifications by contacting the MGCRB
within 45 days from the date this proposed rule is issued in the
Federal Register (Sec. 412.273(c)).\138\
[[Page 36167]]
(2) Proposed Assignment Policy for Hospitals Reclassified to a CBSA
Where One or More Counties Move to the Rural Area or One or More Rural
Counties Move Into the CBSA
In the case where a CBSA would add a current rural county, or lose
a current constituent rural county, the current reclassification to the
resulting proposed CBSA would be maintained. In some cases, a hospital
may be located in a rural county that is proposed to join the CBSA to
which the hospital is reclassified. We note that in the FY 2015 IPPS/
LTCH PPS final rule (79 FR 49977), CMS terminated reclassifications
when, as a result of adopting the revised OMB delineations, a
hospital's geographic county was located in the CBSA for which it was
approved for MGCRB reclassification. At that time, there was no means
for a hospital to obtain an MGCRB reclassification to its own
geographic area (which we refer to as ``home area'' reclassifications).
However, as discussed in the FY 2017 IPPS/LTCH PPS final rule (81 FR
56925), ``home area'' reclassifications have since become possible as a
result of the change in policy in the 2016 IFC (81 FR 23428 through
23438) discussed earlier allowing for dual reclassifications. We
therefore do not believe it is necessary to terminate these
reclassifications as we did in FY 2015. In general, once the MGCRB has
approved a reclassification in accordance with subpart L of 42 CFR part
412, that reclassification remains in place for 3 years (see Sec.
412.274(b)(2)) unless terminated by the hospital pursuant to Sec.
412.273, and CMS does not reevaluate whether the hospital continues to
meet the criteria for reclassification during the three-year period. As
such, we propose to maintain these as ``home area'' reclassifications
instead of terminating them.
If a county is proposed to be removed from a CBSA and becomes
rural, a hospital in that county with a current ``home area''
reclassification would no longer be geographically located in the CBSA
to which they are reclassified. We propose that these reclassifications
would no longer be considered ``home area'' reclassifications, and the
hospital would be assigned the wage index applicable to other hospitals
that reclassify into the CBSA (which may be lower than the wage index
calculated for hospitals geographically located in the CBSA due to the
hold harmless provision at section 1886(d)(8)(C)(i) of the Act).\139\
---------------------------------------------------------------------------
\139\ In accordance with section 1886(d)(8)(C)(i) of the Act,
the wage index for hospitals located in a geographic area cannot be
reduced by the inclusion of reclassified hospitals. Therefore,
hospitals reclassified into the area would receive a wage index that
includes their data, whereas hospitals geographically located there
would receive a wage index that does not.
---------------------------------------------------------------------------
Finally, as discussed in section III.B.4, all the constituent
counties of CBSA 14100 (Bloomsberg-Berwick, PA), CBSA 19180 (Danville,
IL), CBSA 20700 (East Stroudsburg, PA) and CBSA 35100 (New Bern, NC)
become rural if we adopt the revised OMB delineations. There are
currently 6 hospitals with reclassifications to these areas.
[GRAPHIC] [TIFF OMITTED] TP02MY24.160
As there is no sufficiently similar CBSA in the proposed
delineations, we are proposing that hospital reclassifications to these
CBSAs would be terminated for FY 2025. While we prefer to maintain the
remaining years of a MGCRB reclassification and transition the
reclassified hospitals to the most appropriate proposed CBSA, in an
instance when there is no urban county remaining, there is no
equivalent urban area that can be assigned to the reclassified
hospital. We note that Case No. 24C0548 is a ``home area''
reclassification, and the termination would have no direct effect on
wage index calculations.
(3) Proposed Assignment Policy for Hospitals Reclassified to a CBSA
Where the CBSA Number Changes, or the CBSA Is Subsumed by Another CBSA
We propose that in the case of a CBSA that experiences a change in
CBSA number, or where all urban counties in the CBSA are subsumed by
another CBSA, MGCRB reclassifications approved to the FY 2024 CBSA
would be assigned the proposed revised FY 2025 CBSA (as described in
the section III.B.6). In some cases, this reconfiguration of CBSAs
would result in an MGCRB reclassification approved to a different area
becoming a ``home area'' reclassification, if a hospital's current
geographic urban CBSA is subsumed by its reclassified CBSA. Otherwise,
the current reclassification would continue to the proposed revised
CBSA number.
(4) Proposed Assignment Policy for Hospitals Reclassified to CBSAs
Where One or More Counties Move to a New or Different Urban CBSA
In some cases, adopting the revised OMB delineations would result
in one or more counties splitting apart from their current CBSAs to
form new CBSAs, or counties shifting from one CBSA designation to
another CBSA. If CBSAs are split apart, or if counties shift from one
CBSA to another under the revised OMB delineations, for hospitals that
have reclassified to these CBSAs we must determine which reclassified
area to assign to the hospital for the remainder of a hospital's 3-year
reclassification period.
Consistent with the policy implemented in FY 2021 (85 FR 58743
through 58753), we are proposing to assign current ``home area''
reclassifications to these CBSAs to the hospital's proposed geographic
CBSA. That is, hospitals that were approved for MGCRB reclassification
to the geographic area they are located in effective for FYs 2023,
2024, or 2025 would continue to be assigned a reclassification to their
geographic ``home area.'' The assigned ``home area''
[[Page 36168]]
reclassification CBSA may be different from previous years if the
hospital is located in a county that was relocated to a new or
different urban CBSA.
The following is a table of hospitals with current active ``home
area'' reclassification to CBSAs where one or more counties are
proposed to move to a new or different urban CBSA. The table also lists
reclassifications (noted by an asterisk on the ``MGCRB Case Number'')
that were approved in FY 2023 or FY 2024 and would be superseded by a
new FY 2025 reclassification. Per Sec. 412.273(d)(4), these prior year
reclassifications are terminated once a new reclassification becomes
effective. However, if the new reclassification is withdrawn, the prior
year reclassification (often referred to as a ``fallback''
reclassification) would become active.
[GRAPHIC] [TIFF OMITTED] TP02MY24.161
Consistent with the policy CMS implemented in the FY 2005 IPPS
final rule (69 FR 49054 through 49056), the FY 2015 IPPS final rule (79
FR 49973 through 49977), and in the FY 2021 IPPS/LTCH PPS final rule
(85 FR 58743 through 58753), for FY 2025, if a CBSA would be
reconfigured due to adoption of the revised OMB delineations and it
would not be possible for the reclassification to continue seamlessly
to the reconfigured CBSA (not including ``home area''
reclassifications, which were discussed previously), we believe it
would be appropriate for us to determine the best alternative location
to assign current reclassifications for the remaining 3 years.
Therefore, to maintain the integrity of a hospital's 3-year
reclassification period, we are proposing that current geographic
reclassifications (applications approved effective for FY 2023, FY
2024, or FY 2025) that would be affected by CBSAs that are split apart
or counties that shift to another CBSA under the revised OMB
delineations, would ultimately be assigned to a CBSA under the revised
OMB delineations that contains at least one county (or county
equivalent) from the reclassified CBSA under the current FY 2024
delineations, and that would be generally consistent with rules that
govern geographic reclassification. That is, consistent with the policy
finalized in FY 2015 (79 FR 49973) we are proposing a policy that other
affected reclassified hospitals be assigned to a CBSA that would
contain the most proximate county that (1) is located outside of the
hospital's proposed FY 2025 geographic labor market area, and (2) is
part of the original FY 2024 CBSA to which the hospital is
reclassified. We believe that assigning reclassifications to the CBSA
that contains the nearest county that meets the aforementioned criteria
satisfies the statutory requirement at section 1886(d)(10)(v) of the
Act by maintaining reclassification status for a period of 3 fiscal
years, while generally respecting the longstanding principle of
geographic proximity in the labor market reclassification process. For
county group reclassifications, we would follow our proposed policy, as
previously discussed, except that we are proposing to reassign
hospitals in a county group reclassification to the CBSA under the
revised OMB delineations that contains the county to which the majority
of hospitals in the group reclassification are geographically closest.
We are also proposing to allow such hospitals, or county groups of
hospitals, to submit a
[[Page 36169]]
request to the [email protected] mailbox for reassignment to
another proposed CBSA that would contain a county that is part of the
current CBSA to which it was approved to be reclassified (based on FY
2024 delineations) if the hospital or county group of hospitals can
demonstrate compliance with applicable reclassification proximity
rules, as described later in this section.
The following Table X provides a list of current FY 2024 CBSAs
(column 1) where one or more counties would be relocated to a new or
different urban CBSA. Hospitals with active MGCRB reclassifications
into the current FY 2024 CBSAs in column 1 would be subject to the
proposed reclassification assignment policy described in this
subsection. The third column of ``eligible'' CBSAs lists all proposed
revised CBSAs that contain at least one county that is part of the
current FY 2024 CBSA (in column 1).
[GRAPHIC] [TIFF OMITTED] TP02MY24.162
Table Y lists all hospitals subject to our proposed
reclassification assignment policy and where their reclassifications
would be assigned for FY 2025 under this proposed policy. The table
lists reclassifications that would be in effect for FY 2025 under our
proposed policy and that are included in Table 2 in the addendum of
this proposed rule. The table also includes reclassifications (noted by
an asterisk on the ``MGCRB Case Number'') that were approved in FY 2023
or FY 2024 and that would be superseded by a new FY 2025
reclassification. As discussed previously, these prior year
``fallback'' reclassifications would become active if the subsequent FY
2025 reclassification is withdrawn. Please note, the following table
does not include hospitals currently reclassified to their ``home''
geographic area, which are discussed previously in this section.
[[Page 36170]]
[GRAPHIC] [TIFF OMITTED] TP02MY24.163
[[Page 36171]]
[GRAPHIC] [TIFF OMITTED] TP02MY24.164
(5) Proposed Assignment Policy for Hospitals Reclassified to CBSAs
Reconfigured Due to the Migration to Connecticut Planning Regions
As discussed in section III.B., CMS is proposing to adopt the
revised OMB Bulletin No. 23-01 delineations, which use planning regions
instead of counties as the basis for CBSA construction in the State of
Connecticut. There are five current urban CBSAs that include at least
one county in Connecticut. These are 14860 (Bridgeport-Stamford-
Norwalk, CT), 25540 (Hartford-East Hartford-Middletown, CT), 35300 (New
Have-Milford, CT), 35980 (Norwich-New London, CT), and 49340
(Worcester, MA-CT). In the proposed FY 2025 CBSAs, based on the OMB
Bulletin No. 23-01 delineations, there are five CBSAs that will contain
at least one county-equivalent ``planning region.'' The five CBSAs are
14860 (Bridgeport-Stamford-Danbury, CT), 25540 (Hartford-West Hartford-
East Hartford, CT), 35300 (New Haven, CT), 35980 (Norwich-New London-
Willimantic, CT), and 47930 (Waterbury-Shelton, CT).
As there was significant reconfiguration of the CBSAs due to the
transition from counties to planning regions, we are proposing to adopt
a similar assignment policy for hospitals reclassified to CBSAs that
currently include Connecticut counties as we do for hospitals
reclassified to CBSAs where one or more counties move to a new or
different urban CBSA (described in the previous subsection).
The following table lists all current ``home area''
reclassifications to one of the CBSAs that currently contain at least
one county in Connecticut.
[[Page 36172]]
[GRAPHIC] [TIFF OMITTED] TP02MY24.165
The following table provides a list of current FY 2024 CBSAs
(column 1) that contain at least one county in Connecticut. Hospitals
with active MGCRB reclassifications into the CBSAs in column 1 would be
subject to the proposed reclassification assignment policy. The third
column of ``eligible'' CBSAs lists all proposed revised CBSAs that
contain at least one planning region that is part of the current FY
2025 CBSA (in column 1). Consistent with the policy proposed in the
previous section, we are proposing a policy that affected reclassified
hospitals be assigned to a CBSA that would contain the most proximate
planning region that (1) is located outside of the hospital's proposed
FY 2025 geographic labor market area, and (2) contains a portion of a
county included in the original FY 2024 CBSA to which the hospital is
reclassified.
[GRAPHIC] [TIFF OMITTED] TP02MY24.166
The following table lists all hospitals subject to our proposed
reclassification assignment policy and their reclassifications to a
CBSA reconfigured due to the adoption of Connecticut planning regions
in FY 2025 under this proposed policy. The table lists
reclassifications that would be in effect for FY 2025 under our
proposed policy, and that are included in Table 2 in the addendum of
this proposed rule. The table also includes reclassifications (noted by
an asterisk on the ``MGCRB Case Number'') that were approved in FY 2023
or FY 2024 and would be superseded by a new FY 2025 reclassification.
These prior year reclassifications, frequently referred to as
``fallback'' reclassifications, may become active if the subsequent FY
2025 reclassification is withdrawn. (Please note, the following table
does not include hospitals currently reclassified to their ``home''
geographic area, which are discussed previously in this section.)
[[Page 36173]]
[GRAPHIC] [TIFF OMITTED] TP02MY24.167
We note that the remote location currently indicated with 07B033
would, as proposed, be located in the same CBSA as the main provider
070033. Therefore, it would no longer be necessary to identify this
remote location separately from the main provider for wage index
purposes, and its MGCRB reclassification would no longer be listed in
Table 2 of the addendum of this proposed rule.
We believe that assigning reclassifications to the CBSA that
contains the nearest county-equivalent planning region that meets the
aforementioned criteria satisfies the statutory requirement at section
1886(d)(10)(v) of the Act by maintaining reclassification status for a
period of 3 fiscal years, while generally respecting the longstanding
principle of geographic proximity in the labor market reclassification
process. For county group reclassifications, we would follow our
proposed policy, as previously discussed, except that we are proposing
to reassign hospitals in a county group reclassification to the CBSA
under the revised OMB delineations that contains the county-equivalent
to which the majority of hospitals in the group reclassification are
geographically closest. We are also proposing to allow such hospitals,
or county groups of hospitals, to submit a request to the
[email protected] mailbox for reassignment to another proposed CBSA
that would contain a county that is part of the current CBSA to which
it was approved to be reclassified (based on FY 2024 delineations) if
the hospital or county group of hospitals can demonstrate compliance
with applicable reclassification proximity rules.
(6) Instructions To Request Reassignment of Reclassified CBSA
Hospitals that wish to be reassigned to an eligible CBSA (other
than the CBSA to which their reclassification would be assigned in this
proposed rule) for which they meet the applicable proximity criteria
under subpart L of 42 CFR part 412 may request reassignment within 45
days from the date the proposed rule is placed on display at the
Federal Register. Hospitals must send a request to
[email protected] and provide documentation establishing that they
meet the requisite proximity criteria for reassignment to an alternate
CBSA that contains one or more counties (or county-equivalents) from
the CBSA to which they are currently reclassified. We believe this
option of allowing hospitals to submit a request to CMS would provide
hospitals with greater flexibility with respect to their
reclassification reassignment, while ensuring that the proximity
requirements are met. We believe that where the proximity requirements
are met, the reclassified wage index would be consistent with the labor
market area to which the hospitals were originally approved for
reclassification. A hospital may request to reassign an individual
reclassification to any CBSA that in FY 2025 would contain a county or
county-equivalent (or in the case of Connecticut CBSAs, a portion of a
county) from the CBSA to which it was approved to be reclassified
(based on FY 2024 delineations). However, to be reassigned to an area
that is not the most proximate to the hospital, we believe it is
necessary that the hospital demonstrates that it complies with the
applicable proximity criteria under subpart L of 42 CFR part 412. If a
hospital cannot demonstrate proximity to a different eligible CBSA, the
hospital would not be considered for reclassification to that labor
market area, and the reclassification would remain with the CBSA
assigned under the general policy proposed earlier in this section. In
the case of a county group reclassification, all requests for
reassignment must include all actively reclassified hospitals (that is,
excluding any hospital that has since closed or converted to a
different provider type, or has terminated the reclassification).
County
[[Page 36174]]
groups must also demonstrate that they meet the appropriate proximity
requirements, including, for rural county groups, being adjacent to the
MSA to which they seek redesignation (412.232(a)(1)(ii)), and for urban
county groups, being in the same Combined Statistical Area or CBSA as
the urban area to which they seek redesignation (412.234(a)(3)(iv)).
All hospital requests for reassignment should contain the
hospital's name, address, CCN, and point of contact information. All
requests must be sent to [email protected]. Changes to a hospital's
CBSA assignment on the basis of a hospital's disagreement with our
determination of closest county, or on the basis of being granted a
reassignment due to meeting applicable proximity criteria under subpart
L of 42 CFR part 412 to an eligible CBSA will be announced in the FY
2025 IPPS/LTCH PPS final rule. In any cases where a hospital requested
the Administrator review a reclassification dismissal or denial by the
MGCRB, the assignment and reassignment policies discussed in this
proposed rule would apply if the Board's decision is overturned; that
is, if the Administrator decides that the hospital's reclassification
request should be granted but the CBSA to which the hospital would
reclassify based on that decision would potentially be assigned to a
different CBSA as a result of adoption of the new OMB delineations, the
policies discussed in this proposed rule would apply to that
assignment. At the time of writing, CMS does not have a list of cases
for which the Administrator's review has been requested, nor the
disposition of any such cases. If a hospital is requesting review of a
reclassification to one of the CBSAs discussed in this section, they
may contact [email protected] to confirm to what CBSA the
reclassification would be assigned.
We recognize that the proposed reclassification assignment policies
may result in the assignment of the hospital for the remainder of its
3-year reclassification period to a CBSA that has a lower wage index
than the wage index that would have been assigned for the reclassified
hospital in the absence of the proposed adoption of the revised OMB
delineations. We believe that the 5 percent cap on negative wage index
changes discussed in section III.G.6 would mitigate significant
negative payment impacts for FY 2025, and hospitals would have adequate
time to fully assess any additional reclassification options available
to them.
d. Proposed Change to Timing of Withdrawals at 412.273(c)
As mentioned in section III.F.3.a of this proposed rule, under the
regulations at Sec. 412.273, hospitals that have been reclassified by
the MGCRB are permitted to withdraw or terminate an approved
reclassification. The current regulations at Sec. 412.273(c)(1)(ii)
and (c)(2) for withdrawals and terminations require the request to be
received by the MGCRB within 45 days of the date that CMS' annual
notice of proposed rulemaking is issued in the Federal Register
concerning changes to the IPPS and proposed payment rates.
In the 2018 IPPS/LTCH PPS Final Rule (82 FR 38148 through 38150),
we finalized changes to the 45-day notification rules so that hospitals
have 45 days from the public display of the annual proposed rule for
the IPPS instead of 45 days from publication to inform CMS of certain
requested changes relating to the development of the hospital wage
index. We stated that we believe that the public has access to the
necessary information from the date of public display of the proposed
rule at the Office of the Federal Register and on its website in order
to make the decisions at issue. While we finalized changes to the 45-
day notification rules for decisions about the outmigration adjustment
and waiving Lugar status, we did not finalize a change to the timing
for withdrawing or terminating MGCRB decisions.
Instead, in response to comments expressing concern that some
hospitals may be disadvantaged if the Administrator's decision on a
hospital's request for review of an MGCRB decision has not been issued
prior to the proposed deadline for submitting withdrawal or termination
requests to the MGCRB, we maintained our existing policy of requiring
hospitals to request from the MGCRB withdrawal or termination of an
MGCRB reclassification within 45 days of issuance in the Federal
Register. We stated in the FY 2018 IPPS/LTCH PPS final rule (82 FR
38149) that considering the usual dates of the MGCRB's decisions
(generally early February) and of the public display of the IPPS
proposed rule, the maximum amount of time for an Administrator's
decision to be issued may potentially extend beyond the proposed
deadline of 45 days from the date of public display.
However, the MGCRB currently issues decisions earlier, in January,
which mitigates this concern. For example, the MGCRB has sent decision
letters to hospitals via email on January 23, 2024 for the FY 2025
cycle and on January 31, 2023 for the FY 2024 cycle. We believe that
the MGCRB will continue to issue its decisions in January, due to their
upgrade to an electronic system that expedites processing applications
and issuing decision letters efficiently. The regulations at Sec. Sec.
412.278(a) and (b)(1) provide that a hospital may request the
Administrator to review the MGCRB decision within 15 days after the
date the MGCRB issues its decision. Under Sec. 412.278(f)(2)(i), the
Administrator issues a decision not later than 90 days following
receipt of the party's request for review. Consequently, MGCRB
decisions could be issued as late as the end of January, and the 15
days the hospital has to request the Administrator's review, plus the
90 days the Administrator has to issue a decision, would result in
hospitals receiving the results of the review prior to 45 days after
display (which would be May 16th if the proposed rule is displayed on
the target date of April 1, but later if there is a delay).
While the current timing of MGCRB decisions in January allows for
hospitals to receive the results of any review prior to 45 days after
display of the proposed rule for the relevant FY, and we expect this
timing to continue, we acknowledge that section 1886(d)(10)(C)(iii)(I)
of the Act grants the MGCRB 180 days after the application deadline to
render a decision. If the MGCRB were to delay issuing decisions until
the last day possible according to the Statute, which is February 28th,
a hospital requesting the Administrator's review may not receive the
results of the review prior to 45 days after display.
Therefore, we are proposing to change the deadline for hospitals to
withdraw or terminate MGCRB classifications from within 45 days of the
date that the annual notice of proposed rulemaking is issued in the
Federal Register to within 45 days of the public display of the annual
notice of proposed rulemaking on the website of the Office of the
Federal Register, or within 7 calendar days of receiving a decision of
the Administrator in accordance with Sec. 412.278 of this part,
whichever is later. This proposed change will synchronize this deadline
with other wage index deadlines, such as the deadlines for accepting
the outmigration adjustment and waiving or reinstating Lugar status. As
hospitals typically know the results of the Administrator's decisions
on reviews within 45 days of the public display of the proposed rule
for the upcoming fiscal year, we believe hospitals have access to the
information they need to make reclassification decisions. In the rare
circumstance that a hospital would not receive the results
[[Page 36175]]
of the review prior to 45 days of the public display date, or receives
the results of the review less than 7 days before the deadline, the
hospital would have 7 calendar days after receiving the Administrator's
decision to request to withdraw or terminate MGCRB classification.
While we do not anticipate frequent use of this extension, we believe
this fully addresses the concern that some hospitals may be
disadvantaged if the Administrator's decision on a hospital's request
for review of an MGCRB decision has not been issued prior to the
proposed deadline for submitting withdrawal or termination requests to
the MGCRB. We believe that 7 days after receiving the Administrator's
decision affords hospitals adequate time to make calculated
reclassification decisions.
Specifically, we are proposing to change the words ``within 45 days
of the date that CMS' annual notice of proposed rulemaking is issued in
the Federal Register'' in the regulation text at 412.273(c)(1)(ii) and
412.273(c)(2) for withdrawals and terminations to ``within 45 days of
the date of filing for public inspection of the proposed rule at the
website of the Office of the Federal Register, or within 7 calendar
days of receiving a decision of the Administrator in accordance with
Sec. 412.278 of this part, whichever is later''.
4. Redesignations Under Section 1886(d)(8)(B) of the Act
a. Lugar Status Determinations
In the FY 2012 IPPS/LTCH PPS final rule (76 FR 51599 through
51600), we adopted the policy that, beginning with FY 2012, an eligible
hospital that waives its Lugar status in order to receive the out-
migration adjustment has effectively waived its deemed urban status
and, thus, is rural for all purposes under the IPPS effective for the
fiscal year in which the hospital receives the outmigration adjustment.
In addition, in that rule, we adopted a minor procedural change that
would allow a Lugar hospital that qualifies for and accepts the out-
migration adjustment (through written notification to CMS within 45
days from the issuance of the proposed rule in the Federal Register) to
waive its urban status for the full 3-year period for which its out-
migration adjustment is effective. By doing so, such a Lugar hospital
would no longer be required during the second and third years of
eligibility for the out-migration adjustment to advise us annually that
it prefers to continue being treated as rural and receive the out-
migration adjustment. In the FY 2017 IPPS/LTCH PPS final rule (81 FR
56930), we further clarified that if a hospital wishes to reinstate its
urban status for any fiscal year within this 3-year period, it must
send a request to CMS within 45 days of the issuance of the proposed
rule in the Federal Register for that particular fiscal year. We
indicated that such reinstatement requests may be sent electronically
to [email protected]. In the FY 2018 IPPS/LTCH PPS final rule (82
FR 38147 through 38148), we finalized a policy revision to require a
Lugar hospital that qualifies for and accepts the out-migration
adjustment, or that no longer wishes to accept the out-migration
adjustment and instead elects to return to its deemed urban status, to
notify CMS within 45 days from the date of public display of the
proposed rule at the Office of the Federal Register. These revised
notification timeframes were effective beginning October 1, 2017. In
addition, in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38148), we
clarified that both requests to waive and to reinstate ``Lugar'' status
may be sent to [email protected]. To ensure proper accounting, we
request hospitals to include their CCN, and either ``waive Lugar'' or
``reinstate Lugar'', in the subject line of these requests.
In the FY 2020 IPPS/LTCH PPS final rule (84 FR 42314 and 42315), we
clarified that in circumstances where an eligible hospital elects to
receive the outmigration adjustment within 45 days of the public
display date of the proposed rule at the Office of the Federal Register
in lieu of its Lugar wage index reclassification, and the county in
which the hospital is located would no longer qualify for an
outmigration adjustment when the final rule (or a subsequent correction
notice) wage index calculations are completed, the hospital's request
to accept the outmigration adjustment would be denied, and the hospital
would be automatically assigned to its deemed urban status under
section 1886(d)(8)(B) of the Act. We stated that final rule wage index
values would be recalculated to reflect this reclassification, and in
some instances, after taking into account this reclassification, the
out-migration adjustment for the county in question could be restored
in the final rule. However, as the hospital is assigned a Lugar
reclassification under section 1886(d)(8)(B) of the Act, it would be
ineligible to receive the county outmigration adjustment under section
1886(d)(13)(G) of the Act.
b. Effects of Proposed Implementation of Revised OMB Labor Market Area
Delineations on Redesignations Under Section 1886(d)(8)(B) of the Act
As discussed in section III.A.2. of the preamble of this proposed
rule, CMS is proposing to update the CBSA labor market delineations to
reflect the changes made in the July 15, 2023, OMB Bulletin 23-01. In
that section, we proposed that 54 currently rural counties be added to
new or existing urban CBSAs. Of those 54 counties, 22 are currently
deemed urban under section 1886(d)(8)(B) of the Act. Hospitals located
in such a ``Lugar'' county, barring another form of wage index
reclassification, are assigned the reclassified wage index of a
designated urban CBSA. Section 1886(d)(8)(B) of the Act defines a
deemed urban county as a ``rural county adjacent to one or more urban
areas'' that meets certain commuting thresholds. Since we are proposing
to modify the status of these 22 counties from rural to urban, they
would no longer qualify as ``Lugar'' counties. Hospitals located within
these counties would be considered geographically urban under the
revised OMB delineations. The table in this section of this rule lists
the counties that would no longer be deemed urban under section
1886(d)(8)(B) of the Act if we adopt the revised OMB delineations. We
note that in almost all instances, the ``Lugar'' county is joining the
same (or a substantially similar) urban CBSA as it was deemed to in FY
2024.
[[Page 36176]]
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We note that in the FY 2015 IPPS/LTCH PPS final rule (79 FR 49973
through 49977), when we adopted large scale changes to the CBSA labor
market delineations based on the new 2010 decennial census, we also re-
evaluated the commuting data thresholds for all eligible rural counties
in accordance with the requirement set forth in section
1886(d)(8)(B)(ii)(II) of the Act to base the list of qualifying
hospitals on the most recently available decennial population data. We
are therefore proposing to reevaluate the ``Lugar'' status for all
counties in FY 2025 using the same commuting data table used to develop
the OMB Bulletin No. 23-01 revised delineations. The data table is the
``2016-2020 5-Year American Community Survey Commuting Flows''
(available on OMB's website: https://www.census.gov/data/tables/2020/demo/metro-micro/commuting-flows-2020.html). We are also proposing to
use the same methodology discussed in the FY 2020 IPPS/LTCH final rule
(84 FR 42315 through 42318) to assign the appropriate reclassified CBSA
for hospitals in ``Lugar'' counties. That is, when assessing which CBSA
to assign, we will sum the total number of workers that commute from
the ``Lugar'' county to both ``central'' and ``outlying'' urban
counties (rather than just ``central'' county commuters).
By applying the 2020 American Community Survey (ACS) commuting data
to the updated OMB labor market delineations, we are proposing the
following changes to the current ``Lugar'' county list: 17 of the 53
urban counties that are proposed to become rural under the revised OMB
delineations, and both newly created rural Connecticut planning region
county-equivalents would qualify as ``Lugar'' counties. We also have
determined that, as proposed, 33 rural counties (an approximately 11
hospitals) would lose ``Lugar'' status, as the county no longer meets
the commuting thresholds or adjacency criteria specified in section
1886(d)(8)(B) of the Act.
[[Page 36177]]
[GRAPHIC] [TIFF OMITTED] TP02MY24.169
The following table lists all proposed ``Lugar'' counties for FY
2025. We indicated additions to the list with ``New'' in column 5.
[[Page 36178]]
[GRAPHIC] [TIFF OMITTED] TP02MY24.170
[[Page 36179]]
[GRAPHIC] [TIFF OMITTED] TP02MY24.171
[[Page 36180]]
[GRAPHIC] [TIFF OMITTED] TP02MY24.172
[[Page 36181]]
[GRAPHIC] [TIFF OMITTED] TP02MY24.173
We note that Litchfield County, CT is no longer listed as a
``Lugar'' county as it is not included in the revised CBSA
delineations. The majority of Litchfield County is now within the
proposed Northwest Hills Planning Region county-equivalent, with some
of the county's current constituent townships assigned to other urban
county-equivalents. We also note that in prior fiscal years, Merrimack
County, NH was included as a ``Lugar'' redesignated county pursuant to
the provision at Sec. 412.62(f)(1)(ii)(B), which deems certain rural
counties in the New England region to be part of urban areas. Merrimack
County now meets the commuting standards to be considered deemed urban
under the ``Lugar'' statute at section 1886(d)(8)(B) of the Act.
We recognize that the changes to the ``Lugar'' list may have
negative financial impacts for hospitals that lose deemed urban status.
We believe that the 5 percent cap on negative wage index changes
discussed in section III.G.6, would mitigate significant negative
payment impacts for FY 2025, and would afford hospitals adequate time
to fully assess any additional reclassification options available to
them. We also note that special statuses limited to hospitals located
in rural areas (such as MDH or SCH status) may be terminated if
hospitals are deemed urban under section 1886(d)(8)(B) of the Act. In
these cases, hospitals should apply for rural reclassification status
under Sec. 413.103 prior to October 1, 2024, if they wish to ensure no
disruption in status.
G. Wage Index Adjustments: Rural Floor, Imputed Floor, State Frontier
Floor, Out-Migration Adjustment, Low Wage Index, and Cap on Wage Index
Decrease Policies
The following adjustments to the wage index are listed in the order
that they are generally applied. First, the rural floor, imputed floor,
and State frontier floor provide a minimum wage index. The rural floor
at section 4410(a) of the Balanced Budget Act of 1997 (Pub. L. 105-33)
provides that the wage index for hospitals in urban areas of a State
may not be less than the wage index applicable to hospitals located in
rural areas in that State. The imputed floor at section
1886(d)(3)(E)(iv) of the Act provides a wage index minimum for all-
urban states. The state frontier floor at section 1886(d)(3)(E)(iii) of
the Act requires that hospitals in frontier states cannot be assigned a
wage index of less than 1.0000. Next, the out-migration adjustment at
section 1886(d)(13)(A) of the Act is applied, potentially increasing
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. The low-wage index hospital adjustment finalized in the FY 2020
IPPS/LTCH PPS final rule (84 FR 42325 through 42339) is then applied,
which increases the wage index values for hospitals with wage indexes
at or below the 25th percentile. Finally, all hospital wage index
decreases are capped at 95 percent of the hospital's final wage index
in the prior fiscal year, according to the policy finalized in the FY
2023 IPPS/LTCH PPS final rule (87 FR 49018 through 49021).
1. 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 2025 wage index associated with this proposed
rule (which is available via the internet on the CMS website), and
based on the calculation of the rural floor including the wage data of
hospitals that have reclassified as rural under Sec. 412.103, we
estimate that 494 hospitals would receive the rural floor in FY 2025.
The budget neutrality impact of the proposed application of the rural
floor is discussed in section II.A.4.e. of Addendum A of this proposed
rule.
In the FY 2023 IPPS/LTCH PPS final rule (87 FR 48784), CMS
finalized a
[[Page 36182]]
policy change to calculate the rural floor in the same manner as we did
prior to the FY 2020 IPPS/LTCH PPS final rule, in which the rural wage
index sets the rural floor. We stated that for FY 2023 and subsequent
years, we would include the wage data of Sec. 412.103 hospitals that
have no MGCRB reclassification in the calculation of the rural floor,
and 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.
In the FY 2024 IPPS/LTCH final rule (88 FR 58971-77), we finalized
a policy change beginning that year to include the data of all Sec.
412.103 hospitals, even 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 explained that
after revisiting the case law, prior public comments, and the relevant
statutory language, we agreed 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.
Accordingly, in the FY 2024 IPPS/LTCH PPS final rule, we finalized
a policy 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) that are
implicated by the hold harmless provision at section 1886(d)(8)(C)(ii)
of the Act. (For additional information on these changes, we refer
readers to the FY 2024 IPPS/LTCH PPS final rule (88 FR 58971 and
58977).)
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 Sec. 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 Sec. 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 proposed rule, States that would
be all-urban States as defined in section 1886(d)(3)(E)(iv)(IV) of the
Act, and thus hospitals in such States that would be eligible to
receive an increase in their wage index due to application of the
imputed floor for FY 2025, are identified in Table 3 associated with
this proposed rule. States with a value in the column titled ``State
Imputed Floor'' would be 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 would continue to be applied for FY 2025 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 2025
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 Sec. 412.64(m) and to a
discussion of the implementation of this provision in the FY 2011 IPPS/
LTCH PPS final rule (75 FR 50160 through 50161).) In this FY 2025 IPPS/
LTCH PPS proposed rule, we are not proposing any changes to the
frontier floor policy for FY 2025. In this proposed rule, 41 hospitals
would receive the frontier floor value of 1.0000 for their FY 2025
proposed wage index. These hospitals are located in Montana, North
Dakota, South Dakota, and Wyoming.
We note that while Nevada meets the criteria of a frontier State,
all hospitals within the State are projected to receive a wage index
value greater than 1.0000 prior to the application of the frontier
floor policy for FY 2025.
The areas affected by the rural and frontier floor policies for the
proposed FY 2025 wage index are identified in Table 3 associated with
this proposed rule, which is available via the internet on the CMS
website.
4. Proposed Out-Migration Adjustment Based on Commuting Patterns of
Hospital Employees
In accordance with section 1886(d)(13) of the Act, as added by
section 505 of Public Law 108-173, beginning with FY 2005, we
established a process to make adjustments to the hospital wage index
based on
[[Page 36183]]
commuting patterns of hospital employees (the ``out-migration''
adjustment). The process, outlined in the FY 2005 IPPS final rule (69
FR 49061), provides for an increase in the wage index for hospitals
located in certain counties that have a relatively high percentage of
hospital employees who reside in the county but work in a different
county (or counties) with a higher wage index.
Section 1886(d)(13)(B) of the Act requires the Secretary to use
data the Secretary determines to be appropriate to establish the
qualifying counties. When the provision of section 1886(d)(13) of the
Act was implemented for the FY 2005 wage index, we analyzed commuting
data compiled by the U.S. Census Bureau that were derived from a
special tabulation of the 2000 Census journey-to-work data for all
industries (CMS extracted data applicable to hospitals). These data
were compiled from responses to the ``long-form'' survey, which the
Census Bureau used at that time, and which contained questions on where
residents in each county worked (69 FR 49062). However, the 2010 Census
was ``short form'' only; information on where residents in each county
worked was not collected as part of the 2010 Census. The Census Bureau
worked with CMS to provide an alternative dataset based on the latest
available data on where residents in each county worked in 2010, for
use in developing a new out-migration adjustment based on new commuting
patterns developed from the 2010 Census data beginning with FY 2016.
To determine the out-migration adjustments and applicable counties
for FY 2016, we analyzed commuting data compiled by the Census Bureau
that were derived from a custom tabulation of the American Community
Survey (ACS), an official Census Bureau survey, utilizing 2008 through
2012 (5-year) Microdata. The data were compiled from responses to the
ACS questions regarding the county where workers reside and the county
to which workers commute. As we discussed in 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 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. We also stated that we would consider determining out-migration
adjustments based on data from the next Census or other available data,
as appropriate.
As discussed earlier in section III.B., CMS is proposing to adopt
revised delineations from the OMB Bulletin 23-01, published July 21,
2023. The revised delineations incorporate population estimates based
on the 2020 decennial census, as well as updated journey-to-work
commuting data. The Census Bureau once again worked with CMS to provide
an alternative dataset based on the latest available data on where
residents in each county worked, for use in developing a new out-
migration adjustment based on new commuting patterns. We analyzed
commuting data compiled by the Census Bureau that were derived from a
custom tabulation of the ACS, utilizing 2016 through 2020 data. The
Census Bureau produces county level commuting flow tables every 5 years
using non-overlapping 5-year ACS estimates. The data include
demographic characteristics, home and work locations, and journey-to-
work travel flows. The custom tabulation requested by CMS was specific
to general medical and surgical hospital and specialty (except
psychiatric and substance use disorder treatment) hospital employees
(hospital sector Census code 8191/NAICS code 6221 and 6223) who worked
in the 50 States, Washington, DC, and Puerto Rico and, therefore,
provided information about commuting patterns of workers at the county
level for residents of the 50 States, Washington, DC, and Puerto Rico.
For the ACS, the Census Bureau selects a random sample of addresses
where workers reside to be included in the survey, and the sample is
designed to ensure good geographic coverage. The ACS samples
approximately 3.5 million resident addresses per year.\140\ The results
of the ACS are used to formulate descriptive population estimates, and,
as such, the sample on which the dataset is based represents the actual
figures that would be obtained from a complete count.
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\140\ According to the Census Bureau, the effects of the PHE on
ACS activities in 2020 resulted in a lower number of addresses (~2.9
million) in the sample, as well as fewer interviews than a typical
year.
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For FY 2025, and subsequent years, we are proposing that the out-
migration adjustment will be based on the data derived from the
previously discussed custom tabulation of the ACS utilizing 2016
through 2020 (5-year) Microdata. As discussed earlier, we believe that
these data are the most appropriate to establish qualifying counties,
because they are the most accurate and up-to-date data that are
available to us. Furthermore, with the proposed transition of several
counties in Connecticut to ``planning region'' county equivalents
(discussed in section III.B.3. of the preamble this proposed rule), the
continued use of a commuting dataset developed with expiring county
definitions would be less accurate in approximating commuting flows. We
are proposing that the FY 2025 out-migration adjustments continue to be
based on the same policies, procedures, and computation that were used
for the FY 2012 out-migration adjustment. We have applied these same
policies, procedures, and computations since FY 2012, and we believe
they continue to be appropriate for FY 2025. (We refer readers to a
full discussion of the out-migration adjustment, including rules on
deeming hospitals reclassified under section 1886(d)(8) or section
1886(d)(10) of the Act to have waived the out-migration adjustment, in
the FY 2012 IPPS/LTCH PPS final rule (76 FR 51601 through 51602).)
Table 2 of this proposed rule (which is available via the internet on
the CMS website) lists the proposed out-migration adjustments for the
FY 2025 wage index.
5. Proposed 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, at least in part, by the use of historical wage data to
prospectively set hospitals' wage indexes. That lag creates barriers to
hospitals with low wage index values 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 increase employee compensation without
the usual lag in those increases being reflected in the calculation of
the wage index (as they would expect to do if not for the lag).\141\
[[Page 36184]]
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.
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\141\ In the FY 2020 IPPS/LTCH proposed rule, we agreed with
respondents to a previous 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).
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We increased the wage index for hospitals with a wage index value
below the 25th percentile wage index value for a fiscal year by half
the difference between the otherwise applicable final wage index value
for a year for that hospital and the 25th percentile wage index value
for that year across all hospitals (the low wage index hospital
policy). We stated in the FY 2020 IPPS/LTCH PPS final rule (84 FR 42326
through 42328) our intention that this policy would be effective for at
least 4 years, beginning in FY 2020, 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.), No. 22-5249 (D.C. Cir.) (hereafter referred to
as Bridgeport). The district court in Bridgeport held 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.
As noted earlier, we finalized this policy in the FY 2020 IPPS/LTCH
final rule to provide low wage index hospitals with an opportunity to
increase employee compensation without the usual lag in those increases
being reflected in the calculation of the wage index (as they would
expect to do if not for the lag). This continues to be the purpose of
the policy. We stated in the FY 2020 IPPS/LTCH PPS final rule our
intention that it would be in effect for at least 4 years beginning
October 1, 2019 (84 FR 42326). We also stated we intended to revisit
the issue of the duration of this policy in future rulemaking as we
gained experience under the policy. What could not have been
anticipated at the time the policy was promulgated was that
implementation of the policy would occur during the COVID-19 PHE, which
was declared starting in January of 2020 and continued until May of
2023. The effects of the COVID-19 PHE complicate our ability to
evaluate the low wage policy and our ability to determine whether low
wage hospitals have been provided a sufficient opportunity to increase
employee compensation under the policy without the usual lag.
In order to help gauge the impact of the COVID-19 PHE relative to
the impact of the low wage index hospital policy, we examined the
aggregate revenue each hospital reported on their FY 2020 cost reports
from the COVID-19 PHE Provider Relief Fund, the Small Business
Association Loan Forgiveness program, and other sources of COVID-19
related funding such as payroll retention credits and State emergency
relief funds. Specifically, we examined Worksheet G-3, lines 24.50
through 24.60 for each IPPS hospital's 2020 cost report. We found that
hospitals in the aggregate reported $31.1 billion in COVID-19 related
funding, and of that amount low wage hospitals reported $3.6 billion.
These amounts are much larger than, and likely had a much greater
impact on hospital operations, the approximately $230 million impact of
the low wage index hospital policy.\142\ For example, COVID-19 related
funding impacted the ability of hospitals, both low wage hospitals and
non-low wage hospitals, to change employee compensation in ways that
overshadowed any differential impact of the low wage index hospital
policy between the two groups that may have occurred in the absence of
the COVID-19 PHE.
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\142\ As discussed in the FY 2020 IPPS final rule, the low wage
index hospital policy was implemented in a budget neutral manner. In
order to ensure that the overall effect of the application of the
low wage index hospital policy was budget neutral, we applied a
budget neutrality factor of 0.997987 to the FY 2020 standardized
amount (84 FR 42667). The IPPS spending associated with the
accounting statement in the FY 2020 IPPS final rule was
approximately $113 billion. Applying the budget neutrality
adjustment to the IPPS spending associated with the accounting
statement results in roughly a $230 million impact of the low wage
index hospital policy.
---------------------------------------------------------------------------
In addition to examining the COVID-19 related funding data, we also
examined the wage index data itself. For the FY 2025 wage index the
best available data typically would be from the FY 2021 wage data from
hospital cost reports. As discussed earlier in more detail in section
III.C, in considering the impacts of the COVID-19 PHE on the FY 2021
hospital wage data, we compared that data with recent historical data.
While there are some differences, it is not readily apparent how any
changes due to the COVID-19 PHE differentially impacted the wages paid
by individual hospitals. Furthermore, even if changes due to the COVID-
19 PHE did differentially impact the wages paid by individual hospitals
over time, 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 to account for the effects of
the COVID-19 PHE. Our inability to isolate the wage data changes due to
the COVID-19 PHE and disentangle them from changes due to the low wage
index hospital policy makes isolating and evaluating the impact of the
low wage index hospital policy challenging. We reached similar
conclusions with respect to the FY 2020 hospital wage data.
To help further inform our FY 2025 rulemaking with respect to the
low wage index hospital policy, we also conducted an analysis of
hospitals that received an increase to their wage index due to the
policy in FY 2020 (referred to as the low wage index hospitals for
brevity in the following discussion). Specifically, for each low wage
index hospital we calculated the percent increase in its average hourly
wages (AHWs) from FY 2019 to FY 2021 based on dividing its FY 2021
average hourly wage (using the wage data one year after the low wage
index hospital policy was implemented in FY 2020, available on the FY
2025 IPPS Proposed Rule web page) by its average hourly wage from the
FY 2019 wage data (the wage data one year before the low wage index
hospital policy was implemented in FY 2020, available on the FY 2023
IPPS final rule web page). We performed the same calculation for the
hospitals that were not low wage index hospitals. We then compared the
distributions of the average hourly wage increases between the two
groups. The results are shown in the following chart (Chart 1).
[[Page 36185]]
[GRAPHIC] [TIFF OMITTED] TP02MY24.174
In general, the chart shows that the distribution of the changes in
the average hourly wages of the low wage index hospitals (mean = 15.1%,
standard deviation = 11.0%) is similar to the distribution of the
changes in the average hourly wages of the non-low wage index hospitals
(mean = 14.7%, standard deviation 8.9%). Although some low wage
hospitals have indicated to us that they did use the increased payments
they received under the low wage index hospital policy to increase
wages more than they otherwise would have, the similarity in the two
distributions indicates that, based on the audited wage data available
to us, the policy has generally not yet had the effect of substantially
reducing the wage index disparities that existed at the time the policy
was promulgated. Also, to the extent that wage index disparities for a
subset of low wage index hospitals has diminished, it is unclear to
what extent that is attributable to the low wage index hospital policy
given the effects of the COVID-19 PHE (as discussed below).
The COVID-19 PHE ended in May of 2023. With regard to the wage
index,4 years is the minimum time before increases in employee
compensation included in the Medicare cost report could be reflected in
the wage index data. The first full fiscal year of wage data after the
COVID-19 PHE is the FY 2024 wage data, which would be available for the
FY 2028 IPPS/LTCH PPS rulemaking. As we explained earlier in this
section, at the time the low wage index hospital policy was finalized,
our intention was that it would be in effect for at least 4 fiscal
years beginning October 1, 2019 and to revisit the issue of the
duration of this policy as we gained experience under the policy.
Because the effects of the COVID-19 PHE complicate our ability to
evaluate the low wage index hospital policy and our ability to
determine whether low wage hospitals have been provided a sufficient
opportunity to increase employee compensation under the policy without
the usual lag, we are proposing that the low wage index hospital policy
and the related budget neutrality adjustment would be effective for at
least three more years, beginning in FY 2025. This would result in the
policy being in effect for at least 4 full fiscal years in total after
the end of the COVID-19 PHE in May of 2023. This will allow us to gain
experience under the policy for the same duration and in an environment
more similar to the one we expected at the time the policy was first
promulgated.
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 2025 and for subsequent fiscal years during which the low
wage index hospital policy is in effect, we are proposing to apply a
budget neutrality adjustment in the same manner as we have 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 proposed rule for further discussion of the budget
neutrality adjustment for FY 2025. For purposes of the low wage index
hospital policy, based on the data for this proposed rule, the table
displays the 25th percentile wage index value across all hospitals for
FY 2025.
[GRAPHIC] [TIFF OMITTED] TP02MY24.175
6. 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
[[Page 36186]]
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 Sec.
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).
For FY 2025, we would 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 proposed rule
for further information regarding the budget neutrality calculations.
H. FY 2025 Wage Index Tables
In this FY 2025 IPPS/LTCH PPS proposed 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
proposed rule for a discussion of the wage index tables for FY 2025.
I. Proposed Labor-Related Share for the FY 2025 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 results 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 to a 2018-
based IPPS hospital market basket which replaced the 2014-based IPPS
hospital market basket, effective beginning 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, 86 FR 45529
through 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 this proposed rule,
for FY 2025, we are not proposing to make any further changes to the
labor-related share. For FY 2025, we are proposing to continue to use a
labor-related share of 67.6 percent for discharges occurring on or
after October 1, 2024. We note that, consistent with our established
frequency of rebasing the IPPS market basket every 4 years, we
anticipate proposing to rebase and revise the IPPS market basket in the
FY 2026 IPPS/LTCH PPS proposed rule. Our preliminary evaluation of more
recent Medicare cost report data for IPPS hospitals for 2022 indicates
that the major IPPS market basket cost weights (particularly the
compensation and drug cost weights) are similar to those finalized in
the 2018-based IPPS market basket.
As discussed in section V.B. of the preamble of this proposed rule,
prior to January 1, 2016, Puerto Rico hospitals were paid based on 75
percent of the national standardized amount and 25 percent of the
Puerto Rico-specific standardized amount. As a result, we applied the
Puerto Rico-specific labor-related share percentage and nonlabor-
related share percentage to the Puerto Rico-specific standardized
amount. Section 601 of the Consolidated Appropriations Act, 2016 (Pub.
L. 114-113) amended section 1886(d)(9)(E) of the Act to specify that
the payment calculation with respect to operating costs of inpatient
hospital services of a subsection (d) Puerto Rico hospital for
inpatient hospital discharges on or after January 1, 2016, shall use
100 percent of the national standardized amount. Because Puerto Rico
hospitals are no longer paid with a Puerto Rico-specific standardized
amount as of January 1, 2016, under section 1886(d)(9)(E) of the Act as
amended by section 601 of the Consolidated Appropriations Act, 2016,
there is no longer a need for us to calculate a Puerto Rico-specific
labor-related share percentage and nonlabor-related share percentage
for application to the Puerto Rico-specific standardized amount.
Hospitals in Puerto Rico are now paid 100 percent of the national
standardized amount and, therefore, are subject to the national labor-
related share and nonlabor-related share percentages that are applied
to the national standardized amount. Accordingly, for FY 2025, we are
not proposing a Puerto Rico-specific labor-related share percentage or
a nonlabor-related share percentage.
Tables 1A and 1B, which are published in section VI. of the
Addendum to this FY 2025 IPPS/LTCH PPS proposed rule and available via
the internet on the CMS website, reflect the proposed national labor-
related share. Table 1C, in section VI. of the Addendum to this FY 2025
IPPS/LTCH PPS proposed rule and available via the internet on the CMS
website, reflects the
[[Page 36187]]
national labor-related share for hospitals located in Puerto Rico. For
FY 2025, for all IPPS hospitals (including Puerto Rico hospitals) whose
wage indexes are less than or equal to 1.0000, we are proposing to
apply the wage index to a labor-related share of 62 percent of the
national standardized amount. For all IPPS hospitals (including Puerto
Rico hospitals) whose wage indexes are greater than 1.000, for FY 2025,
we are proposing to apply the wage index to a labor-related share of
67.6 percent of the national standardized amount.
IV. Proposed Payment Adjustment for Medicare Disproportionate Share
Hospitals (DSHs) for FY 2025 (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 more commonly used 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.
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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 those hospitals that qualify under
the Pickle method under section 1886(d)(5)(F)(i)(II) of the Act.
The remaining amount, equal to an estimate of 75 percent of what
otherwise would have been paid as Medicare DSH payments, reduced to
reflect changes in the percentage of individuals who are uninsured, is
available to make additional payments to each hospital that qualifies
for Medicare DSH payments and that has uncompensated care. The payments
to each hospital for a fiscal year are based on the hospital's amount
of uncompensated care for a given time period relative to the total
amount of uncompensated care for that same time period reported by all
hospitals that receive Medicare DSH payments for that fiscal year.
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 2 separately calculated payments:
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[[Page 36188]]
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.\143\ We refer to this payment as the ``empirically
justified Medicare DSH payment.''
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\143\ https://www.medpac.gov/document/march-2007-report-to-the-congress-medicare-payment-policy/.
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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, 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).
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:
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Section 1886(r) of the Act applies to FY 2014 and each subsequent
fiscal year. In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50620
through 50647) and the FY 2014 IPPS interim final rule with comment
period (78 FR 61191 through 61197), we set forth our policies for
implementing the required changes to the Medicare DSH payment
methodology made by section 3133 of the Affordable Care Act for FY
2014. In those rules, we noted that, because section 1886(r) of the Act
modifies the payment required under section 1886(d)(5)(F) of the Act,
it affects only the DSH payment under the operating IPPS. It does not
revise or replace the capital IPPS DSH payment provided under the
regulations at 42 CFR part 412, subpart M, which was established
through the exercise of the Secretary's discretion in implementing the
capital IPPS under section 1886(g)(1)(A) of the Act.
Finally, section 1886(r)(3) of the Act provides that there shall be
no administrative or judicial review under section 1869, section 1878,
or otherwise of any estimate of the Secretary for purposes of
determining the factors described in section 1886(r)(2) of the Act or
of any period selected by the Secretary for the purpose of determining
those factors. Therefore, there is no administrative or judicial review
of the estimates developed for purposes of applying the three factors
used to determine uncompensated care payments, or of the periods
selected to develop such estimates.
B. Eligibility for Empirically Justified Medicare DSH Payments and
Uncompensated Care Payments
The payment methodology under section 3133 of the Affordable Care
Act applies to ``subsection (d) hospitals'' that would otherwise
receive a DSH payment made under section 1886(d)(5)(F) of the Act.
Therefore, hospitals must receive empirically justified Medicare DSH
payments in a fiscal year to receive an additional Medicare
uncompensated care payment for that year. Specifically, section
1886(r)(2) of the Act states that, in addition to the empirically
justified Medicare DSH payment made to a subsection (d) hospital under
section 1886(r)(1) of the Act, the Secretary shall 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) for the applicable fiscal year.
In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50622) and the FY
2014 IPPS interim final rule with comment period (78 FR 61193), we
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 (that is, eligibility to receive empirically justified Medicare
DSH payments) for the applicable fiscal year (using the most recent
data that are available). For this proposed rule, we estimated DSH
status for all hospitals using the most recent available SSI ratios and
information from the most recent available Provider Specific File. We
note that FY 2020 SSI ratios available on the CMS website were the most
recent available SSI ratios at the time of developing this proposed
[[Page 36189]]
rule.\144\ If more recent data on DSH eligibility becomes available
before the final rule, we would use such data in the final rule.
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\144\ https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/dsh.
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Our final determinations of a hospital's eligibility for
uncompensated care and empirically justified Medicare DSH payments will
be based on the hospital's actual DSH status at cost report settlement
for FY 2025.
In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50622) and in the
rulemakings for subsequent fiscal years, we have specified our policies
for several specific classes of hospitals within the scope of section
1886(r) of the Act. 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 fiscal
year (based on the best available data at that time) subject to
settlement through the cost report. If they receive interim empirically
justified Medicare DSH payments in a fiscal year, they will also be
eligible to receive interim uncompensated care payments for that fiscal
year on a per discharge basis. Final eligibility determinations will be
made at the end of the cost reporting period at settlement, and both
interim empirically justified Medicare DSH payments and uncompensated
care payments will be adjusted accordingly (78 FR 50624 and 79 FR
50007).
Medicare-dependent, small rural hospitals (MDHs) are paid
based on the IPPS Federal rate or, if higher, the IPPS Federal rate
plus 75 percent of the amount by which the Federal rate is exceeded by
the updated hospital-specific rate from certain specified base years
(76 FR 51684). The IPPS Federal rate that is used in the MDH payment
methodology is the same IPPS Federal rate that is used in the SCH
payment methodology. 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. We refer readers
to section V.F. of the preamble of this proposed rule for further
discussion of the MDH program.
Section 307 of the Consolidated Appropriations Act, 2024 extended
the MDH program through December 31, 2024. We will continue to make a
determination concerning an MDH's eligibility for interim empirically
justified Medicare DSH and 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, will
continue to be paid under the IPPS and, therefore, are eligible to
receive empirically justified Medicare DSH payments and uncompensated
care payments until the Model's final performance year, which ends 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 (CJR) Model's (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 final rule that appeared in the May 3, 2021,
Federal Register (86 FR 23496), which extended the CJR Model for an
additional three performance years. The Model's final performance year
ends on December 31, 2024. For additional information on the CJR Model,
we refer readers to the CMS website at https://www.cms.gov/priorities/innovation/innovation-models/CJR.
Transforming Episode Accountability Model (TEAM) is a new
proposed episode-based model, which is discussed in section X.A. of the
preamble of this proposed rule. Hospitals participating in TEAM would
continue to be paid under the IPPS and, therefore, are eligible to
receive empirically justified Medicare DSH payments and uncompensated
care payments. The proposed model's start date is January 2026.
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 1866(r) of the Act because they are
not paid under the IPPS. As discussed in the FY 2019 IPPS/LTCH PPS
final rule (83 FR 41402 through 41403), CMS and the State have entered
into an agreement to govern payments to Maryland hospitals under a new
payment model, the Maryland Total Cost of Care (TCOC) Model, which
began on January 1, 2019. Under the Maryland TCOC Model, which
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 (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).\145\ 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 this most recent extension of 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 proposed rule, we believe 23 hospitals may
participate in the
[[Page 36190]]
demonstration program at the start of FY 2025.
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\145\ The Rural Community Hospital Demonstration Program was
extended for a subsequent 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 on December 31,
2016. Section 15003 of the 21st Century Cures Act (Pub. L. 114 255),
enacted on December 13, 2016, again amended section 410A of Public
Law 108-173 to require a 10-year extension period (in place of the
5-year extension required by the Affordable Care Act), therefore
requiring an additional 5-year participation period for the
demonstration program. Section 15003 of Public Law 114-255 also
required a solicitation for applications for additional hospitals to
participate in the demonstration program. The period of performance
for this 5-year extension period ended December 31, 2021. The
Consolidated Appropriations Act, 2021 (Pub. L. 116-260) amended
section 410A of Public Law 108-173 to extend the demonstration
program for an additional 5-year period.
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C. Empirically Justified Medicare DSH Payments
As we have discussed earlier, section 1886(r)(1) of the Act
requires the Secretary to pay 25 percent of the amount of the Medicare
DSH payment that would otherwise be made under section 1886(d)(5)(F) of
the Act to a subsection (d) hospital. Because section 1886(r)(1) of the
Act merely requires the Secretary to pay a designated percentage of
these payments, without revising the criteria governing eligibility for
DSH payments or the underlying payment methodology, we stated in the FY
2014 IPPS/LTCH PPS final rule that we did not believe that it was
necessary to develop any new operational mechanisms for making such
payments.
Therefore, in the FY 2014 IPPS/LTCH PPS final rule (78 FR 50626),
we implemented this provision by advising Medicare Administrative
Contractors (MACs) to simply adjust 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 could be settled at the
appropriate level at the time of cost report settlement. We provided
more detailed operational instructions and cost report instructions
following issuance of the FY 2014 IPPS/LTCH PPS final rule that are
available on the CMS website at https://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/2014-Transmittals-Items/R5P240.html.
D. 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 a 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 2025 for purposes of this
rulemaking) and FY 2022, where the total uncompensated care amount for
a fiscal 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.
We are not proposing any changes to the methodology for determining
supplemental payments, and we will calculate the supplemental payments
to eligible IHS/Tribal and Puerto Rico hospitals consistent with the
methodology described in the FY 2023 IPPS/LTCH PPS final rule (87 FR
49047 through 49051) and Sec. 412.106(h).
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 PPS 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.
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 three factors, which are
discussed in the next sections.
1. Proposed Calculation of Factor 1 for FY 2025
Section 1886(r)(2)(A) of the Act establishes Factor 1 in the
calculation of the uncompensated care payment. The regulations located
at 42 CFR 412.106(g)(1)(i) govern the Factor 1 calculation. Under a
prospective payment system, we would not know the precise aggregate
Medicare DSH payment amounts that would be paid for a fiscal year until
cost report settlement for all IPPS hospitals is completed, which
occurs several years after the end of the 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, we
would not know the precise aggregate empirically justified Medicare DSH
payment amounts that would be paid for a fiscal year until cost report
settlement for all IPPS hospitals is completed. Thus, section
1886(r)(2)(A)(ii) of the Act provides authority to estimate this
amount. In brief, Factor 1 is the difference between the Secretary's
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, which takes into account the
requirement to pay 25 percent of what would have otherwise been paid
under section 1886(d)(5)(F) of the Act.
In this FY 2025 IPPS/LTCH PPS proposed rule, consistent with the
policy that has applied since the FY 2014 final rule (78 FR 50627
through 50631), we are determining Factor 1 from the most recently
available estimates of the aggregate amount of Medicare DSH payments
that would be made for FY 2025 in the absence of section 1886(r)(1) of
the Act and the aggregate amount of empirically justified Medicare DSH
payments that would be made for FY 2025, both as calculated by CMS'
Office of the Actuary (OACT). Consistent with the policy that has
applied in previous years, these estimates will not be revised or
updated subsequent to the publication of our final projections in the
FY 2025 IPPS/LTCH PPS final rule.
For this proposed rule, to calculate both estimates, we used the
most recently available projections of Medicare DSH payments for the
fiscal year, as calculated by OACT using the most recently filed
Medicare hospital cost reports with Medicare DSH payment information
and the most recent DPPs and Medicare DSH payment adjustments provided
in the IPPS Impact File. The projection of Medicare DSH payments for
the fiscal year is also partially based on OACT's Part A benefits
projection model, which projects, among other things, inpatient
hospital spending. Projections of DSH payments additionally require
projections of expected increases in
[[Page 36191]]
utilization and case-mix. The assumptions that were used in making
these inpatient hospital spending, utilization, and case-mix
projections and the resulting estimates of DSH payments for FY 2022
through FY 2025 are discussed later in this section and in the table
titled ``Factors Applied for FY 2022 through FY 2025 to Estimate
Medicare DSH Expenditures Using FY 2021 Baseline.''
For purposes of calculating Factor 1 and modeling the impact of
this FY 2025 IPPS/LTCH PPS proposed rule, we used OACT's January 2024
Medicare DSH estimates, which were based on data from the December 2023
update of the Medicare Hospital Cost Report Information System (HCRIS)
and the FY 2024 IPPS/LTCH PPS final rule IPPS Impact File, published in
conjunction with the publication of the FY 2024 IPPS/LTCH PPS final
rule. 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 2024 Medicare DSH estimates. 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 OACT's January 2024 Medicare DSH estimates.
The 23 hospitals that CMS expects will participate in the Rural
Community Hospital Demonstration Program in FY 2025 were also excluded
from OACT's January 2024 Medicare DSH estimates because under the
payment methodology that applies during the demonstration, these
hospitals are not eligible to receive empirically justified Medicare
DSH payments or uncompensated care payments.
For this proposed rule, using the data sources as previously
discussed, OACT's January 2024 estimates of Medicare DSH payments for
FY 2025 without regard to the application of section 1886(r)(1) of the
Act is approximately $13.943 billion. Therefore, also based on OACT's
January 2024 Medicare DSH estimates, the estimate of empirically
justified Medicare DSH payments for FY 2025, with the application of
section 1886(r)(1) of the Act, is approximately $3.486 billion (or 25
percent of the total amount of estimated Medicare DSH payments for FY
2025). Under Sec. 412.106(g)(1)(i), Factor 1 is the difference between
these two OACT estimates. Therefore, in this proposed rule, we are
determining that Factor 1 for FY 2025 would be $10,457,250,000, which
is equal to 75 percent of the total amount of estimated Medicare DSH
payments for FY 2025 ($13.943 billion minus $3.486 billion). We note
that consistent with our approach in previous rulemakings, OACT intends
to use more recent data that may become available for purposes of
projecting the final Factor 1 estimates for the FY 2025 IPPS/LTCH PPS
final rule.
We note 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 the Factor 1 estimates for the final rules are generally
consistent with those used for the Midsession Review of the President's
Budget.\146\ Consistent with historical practice, we expect that the
Midsession Review will have updated economic assumptions and actuarial
analysis, which will be used for the development of Factor 1 estimates
in the FY 2025 IPPS/LTCH PPS final rule.
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\146\ As we have in the past, for additional information on the
development of the President's Budget, we refer readers to the
Office of Management and Budget website at https://www.whitehouse.gov/omb/budget.
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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 on the CMS website at https://www.cms.gov/oact/tr/2023 under ``Downloads.'' \147\ The actuarial projections contained in
these reports are based on numerous assumptions regarding future trends
in program enrollment, utilization and costs of health care services
covered by Medicare, as well as other factors affecting program
expenditures. In addition, although the methods used to estimate future
costs based on these assumptions are complex, they are subject to
periodic review by independent experts to ensure their validity and
reasonableness. We also refer readers to the 2018 Actuarial Report on
the Financial Outlook for Medicaid for a discussion of general issues
regarding Medicaid projections (available at https://www.cms.gov/data-research/research/actuarial-studies/actuarial-report-financial-outlook-medicaid).
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\147\ 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.
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In this proposed rule, we include information regarding the data
sources, methods, and assumptions employed by OACT's actuaries in
determining our estimate of Factor 1. In summary, we indicate the
historical HCRIS data update OACT used to estimate Medicare DSH
payments, we explain that the most recent Medicare DSH payment
adjustments provided in the IPPS Impact File were used, and we provide
the components of all the update factors that were applied to the
historical data to estimate the Medicare DSH payments for the upcoming
fiscal year, along with the associated rationale and assumptions. This
discussion also includes descriptions of the ``Other'' and
``Discharges'' assumptions and provides additional information
regarding how we address the Medicaid and CHIP expansion.
OACT's estimates for FY 2025 for this proposed rule began with a
baseline of $13.400 billion in Medicare DSH expenditures for FY 2021.
The following table shows the factors applied to update this baseline
through the current estimate for FY 2025:
[[Page 36192]]
[GRAPHIC] [TIFF OMITTED] TP02MY24.179
In this table, the discharges column shows the changes in the
number of Medicare fee-for-service (FFS) inpatient hospital discharges.
The discharge figures for FY 2022 and FY 2023 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 2024 is
based on preliminary data. The discharge figure for FY 2025 is an
assumption based on recent historical experience, an assumed partial
return to pre-COVID 19 trends, and assumptions related to how many
beneficiaries will be enrolled in Medicare Advantage (MA) plans. The
discharge figures for FY 2022 to FY 2025 incorporate the actual impact
and estimated future impact of the COVID-19 pandemic.
The case-mix column shows the estimated change in case-mix for IPPS
hospitals. The case-mix figures for FY 2022 and FY 2023 are based on
actual claims data 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 case-mix figures for FY 2024 and
for FY 2025 are assumptions based on the 2012 ``Review of Assumptions
and Methods of the Medicare Trustees' Financial Projections'' report by
the 2010-2011 Medicare Technical Review Panel.\148\
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\148\ 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 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. Based on the most recent available data, Medicaid
enrollment is estimated to be as follows: +8.3 percent in FY 2022, +5.1
percent in FY 2023, -13.9 percent in FY 2024, and -4.3 percent in FY
2025. In future IPPS rulemakings, our 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 enrollee and, therefore, receive fewer hospital services.\149\
Specifically, based on the most recent available data at the time of
developing this 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-expansion and post-expansion. In
future IPPS rulemakings, the assumption about the average per-capita
expenditures of Medicaid beneficiaries who enrolled due to the COVID-19
pandemic may change.
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\149\ For a discussion of general issues regarding Medicaid
projections, we refer readers to the 2018 Actuarial Report on the
Financial Outlook for Medicaid, which is available at https://www.cms.gov/files/document/2018-report.pdf.
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The following table shows the factors that are included in the
``Update'' column of the previous table:
[GRAPHIC] [TIFF OMITTED] TP02MY24.180
[[Page 36193]]
We are inviting public comments on our proposed Factor 1 for FY
2025.
IV. Proposed Payment Adjustment for Medicare Disproportionate Share
Hospitals (DSHs) for FY 2025 (Sec. 412.106)
2. Calculation of Proposed Factor 2 for FY 2025
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 are continuing to use the methodology that was used in FY 2018
through FY 2024 to determine Factor 2 for FY 2025--to use the National
Health Expenditure Accounts (NHEA) data to determine the percent change
in the percent of individuals who are uninsured. We refer readers to
the FY 2018 IPPS/LTCH PPS final rule (82 FR 38197 and 38198) for a
complete discussion of the NHEA and why we determined, and continue to
believe, that it is the data source for the rate of uninsurance that,
on balance, best meets all 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.
In brief, the NHEA represents the government's official estimates
of economic activity (spending) within the health sector. 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. 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 for FY 2025, the first metric that is needed is
the proportion of the total U.S. population that was uninsured in 2013.
For a complete discussion of the approach OACT used to prepare the
NHEA's estimate of the rate of uninsurance in 2013, including the data
sources used, we refer readers to the FY 2024 IPPS/LTCH PPS final rule
(88 FR 58998 and 58999).
The next metrics needed to compute Factor 2 for FY 2025 are
projections of the rate of uninsurance in both CY 2024 and CY 2025. On
an annual basis, OACT projects enrollment and spending trends for the
coming 10-year period. The most recent projections are for 2022 through
2031 and were published on June 14, 2023. Those projections used the
latest NHEA historical data that were available at the time of their
construction (that is, historical data through 2021). The NHEA
projection methodology accounts for expected changes in enrollment
across all of the categories of insurance coverage previously listed.
For a complete discussion of how the NHEA data account for expected
changes in enrollment across all the categories of insurance coverage
previously listed, we refer readers to the FY 2024 IPPS/LTCH PPS final
rule (88 FR 58999).
b. Proposed Factor 2 for FY 2025
Using these data sources and the previously described
methodologies, at the time of developing this proposed rule, OACT has
estimated that the uninsured rate for the historical, baseline year of
2013 was 14 percent, and that the uninsured rates for CYs 2024 and 2025
were 8.5 percent and 8.8 percent, respectively. As required by section
1886(r)(2)(B)(ii) of the Act, the Chief Actuary of CMS has certified
these estimates. We refer readers to OACT's Memorandum on Certification
of Rates of Uninsured prepared for this FY 2025 IPPS/LTCH PPS proposed
rule for further details on the methodology and assumptions that were
used in the projection of these rates of uninsurance.\150\
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\150\ https://www.cms.gov/files/document/certification-rates-uninsured-2025-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 use a weighted average approach to project the rate of
uninsurance for each fiscal year. We continue to believe that, in order
to estimate the rate of uninsurance during a fiscal year accurately,
Factor 2 should reflect the estimated rate of uninsurance that
hospitals will experience during the fiscal year, rather than the rate
of uninsurance during only one of the calendar years that the fiscal
year spans. Accordingly, we are continuing to apply the weighted
average approach used in past fiscal years to estimate this proposed
rule's rate of uninsurance for FY 2025.
OACT certified the estimate of the rate of uninsurance for FY 2025
determined using this weighted average approach to be reasonable and
appropriate for purposes of section 1886(r)(2)(B)(ii) of the Act. We
note that we may also consider the use of more recent data that may
become available for purposes of estimating the rates of uninsurance
used in the calculation of the final Factor 2 for FY 2025. The
calculation of the proposed Factor 2 for FY 2025 is as follows:
Percent of individuals without insurance for CY 2013: 14
percent.
Percent of individuals without insurance for CY 2024: 8.5
percent.
Percent of individuals without insurance for CY 2025: 8.8
percent.
Percent of individuals without insurance for FY 2025 (0.25
times 0.085) + (0.75 times 0.088): 8.7 percent. 1-[verbar]((0.14-
0.087)/0.14)[verbar] = 1-0.3786 = 0.6214 (62.14 percent).
We are proposing that Factor 2 for FY 2025 would be 62.14 percent.
The proposed FY 2025 uncompensated care amount is equivalent to
proposed Factor 1 multiplied by proposed Factor 2, which is
$6,498,135,150.00.
We are inviting public comments on our proposed Factor 2 for FY
2025.
3. Calculation of Proposed Factor 3 for FY 2025
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).
[[Page 36194]]
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 for us 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. For a discussion
of the methodology, we used to calculate Factor 3 for fiscal years 2014
through 2022, we refer readers to the FY 2024 IPPS/LTCH final rule (88
FR 59001 and 59002).
b. Background on the Methodology Used To Calculate Factor 3 for FY 2023
and Subsequent Years
Section 1886(r)(2)(C) of the Act 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 2014 IPPS/LTCH PPS final rule (78 FR 50634 through 50647), 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 for a fiscal year and for those hospitals that we do not
estimate will qualify for Medicare DSH payments for that fiscal year
but that may ultimately qualify for Medicare DSH payments for that
fiscal year at the time of cost report settlement.
As described in the FY 2022 IPPS/LTCH PPS final rule, 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 data from Worksheet S-10 data of the Medicare cost
report (86 FR 45237). In the FY 2022 IPPS/LTCH PPS final rule, we
stated that we would consider using multiple years of data when the
vast majority of providers 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 rules. 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. 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. 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. For IHS and Tribal hospitals
and Puerto Rico hospitals, we use the same multi-year average of
Worksheet S-10 data to determine Factor 3 for FY 2024 and subsequent
fiscal years as is used to determine Factor 3 for all other DSH-
eligible hospitals (in other words, hospitals eligible to receive
empirically justified Medicare DSH payments for a fiscal year) to
determine Factor 3.
In the FY 2023 IPPS/LTCH PPS final rule (87 FR 49033 through
49047), we also modified our policy regarding cost reports that start
in one fiscal year and span the entirety of the following fiscal year.
Specifically, in the rare cases when we use a cost report that starts
in one fiscal year and spans the entirety of the subsequent fiscal year
to determine uncompensated care costs for the subsequent 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.\151\
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\151\ For example, in determining Factor 3 for FY 2023, we did
not use the same cost report to determine a hospital's uncompensated
care costs for both FY 2018 and FY 2019. Rather, we used the cost
report that spanned the entirety of FY 2019 to determine
uncompensated care costs for FY 2019 and used the hospital's most
recent prior cost report to determine its uncompensated care costs
for FY 2018, provided that cost report spanned some portion of FY
2018.
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(1) Scaling Factor
In the FY 2024 IPPS/LTCH PPS final rule (88 FR 59003), we continued
the policy finalized in the FY 2023 IPPS/LTCH PPS final rule (87 FR
49042) to address the effects of calculating Factor
[[Page 36195]]
3 using data from multiple fiscal years, in 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 DSH-eligible for a fiscal year will be consistent with
the estimated amount available to make uncompensated care payments for
that fiscal year. Pursuant to that policy, 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.
(2) New Hospital Policy for Purposes of Factor 3
In the FY 2024 IPPS/LTCH PPS final rule (88 FR 59003), we continued
our new hospital policy that was modified in the FY 2023 IPPS/LTCH PPS
final rule (87 FR 49042) and initially adopted in the FY 2020 IPPS/LTCH
PPS final rule (84 FR 42370 through 42371) 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 fiscal
year after the most recent year for which audits of the Worksheet S-10
data have been conducted. For FY 2024, the FY 2020 cost reports were
the most recent year of cost reports for which audits of Worksheet S-10
data had been conducted. Thus, hospitals with CMS Certification Numbers
(CCNs) established on or after October 1, 2020, were subject to the new
hospital policy for FY 2024.
Under our modified new hospital policy, if a new hospital has a
preliminary projection of being DSH-eligible based on its most recent
available disproportionate patient percentage, it may receive interim
empirically justified DSH payments. However, new hospitals will not
receive interim uncompensated care payments because we would have no
uncompensated care data on which to determine what those interim
payments should be. The MAC will make a final determination concerning
whether the hospital is eligible to receive Medicare DSH payments at
cost report settlement. In FY 2024, 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 determined 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.\152\
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\152\ In the FY 2023 IPPS/LTCH PPS final rule (87 FR 49042), 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, to
improve consistency and predictability across all hospitals.
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(3) Newly Merged Hospital Policy
In the FY 2024 IPPS/LTCH PPS final rule (88 FR 59004), we continued
our policy of treating 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 2024 IPPS/LTCH PPS final rule (88 FR 59004), 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 methodology used to determine Factor 3 for new
hospitals described in section IV.E.3. of the preamble of this proposed
rule, we continued our 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 in section IV.E.3. of the preamble of this proposed rule, to
the Factor 3 calculation for a newly merged hospital. In the FY 2024
IPPS/LTCH PPS final rule, we explained that consistent with past
policy, interim uncompensated care payments for the newly merged
hospital would 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 2024 IPPS/LTCH PPS final rule (88 FR 59004 through
59005), we continued the policy of trimming CCRs, which we adopted in
the FY 2023 IPPS/LTCH PPS final rule (87 FR 49043), for FY 2024. Under
this policy, 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 hospitals that are not DSH-eligible), 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.
[[Page 36196]]
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 hospitals that
are not DSH-eligible), 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 these 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 for the potentially aberrant fiscal year to
determine an adjusted amount of uncompensated care costs for the
applicable fiscal year.\153\
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\153\ 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, as we explained in the FY 2021 IPPS/LTCH PPS final
rule (85 FR 58832), we determined it is unnecessary to apply the UCC
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). In the FY 2024 IPPS/LTCH PPS final rule (88 FR
59004), we stated that in addition to the UCC trim methodology, we will
continue to apply an alternative 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 not calculate a Factor 3 for the
hospital at the time of proposed or final rulemaking. 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 hospitals projected to be DSH-eligible. 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 2024 IPPS/LTCH PPS
final rule (88 FR 59005), 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 most recent audited cost
reports for hospitals that are projected to be DSH-eligible. We stated
that we continued to believe these thresholds are appropriate to
address potentially aberrant data. We also continued to include
Worksheet S-10 data from IHS/Tribal hospitals and Puerto Rico hospitals
consistent with our policy finalized in the FY 2023 IPPS/LTCH PPS final
rule (87 FR 49047 through 49051). In addition, we continued our policy
adopted in the FY 2023 IPPS/LTCH PPS final rule (87 FR 49044) of
applying the same threshold amounts originally calculated for the FY
2018 reports to identify potentially aberrant data for FY 2024 and
subsequent fiscal years 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 2025
For FY 2025, consistent with Sec. 412.106(g)(1)(iii)(C)(11), we
are following the same methodology as applied in FY 2024 and described
in the previous section of this proposed rule: to determine Factor 3
using the most recent 3 years of audited cost reports, from FY 2019, FY
2020, and FY 2021. Consistent with our approach for FY 2024, for FY
2025, we are also applying the scaling factor, new hospital, newly
merged hospital, CCR trim methodology, UCC trim, and alternative trim
methodology policies discussed in the previous section of this proposed
rule. For purposes of this FY 2025 IPPS/LTCH PPS proposed rule, we are
using reports from the December 2023 HCRIS extract to calculate Factor
3. We intend to use the March 2024 update of HCRIS to calculate the
final Factor 3 for the FY 2025 IPPS/LTCH PPS final rule.
Thus, for FY 2025, 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, following these steps:
Step 1: Select the hospital's longest cost report for each of the
most recent 3 years of fiscal year (FY) audited cost reports (FY 2019,
FY 2020, and FY 2021). Alternatively, in the rare case when the
hospital has no cost report for a particular year because the cost
report for the previous fiscal year spanned the more recent fiscal
year, the previous fiscal year cost report will be used in this step.
In the rare case that using a previous fiscal year cost report results
in
[[Page 36197]]
a period without a report, we would use the prior year report, if that
cost report spanned the applicable period.\154\ In general, we note
that, for purposes of the Factor 3 methodology, references to a fiscal
year cost report are to the cost report that spans the relevant fiscal
year.
---------------------------------------------------------------------------
\154\ For example, if a hospital does not have a FY 2020 cost
report because the hospital's FY 2019 cost report spanned the FY
2020 time period, we will use the FY 2019 cost report that spanned
the FY 2020 time period for this step. Using the same example, where
the hospital's FY 2019 report is used for the FY 2020 time period,
we will use the hospital's FY 2018 report if it spans some of the FY
2019 time period. We will not use the same cost report for both the
FY 2020 and the FY 2019 time periods.
---------------------------------------------------------------------------
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 by a scaling factor, as discussed in the previous section of
this proposed rule.
For purposes of identifying new hospitals, for FY 2025, the FY 2021
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, 2021, will be subject to the new
hospital policy in FY 2025. If a new hospital is ultimately determined
to be eligible for Medicare DSH payments for FY 2025, the hospital will
receive an uncompensated care payment calculated using a Factor 3 where
the numerator is the uncompensated care costs reported on Worksheet S-
10 of the hospital's FY 2025 cost report, and the denominator is the
sum of the uncompensated care costs reported on Worksheet S-10 of the
FY 2021 cost reports for all DSH-eligible hospitals. In addition, we
will apply a scaling factor, as discussed previously, to the Factor 3
calculation for a new hospital. As we explained in the FY 2024 IPPS/
LTCH PPS final rule (88 FR 59004), 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, to improve consistency and predictability across all
hospitals.
For FY 2025, the eligibility of a newly merged hospital to receive
interim uncompensated care payments will be based on whether the
surviving CCN has a preliminary projection of being DSH-eligible, and
the amount of any interim uncompensated care payments will be based on
the uncompensated care costs from the FY 2019, FY 2020, and FY 2021
cost reports available for the surviving CCN at the time the final rule
is developed. However, at cost report settlement, we will determine the
newly merged hospital's final uncompensated care payment based on the
uncompensated care costs reported on its FY 2025 cost report. That is,
we will revise the numerator of Factor 3 for the newly merged hospital
to reflect the uncompensated care costs reported on the newly merged
hospital's FY 2025 cost report. The denominator will be the sum of the
uncompensated care costs reported on Worksheet S-10 of the FY 2021 cost
reports for all DSH-eligible hospitals, which is the most recent fiscal
year for which audits have been conducted. We will also apply a scaling
factor, as described previously.
Under the CCR trim methodology, for purposes of this FY 2025
proposed rule, the statewide average CCR was applied to 10 hospitals'
FY 2019 reports, of which 4 hospitals had FY 2019 Worksheet S-10 data.
The statewide average CCR was applied to 8 hospitals' FY 2020 reports,
of which 3 hospitals had FY 2020 Worksheet S-10 data. The statewide
average CCR was applied to 8 hospitals' FY 2021 reports, of which 3
hospitals had FY 2021 Worksheet S-10 data.
For a hospital that is subject to either of the trims for
potentially aberrant data (the UCC trim and alternative trim
methodology explained in the previous section of this proposed rule)
and is ultimately determined to be DSH-eligible at cost report
settlement, its uncompensated care payment will be calculated only
after the hospital's reporting of insured charity care costs on its FY
2025 Worksheet S-10 has been reviewed. Accordingly, the MAC will
calculate a Factor 3 for the hospital only after reviewing the
uncompensated care information reported on Worksheet S-10 of the
hospital's FY 2025 cost report. Then we will calculate Factor 3 for the
hospital using the same methodology used to determine Factor 3 for new
hospitals. Specifically, the numerator will reflect the uncompensated
care costs reported on the hospital's FY 2025 cost report, while the
denominator will reflect the sum of the uncompensated care costs
reported on Worksheet S-10 of the FY 2021 cost reports of all DSH-
eligible hospitals. In addition, we will apply a scaling factor, as
discussed previously, to the Factor 3 calculation for the hospital.
For purposes of the FY 2025 IPPS/LTCH PPS final rule, consistent
with our Factor 3 methodology since the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50642), we intend to use data from the March 2024 HCRIS
extract for this calculation, which will be the latest quarterly HCRIS
extract that is publicly available at the time of the development of
the FY 2025 IPPS/LTCH PPS 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 note that
MACs follow normal timelines and procedures. For purposes of the Factor
3 calculation for the FY 2025 IPPS/LTCH PPS final rule, 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 2024. In other words, if the amended report and/or reopened
report is not available for the March HCRIS extract, then that amended
and/or reopened report data will not be part of the FY 2025 IPPS/LTCH
PPS final rule's Factor 3 calculation. We note that the March HCRIS
data extract will be available during the comment period for this
proposed rule if providers want to verify that their amended and/or
reopened data is reflected in the March HCRIS extract.
d. Per-Discharge Amount of Interim Uncompensated Care Payments for FY
2025 and Subsequent Fiscal Years
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.
[[Page 36198]]
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 using the most recent 3 years of discharge data, which would
have included data from FY 2018, FY 2019, and FY 2020. We explained our
belief that computing a 3-year average with FY 2020 discharge data
would underestimate discharges, due to the decrease in discharges
during the COVID-19 pandemic. For the same reason, 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 rather than a 3-year average using the most recent
3 years of discharge data.
We explained in the FY 2024 IPPS/LTCH PPS final rule (88 FR 59010)
that believed 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. We
considered using an average of FY 2019, FY 2021, and FY 2022 discharge
data to calculate the per-discharge amount for interim uncompensated
care payments for FY 2024. However, we agreed with commenters that
using FY 2019 data may overestimate discharge volume because updated
claims data used to estimate the FY 2024 discharges in the Factor 1
calculation indicated that discharge volumes were not expected to
return to pre-pandemic levels during FY 2024. Therefore, for FY 2024,
we finalized a policy of calculating the per-discharge amount for
interim uncompensated care payments using an average of FY 2021 and FY
2022 discharge data.
For FY 2025 and subsequent fiscal years, we are proposing to
calculate the per-discharge amount for interim uncompensated care
payments using the average of the most recent 3 years of discharge
data. Accordingly, for FY 2025, we propose to use an average of
discharge data from FY 2021, FY 2022, and FY 2023. We believe that our
proposed approach will likely result in a better estimate of the number
of discharges during FY 2025 and subsequent years for purposes of the
interim uncompensated care payment calculation.
As we explained in the FY 2014 IPPS/LTCH PPS final rule (78 FR
50645), we believe that it is appropriate to use a 3-year average of
discharge data to reduce the degree to which we would over- or under-
pay the uncompensated care payment on an interim basis. In any given
year, a hospital could have low or high Medicare utilization that
differs from other years. For example, if a hospital had two Medicare
discharges in its most recent year of claims data but experienced four
discharges in FY 2025, during the fiscal year, we would pay two times
the amount the hospital should receive and need to adjust for that at
cost report settlement. Similarly, if a hospital had four Medicare
discharges in its most recent year of claims data, but experienced two
discharges in FY 2025, during the fiscal year, we would only pay half
the amount the hospital should receive and need to adjust for that at
cost report settlement.
We also believe that, generally, use of the most recent 3 years of
discharge data, rather than older data, is more likely to reflect
current trends in discharge volume and provide an approximate estimate
of the number of discharges in the applicable fiscal year. In addition,
we note that including discharge data from FY 2023 to compute this 3-
year average is consistent with the proposed use of FY 2023 Medicare
claims in the IPPS ratesetting, as discussed in section I.E. of the
preamble of this FY 2025 IPPS/LTCH PPS proposed rule.
Under this proposal, the resulting 3-year average of the most
recent years of available historical discharge data would be used to
calculate a per-discharge payment amount that will be used to make
interim uncompensated care payments to each projected DSH-eligible
hospital during FY 2025 and subsequent fiscal years. The interim
uncompensated care payments made to a hospital during the fiscal year
will be reconciled following the end of the year to ensure that the
final payment amount is consistent with the hospital's prospectively
determined uncompensated care payment for the fiscal year.
We are proposing to make conforming changes to the regulations
under 42 CFR 412.106. Specifically, we are proposing to modify
paragraph (1) of Sec. 412.106(i) to state that for FY 2025 and
subsequent fiscal years, interim uncompensated care payments will be
calculated based on an average of the most recent 3 years of available
historical discharge data. We are requesting comments on this proposal.
In the FY 2021 IPPS/LTCH PPS final rule (85 FR 58833 and 58834), we
finalized a voluntary process through which a hospital may submit a
request to its MAC for a lower per-discharge interim uncompensated care
payment amount, including a reduction to zero, once before the
beginning of the fiscal year and/or once during the fiscal year. In
conjunction with this request, the hospital must provide supporting
documentation demonstrating that there would likely be a significant
recoupment at cost report settlement if the per-discharge amount is not
lowered (for example, recoupment of 10 percent or more of the
hospital's total uncompensated care payment, or at least $100,000). 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 (85 FR 58833 through 58834), the hospital's MAC will evaluate
these requests and the supporting documentation before the beginning of
the 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
fiscal year. We are continuing to apply this policy for FY 2025.
We refer readers to the Addendum in the FY 2023 IPPS/LTCH final
rule for a more detailed discussion of the steps for determining the
operating and capital Federal payment rate and the outlier payment
calculation (87 FR 49431 through 49432). 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-
[[Page 36199]]
discharge uncompensated care payment amount will not change how the
total uncompensated care payment amount will be reconciled at cost
report settlement.
e. Process for Notifying CMS of Merger Updates and To Report Upload
Issues
As we have done for every proposed and final rule beginning in FY
2014, in conjunction with this proposed 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 2025
(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 10 hospitals that
would be subject to the alternative trim for hospitals with potentially
aberrant data that are not projected to be DSH-eligible, with a N/A in
the Factor 3 column.
Hospitals have 60 days from the date of public display of this FY
2025 IPPS/LTCH PPS proposed rule in the Federal Register to review the
table and supplemental data file published on the CMS website in
conjunction with this proposed rule and to notify CMS in writing of
issues related to mergers and/or to report potential upload
discrepancies due to MAC mishandling of Worksheet S-10 data during the
report submission process.\155\ 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 will 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 2025
IPPS/LTCH PPS final rule. All other comments submitted in response to
our proposals for FY 2025 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 note that the CMS DSH inbox is not intended for Worksheet S-10 audit
process related emails, which should be directed to the MACs.
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\155\ For example, if the report does not reflect audit results
due to MAC mishandling, or the most recent report differs from a
previously accepted, amended report due to MAC mishandling.
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IV. Proposed Payment Adjustment for Medicare Disproportionate Share
Hospitals (DSHs) for FY 2025 (Sec. 412.106)
F. Impact on Medicare DSH Payment Adjustment of Proposed Implementation
of New OMB Labor Market Delineations
As discussed in section III.B. of the preamble of this proposed
rule, we are proposing to implement the new OMB labor market area
delineations (which are based on 2020 Decennial Census data) for the FY
2025 wage index. This proposal also would have an impact on the
calculation of Medicare DSH payment adjustments to certain hospitals.
Hospitals that are designated as rural with less than 500 beds and are
not rural referral centers (RRCs) or Medicare-dependent, small rural
hospitals (MDHs) are subject to a maximum DSH payment adjustment of 12
percent. Accordingly, hospitals with less than 500 beds that are
currently in urban counties that would become rural if we finalize our
proposal to adopt the new OMB delineations, and that do not become RRCs
or MDHs, would be subject to a maximum DSH payment adjustment of 12
percent. (We note, as discussed in section V.F.2. of the preamble of
this proposed rule, under current law the MDH program will expire on
December 31, 2024). We also note that urban hospitals are only subject
to a maximum DSH payment adjustment of 12 percent if they have less
than 100 beds.
Our existing regulations at 42 CFR 412.102 will apply in FY 2025
with respect to the calculation of the DSH payments to hospitals that
are currently located in urban counties that would become rural if we
finalize our proposal to adopt the new OMB delineations. The provisions
of 42 CFR 412.102 specify that a hospital located in an area that is
reclassified from urban to rural (as defined in the regulations), as a
result of the most recent OMB standards for delineating statistical
areas adopted by CMS, may receive an adjustment to its rural Federal
payment amount for operating costs for two successive fiscal years.
Specifically, the regulations state that, in the first year after a
hospital loses urban status, the hospital will receive an additional
payment that equals two thirds of the difference between the
disproportionate share payments as applicable to the hospital before
its redesignation from urban to rural and disproportionate share
payments otherwise, applicable to the hospital subsequent to its
redesignation from urban to rural. In the second year after a hospital
loses urban status, the hospital will receive an additional payment
that equals one-third of the difference between the disproportionate
share payments applicable to the hospital before its redesignation from
urban to rural and disproportionate share payments otherwise applicable
to the hospital subsequent to its redesignation from urban to rural.
G. Withdrawal of 42 CFR 412.106 (FY 2004 and Prior Fiscal Years) to the
Extent It Included Only ``Covered Days'' in the SSI Ratio
In Becerra v. Empire Health Foundation, for Valley Hospital Medical
Center, 597 U.S. 424 (2022) (Empire Health), the Supreme Court
addressed the question of whether Medicare patients remain ``entitled
to benefits under part A'' when Medicare does not pay for their care,
such as when they have exhausted their Medicare benefits for a spell of
illness. Prior to fiscal year (FY) 2005, when we calculated a
hospital's DSH adjustment we included in the Medicare fraction (also
referred to as the Medicare-SSI fraction, SSI fraction, or SSI ratio)
only ``covered'' Medicare patient days, that is, days paid by Medicare.
42. CFR 412.106(b)(2)(i) (2003). The ``covered'' days rule originated
in the FY 1986 IPPS interim final rule (51 FR 16,772 and 16,788) and
originally appeared in Sec. 412.106(a)(1)(i) but was later re-
numbered. The approach of excluding from the Medicare fraction patient
days for which Medicare did not pay was based on an interpretation of
the statute's parenthetical phrase ``(for such days).''
Section 1886(d)(5)(F)(vi)(I) of the Act. Following a series of
judicial decisions rejecting a parallel interpretation of the same
language in the numerator of the Medicaid fraction as counting only
patient days actually paid by the Medicaid program, the Secretary
revisited that approach in a 2004 rulemaking. Thus, the ``covered
days'' rule was the relevant Medicare payment policy until it was
revised and replaced
[[Page 36200]]
by the FY 2005 IPPS final rule (69 FR 48,916, 49,099, and 49,246).
The FY 2005 regulation at issue in Empire Health--codified in the
FY 2005 IPPS final rule--interpreted the statute to mean that the
Medicare fraction includes non-covered days in the SSI ratio. (For more
information see 69 FR 48916, 49099, and 49246 (amending 42 CFR
412.106(b)(2)(i) to include in the Medicare fraction all days
associated with patients who were entitled to Medicare Part A during
their hospital stays, regardless of whether Medicare paid for those
days).) In Empire Health, the Supreme Court upheld the FY 2005
regulation and held that the statute ``disclose[s] a surprisingly clear
meaning,'' 597 U.S. at 434, namely that beneficiaries remain ``entitled
to benefits under part A'' on days for which Medicare does not pay and
thus the Medicare fraction includes total days, not only covered days.
The Supreme Court also definitively resolved the meaning of the
parenthetical phrase ``(for such days)'' in the Medicare fraction,
rejecting the provider's contention that the phrase changed the
consistent meaning of ``entitled to benefits under Part A'' from
``meeting Medicare's statutory (age or disability) criteria on the days
in question,'' to ``actually receiving Medicare payments.'' Id. at 440.
The Court determined that the ``for such days'' parenthetical ``instead
works as HHS says: hand in hand with the ordinary statutory meaning of
`entitled to [Part A] benefits.' '' Id.
The Supreme Court has concluded that the interpretation set forth
in the FY 2005 IPPS final rule ``correctly construes the statutory
language at issue.'' Empire Health, 597 U.S. at 434. Because the pre-FY
2005 rule conflicts with the plain meaning of the statute, as confirmed
by the Supreme Court, it cannot govern the calculation of DSH payments
for hospitals with properly pending claims in DSH appeals or open cost
reports that include discharges that need to be determined pursuant to
the statute, regardless of whether such discharges would otherwise pre-
date the change in the regulation finalized by the FY 2005 IPPS final
rule. For that reason, we are proposing to formally withdraw 42 CFR
412.106 as it existed prior to the effective date of the FY 2005 IPPS
final rule to the extent it included only covered days in the SSI
ratio. We will apply the statute as understood by the Supreme Court in
Empire Health, instead of the pre-FY 2005 regulation, to any properly
pending claim in a DSH appeal or open cost report to which that
regulation would otherwise have applied. We do not believe this change
constitutes an exercise of our ``retroactive'' rulemaking authority
under section 1871(e)(1)(A) of the Act. Rather, we will apply the plain
meaning of the statute (as it has existed unchanged, in relevant part,
since its enactment on April 7, 1986). Moreover, because we are
applying the substantive legal standard established by the statute
itself, and not filling any gap therein, notice-and-comment rulemaking
is not required by section 1871(e)(1)(A) of the Act, as construed in
Azar v. Allina Health Services, 139 S. Ct. 1804 (June 3, 2019).
The withdrawal of this regulation will not serve as a basis to
reopen a CMS or contractor determination, a contractor hearing
decision, a CMS reviewing official decision, or a decision by the
Provider Reimbursement Review Board or the Administrator. We recognize
that hospitals may have anticipated receiving greater Medicare
reimbursement for still-open pre-FY 2005 cost reporting periods in
circumstances where the ``covered'' days limitation would have resulted
in a larger DSH adjustment. However, we are obliged to apply the
statute as the Supreme Court determined Congress wrote it.
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 (Fixed-
Loss Outlier threshold for Nontransfer Cases adjusted for geographic
variations in costs/Geometric Mean Length of Stay for the MS-DRG) *
(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) of 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
[[Page 36201]]
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. Proposed Changes for FY 2025
As discussed in section II.D. of the preamble of this proposed
rule, based on our analysis of FY 2023 MedPAR claims data, we are
proposing to make changes to a number of MS-DRGs, effective for FY
2025. Specifically, we are proposing to do the following:
Adding ICD-10-PCS codes describing left atrial appendage
closure (LAAC) procedures and cardiac ablation procedures to proposed
new MS-DRG 317 (Concomitant Left Atrial Appendage Closure and Cardiac
Ablation).
Delete existing MS-DRGs 453, 454, and 455 (Combined
Anterior and Posterior Spinal Fusion with MCC, with CC, and without CC/
MCC, respectively) and to reassign procedures from the existing MS-
DRGs, 453, 454, and 455 and MS-DRGs 459 and 460 (Spinal Fusion except
Cervical with MCC and without MCC, respectively) to proposed new MS-DRG
402 (Single Level Combined Anterior and Posterior Spinal Fusion Except
Cervical), proposed new MS-DRGs 426, 427, and 428 (Multiple Level
Combined Anterior and Posterior Spinal Fusion Except Cervical with MCC,
with CC, without MCC/CC, respectively), proposed new MS-DRGs 429 and
430 (Combined Anterior and Posterior Cervical Spinal Fusion with MCC
and without MCC, respectively), and proposed new MS-DRGs 447 and 448
(Multiple Level Spinal Fusion Except Cervical with MCC, and without
MCC, respectively). We note that we are also proposing to revise the
title of MS-DRGs 459 and 460 to ``Single Level Spinal Fusion Except
Cervical with MCC and without MCC, respectively''.
Reassign cases that report a principal diagnosis of acute
leukemia with an ``other'' O.R. procedure from MS-DRGs 834, 835, and
836 (Acute Leukemia without Major O.R. Procedures with MCC, with CC,
and without CC/MCC, respectively) to proposed new MS-DRG 850 (Acute
Leukemia with Other O.R. Procedures). We note that we are also
proposing to revise the title of MS-DRGs 834, 835, and 836 from ``Acute
Leukemia without Major O.R. Procedures with MCC, with CC, and without
CC/MCC'', respectively to ``Acute Leukemia with MCC, with CC, and
without CC/MCC''.
The proposed revised MS-DRGs 459 and 460 are currently subject to
the postacute care transfer policy. We believe it is appropriate to
reevaluate the postacute care transfer policy status for MS-DRGs 459
and 460. When proposing changes to MS-DRGs that involve adding,
deleting, and reassigning procedures between proposed new and revised
MS-DRGs, we continue to believe it is necessary to evaluate all of the
affected MS-DRGs to determine whether they should be subject to the
postacute care transfer policy.
MS-DRGs 834, 835, and 836 are currently not subject to the
postacute care transfer policy. While we are proposing to reassign
certain cases from these MS-DRGs to newly proposed MS-DRGs, we have
estimated that less than 5 percent of the current cases would shift
from the current assigned MS-DRGs to the proposed new MS-DRGs. We do
not consider these proposed revisions to constitute a material change
that would warrant reevaluation of the postacute care status of MS-DRGs
834, 835, and 836. 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.
In light of the proposed changes to the MS-DRGs for FY 2025,
according to the regulations under Sec. 412.4(d), we have evaluated
the MS-DRGs using the general postacute care transfer policy criteria
and data from the FY 2023 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.
Proposed new MS-DRGs 426, 427, 447, and 448 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 propose
to add proposed new MS-DRGs 426, 427, 428, 447, and 448 to the list of
MS-DRGs that are subject to the postacute care transfer policy.
MS-DRGs 459 and 460 are currently subject to the postacute care
transfer policy. As a result of our review, these MS-DRGs, as proposed
to be revised, would not qualify to be included on the list of MS-DRGs
that are subject to the postacute care transfer policy. We therefore
propose to remove proposed revised MS-DRGs 459 and 460 from the list of
MS-DRGs that are subject to the postacute care transfer policy if the
proposed changes to these MS-DRGs are finalized.
Using the December 2023 update of the FY 2023 MedPAR file, we have
developed the following chart which sets forth the most recent analysis
of the postacute care transfer policy criteria completed for this
proposed rule with respect to each of these proposed new or revised MS-
DRGs. For the FY 2025 final rule, we intend to update this analysis
using the most recent available data at that time.
BILLING CODE 4120-01-P
[[Page 36202]]
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[[Page 36203]]
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BILLING CODE 4120-01-C
During our annual review of proposed new or revised MS-DRGs and
analysis of the December 2023 update of the FY 2023 MedPAR file, we
reviewed the list of proposed revised or new MS-DRGs that qualify to be
included on the list of MS-DRGs subject to the postacute care transfer
policy for FY 2025 to determine if any of these MS-DRGs would also be
subject to the special payment methodology policy for FY 2025. We note
that MS-DRGs 459 and 460 are not currently subject to the special
payment policy, and as we are proposing to remove them from the list of
MS-DRGs subject to the postacute care transfer policy if the proposed
changes to those MS-DRGs are finalized, no further evaluation of
special payment policy is necessary.
Based on our analysis of proposed changes to MS-DRGs included in
this proposed rule, we determined that proposed new MS-DRGs 426, 427,
and 447 meet 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 are proposing that MS-DRGs 426, 427, 428,
447, 448, would be subject to the MS-DRG special payment methodology,
effective for FY 2025. For the FY 2025 final rule, we intend to update
this analysis using the most recent available data at that time.
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B. Proposed Changes in the Inpatient Hospital Update for FY 2025 (Sec.
412.64(d))
1. Proposed FY 2025 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 2025, we are setting the applicable percentage
increase by applying the adjustments listed in this section in the same
sequence as we did for FY 2024. (We note that section
1886(b)(3)(B)(xii) of the Act required an additional reduction each
year only for FYs 2010 through 2019.) Specifically, consistent with
section 1886(b)(3)(B) of the Act, as amended by sections 3401(a) and
10319(a) of the Affordable Care Act, we are setting the applicable
percentage increase by applying the following adjustments in the
following sequence. The applicable percentage increase under the IPPS
for FY 2025 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).
[[Page 36204]]
Section 1886(b)(3)(B)(xi) of the Act, as added by section 3401(a)
of the Affordable Care Act, states that application of the productivity
adjustment may result in the applicable percentage increase being less
than zero.
As published in the FY 2006 IPPS final rule (70 FR 47403), in
accordance with section 404 of Public Law 108-173, CMS determined a new
frequency for rebasing the hospital market basket of every 3 years. In
compliance with section 404 of the of Public Law 108-173, 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. Consistent with our established frequency
of rebasing the IPPS market basket every 4 years, we plan on proposing
to rebase and revise the IPPS market basket in the FY 2026 IPPS/LTCH
PPS proposed rule. We note that our preliminary evaluation of more
recent Medicare cost report data for IPPS hospitals for 2022 indicates
that the major IPPS market basket cost weights (particularly the
compensation and drug cost weights) are similar to those finalized in
the 2018-based IPPS market basket.
We are proposing to base the FY 2025 market basket update used to
determine the applicable percentage increase for the IPPS on IHS Global
Inc.'s (IGI's) fourth quarter 2023 forecast of the 2018-based IPPS
market basket rate-of-increase with historical data through third
quarter 2023, which is estimated to be 3.0 percent. We also are
proposing that if more recent data subsequently become available (for
example, a more recent estimate of the market basket update), we would
use such data, if appropriate, to determine the FY 2025 market basket
update in the final rule.
In the FY 2012 IPPS/LTCH PPS final rule (76 FR 51689 through
51692), we finalized our methodology for calculating and applying the
productivity adjustment. As we explained in that rule, section
1886(b)(3)(B)(xi)(II) of the Act, as added by section 3401(a) of the
Affordable Care Act, defines this productivity adjustment as equal to
the 10-year moving average of changes in annual economy-wide, private
nonfarm business MFP (as projected by the Secretary for the 10-year
period ending with the applicable fiscal year, 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 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/data-research/statistics-trends-and-reports/medicare-program-rates-statistics/market-basket-research-and-information. 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 2025, we are proposing a productivity adjustment of 0.4
percent. Similar to the proposed market basket rate-of-increase, for
this proposed rule, the estimate of the proposed FY 2025 productivity
adjustment is based on IGI's fourth quarter 2023 forecast. As noted
previously, we are proposing that if more recent data subsequently
become available, we would use such data, if appropriate, to determine
the FY 2025 productivity adjustment for the final rule.
Based on these data, we have determined four proposed applicable
percentage increases to the standardized amount for FY 2025, as
specified in the following table:
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In the FY 2020 IPPS/LTCH PPS final rule (84 FR 42344), we revised
our regulations at 42 CFR 412.64(d) to reflect the current law for the
update for FY 2020 and subsequent fiscal years. Specifically, in
accordance with section 1886(b)(3)(B) of the Act, we added paragraph
(d)(1)(viii) to Sec. 412.64 to set forth the applicable percentage
increase to the operating standardized amount for FY 2020 and
subsequent fiscal years as the percentage increase in the market basket
index, subject to the reductions specified under Sec. 412.64(d)(2) for
a hospital that does not submit quality
[[Page 36205]]
data and Sec. 412.64(d)(3) for a hospital that is not a meaningful EHR
user, less a productivity adjustment.
As discussed in section V.F. of the preamble of this proposed rule,
section 4102 of the Consolidated Appropriations Act (CAA), 2023 (Pub.
L. 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). Subsequently, section 307 of the Consolidated
Appropriations Act, 2024 (CAA, 2024) (Pub. L. 118-42), enacted on March
9, 2024, further extended the MDH program for FY 2025 discharges
occurring before January 1, 2025. Prior to enactment of the CAA, 2024,
the MDH program was only to be in effect through the end of FY 2024.
Under current law, the MDH program will expire for discharges on or
after January 1, 2025. We refer readers to section V.F. of the preamble
of this proposed rule for further discussion of the MDH program.
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.
For FY 2025, we are proposing the following updates to the
hospital-specific rates applicable to SCHs and MDHs: A proposed update
of 2.6 percent for a hospital that submits quality data and is a
meaningful EHR user; a proposed update of 0.35 percent for a hospital
that submits quality data and is not a meaningful EHR user; a proposed
update of 1.85 percent for a hospital that fails to submit quality data
and is a meaningful EHR user; and a proposed update of -0.4 percent for
a hospital that fails to submit quality data and is not an meaningful
EHR user. As previously discussed, we are proposing that if more recent
data subsequently become available (for example, a more recent estimate
of the market basket update and the productivity adjustment), we would
use such data, if appropriate, to determine the market basket update
and the productivity adjustment in the final rule.
2. Proposed FY 2025 Puerto Rico Hospital Update
Section 602 of Public Law 114-113 amended section 1886(n)(6)(B) of
the Act to specify that subsection (d) Puerto Rico hospitals are
eligible for incentive payments for the meaningful use of certified EHR
technology, effective beginning FY 2016. In addition, section
1886(n)(6)(B) of the Act was amended to specify that the adjustments to
the applicable percentage increase under section 1886(b)(3)(B)(ix) of
the Act apply to subsection (d) Puerto Rico hospitals that are not
meaningful EHR users, effective beginning FY 2022. Accordingly, for FY
2022, section 1886(b)(3)(B)(ix) of the Act in conjunction with section
602(d) of Public Law 114-113 requires that any subsection (d) Puerto
Rico hospital that is not a meaningful EHR user as defined in section
1886(n)(3) of the Act and not subject to an exception under section
1886(b)(3)(B)(ix) of the Act will have ``three-quarters'' of the
applicable percentage increase (prior to the application of other
statutory adjustments), or three-quarters of the applicable market
basket rate-of-increase, reduced by 33\1/3\ percent. The reduction to
three-quarters of the applicable percentage increase for subsection (d)
Puerto Rico hospitals that are not meaningful EHR users increases to
66\2/3\ percent for FY 2023, and, for FY 2024 and subsequent fiscal
years, to 100 percent. (We note that section 1886(b)(3)(B)(viii) of the
Act, which specifies the adjustment to the applicable percentage
increase for ``subsection (d)'' hospitals that do not submit quality
data under the rules established by the Secretary, is not applicable to
hospitals located in Puerto Rico.) The regulations at 42 CFR
412.64(d)(3)(ii) reflect the current law for the update for subsection
(d) Puerto Rico hospitals for FY 2022 and subsequent fiscal years. In
the FY 2019 IPPS/LTCH PPS final rule, we finalized the payment
reductions (83 FR 41674).
For FY 2025, 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 2023 forecast of the 2018-based IPPS
market basket update with historical data through third quarter 2023,
for this FY 2025 IPPS/LTCH PPS proposed rule, in accordance with
section 1886(b)(3)(B) of the Act, as discussed previously, for Puerto
Rico hospitals we are proposing a market basket update of 3.0 percent
less a productivity adjustment of 0.4 percentage point. Therefore, for
FY 2025, depending on whether a Puerto Rico hospital is a meaningful
EHR user, there are 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 2025 for Puerto Rico hospitals:
For a Puerto Rico hospital that is a meaningful EHR user,
we are proposing a FY 2025 applicable percentage increase to the
operating standardized amount of 2.6 percent (that is, the FY 2025
estimate of the proposed market basket rate-of-increase of 3.0 percent
less 0.4 percentage point for the proposed productivity adjustment).
For a Puerto Rico hospital that is not a meaningful EHR
user, we are proposing a FY 2025 applicable percentage increase to the
operating standardized amount of 0.35 percent (that is, the FY 2025
estimate of the proposed market basket rate-of-increase of 3.0 percent,
less an adjustment of 2.25 percentage points (the proposed market
basket rate-of-increase of 3.0 percent x 0.75 for failure to be a
meaningful EHR user), and less 0.4 percentage point for the proposed
productivity adjustment).
As noted previously, we are proposing that if more recent data
subsequently become available, we would use such data, if appropriate,
to determine the FY 2025 market basket update and the productivity
adjustment for the FY 2025 IPPS/LTCH PPS final rule.
[[Page 36206]]
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C. 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 the Medicare Prescription Drug, Improvement, and
Modernization Act of 2003 (Pub. L. 108-173) raised the DSH payment
adjustment for RRCs such that they are not subject to the 12-percent
cap on DSH payments that is applicable to other rural hospitals. RRCs
also are not subject to the proximity criteria when applying for
geographic reclassification. In addition, they do not have to meet the
requirement that a hospital's average hourly wage must exceed, by a
certain percentage, the average hourly wage of the labor market area in
which the hospital is located.
Section 4202(b) of the Balanced Budget Act of 1997 (Pub. L. 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 through 46000), 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
47087), we indicated that we were revisiting that decision.
Specifically, we stated that we would permit hospitals that previously
qualified as an RRC and lost their status due to OMB redesignation of
the county in which they are located from rural to urban, to be
reinstated as an RRC. Otherwise, a hospital seeking RRC status must
satisfy all of the other applicable criteria. We use the definitions of
``urban'' and ``rural'' specified in subpart D of 42 CFR part 412. One
of the criteria under which a hospital may qualify as an RRC is to have
275 or more beds available for use (Sec. 412.96(b)(1)(ii)). A rural
hospital that does not meet the bed size requirement can qualify as an
RRC if the hospital meets two mandatory prerequisites (a minimum case-
mix index (CMI) and a minimum number of discharges), and at least one
of three optional criteria (relating to specialty composition of
medical staff, source of inpatients, or referral volume). (We refer
readers to Sec. 412.96(c)(1) through (5) and the September 30, 1988,
Federal Register (53 FR 38513) for additional discussion.) With respect
to the two mandatory prerequisites, a hospital may be classified as an
RRC if the hospital's--
CMI is at least equal to the lower of the median CMI for
urban hospitals in its census region, excluding hospitals with approved
teaching programs, or the median CMI for all urban hospitals
nationally; and
Number of discharges is at least 5,000 per year, or, if
fewer, the median number of discharges for urban hospitals in the
census region in which the hospital is located. The number of
discharges criterion for an osteopathic hospital is at least 3,000
discharges per year, as specified in section 1886(d)(5)(C)(i) of the
Act.
In the FY 2022 IPPS/LTCH PPS final rule (86 FR 45217), in light of
the COVID-19 PHE, we amended the regulations at Sec. 412.96(h)(1) to
provide for the use of the best available data rather than the latest
available data in calculating the national and regional CMI criteria.
We also amended the regulations at Sec. 412.96(c)(1) to indicate that
the individual hospital's CMI value for discharges during the same
Federal fiscal year used to compute the national and regional CMI
values is used for purposes of determining whether a hospital qualifies
for RRC classification. We also amended the regulations Sec.
412.96(i)(1) and (2), which describe the methodology for calculating
the number of discharges criteria, to provide for the use of the best
available data rather than the latest available or most recent data
when calculating the regional discharges for RRC classification.
1. Case-Mix Index (CMI)
Section 412.96(c)(1) provides that CMS establish updated national
and regional CMI values in each year's annual notice of prospective
payment rates for purposes of determining RRC status. The methodology
we used to determine the national and regional CMI values is set forth
in the regulations at Sec. 412.96(c)(1)(ii). The proposed national
median CMI value for FY 2025 is based on the CMI values of all urban
hospitals nationwide, and the proposed regional median CMI values for
FY 2025 are based on the CMI values of all urban hospitals within each
census region, excluding those hospitals with approved teaching
programs (that is, those hospitals that train residents in an approved
GME program as provided in Sec. 413.75). These proposed values are
based on discharges occurring during FY 2023 (October 1, 2022 through
September 30, 2023), and include bills posted to CMS' records through
December 2023. We believe that this is the best available data for use
in calculating the proposed national and regional median CMI values and
is consistent with our proposal to use the FY 2023 MedPAR claims data
for FY 2025 ratesetting.
In this FY 2025 IPPS/LTCH PPS proposed rule, we are proposing that,
in addition to meeting other criteria, if rural hospitals with fewer
than 275 beds are to qualify for initial RRC status for cost reporting
periods beginning on or after October 1, 2024, they must have a CMI
value for FY 2023 that is at least--
1.7764 (national--all urban); or
The median CMI value (not transfer-adjusted) for urban
hospitals
[[Page 36207]]
(excluding hospitals with approved teaching programs as identified in
Sec. 413.75) calculated by CMS for the census region in which the
hospital is located.
The proposed median CMI values by region are set forth in the
following table. We intend to update the proposed CMI values in the FY
2025 IPPS/LTCH PPS final rule to reflect the updated FY 2023 MedPAR
file, which will contain data from additional bills received through
March 2024.
[GRAPHIC] [TIFF OMITTED] TP02MY24.186
A hospital seeking to qualify as an RRC should obtain its hospital-
specific CMI value (not transfer-adjusted) from its MAC. Data are
available on the Provider Statistical and Reimbursement (PS&R) System.
In keeping with our policy on discharges, the CMI values are computed
based on all Medicare patient discharges subject to the IPPS MS-DRG-
based payment.
2. Discharges
Section 412.96(c)(2)(i) provides that CMS set forth the national
and regional numbers of discharges criteria in each year's annual
notice of prospective payment rates for purposes of determining RRC
status. As specified in section 1886(d)(5)(C)(ii) of the Act, the
national standard is set at 5,000 discharges. For FY 2025, we are
proposing to update the regional standards based on discharges for
urban hospitals' cost reporting periods that began during FY 2022 (that
is, October 1, 2021 through September 30, 2022), which are the latest
cost report data available at the time this proposed rule was
developed. We believe that this is the best available data for use in
calculating the proposed median number of discharges by region and is
consistent with our data proposal to use cost report data from cost
reporting periods beginning during FY 2022 for FY 2025 ratesetting.
Therefore, we are proposing that, in addition to meeting other
criteria, a hospital, if it is to qualify for initial RRC status for
cost reporting periods beginning on or after October 1, 2024, must
have, as the number of discharges for its cost reporting period that
began during FY 2022, at least--
5,000 (3,000 for an osteopathic hospital); or
If less, the median number of discharges for urban
hospitals in the census region in which the hospital is located. We
refer readers to the proposed number of discharges as set forth in the
following table. We intend to update these numbers in the FY 2025 final
rule based on the latest available cost report data.
[GRAPHIC] [TIFF OMITTED] TP02MY24.187
We note that because the median number of discharges for hospitals
in each census region is greater than the national standard of 5,000
discharges, under this proposed rule, 5,000 discharges is the minimum
criterion for all hospitals, except for osteopathic hospitals for which
the minimum criterion is 3,000 discharges.
3. Qualification Under the Discharge Criterion for Osteopathic
Hospitals
Section 1886(d)(5)(C) of the Act sets forth certain criteria that
must be met for a hospital to be classified as a rural
[[Page 36208]]
referral center, including a discharge criterion specifying the
hospital has at least 5,000 discharges a year or, if less, the median
number of discharges in urban hospitals in the region in which the
hospital is located. Section 9106 of the Consolidated Omnibus Budget
Reconciliation Act of 1985 (Pub. L. 99-272) amended section
1886(d)(5)(C) of the Act to provide for a separate discharge criterion
for an osteopathic hospital to qualify for classification as a rural
referral center, effective for cost reporting periods beginning on or
after January 1, 1986. To implement this statutory provision, in the FY
1987 IPPS final rule, we revised 42 CFR 412.96(c)(2) to specify that
for cost reporting periods beginning on or after January 1, 1986 an
osteopathic hospital, recognized by the American Osteopathic Hospital
Association, that is located in a rural area must have at least 3,000
discharges during its most recently completed cost reporting period to
meet the number of discharges criterion (51 FR 31471). In the FY 1996
IPPS final rule, in light of a name change of the American Osteopathic
Hospital Association to the American Osteopathic Healthcare
Association, we subsequently revised 42 CFR 412.96(c)(2) to specify
that the osteopathic hospital must be recognized by the American
Osteopathic Healthcare Association ``(or any successor organization)''
(60 FR 45810).
As we discussed in implementing the number of discharges criterion
for osteopathic hospitals in the FY 1987 IPPS final rule, ``[b]ecause
section 1886(d)(5)(C)(i) of the Act specifically limits this
qualification to osteopathic hospitals, we do not believe that this
standard should apply to all hospitals'' (51 FR 31473). Accordingly, to
qualify under this lower number of discharges criterion, a hospital
must be an osteopathic hospital. It has come to the attention of CMS
that the successor organization to the American Osteopathic Healthcare
Association, namely the Accreditation Commission for Health Care,
accredits acute care hospitals, including hospitals that are not
osteopathic. Thus, a hospital receiving an accreditation letter or
certificate from the successor organization is not necessarily an
osteopathic hospital. We are therefore proposing to revise the
regulations at 42 CFR 412.96(c)(2) to clarify that, to qualify for RRC
classification based on the lower discharge criterion for osteopathic
hospitals, a hospital must be an osteopathic hospital and by itself
recognition (such as an accreditation letter) by a successor
organization to the American Osteopathic Healthcare Association is not
necessarily sufficient to demonstrate that a hospital is an osteopathic
hospital.
We propose to amend our regulations at 42 CFR 412.96 by revising
paragraph (c)(2)(ii) as follows: ``(ii) For cost reporting periods
beginning on or after January 1, 1986, an osteopathic hospital,
recognized by the American Osteopathic Healthcare Association (or any
successor organization), that is located in a rural area must have at
least 3,000 discharges during its cost reporting period that began
during the same fiscal year as the cost reporting periods used to
compute the regional median discharges under paragraph (i) of this
section to meet the number of discharges criterion. A hospital applying
for rural referral center status under the number of discharges
criterion in this paragraph must demonstrate its status as an
osteopathic hospital.''
Consistent with section 1886(d)(5)(C)(i) of the Act, evidence of
osteopathic status may include, but is not limited to, the hospital's
scope of services and its mix of medical specialties. CMS will consider
the totality of the information demonstrating whether an applicant
hospital is an osteopathic hospital. We seek comment on additional
types of evidence we should consider in the determination of a
hospital's osteopathic status.
D. Proposed Payment Adjustment for Low-Volume Hospitals (Sec. 412.101)
1. Background
Section 1886(d)(12) of the Act provides for an additional payment
to each qualifying low-volume hospital under the IPPS beginning in FY
2005. The 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 addition to any payment calculated under section 1886 of the Act,
and is based on the per discharge amount paid to the qualifying
hospital. 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. The payment adjustment for
low-volume hospitals is not budget neutral.
As discussed in the FY 2024 IPPS/LTCH PPS final rule (88 FR 59041
through 59045), section 4101 of the CAA, 2023 (Pub. L. 117-328)
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. The
Consolidated Appropriations Act, 2024 (CAA, 2024) (Pub. L. 118-42),
enacted on March 9, 2024, extended the temporary changes to the low-
volume hospital qualifying criteria and payment adjustment under the
IPPS for a portion of FY 2025. Specifically, section 306 of the CAA,
2024 further extended the modified definition of low-volume hospital
and the methodology for calculating the payment adjustment for low-
volume hospitals under section 1886(d)(12) through December 31, 2024.
Beginning January 1, 2025, the low-volume hospital qualifying criteria
and payment adjustment will revert to the statutory requirements that
were in effect prior to FY 2011, and the preexisting low-volume
hospital payment adjustment methodology and qualifying criteria, as
implemented in FY 2005 and discussed later in this section, will
resume. We discuss the proposed payment policies for FY 2025 in section
V.E.2. in the preamble of this proposed rule.
[[Page 36209]]
[GRAPHIC] [TIFF OMITTED] TP02MY24.188
2. Extension of Temporary Changes to Low-Volume Hospital Payment
Definition and Payment Adjustment Methodology and Conforming Changes to
Regulations
As discussed previously, section 4101 of the CAA, 2023 modified the
definition of low-volume hospital and the methodology for calculating
the payment adjustment for low-volume hospitals under section
1886(d)(12) of the Act through September 30, 2024. Prior to the
enactment of the CAA, 2024 (Pub. L. 118-42), the temporary changes to
the low-volume hospital qualifying criteria and payment adjustment
provided by section 4101 of CAA, 2023 were set to expire on October 1,
2024. Section 306 of the CAA, 2024 extends the temporary changes to the
low-volume hospital qualifying criteria and payment adjustment under
the IPPS for the portion of FY 2025 beginning on October 1, 2024, and
ending on December 31, 2024 (that is, for discharges occurring before
January 1, 2025).
Under section 1886(d)(12)(C)(i) of the Act, as amended by Public
Law 118-42, for FYs 2019 through 2024 and the portion of FY 2025
occurring before January 1, 2025, 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. In accordance with the existing regulations at Sec.
412.101(a), we define the term ``road miles'' to mean ``miles'' as
defined at Sec. 412.92(c)(1). Under section 1886(d)(12)(D) of the Act,
as amended, for discharges occurring in FY 2019 through December 31,
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).
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. For qualifying hospitals with fewer
than 3,800 total discharges but more than 500 total discharges, the
low-volume hospital payment adjustment is calculated using the formula
at Sec. 412.101(c)(3)(ii) (which is shown in the Table V.E.-01). For
this purpose, the term ``discharge'' refers to total discharges,
regardless of payer (that is, Medicare and non-Medicare discharges).
The hospital's most recently submitted cost report is used to determine
if the hospital meets the discharge criterion to receive the low volume
payment adjustment in the current year (Sec. 412.101(b)(2)(iii)). The
low-volume hospital payment adjustment for FYs 2019 through 2024 is set
forth in the regulations at Sec. 412.101(c)(3).
Consistent with the extension of the methodology for calculating
the payment adjustment for low-volume hospitals through FY 2024, we are
proposing to continue using the previously specified continuous, linear
sliding scale formula to determine the low-volume hospital payment
adjustment for the portion of FY 2025 occurring before January 1, 2025.
We are also proposing 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 CAA, 2024.
Specifically, we are proposing 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
the portion of FY 2025 through December 31, 2024, is the same low-
volume hospital payment adjustment policy in effect for FYs 2019
through 2024 (as described in the FY 2019 IPPS/LTCH PPS final rule (83
FR 41398 through 41399) and in the FY 2024 IPPS/LTCH final rule (88 FR
59041 through 59045)). In addition, in accordance with the provisions
of the CAA, 2024, we are proposing to make conforming changes to
paragraphs (b)(2)(i) and (c)(1) of Sec. 412.101 to reflect that for
the portion of FY 2025 beginning on January 1, 2025 and for subsequent
fiscal years, the low-volume hospital payment adjustment policy will
revert back to the low-volume hospital payment adjustment policy in
effect for FYs 2005 through 2010, as described in section V.E.3. of
this preamble. We further propose that if the temporary changes to the
low-volume payment adjustment are extended through legislation beyond
December 31, 2024, we would make the conforming changes to the
regulations at Sec. 412.101 (b)(2)(i),
[[Page 36210]]
(b)(2)(iii), (c)(1), and (c)(3) to reflect any further extension.
3. Proposed Payment Adjustment for the Portion of FY 2025 Beginning on
January 1, 2025, and Subsequent Fiscal Years
In accordance with section 1886(d)(12) of the Act, as amended by
section 306 of the CAA, 2024, beginning with FY 2025 discharges
occurring on or after January 1, 2025, the low-volume hospital
definition and payment adjustment methodology will revert to the
statutory requirements that were in effect prior to the amendments made
by the Affordable Care Act and subsequent legislation. Specifically,
section 1886(d)(12)(B) of the Act requires, for discharges occurring in
FYs 2005 through 2010, FY 2025 discharges occurring on or after January
1, 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.
Therefore, effective for the portion of FY 2025 beginning on
January 1, 2025 and subsequent years, under current policy at Sec.
412.101(b), to qualify as a low-volume hospital, a subsection (d)
hospital must be more than 25 road miles from another subsection (d)
hospital and have less than 200 discharges (that is, less than 200
discharges total, including both Medicare and non-Medicare discharges)
during the fiscal year. For the portion of FY 2025 beginning on January
1, 2025, and subsequent years, the statute specifies that a low-volume
hospital must have less than 800 discharges during the fiscal year.
However, as required by section 1886(d)(12)(B)(i) of the Act, the
Secretary has developed an empirically justifiable payment adjustment
based on the relationship, for IPPS hospitals with less than 800
discharges, between the additional incremental costs (if any) that are
associated with a particular number of discharges. Based on an analysis
we conducted for the FY 2005 IPPS final rule (69 FR 49099 through
49102), a 25-percent low-volume adjustment to all qualifying hospitals
with less than 200 discharges was found to be most consistent with the
statutory requirement to provide relief for low-volume hospitals where
there is empirical evidence that higher incremental costs are
associated with low numbers of total discharges. (Under the policy we
established in that same final rule, hospitals with between 200 and 799
discharges do not receive a low-volume hospital adjustment.)
As discussed previously, for FYs 2005 through 2010 and FY 2019 and
subsequent years, the discharge determination is made based on the
hospital's number of total discharges, that is, Medicare and non-
Medicare discharges. The hospital's most recently submitted cost report
is used to determine if the hospital meets the discharge criterion to
receive the low-volume payment adjustment in the current year (Sec.
412.101(b)(2)(i)). We use cost report data to determine if a hospital
meets the discharge criterion because this is the best available data
source that includes information on both Medicare and non-Medicare
discharges. We note that, for FYs 2011 through 2018, we used the most
recently available MedPAR data to determine the hospital's Medicare
discharges because only Medicare discharges were used to determine if a
hospital met the discharge criterion for those years.
In addition to the discharge criterion, a hospital must also meet
the mileage criterion to qualify for the low-volume payment adjustment.
As specified by section 1886(d)(12)(C)(i) of the Act, a low-volume
hospital must be more than 25 road miles (or 15 road miles for FYs 2011
through 2024) from another subsection (d) hospital. Accordingly, for FY
2025 and subsequent fiscal years, in addition to the discharge
criterion, the eligibility for the low-volume payment adjustment is
also dependent upon the hospital meeting the mileage criterion at Sec.
412.101(b)(2)(i), which specifies that a hospital must be located more
than 25 road miles from the nearest subsection (d) hospital, consistent
with section 1886(d)(12)(C)(i) of the Act. We define, at Sec.
412.101(a), the term ``road miles'' to mean ``miles'' as defined at
Sec. 412.92(c)(1) (75 FR 50238 through 50275 and 50414). As previously
noted, we are proposing to make conforming changes to paragraphs
(b)(2)(i) and (c)(1) of Sec. 412.101 to reflect that for the portion
of FY 2025 beginning on January 1, 2025, and subsequent fiscal years,
the low-volume hospital payment adjustment policy is the same as that
in effect for FYs 2005 through 2010.
On average, approximately 600 hospitals per year were eligible for
the low-volume hospital payment adjustment for FYs 2019 through 2024
under the temporary changes in the low-volume hospital payment policy
as amended by section 50204 of the Bipartisan Budget Act of 2018 (Pub.
L. 115-123), and section 4101 of the Consolidated Appropriations Act,
2023 (CAA, 2023) (Pub. L. 117-328). As discussed previously, the CAA,
2024 further extended the modified definition of low-volume hospital
and the methodology for calculating the payment adjustment for low-
volume hospitals under section 1886(d)(12) through December 31, 2024.
Therefore, for the portion of FY 2025 beginning on January 1, 2025 and
for subsequent years the low-volume hospital qualifying criteria and
payment adjustment will revert to the statutory requirements that were
in effect prior to FY 2011. Based on historical data for hospitals that
qualified during FYs 2005--2010, we estimate that fewer than 10
hospitals would qualify for the low-volume hospital payment adjustment
for the portion of FY 2025 beginning on January 1, 2025 under current
law.
5. Process for Requesting and Obtaining the Low-Volume Hospital Payment
Adjustment FY 2025
In the FY 2011 IPPS/LTCH PPS final rule (75 FR 50238 through 50275
and 50414) and subsequent rulemaking, most recently in the FY 2024
IPPS/LTCH PPS final rule (88 FR 59044 through 59045), 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
[[Page 36211]]
determination is made based on the hospital's number of total
discharges, that is, Medicare and non-Medicare discharges, as was the
case for FYs 2005 through 2010. Under Sec. 412.101(b)(2)(i) and (iii),
a hospital's most recently submitted cost report is used to determine
if the hospital meets the discharge criterion to receive the low volume
payment adjustment in the current year. As discussed in the FY 2019
IPPS/LTCH PPS final rule (83 FR 41399 and 41400), we use cost report
data to determine if a hospital meets the discharge criterion because
this is the best available data source that includes information on
both Medicare and non-Medicare discharges. (For FYs 2011 through 2018,
the most recently available MedPAR data were used to determine the
hospital's Medicare discharges because non-Medicare discharges were not
used to determine if a hospital met the discharge criterion for those
years.) Therefore, a hospital 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.
In addition to the discharge criterion, eligibility for the low-
volume hospital payment adjustment is also dependent upon the hospital
meeting the applicable mileage criterion specified in section
1886(d)(12)(C)(i) of the Act, which is codified at Sec. 412.101(b)(2),
for the fiscal year. Specifically, to meet the mileage criterion to
qualify for the low-volume hospital payment adjustment for the portion
of FY 2025 beginning October 1, 2024 through December 31, 2024, a
hospital must be located more than 15 road miles from the nearest
subsection (d) hospital, as reflected in proposed revised Sec.
412.101(b)(2). Additionally, to meet the mileage criterion to qualify
for the low-volume hospital payment adjustment for the portion of FY
2025 beginning January 1, 2025 through September 30, 2025, a hospital
must be located more than 25 road miles from the nearest subsection (d)
hospital. (We define in Sec. 412.101(a) the term ``road miles'' to
mean ``miles'' as defined in Sec. 412.92(c)(1) (75 FR 50238 through
50275 and 50414).) For establishing that the hospital meets the mileage
criterion, the use of a web-based mapping tool as part of the
documentation is acceptable. The MAC will determine if the information
submitted by the hospital, such as the name and street address of the
nearest hospital(s), location on a map, and distance from the hospital
requesting low-volume hospital status, is sufficient to document that
it meets the mileage criterion. If not, the MAC will follow up with the
hospital to obtain additional necessary information to determine
whether or not the hospital meets the applicable mileage criterion.
In accordance with our previously established process, a hospital
must make a written request for low-volume hospital status that is
received by its MAC by September 1 immediately preceding the start of
the Federal fiscal year for which the hospital is applying for low-
volume hospital status in order for the applicable low-volume hospital
payment adjustment to be applied to payments for its discharges for the
fiscal year beginning on or after October 1 immediately following the
request (that is, the start of the Federal fiscal year). For a hospital
whose request for low-volume hospital status is received after
September 1, if the MAC determines the hospital meets the criteria to
qualify as a low-volume hospital, the MAC will apply the applicable
low-volume hospital payment adjustment to determine payment for the
hospital's discharges for the fiscal year, effective prospectively
within 30 days of the date of the MAC's low-volume status
determination.
Consistent with this previously established process, for FY 2025,
we are proposing that a hospital must submit a written request for low-
volume hospital status to its MAC that includes sufficient
documentation to establish that the hospital meets the applicable
mileage and discharge criteria (as described earlier). Specifically,
for the portion of FY 2025 beginning October 1, 2024 through December
31, 2024, a hospital must make a written request for low-volume
hospital status that is received by its MAC no later than September 1,
2024, in order for the low-volume, add-on payment adjustment to be
applied to payments for its discharges beginning on or after October 1,
2024. If a hospital's written request for low-volume hospital status
for the portion of FY 2025 beginning October 1, 2024 through December
31, 2024 is received after September 1, 2024, 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 2025 discharges beginning
October 1, 2024 through December 31, 2024, effective prospectively
within 30 days of the date of the MAC's low-volume hospital status
determination.
Additionally, we are proposing that a hospital must also submit a
written request for low-volume hospital status to its MAC that includes
sufficient documentation to establish that the hospital continues to
meet the applicable mileage and discharge criteria for the portion of
FY 2025 beginning on January 1, 2025 through September 30, 2025 (as
described earlier). Specifically, for the portion of FY 2025 beginning
on January 1, 2025, a hospital must make a written request for low-
volume hospital status that is received by its MAC no later than
December 1, 2024, in order for the 25-percent, low-volume, add-on
payment adjustment to be applied to payments for its discharges
beginning on or after January 1, 2025. If a hospital's written request
for low-volume hospital status for the portion of FY 2025 beginning on
January 1, 2025 is received after December 1, 2024, 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 2025
discharges on or after January 1, 2025, effective prospectively within
30 days of the date of the MAC's low-volume hospital status
determination.
A hospital may choose to make a single written request for low-
volume hospital status to its MAC for both the portion of FY 2025
beginning on October 1, 2024 and ending December 31, 2024 and the
portion of FY 2025 beginning on January 1, 2025 through September 30,
2024 by the September 1, 2024 deadline discussed previously.
Alternatively, a hospital may choose to submit separate written
requests, one for the portion of FY 2025 beginning on October 1, 2024
and ending on December 31, 2024 (by the September 1, 2024 deadline
discussed previously), and another for the portion of FY 2025 beginning
on January 1, 2025 through September 30, 2025 (by the December 1, 2024
deadline discussed previously).
Under this process, a hospital that qualified for the low-volume
hospital payment adjustment for FY 2024 may continue to receive a low-
volume hospital payment adjustment for FY 2025 without reapplying if it
meets both the discharge criterion and the mileage criterion applicable
for FY 2025 (that is, the discharge criterion and mileage criterion for
the period beginning October 1, 2024 through December 31, 2024, as well
as the discharge criterion and mileage criterion for the period
beginning on January 1, 2025 through September 30, 2025, respectively).
As discussed previously, for the portion of FY 2025 beginning on
January 1, 2025, the discharge and the mileage criteria are reverting
to the statutory requirements that were in effect prior to FY 2011, and
to the preexisting low-
[[Page 36212]]
volume hospital qualifying criteria, as implemented in FY 2005 and
specified in the existing regulations at Sec. 412.101(b)(2)(i). As in
previous years, we are proposing that such a hospital must send written
verification that is received by its MAC no later than September 1,
2024 or December 1, 2024, respectively, stating that it meets the
mileage criterion for the applicable portion(s) of FY 2025, as
described previously. For example, for the portion of FY 2025 beginning
October 1, 2024 through December 31, 2024, the hospital must state it
is located more than 15 road miles from the nearest ``subsection (d)''
hospital. Similarly, for the portion of FY 2025 beginning on January 1,
2025, the hospital must state it is located more than 25 road miles
from the nearest ``subsection (d)'' hospital. For FY 2025, we are
further proposing that this written verification must also state, based
upon the most recently submitted cost report, that the hospital meets
the discharge criterion for the applicable portion(s) of FY 2025, as
described previously. For example, for the portion of FY 2025 beginning
October 1, 2024 through December 31, 2024, the hospital must have less
than 3,800 discharges total, including both Medicare and non-Medicare
discharges. Similarly, for the portion of FY 2025 beginning on January
1, 2025, the hospital must have less than 200 discharges total,
including both Medicare and non-Medicare discharges. If a hospital's
request for low-volume hospital status for FY 2025 is received after
September 1, 2024, (or after December 1, 2024 for the portion of FY
2025 beginning on January 1, 2025) and if the MAC determines the
hospital meets the criteria to qualify as a low-volume hospital, the
MAC will apply the applicable low-volume add-on payment adjustment to
determine the payment for the hospital's discharges for the applicable
portion(s) FY 2025, effective prospectively within 30 days of the date
of the MAC's low-volume hospital status determination.
E. Proposed Changes in the Medicare-Dependent, Small Rural Hospital
(MDH) Program (Sec. 412.108)
1. Background for the MDH Program
Section 1886(d)(5)(G) of the Act provides special payment
protections, under the IPPS, to a Medicare-dependent, small rural
hospital (MDH). (For additional information on the MDH program and the
payment methodology, we refer readers to the FY 2012 IPPS/LTCH PPS
final rule (76 FR 51683 through 51684).) As discussed in section V.B.
of the preamble of this proposed rule, section 307 of the Consolidated
Appropriations Act, 2024 (CAA, 2024) (Pub. L. 118-42), enacted on March
9, 2024, extended the MDH program for FY 2025 discharges occurring
before January 1, 2025. Prior to enactment of the CAA, 2024, the MDH
program was only to be in effect through the end of FY 2024. Under
current law, the MDH program provisions at section 1886(d)(5)(G) of the
Act will expire for discharges on or after January 1, 2025. Beginning
with discharges occurring on or after January 1, 2025, all hospitals
that previously qualified for MDH status will be paid based on the
Federal rate.
Since the extension of the MDH program through FY 2012 provided by
section 3124 of the Affordable Care Act, the MDH program had been
extended by subsequent legislation as follows: section 606 of the
American Taxpayer Relief Act (Pub. L. 112-240) extended the MDH program
through FY 2013 (that is, for discharges occurring before October 1,
2013). Section 1106 of the Pathway for SGR Reform Act of 2013 (Pub. L.
113-67) extended the MDH program through the first half of FY 2014
(that is, for discharges occurring before April 1, 2014). Section 106
of the Protecting Access to Medicare Act (Pub. L. 113-93) extended the
MDH program through the first half of FY 2015 (that is, for discharges
occurring before April 1, 2015). Section 205 of the MACRA (Pub. L. 114-
10) extended the MDH program through FY 2017 (that is, for discharges
occurring before October 1, 2017). Section 50205 of the Bipartisan
Budget Act (Pub. L. 115-123) extended the MDH program through FY 2022
(that is for discharges occurring before October 1, 2022). Section 102
of the Continuing Appropriations and Ukraine Supplemental
Appropriations Act, 2023 (Pub. L. 117-180) extended the MDH program
through December 16, 2022. Section 102 of the Further Continuing
Appropriations and Extensions Act, 2023 (Pub. L. 117-229) extended the
MDH program through December 23, 2022. Section 4102 of the Consolidated
Appropriations Act, 2023 (Pub. L. 117-328) extended the MDH program
through FY 2024 (that is for discharges occurring before October 1,
2024). Lastly, under current law, section 307 of the CAA, 2024 (Pub. L.
118-42) extended the MDH program through December 31, 2024 (that is,
for discharges occurring before January 1, 2025).
For additional information on the extensions of the MDH program
after FY 2012, we refer readers to the following Federal Register
documents: The FY 2013 IPPS/LTCH PPS final rule (77 FR 53404 through
53405 and 53413 through 53414); the FY 2013 IPPS notice (78 FR 14689);
the FY 2014 IPPS/LTCH PPS final rule (78 FR 50647 through 50649); the
FY 2014 interim final rule with comment period (79 FR 15025 through
15027); the FY 2014 notice (79 FR 34446 through 34449); the FY 2015
IPPS/LTCH PPS final rule (79 FR 50022 through 50024); the August 2015
interim final rule with comment period (80 FR 49596); the FY 2017 IPPS/
LTCH PPS final rule (81 FR 57054 through 57057); the FY 2018 notice (83
FR 18303 through 18305); the FY 2019 IPPS/LTCH PPS final rule (83 FR
41429); and the FY 2024 IPPS/LTCH PPS final rule (88 FR 59045).
2. Implementation of Legislative Extension of MDH Program
Prior to the enactment of Public Law 118-42, under section 4102 of
Public Law 117-328, the MDH program authorized by section 1886(d)(5)(G)
of the Act was set to expire at the end of FY 2024. Section 307 of
Public Law 118-42 amended sections 1886(d)(5)(G)(i) and
1886(d)(5)(G)(ii)(II) of the Act by striking ``October 1, 2024'' and
inserting ``January 1, 2025''. Section 307 of Public Law 118-42 also
made conforming amendments to sections 1886(b)(3)(D)(i) and
1886(b)(3)(D)(iv) of the Act.
Therefore, we are proposing 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 December 31, 2024.
As a result of the extension of the MDH program through December
31, 2024 as provided by section 307 of Public Law 118-42, a provider
that is classified as an MDH as of September 30, 2024, will continue to
be classified as an MDH as of October 1, 2024, with no need to reapply
for MDH classification.
3. Expiration of the MDH Program
Because section 307 of the CAA, 2024 extended the MDH program
through December 31, 2024 only, beginning January 1, 2025, the MDH
program will no longer be in effect. Since the MDH program is not
authorized by statute beyond December 31, 2024, beginning January 1,
2025, all hospitals that previously qualified for MDH status under
section 1886(d)(5)(G) of the Act will no longer have MDH status and
will be paid based on the IPPS Federal rate. There are currently 173
MDHs, of which we estimate 114 would have been paid under the blended
payment of the Federal rate and hospital-specific rate while the
remaining 59 would have
[[Page 36213]]
been paid based on the IPPS Federal rate. With the expiration of the
MDH program, all these providers will all be paid based on the IPPS
Federal rate beginning with discharges occurring on or after January 1,
2025.
When the MDH program was set to expire at the end of FY 2012, in
the FY 2013 IPPS/LTCH PPS final rule (77 FR 53404 through 53405), we
revised our sole community hospital (SCH) policies to allow MDHs to
apply for SCH status in advance of the expiration of the MDH program
and be paid as such under certain conditions. We codified these changes
in the regulations at Sec. 412.92(b)(2)(i) and (b)(2)(v).
Specifically, the existing regulations at Sec. 412.92(b)(2)(i) and
(b)(2)(v) allow for an effective date of an approval of SCH status that
is the day following the expiration date of the MDH program. We note
that these same conditions apply to MDHs that intend to apply for SCH
status with the expiration of the MDH program on December 31, 2024.
Therefore, in order for an MDH to receive SCH status effective January
1, 2025, the MDH must apply for SCH status at least 30 days before the
expiration of the MDH program; that is, the MDH must apply for SCH
status by December 2, 2024. The MDH also must request that, if approved
as an SCH, the SCH status be effective with the expiration of the MDH
program; that is, the MDH must request that the SCH status, if
approved, be effective January 1, 2025, immediately after its MDH
status expires with the expiration of the MDH program on December 31,
2024. We emphasize that an MDH that applies for SCH status in
anticipation of the expiration of the MDH program would not qualify for
the January 1, 2025 effective date for SCH status if it does not apply
by the December 2, 2024 deadline. If the MDH does not apply by the
December 2, 2024 deadline, the hospital would instead be subject to the
usual effective date for SCH classification as specified at Sec.
412.92(b)(2)(i); that is, as of the date the MAC receives the complete
application from the provider.
As noted, we are proposing 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 December 31, 2024. We are
further proposing that if the MDH program were to be extended by law
beyond December 31, 2024, similar to how it was extended by prior
legislation as described previously, we would, depending on timing of
such legislation in relation to the final rule, modify our proposed
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 any such further extension of the MDH
program. These modifications to our proposed conforming changes would
only be made if the MDH program were to be extended by statute beyond
December 31, 2024.
F. Payment for Indirect and Direct Graduate Medical Education Costs
(Sec. Sec. 412.105 and 413.75 Through 413.83)
1. Background
Section 1886(h) of the Act, as added by section 9202 of the
Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1985 (Pub. L.
99-272) and as currently implemented in the regulations at 42 CFR
413.75 through 413.83, establishes a methodology for determining
payments to hospitals for the direct costs of approved graduate medical
education (GME) programs. Section 1886(h)(2) of the Act sets forth a
methodology for the determination of a hospital-specific base-period
per resident amount (PRA) that is calculated by dividing a hospital's
allowable direct costs of GME in a base period by its number of full-
time equivalent (FTE) residents in the base period. The base period is,
for most hospitals, the hospital's cost reporting period beginning in
FY 1984 (that is, October 1, 1983 through September 30, 1984). The base
year PRA is updated annually for inflation. In general, Medicare direct
GME payments are calculated by multiplying the hospital's updated PRA
by the weighted number of FTE residents working in all areas of the
hospital complex (and at nonprovider sites, when applicable), and the
hospital's Medicare share of total inpatient days.
Section 1886(d)(5)(B) of the Act provides for a payment adjustment
known as the indirect medical education (IME) adjustment under the IPPS
for hospitals that have residents in an approved GME program, in order
to account for the higher indirect patient care costs of teaching
hospitals relative to nonteaching hospitals. The regulations regarding
the calculation of this additional payment are located at 42 CFR
412.105. The hospital's IME adjustment applied to the DRG payments is
calculated based on the ratio of the hospital's number of FTE residents
training in either the inpatient or outpatient departments of the IPPS
hospital (and, for discharges occurring on or after October 1, 1997, at
non-provider sites, when applicable) to the number of inpatient
hospital beds.
The calculation of both direct GME payments and the IME payment
adjustment is affected by the number of FTE residents that a hospital
is allowed to count. Generally, the greater the number of FTE residents
a hospital counts, the greater the amount of Medicare direct GME and
IME payments the hospital will receive. In an attempt to end the
implicit incentive for hospitals to increase the number of FTE
residents, Congress 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 in the Balanced Budget
Act of 1997 (Pub. L. 105-33). 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
cannot exceed the hospital's unweighted FTE count for direct GME in its
most recent cost reporting period ending on or before December 31,
1996. Under section 1886(d)(5)(B)(v) of the Act, a similar limit based
on the FTE count for IME during that cost reporting period is applied,
effective for discharges occurring on or after October 1, 1997. Dental
and podiatric residents are not included in this statutorily mandated
cap.
2. Distribution of Additional Residency Positions Under the Provisions
of Section 4122 of Subtitle C of the Consolidated Appropriations Act,
2023 (CAA, 2023)
a. Overview
CMS has increased the overall number of slots available to teaching
hospitals on several previous occasions. Notably, Congress authorized
Medicare payment for one thousand additional FTE GME resident slots in
section 126(a) of the Consolidated Appropriations Act, 2021, adding
paragraph 1886(h)(9) to the Act. Most recently, section 4122(a) of the
CAA, 2023 amended section 1886(h) of the Act by adding a new section
1886(h)(10) of the Act requiring the distribution of additional
residency positions (also referred to as slots) to hospitals. Section
1886(h)(10)(A) of the Act requires that for FY 2026, the Secretary
shall initiate an application round to distribute 200 residency
positions. At least 100 of the positions made available under section
1886(h)(10)(A) shall be distributed for psychiatry or psychiatry
subspecialty residency training programs. The Secretary is required,
subject to certain
[[Page 36214]]
provisions in the law, to increase the otherwise applicable resident
limit for each qualifying hospital that submits a timely application by
the number of positions that may be approved by the Secretary for that
hospital. The Secretary is required to notify hospitals of the number
of positions distributed to them by January 31, 2026, and the increase
is effective beginning July 1, 2026.
In determining the qualifying hospitals for which an increase is
provided, section 1886(h)(10)(B)(i) of the Act requires the Secretary
to take into account the ``demonstrated likelihood'' of the hospital
filling the positions made available within the first 5 training years
beginning after the date the increase would be effective, as determined
by the Secretary.
Section 1886(h)(10)(B)(ii) of the Act requires a minimum
distribution for certain categories of hospitals. Specifically, the
Secretary is required to distribute at least 10 percent of the
aggregate number of total residency positions available to each of four
categories of hospitals. Stated briefly, and discussed in greater
detail later in this proposed rule, the categories are as follows: (1)
hospitals located in rural areas or that are treated as being located
in a rural area (pursuant to sections 1886(d)(2)(D) and 1886(d)(8)(E)
of the Act); (2) hospitals in which the reference resident level of the
hospital is greater than the otherwise applicable resident limit; (3)
hospitals in states with new medical schools or additional locations
and branches of existing medical schools; and (4) hospitals that serve
areas designated as Health Professional Shortage Areas (HPSAs). Section
1886(h)(10)(F)(iii) of the Act defines a qualifying hospital as a
hospital in one of these four categories.
Section 1886(h)(10)(B)(iii) of the Act further requires that each
qualifying hospital that submits a timely application receive at least
1 (or a fraction of 1) of the residency positions made available under
section 1886(h)(10) of the Act before any qualifying hospital receives
more than 1 residency position.
Section 1886(h)(10)(C) of the Act places certain limitations on the
distribution of the residency positions. First, a hospital may not
receive more than 10 additional full-time equivalent (FTE) residency
positions. Second, no increase in the otherwise applicable resident
limit of a hospital may be made unless the hospital agrees to increase
the total number of FTE residency positions under the approved medical
residency training program of the hospital by the number of positions
made available to that hospital. Third, if a hospital that receives an
increase to its otherwise applicable resident limit under section
1886(h)(10) of the Act is eligible for an increase to its otherwise
applicable resident limit under 42 CFR 413.79(e)(3) (or any successor
regulation), that hospital must ensure that residency positions
received under section 1886(h)(10) of the Act are used to expand an
existing residency training program and not for participation in a new
residency training program.
b. Determinations Required for the Distribution of Residency Positions
(1) Determination That a Hospital Has a ``Demonstrated Likelihood'' of
Filling the Positions
Section 1886(h)(10)(B)(i) of the Act directs the Secretary to take
into account the ``demonstrated likelihood'' of the hospital filling
the positions made available within the first 5 training years
beginning after the date the increase would be effective, as determined
by the Secretary. In accordance with section 1886(h)(10)(A)(iv) of the
Act, the increase would be effective beginning July 1 of the fiscal
year of the increase; therefore, additional residency positions under
section 1886(h)(10) of the Act would be effective July 1, 2026.
Consistent with the application cycle established for section 126
of the CAA, 2021 (86 FR 73419 through 73445) we are proposing that the
application deadline for the additional positions made available for a
fiscal year be March 31 of the prior fiscal year; that is, for FY 2026,
the application deadline would be March 31, 2025. Accordingly, all
references in this section to the application deadline are references
to the application deadline of March 31, 2025.
We are proposing that a hospital show a ``demonstrated likelihood''
of filling the additional positions (sometimes equivalently referred to
as slots) for which it applies by demonstrating that it does not have
sufficient room under its current FTE resident cap(s) to accommodate a
planned new program or expansion of an existing program. In order to be
eligible for additional positions, the new program or expansion of an
existing program could not begin prior to July 1, 2026, the effective
date of the section 4122 residency positions.
In order to demonstrate that a hospital does not have sufficient
room under its current FTE resident cap(s) for purposes of the
prioritization discussed at section c.3. of this preamble, if
applicable, we are proposing that a hospital would be required to
submit copies of its most recently submitted Worksheet E, Part A and
Worksheet E-4 from the Medicare cost report (CMS-Form- 2552-10) as part
of its application for an increase to its FTE resident cap(s). The
hospital would demonstrate and attest to a planned new program or
expansion of an existing program by meeting at least one of the
following two ``Demonstrated Likelihood'' criteria:
``Demonstrated Likelihood'' Criterion 1 (New Residency
Program). The hospital does not have sufficient room under its FTE
resident cap, is not a rural hospital eligible for an increase to its
cap under 42 CFR 413.79(e)(3) (or any successor regulation), and
intends to use the additional FTEs as part of a new residency program
that it intends to establish on or after the date the increase would be
effective (that is, a new program that begins training residents at any
point within the hospital's first 5 training years beginning on or
after the effective date of the increase). Under ``Demonstrated
Likelihood'' Criterion 1, the hospital will be required to meet at
least one of the following conditions as part of its application:
++ Application for accreditation of the new residency program has
been submitted to the Accreditation Council for Graduate Medical
Education (ACGME) (or application for approval of the new residency
program has been submitted to the American Board of Medical Specialties
(ABMS)) by the application deadline.
++ The hospital has received written correspondence from the ACGME
(or ABMS) acknowledging receipt of the application for the new
residency program, or other types of communication concerning the new
program accreditation or approval process (such as notification of site
visit) by the application deadline.
``Demonstrated Likelihood'' Criterion 2 (Expansion of an
Existing Residency Program). The hospital does not have sufficient room
under its FTE resident cap, and the hospital intends to use the
additional FTEs to expand an existing residency training program within
the hospital's first 5 training years beginning on or after the date
the increase would be effective. Under ``Demonstrated Likelihood''
criterion 2, the hospital will be required to meet at least one of the
following conditions as part of its application:
++ The hospital has received approval by the application deadline
from an appropriate accrediting body (the ACGME or ABMS) to expand the
number of FTE residents in the program.
++ The hospital has submitted a request by the application deadline
for
[[Page 36215]]
a permanent complement increase of the existing residency program.
++ The hospital currently has unfilled positions in its residency
program that have previously been approved by the ACGME and is now
seeking to fill those positions.
Under ``Demonstrated Likelihood'' Criterion 2, the hospital is
applying for an increase in its FTE resident cap because it is
expanding an existing residency program. We are proposing this means
that as of the application deadline the hospital is either already
training residents in this program, or, if the program exists at
another hospital as of that date, the residents will begin to rotate to
the applying hospital on or after the effective date of the increase.
In addition, we note that section 1886(h)(10)(C)(ii) of the Act
requires that if a hospital is awarded positions, that hospital must
increase the number of its residency positions by the amount the
hospital's FTE resident cap increases, based on the newly awarded
positions under section 4122 of CAA, 2023. Therefore, we are proposing
that a hospital must, as part of its application, attest to increasing
the number of its residency positions by the amount of the hospital's
FTE resident cap increase based on any newly awarded positions, in
accordance with the provisions of section 1886(h)(10)(B)(i) of the Act.
(2) Determination That a Hospital Is Located or Treated as Being
Located in a Rural Area (Category One)
Section 1886(h)(10)(B)(ii) of the Act requires the Secretary to
distribute not less than 10 percent of resident positions available for
distribution to each of four categories of hospitals. Under section
1886(h)(10)(B)(ii)(I) of the Act, the first of these categories
consists of hospitals that are located in a rural area (as defined in
section 1886(d)(2)(D) of the Act) or are treated as being located in a
rural area (pursuant to section 1886(d)(8)(E) of the Act). We refer to
this category as Category One. We note that the definition of Category
One for purposes of section 4122 of the CAA, 2023 mirrors the
definition of Category One included under section 1886(h)(9)(B)(ii)(I)
for purposes of section 126 of the CAA, 2021. Therefore, we are
proposing to determine Category One eligibility as discussed in the
final rule implementing section 126 of the CAA, 2021 (86 FR 73422
through 73424).
For purposes of determining whether a hospital is considered rural,
we are proposing to use the County to CBSA Crosswalk and Urban CBSAs
and Constituent Counties for Acute Care Hospitals File, or successor
files containing similar information, from the most recent FY IPPS
final rule (or correction notice if applicable). This file will be
available on the CMS website in approximately August 2024, the year
prior to the year of the application deadline, March 31, 2025. Under
the file's current format, blank cells in Columns D and E indicate an
area outside of a CBSA.
Under section 1886(d)(8)(E) of the Act, a subsection (d) hospital
(that is, generally, an IPPS hospital) that is physically located in an
urban area is treated as being located in a rural area for purposes of
payment under the IPPS if it meets criteria specified in section
1886(d)(8)(E)(ii) of the Act, as implemented in the regulations at
Sec. 412.103. Under these regulations, a hospital may apply to CMS to
be treated as located in a rural area for purposes of payment under the
IPPS. Given the fixed number of available residency positions, it is
necessary to establish a deadline by which a hospital must be treated
as being located in a rural area for purposes of Category One. We are
proposing to use Table 2, or a successor table containing similar
information, posted with the most recent IPPS final rule, available on
the CMS website in approximately August 2024, (or correction notice if
applicable), to determine whether a hospital is reclassified to rural
under Sec. 412.103. If a hospital is not listed as reclassified to
rural on Table 2, but has been subsequently approved by the CMS
Regional Office to be treated as being located in a rural area for
purposes of payment under the IPPS as of the March 31, 2025 application
deadline, the hospital would submit its approval letter with its
application in order to be treated as being located in a rural area for
purposes of Category One.
(3) Determination of Hospitals for Which the Reference Resident Level
of the Hospital Is Greater Than the Otherwise Applicable Resident Limit
(Category Two)
Under section 1886(h)(10)(B)(ii)(II) of the Act, the second
category consists of hospitals in which the reference resident level of
the hospital (as specified in section 1886(h)(10)(F)(iv) of the Act) is
greater than the otherwise applicable resident limit. We refer to this
category as Category Two. We note the definition of Category Two under
section 1886(h)(10)(B)(ii)(II) of the Act mirrors the definition of
Category Two under section 1886(h)(9)(B)(ii)(II), section 126 of the
CAA, 2021. Therefore, we are proposing to determine Category Two
eligibility as discussed in the final rule implementing section 126 of
the CAA, 2021 (86 FR 73424 through 73425) with adjustments to consider
the provisions of sections 126, 127, and 131 of the CAA, 2021, as
discussed later.
Under section 1886(h)(10)(F)(iv) of the Act, the term `reference
resident level' means, with respect to a hospital, the resident level
for the most recent cost reporting period of the hospital ending on or
before the date of enactment of section 1886(h)(10) of the Act,
December 29, 2022, for which a cost report has been settled (or, if
not, submitted (subject to audit)), as discussed in this proposed rule.
Under section 1886(h)(10)(F)(v) of the Act, the term `resident
level' has the meaning given such term in paragraph (7)(C)(i). That
section defines ``resident level'' as with respect to a hospital, the
total number of full-time equivalent residents, before the application
of weighting factors (as determined under paragraph (4)), in the fields
of allopathic and osteopathic medicine for the hospital.
Under section 1886(h)(10)(F)(i) of the Act, the term `otherwise
applicable resident limit' means, ``with respect to a hospital, the
limit otherwise applicable under subparagraphs (F)(i) and (H) of
paragraph (4) on the resident level for the hospital determined without
regard to the changes made by this provision of the CAA, 2023, but
taking into account section 1886(h)(7)(A), (7)(B), (8)(A), (8)(B), and
(9)(A)'' of the Act. These cross-referenced sub-paragraphs all address
the distribution of positions and redistribution of unused positions.
As finalized for purposes of section 126 of the CAA, 2023, the
``reference resident level'' refers to a hospital's allopathic and
osteopathic FTE resident count for a specific period. The definition
can vary based on what calculation is being performed to determine the
correct allopathic and osteopathic FTE resident count (see, for
example, 42 CFR 413.79(c)(1)(ii)) (86 FR 73424)). As noted previously,
section 4122 of the CAA, 2023, under new section 1886(h)(10)(F)(iv) of
the Act defines the ``reference resident level'' as coming from the
most recent cost reporting period of the hospital ending on or before
the date of enactment of the CAA, 2023 (that is, December 29, 2022).
Under new section 1886(h)(10)(F)(i) of the Act, the term
``otherwise applicable resident limit'' is defined as ``the limit
otherwise applicable under subparagraphs (F)(i) and (H) of paragraph
(4) on the resident level for the hospital determined without regard to
this paragraph [that is, section 1886(h)(10) of the Act], but taking
into
[[Page 36216]]
account paragraphs (7)(A), (7)(B), (8)(A), (8)(B), and (9)(A).'' In the
FY 2022 IPPS/LTCH PPS final rule (86 FR 25505), we finalized for
purposes of section 126 of the CAA, 2021, the definition of ``otherwise
applicable resident limit'' as the hospital's 1996 cap during its
reference year, adjusted for the following: ``new medical residency
training programs'' as defined at Sec. 413.79(l); participation in a
Medicare GME affiliation agreement as defined at Sec. Sec. 413.75(b)
and referenced at 413.79(f); participation in an Emergency Medicare GME
affiliation agreement as defined at Sec. 413.79(f); participation in a
hospital merger; whether an urban hospital has a separately accredited
rural training track program as defined at Sec. 413.79(k); applicable
decreases or increases under section 422 of the MMA, applicable
decreases or increases under section 5503 of the Affordable Care Act,
and applicable increases under section 5506 of the Affordable Care Act.
For purposes of section 4122 of the CAA, 2023, we are proposing to use
this same definition of ``otherwise applicable resident limit'' and
adding to this definition the following: applicable increases or
adjustments under sections 126, 127, and 131 of the CAA, 2021.
Regarding the term ``resident level'', in the CY 2011 OPPS final
rule (75 FR 46391) we indicated that we generally refer to a hospital's
number of unweighted allopathic and osteopathic FTE residents in a
particular period as the hospital's resident level, which we are
proposing to define consistently with the definition in section 4122 of
the CAA, 2023; that is, the ``resident level'' under section
1886(h)(7)(c)(i) of the Act, which is defined as the total number of
full-time equivalent residents, before the application of weighting
factors (as determined under paragraph 1886(h)(4) of the Act), in the
fields of allopathic and osteopathic medicine for the hospital.
For the purposes of section 4122 of the CAA, 2023 we are proposing
that the definitions of the terms ``otherwise applicable resident
limit,'' ``reference resident level,'' and ``resident level'' should be
as similar as possible to the definitions those terms have in the
regulations at Sec. 413.79(c), as initially set out in the CY 2011
OPPS rulemaking, as revised for purposes of section 126 of the CAA,
2021 (86 FR 73424) with adjustments made to the definition of
``otherwise applicable resident limit'' for sections 126, 127, and 131
of the CAA, 2021.
(4) Determination of Hospitals Located in States With New Medical
Schools, or Additional Locations and Branch Campuses (Category Three)
The third category specified in section 1886(h)(10)(B)(ii)(III) of
the Act, as added by section 4122 of CAA, 2023, consists of hospitals
located in States with new medical schools that received `Candidate
School' status from the Liaison Committee on Medical Education (LCME)
or that received `Pre-Accreditation' status from the American
Osteopathic Association (AOA) Commission on Osteopathic College
Accreditation (the COCA) on or after January 1, 2000, and that have
achieved or continue to progress toward `Full Accreditation' status (as
such term is defined by the LCME) or toward `Accreditation' status (as
such term is defined by the COCA); or additional locations and branch
campuses established on or after January 1, 2000, by medical schools
with `Full Accreditation' status (as such term is defined by LCME) or
`Accreditation' status (as such term is defined by the COCA). We note
that the statutory language is specific with respect to these
definitions. We refer to this category as Category Three. We note that
the definition of Category Three for purposes of section 4122 of the
CAA, 2023, mirrors the definition of Category Three included under
section 1886(h)(9)(B)(ii)(III) of the Act for purposes of section 126
of the CAA, 2021. Therefore, we are proposing to determine Category
Three eligibility as discussed in the final rule implementing section
126 of the CAA, 2021 (86 FR 73425 through 73426).
We are proposing that the hospitals located in the following 35
States and one territory, referred to as Category Three States, would
be considered Category Three hospitals: Alabama, Arizona, Arkansas,
California, Colorado, Connecticut, Delaware, Florida, Georgia, Idaho,
Illinois, Indiana, Kansas, Kentucky, Louisiana, Massachusetts,
Michigan, Mississippi, Missouri, Nevada, New Jersey, New Mexico, New
York, North Carolina, Ohio, Oklahoma, Pennsylvania, Puerto Rico, South
Carolina, Tennessee, Texas, Utah, Virginia, Washington, West Virginia,
and Wisconsin. If a hospital is located in a State not listed here, but
it believes the State in which it is located should be on this list,
the hospital may submit a formal comment on this proposed rule to make
a change to this list, or must provide documentation with submission of
its application to CMS that the State in which it is located has a
medical school or additional location or branch campus of a medical
school established on or after January 1, 2000. Pursuant to the
statutory language, all hospitals in such states are eligible for
consideration; the hospitals, themselves, do not need to meet the
conditions of section 1886(h)(10)(B)(ii)(III)(aa) or (bb) of the Act in
order to be considered.
(5) Determination of Hospitals That Serve Areas Designated as Health
Professional Shortage Areas Under Section 332(a)(1)(A) of the Public
Health Service Act (Category Four)
The fourth category specified in the law consists of hospitals that
serve areas designated as HPSAs under section 332(a)(1)(A) of the
Public Health Service Act (PHSA), as determined by the Secretary.
Category Four for section 4122 of the CAA, 2023 mirrors the definition
of Category Four included under section 1886(h)(9)(B)(ii)(IV) for
purposes of implementing section 126 of the CAA, 2021. Therefore, we
are proposing to determine Category Four eligibility as discussed in
the final rule implementing section 126 of the CAA, 2021 (86 FR 73426
through 73430).
We are proposing that an applicant hospital qualifies under
Category Four if it participates in training residents in a program in
which the residents rotate for at least 50 percent of their training
time to a training site(s) physically located in a primary care or
mental-health-only geographic HPSA. Specific to mental-health-only
geographic HPSAs, we are proposing that the program must be a
psychiatry program or a subspecialty of psychiatry. In addition, a
Category Four hospital must submit an attestation, signed and dated by
an officer or administrator of the hospital who signs the hospital's
Medicare cost report, that it meets the requirement that residents
rotate for at least 50 percent of their training time to a training
site(s) physically located in a primary care or mental-health-only
geographic HPSA.
(6) Determination of a Qualifying Hospital
Section 1886(h)(10)(F)(iii) of the Act defines a ``qualifying
hospital'' as ``a hospital described in any of the subclauses (I)
through (IV) of subparagraph (B)(ii).'' As such, and consistent with
the definition of ``qualifying hospital'' used for purposes of section
126 of the CAA, 2021 (86 FR 73430 through 73431), we are proposing to
define a qualifying hospital as a Category One, Category Two, Category
Three, or Category Four hospital, or one that meets the definitions of
more than one of these categories.
[[Page 36217]]
c. Number of Residency Positions Made Available to Hospitals and
Limitation on Individual Hospitals
(1) Number of Residency Positions Made Available and Distribution for
Psychiatry or Psychiatry Subspecialty Residencies
Section 1886(h)(10)(A)(ii) of the Act limits the aggregate number
of total new residency positions made available in FY 2026 across all
hospitals to no more than 200. Section 1886(h)(10)(A)(iii) of the Act
further specifies that at least 100 of the positions made available
under section 1886(h)(10) must be distributed for a psychiatry or
psychiatry subspecialty residency. The phrase ``psychiatry or
psychiatry subspecialty residency'' is defined at section
1886(h)(10)(F)(ii) of the Act to mean ``a residency in psychiatry as
accredited by the Accreditation Council for Graduate Medical Education
(ACGME) for the purpose of preventing, diagnosing, and treating mental
health disorders.''
We are proposing that of the total residency slots distributed
under section 4122 of the CAA, 2023, at least 100 but not more than 200
slots would be distributed to hospitals applying for residency programs
in psychiatry and psychiatry subspecialties. For purposes of
determining which programs are considered psychiatry subspecialties, we
are proposing to refer to the list included on ACGME website at https://www.acgme.org/ under the ``Specialties'' tab, currently: Addiction
Medicine, Addiction Psychiatry, Brain Injury Medicine, Child and
Adolescent Psychiatry, Consultation-Liaison Psychiatry, Forensic
Psychiatry, Geriatric Psychiatry, Hospice and Palliative Medicine, and
Sleep Medicine. We note that the ACGME list of psychiatry
subspecialties may change, and we are proposing that the list of
psychiatry subspecialties included on the ACGME website at the time of
application submission would guide determination of which programs CMS
would consider psychiatry subspecialties. In accordance with statute,
the subspecialty would have to be accredited with psychiatry as a core
specialty. We are also proposing that the remaining non-psychiatric
slots would be awarded to other approved medical residency programs
under 42 CFR 413.75(b).
(2) Pro Rata Distribution and Limitation on Individual Hospitals
As noted earlier in this preamble, section 1886(h)(10)(B)(iii) of
the Act requires that each qualifying hospital that submits a timely
application under subparagraph 1886(h)(10)(A) of the Act would receive
at least 1 (or a fraction of 1) of the positions made available under
section 1886(h)(10) of the Act before any qualifying hospital receives
more than 1 of such positions. Section 1886(h)(10)(C)(i) of the Act
limits a qualifying hospital to receiving no more than 10 additional
FTEs from those authorized under section 1886(h)(10) of the Act. As
stated earlier in this preamble, we are proposing that a qualifying
hospital is a Category One, Category Two, Category Three, or Category
Four hospital, or one that meets the definitions of more than one of
these categories. For purposes of distributing residency slots under
section 4122 of the CAA, 2023, we are proposing to first distribute
slots by prorating the available 200 positions among all qualifying
hospitals such that each qualifying hospital receives up to 1.00 FTE,
that is, 1.00 FTE or a fraction of 1.00 FTE. We are proposing that if
residency positions are awarded based on a fraction of 1.00 FTE, each
qualifying hospital would receive the same FTE amount. Consistent with
the number of decimal places used for the FTE slots awards in other
distributions such as section 126 of the CAA, 2021, we are proposing to
prorate the slot awards under section 4122 of the CAA, 2023, rounded to
two decimal places. The table later in this section provides examples
of how the 200 slots would be prorated based on the number of
qualifying applicants. Given the limited number of residency positions
available and the number of hospitals we expect to apply, we are
proposing that a hospital may not submit more than one application
under section 4122 of the CAA, 2023.
[GRAPHIC] [TIFF OMITTED] TP02MY24.189
We refer readers to section I.O.6. of Appendix A of this proposed
rule where we discuss an alternative we considered for the distribution
of slots under section 4122 of the CAA, 2023.
(3) Prioritization of Applications by HPSA Score
If any residency slots remain after distributing up to 1.00 FTE to
each qualifying hospital, we will prioritize the distribution of the
remaining slots based on the HPSA score associated with the program for
which each hospital is applying. Taking an example from the table in
the previous section, if 180 qualifying hospitals apply under section
4122 of the CAA, 2023, each qualifying hospital would receive 1.00 FTE
and the 20 remaining residency positions would be prioritized for
distribution based on the HPSA score associated with the program for
which each hospital is applying. We are proposing the HPSA
prioritization methodology will be the methodology we finalized for
purposes of section 126 of the CAA, 2021 (86 FR 73434 through 73440).
We believe including such a prioritization will further support the
training of residents in underserved and rural areas thereby helping to
address physician shortages and the larger issue of health inequities
in these areas. Using this HPSA prioritization method, we are proposing
to limit a qualifying hospital's total award under section 4122 of the
CAA, 2023, to 10.00 additional FTEs, consistent with section
1886(h)(10)(C)(i) of the Act. Consistent with the methodology we use
for implementing section 126 of the CAA, 2021, as part of determining
eligibility for additional slots, we would compare the hospital's FTE
resident count to its adjusted FTE resident cap on the cost report
worksheets submitted with its application. If the hospital's FTE count
is below its adjusted FTE cap, the hospital would be ineligible for its
full FTE request, because the facility had not yet fully utilized the
already-allotted slots. We note that in calculating the adjusted FTE
cap we do not consider adjustments for Medicare GME Affiliation
Agreements since these adjustments are temporary.
As finalized under section 126 of the CAA, 2021 (86 FR 73435), for
purposes of prioritization under section 4122 of
[[Page 36218]]
the CAA, 2023, primary care and mental-health-only population and
geographic HPSAs apply. As discussed in the final rule implementing
section 126 of the CAA, 2021, each year in November, prior to the
beginning of the application period, CMS will request HPSA ID and score
information from HRSA so that recent HPSA information is available for
use for the application period. CMS will only use this HPSA
information, HPSA ID's and their corresponding HPSA scores, in order to
review and prioritize applications. To assist hospitals in preparing
for their applications, the HPSA information received from HRSA will
also be posted when the online application system becomes available on
the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/DGME. The information will also be
posted on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/IPPS-Regulations-and-Notices.
Click on the link on the left side of the screen associated with the
appropriate final rule home page or ``Acute Inpatient--Files for
Download'' (86 FR 73445).
Given that residency slots under section 4122 of the CAA, 2023 are
to be distributed in FY 2026, we are proposing that the HPSA IDs and
scores used for the prioritization of slots, if applicable, would be
the same HPSA IDs and scores used for the prioritization of slots under
round 4 of section 126 of the CAA, 2021. This group would include HPSAs
that are in designated or proposed for withdrawal status at the time
the HPSA information is received from HRSA. As noted in section j. of
this preamble, CMS will request HPSA data from HRSA in November 2024 to
be used for purposes of section 4122 of the CAA, 2023.
(4) Requirement for Rural Hospitals To Expand Programs
Section 1886(h)(10)(C)(iii) of the Act requires that if a hospital
that receives an increase in the otherwise applicable resident limit
under section 1886(h)(10) of the Act would be eligible for an
adjustment to the otherwise applicable resident limit for participation
in a new medical residency training program under 42 CFR 413.79(e)(3)
(or any successor regulation), the hospital shall ensure that any
positions made available under this paragraph are used to expand an
existing program of the hospital, and not be utilized for new medical
residency training programs. Under the regulations at 42 CFR
413.79(e)(3), a rural hospital may receive an increase to its cap for
participating in training residents in a new program, which is
effective after a 5-year cap-building period for that new program. We
note that if a rural hospital were to receive a cap increase for a new
program under the 5-year cap-building period as well as a cap increase
for the new program under section 4122 of the CAA, 2023, there may be
duplicative awarding of cap slots for the same program. Therefore, we
are proposing to implement section 1886(h)(10)(C)(iii) of the Act by
allowing rural hospitals to apply for slots to expand an existing
program, but not for slots to begin a new program. We are proposing
that this policy apply to both geographically rural hospitals and
hospitals that have reclassified as rural under 42 CFR 412.103, since
both groups of hospitals are considered rural under section
1886(h)(10)(B)(ii)(I), which we refer to as Category One hospitals.
Only geographically urban hospitals that have not reclassified as rural
under 42 CFR 412.103 would be permitted to apply for slots to begin a
new program.
d. Distributing at Least 10 Percent of Positions to Each of the Four
Categories
Section 1886(h)(10)(B)(ii) of the Act requires the Secretary to
distribute at least 10 percent of the aggregate number of total
residency positions available to each of the following categories of
hospitals discussed earlier. Given our experience with distributing
slots under section 126 of the CAA, 2021, we expect many hospitals will
meet the qualifications of more than one category. We are proposing to
collect information regarding qualification for all four categories in
the distribution of slots under section 4122 of the CAA, 2023, to allow
us to confirm that we have met this statutory requirement. Like the
CAA, 2023 provision, section 1886(h)(9)(B)(ii) of the Act from 2021
also requires the Secretary to distribute at least 10 percent of the
aggregate number of total residency positions available to the same
four categories of hospitals. Section 126 of the CAA, 2021, makes
available 1,000 residency positions and therefore, at least 100
residency positions must be distributed to hospitals qualifying in each
of the four categories. In the final rule implementing section 126 of
the CAA, 2021, we stated we would track progress in meeting all
statutory requirements and evaluate the need to modify the distribution
methodology in future rulemaking (86 FR 73441).
To date, we have completed the distribution of residency slots
under rounds 1 and 2 of the section 126 distributions (refer to CMS'
DGME web page for links to the round 1 and 2 awards: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/direct-graduate-medical-education-dgme). In tracking the
statutory requirement that at least 10 percent of the aggregate number
of total residency positions (100 out 1,000 slots) be distributed to
hospitals qualifying in each of the four categories, we have determined
that in rounds 1 and 2, only 12.76 DGME slots and 18.06 IME slots were
distributed to hospitals qualifying under Category Four. For each of
the other 3 categories based on the slots awarded in rounds 1 and 2, we
anticipate meeting the 10 percent requirement. For example, we have
determined that in rounds 1 and 2, 374.59 DGME and 375.11 IME slots
were distributed to hospitals qualifying under Category Three.
As discussed in the final rule implementing section 126 of the CAA,
2021, an applicant hospital qualifies under Category Four if it
participates in training residents in a program in which the residents
rotate for at least 50 percent of their training time to a training
site(s) physically located in a primary care or mental-health-only
geographic HPSA. Specific to mental-health-only geographic HPSAs, the
program must be a psychiatric or a psychiatric subspecialty program (86
FR 73430). Given that only 12.76 DGME slots and 18.06 IME slots have
been distributed to hospitals qualifying under Category Four, we are
proposing an amendment to our prioritization methodology for rounds 4
and 5 of section 126 of the CAA, 2021, to ensure that at least 100
residency slots are distributed to these hospitals. We are not
proposing an amendment to our prioritization methodology for round 3
because the application period for round 3 runs from January 9, 2024 to
March 31, 2024, prior to the date any proposals in this rule might be
finalized.
Our current methodology for distributing residency slots under
section 126 prioritizes slot awards based on the HPSA score associated
with the program for which the hospital is applying, with higher scores
receiving priority (86 FR 73434 through 73440). We are proposing that
in rounds 4 and 5 of section 126 of the CAA, 2021, we will prioritize
the distribution of slots to hospitals that qualify under Category
Four, regardless of HPSA score. The remaining slots awarded under
rounds 4 and 5 will be distributed using the existing methodology based
on HPSA score (86 FR 73434 through 73440). That is, the remaining slots
will be distributed to hospitals qualifying under Category One,
Category Two, or Category Three, or hospitals that meet
[[Page 36219]]
the definitions of more than one of these categories, based on the HPSA
score associated with the program for which each hospital is applying.
e. Hospital Attestation to National CLAS Standards
For section 126 of the CAA, 2021, we finalized a policy that all
applicant hospitals be required to attest that they meet the National
Standards for Culturally and Linguistically Appropriate Services in
Health and Health Care (the National CLAS Standards) (86 FR 73441).
This was to ensure that the section 126 distribution broadened the
availability of quality care and services to all individuals,
regardless of preferred language, cultures, and health beliefs. We
stated in the final rule that the National CLAS standards are aligned
with the Administration's commitment to addressing healthcare barriers,
which include that residents are educated and trained in culturally and
linguistically appropriate policies and practices. This continues to be
the case today. Therefore, we are proposing the same requirement for
section 4122 of the CAA, 2023, that we adopted for section 126 of the
CAA, 2021, for the same reason. Specifically, we are proposing that in
order to ensure that residents are educated and trained in culturally
and linguistically appropriate policies and practices, all applicant
hospitals for slots allocated under section 4122 of the CAA, 2023,
would be required to attest that they meet the National CLAS Standards
to ensure that the section 4122 distribution broadens the availability
of quality care and services to all individuals, regardless of
preferred language, cultures, and health beliefs. (For more information
on the CLAS standards, please refer to https://thinkculturalhealth.hhs.gov/)
f. Payment of Additional FTE Residency Positions Awarded Under Section
4122 of the CAA, 2023
Section 1886(h)(10)(D) requires that CMS pay a hospital for
additional positions awarded under this paragraph using the hospital's
existing direct GME nonprimary care PRAs consistent with the
regulations at Sec. 413.77. We note that as specified in section
1886(h)(2)(D)(ii) of the Act, for cost reporting periods beginning on
or after October 1, 1993, through September 30, 1995, each hospital's
PRA for the previous cost reporting period was not updated for
inflation for any FTE residents who were not either a primary care or
an obstetrics and gynecology resident. As a result, hospitals with both
primary care and obstetrics and gynecology residents and nonprimary
care residents in FY 1994 or FY 1995 have two separate PRAs: one for
primary care and obstetrics and gynecology and one for nonprimary care.
Those hospitals that only trained primary care and/or obstetrics and
gynecology residents and those that did not become teaching hospitals
until after this 2-year period, have a single PRA for direct GME
payment purposes. Therefore, we are proposing that for purposes of
direct GME payments for section 4122 of the CAA, 2023, if a hospital
has both a primary care and obstetrics and gynecology PRA and a
nonprimary care PRA, the nonprimary care PRA will be used, and if a
hospital has a single PRA, that PRA will be used. Furthermore, similar
to the policy finalized for purposes of direct GME payments under
section 126 of the CAA, 2021 (86 FR 73441), we are proposing that a
hospital that receives additional positions under section 4122 of the
CAA, 2023, would be paid for the FTE residents counted under those
positions using the PRAs for which payment is made for FTE residents
subject to the 1996 FTE cap. We expect to revise Worksheet E-4 to add a
line on which hospitals will report the number of FTEs by which the
hospital's FTE caps were increased for direct GME positions received
under section 4122 of the CAA, 2023.
g. Aggregation of Additional FTE Residency Positions Awarded Under
Section 4122 of the CAA, 2023
Section 1886(h)(10)(E) of the Act states that the Secretary shall
permit hospitals receiving additional residency positions attributable
to the increase provided under 1886(h)(10) to, beginning in the fifth
year after the effective date of such increase, apply such positions to
the limitation amount under paragraph (4)(F) that may be aggregated
pursuant to paragraph (4)(H) among members of the same affiliated
group. Therefore, we are proposing that FTE resident cap positions
added under section 4122 of the CAA, 2023, may be used in a Medicare
GME affiliation agreement beginning in the 5th year after the effective
date of the FTE resident cap positions consistent with the regulations
at 42 CFR 413.75(b) and 413.79(f). We are proposing to amend paragraph
(8) at 42 CFR 413.79(f) to state that FTE resident cap slots added
under section 4122 of Public Law 117-328 may be used in a Medicare GME
affiliation agreement beginning in the fifth year after the effective
date of those FTE resident cap slots.
h. Conforming Regulation Amendments for 42 CFR 412.105 and 42 CFR
413.79
Section 4122 of the CAA, 2023, under subsection (b), amends section
1886(d)(5)(B) of the Act to provide for increases in FTE resident
positions for IME payment purposes. Specifically, subsection (b) adds a
new section 1886(d)(5)(B)(xiii) of the Act, which states that for
discharges occurring on or after July 1, 2026, if additional payment is
made for FTE resident positions distributed to a hospital for direct
GME purposes under section 1886(h)(10) of the Act, the hospital will
receive IME payments based on the additional residency positions
awarded using the same IME adjustment factor used for the hospital's
other FTE residents. We are proposing conforming amendments to the IME
regulations at 42 CFR 412.105(f)(1)(iv)(C)(4) to specify that effective
for portions of cost reporting periods beginning on or after July 1,
2026, a hospital may qualify to receive an increase in its otherwise
applicable FTE resident cap if the criteria specified in 42 CFR
413.79(q) are met. We expect to revise Worksheet E Part A to add a line
on which hospitals will report the number of FTEs by which the
hospital's FTE caps were increased for IME positions received under
section 4122 of the CAA, 2023.
We are also proposing to amend our regulations at 42 CFR 413.79 by
adding a paragraph (q) to specify that for portions of cost reporting
periods beginning on or after July 1, 2026, a hospital may receive an
increase in its otherwise applicable FTE resident cap (as determined by
CMS) if the hospital meets the requirements and qualifying criteria
under section 1886(h)(10) of the Act and if the hospital submits an
application to CMS within the timeframe specified by CMS.
i. Prohibition on Administrative and Judicial Review
Section 4122 of the CAA, 2023, under subsection (c), prohibits
administrative and judicial review of actions taken under section
1886(h)(10) of the Act. Specifically, subsection (c) amends section
1886(h)(7)(E) of the Act by inserting ``paragraph (10),'' after
``paragraph (8),'' adding to the that paragraph to the list of
residency distributions not subject to review. Therefore, we are
proposing that the determinations and distribution of residency
positions under sections 1886(d)(5)(B)(xiii) and 1886(h)(10) of the Act
would be final and could not be subject to administrative or judicial
review.
[[Page 36220]]
j. Application Process for Receiving Increases in FTE Resident Caps
All qualifying hospitals seeking increases in their FTE resident
caps must submit timely applications for this distribution by March 31,
2025. The completed application must be submitted to CMS using an
online application system, the Medicare Electronic Application Request
Information System\TM\ (MEARIS\TM\). The burden associated with this
information collection requirement is the time and effort necessary to
review instructions and register for MEARIS\TM\ as well as the time and
effort to gather, develop and submit various documents associated with
a formal request of resident position increases from teaching hospitals
to CMS. The aforementioned burden is subject to the Paperwork Reduction
Act (PRA); and as discussed in section XII.B. of this proposed rule,
the burden associated with these requests will be captured under OMB
control number 0938-1417 (expiration date March 31, 2025). We will
submit a revised information collection estimate to OMB for approval
under OMB control number 0938-1417 (expiration date March 31, 2025).
We are proposing that the following information be submitted as
part of an application for the application to be considered complete:
The name and Medicare provider number (CCN) of the
hospital.
The name of the Medicare Administrative Contractor to
which the hospital submits its Medicare cost report.
The residency program for which the hospital is applying
to receive an additional position(s).
FTE resident counts for direct GME and IME and FTE
resident caps for direct GME and IME reported by the hospital in the
most recent as-filed cost report. (Including copies of Worksheet E,
Part A, and Worksheet E-4).
If the hospital qualifies under ``Demonstrated
Likelihood'' Criterion 1 (New Residency Program), which of the
following applies:
++ Application for accreditation of the new residency program has
been submitted to the Accreditation Council for Graduate Medical
Education (ACGME) (or application for approval of the new residency
program has been submitted to the American Board of Medical Specialties
(ABMS)) by March 31, 2025.
++ The hospital has received written correspondence from the ACGME
(or ABMS) acknowledging receipt of the application for the new
residency program, or other types of communication concerning the new
program accreditation or approval process (such as notification of a
site visit) by March 31, 2025.
If the hospital qualifies under ``Demonstrated
Likelihood'' Criterion 2 (Expansion of an Existing Residency Program),
which of the following applies:
++ The hospital has received approval by March 31, 2025 from an
appropriate accrediting body (the ACGME or ABMS) to expand the number
of FTE residents in the program.
++ The hospital has submitted a request by March 31, 2025 for a
permanent complement increase of the existing residency training
program.
++ The hospital currently has unfilled positions in its residency
program that have previously been approved by the ACGME and is now
seeking to fill those positions.
Indication of the categories under section
1886(h)(10)(F)(iii) of the Act under which the hospital believes itself
to qualify:
++ (I) The hospital is located in a rural area (as defined in
section 1886(d)(2)(D) of the Act) or is treated as being located in a
rural area pursuant to section 1886(d)(8)(E) of the Act.
++ (II) The reference resident level of the hospital (as specified
in section 1886(h)(10)(F)(iv) of the Act) is greater than the otherwise
applicable resident limit.
++ (III) The hospital is located in a State with a new medical
school (as specified in section 1886(h)(10)(B)(ii)(III)(aa) of the
Act), or with additional locations and branch campuses established by
medical schools (as specified in section 1886(h)(10)(B)(ii)(III)(bb) of
the Act) on or after January 1, 2000.
++ (IV) The hospital serves an area designated as a HPSA under
section 332(a)(1)(A) of the Public Health Service Act, as determined by
the Secretary.
The HPSA (if any) served by the residency program for
which the hospital is applying and the HPSA ID for that HPSA.
An attestation, signed and dated by an officer or
administrator of the hospital who signs the hospital's Medicare cost
report, stating the following:
``I hereby certify that the hospital is a Qualifying Hospital under
section 1886(h)(10)(F)(iii) of the Social Security Act, and that there
is a ``demonstrated likelihood'' that the hospital will fill the
position(s) made available under section 1886(h)(10) of the Act within
the first 5 training years beginning after the date the increase would
be effective.''
``I hereby certify that (choose if applicable):
__ If my application is for a currently accredited residency program,
the number of full-time equivalent (FTE) positions requested by the
hospital does not exceed the number of positions for which the program
is accredited.
__ If my hospital currently has unfilled positions in its residency
program that have previously been approved by the ACGME, the number of
FTE positions requested by the hospital does not exceed the number of
previously approved unfilled residency positions.
__ If my application is for a residency training program with more than
one participating site, I am only requesting the FTE amount that
corresponds with the training occurring at my hospital, and any FTE
training occurring at nonprovider settings consistent with 42 CFR
412.105(f)(1)(ii)(E) and 413.78(g).''
``I hereby certify that the hospital agrees to increase the number
of its residency positions by the amount the hospital's FTE resident
caps are increased under section 4122 of Subtitle C of the Consolidated
Appropriations Act, 2023, if awarded positions under section
1886(h)(10)(C)(ii) of the Act.''
``I hereby certify that (choose one):
__ In the geographic HPSA the hospital is requesting that CMS use for
prioritization of its application, at least 50 percent of the program's
training time based on resident rotation schedules (or similar
documentation) occurs at training sites that treat the population of
the HPSA and are physically located in the HPSA.
__ In the population HPSA the hospital is requesting that CMS use for
prioritization of its application, at least 50 percent of the program's
training time based on resident rotation schedules (or similar
documentation) occurs at training sites that treat the designated
underserved population of the HPSA and are physically located in the
HPSA.
__ In the geographic HPSA the hospital is requesting that CMS use for
prioritization of its application, at least 5 percent of the program's
training time based on resident rotation schedules (or similar
documentation) occurs at training sites that treat the population of
the HPSA and are physically located in the HPSA, and the program's
training time at those sites plus the program's training time at Indian
or Tribal facilities located outside of the HPSA is at least 50 percent
of the program's training time.
__ In the population HPSA the hospital is requesting that CMS use for
[[Page 36221]]
prioritization of its application, at least 5 percent of the program's
training time based on resident rotation schedules (or similar
documentation) occurs at training sites that treat the designated
underserved population of the HPSA and are physically located in the
HPSA, and the program's training time at those sites plus the program's
training time at Indian or Tribal facilities located outside of that
HPSA is at least 50 percent of the program's training time.
__ None of the above apply.''
``I hereby certify that the hospital meets the National Standards
for Culturally and Linguistically Appropriate Services in Health and
Health Care (the National CLAS Standards).''
``I hereby certify that I understand that misrepresentation or
falsification of any information contained in this application may be
punishable by criminal, civil, and administrative action, fine and/or
imprisonment under Federal law. Furthermore, I understand that if
services identified in this application were provided or procured
through payment directly or indirectly of a kickback or where otherwise
illegal, criminal, civil, and administrative action, fines and/or
imprisonment may result. I also certify that, to the best of my
knowledge and belief, it is a true, correct, and complete application
prepared from the books and records of the hospital in accordance with
applicable instructions, except as noted. I further certify that I am
familiar with the laws and regulations regarding Medicare payment to
hospitals for the training of interns and residents.''
The completed application must be submitted to CMS using the online
application system MEARIS\TM\. A link to the online application system
as well as instructions for accessing the system and completing the
online application process will be made available on the CMS Direct GME
website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/DGME.
We note that if the hospital is applying using a HPSA ID, the HPSA
score associated with that ID will automatically populate in the
application module. In preparing their applications for additional
residency positions, hospitals should refer to HRSA's Find Shortage
Areas by Address (https://data.hrsa.gov/tools/shortage-area/by-address)
to obtain the HPSA ID of the HPSA served by the program and include
this ID in its application. Using this HPSA Find Shortage Areas by
Address, applicants may enter the address of a training location
(included on the hospital's rotation schedule or similar
documentation), provided the location chosen participates in training
residents in a program where at least 50 percent (5 percent if an
Indian and Tribal facility is included) of the training time occurs in
the HPSA. In November 2024, prior to the beginning of the application
period, CMS will request HPSA ID and score information from HRSA so
that recent HPSA information is available for use for the application
period. CMS will only use this HPSA information, HPSA IDs and their
corresponding HPSA scores, in order to review and prioritize
applications. To assist hospitals in preparing for their applications,
the HPSA information received from HRSA will also be posted when the
MEARIS\TM\ application module becomes available on the CMS website at:
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/DGME.
The information will also be posted on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/IPPS-Regulations-and-Notices. Click on the link on
the left side of the screen associated with the appropriate final rule
home page or ``Acute Inpatient--Files for Download.''
3. Proposed Modifications to the Criteria for New Residency Programs
and Requests for Information
Section 1886(h)(4)(H)(i) of the Act requires CMS to establish rules
for applying the direct GME cap in the case of medical residency
training programs established on or after January 1, 1995. Under
section 1886(d)(5)(B)(viii) of the Act, this provision also applies for
purposes of the IME adjustment. Accordingly, we issued regulations at
Sec. Sec. 413.79(e)(1) through (3) discussing the direct GME cap
calculation for a hospital that begins training residents in a new
medical residency training program(s) on or after January 1, 1995. The
same regulations apply for purposes of the IME cap calculation at Sec.
412.105(f)(1)(vii). CMS implemented these statutory requirements in the
August 29, 1997 Federal Register (62 FR 46005) and in the May 12, 1998
Federal Register (63 FR 26333). The calculation of both the DGME cap
and IME cap for new programs is discussed in the August 31, 2012
Federal Register (77 FR 53416).
Section 413.79(l) defines a new medical residency training program
as ``a medical residency that receives initial accreditation by the
appropriate accrediting body or begins training residents on or after
January 1, 1995.'' In the August 27, 2009 Federal Register (74 FR 43908
through 43917), CMS clarified the definition of a ``new'' residency
program and adopted supporting criteria regarding whether or not a
residency program can be considered ``new'' for the purpose of
determining if a hospital can receive additional direct GME and/or IME
cap slots for that program. CMS adopted these criteria in part to
prevent situations where a program at an existing teaching hospital
would be transferred to a new teaching hospital, resulting in cap slots
created for the same program at two different hospitals. To be
considered a ``new'' program for which new cap slots would be created,
a previously non-teaching hospital would have to ensure that the
program meets three primary criteria (74 FR 43912):
The residents are new, and
The program director is new, and
The teaching staff are new.
Over the years, we have received questions regarding the
application of these criteria, such as whether CMS would still consider
a program to be new for cap adjustment purposes if the three criteria
were partially, but not fully, met. We have answered such questions by
stating that, generally, a residency program's newness would not be
compromised as long as the ``overwhelming majority'' of the residents
or staff are not coming from previously existing programs in that same
specialty.
The question of what constitutes a ``new'' program for purposes of
receiving additional Medicare-funded GME slots has taken on increasing
significance in light of the ability of urban hospitals to reclassify
as rural under 42 CFR 412.103 for IME purposes, and thus receive
additional IME cap slots for any new program started. To continue to
ensure that newly funded cap slots are created appropriately, we
ultimately would like to establish in rulemaking additional criteria
for determining program newness. However, we are not yet certain about
some of the criteria that should be proposed, and so we are soliciting
comments to gain additional clarity on best practices in these areas.
Accordingly, we discuss the items we are proposing and the items on
which we are soliciting public input through a Request for Information
(RFI).
a. Newness of Residents
Generally, when a hospital is creating a new residency program, it
recruits individuals that have recently graduated from medical school,
have no previous residency training experience, and
[[Page 36222]]
would be entering the program as first year (PGY1) residents. However,
new programs sometimes receive inquiries from applicants that have
training experience already, but for a variety of reasons need to
transfer to another program. If the program that such a resident wishes
to join is still within the 5-year cap building period, then,
consistent with the criteria adopted in the August 27, 2009 final rule,
the program director of this ``new'' program should be judicious with
regard to accepting residents who have received previous training in
the same specialty. In order to maintain the classification as a
``new'' residency program, the ``overwhelming majority'' of residents
in the program must be new. We believe it would be useful for the
provider community to have a concrete standard to refer to in
determining whether the ``overwhelming majority'' of residents in a
program are in fact new. Therefore, we propose that, in order for a
residency program to be considered new, at least 90 percent of the
individual resident trainees (not FTEs) must not have previous training
in the same specialty as the new program. For example, if there were 50
trainees (not FTEs) entering the program over the course of the 5-year
cap building period, then at least 45 of the trainees (90 percent of
50) must enter the program as brand new first year residents in that
particular specialty. If more than 10 percent of the trainees (not
FTEs) transferred from another program at a different hospital/sponsor
in the same specialty, even during their first year of training, we
propose that this would render the program ineligible for new cap
slots. (Note--we would apply standard rounding when 90 percent of a
number does not equal a whole number, rounding down to the nearest
whole number when the remainder is less than 0.5, and rounding up to
the nearest whole number when the remainder is 0.5 or above. For
example, if there were 48 trainees (not FTEs) entering the program over
the course of the 5-year cap building period, then at least 43 of the
trainees (90 percent of 48 = 43.2, which rounds down to 43) must enter
the program as brand new first year residents in that particular
specialty. If there were 45 trainees (not FTEs) entering the program,
then at least 41 of the trainees (90 percent of 45 = 40.5, which rounds
up to 41) must enter the program as brand new first year residents in
that particular specialty.)
For example, if a new program is in internal medicine, then at
least 90 percent of the entering residents must not have previously
enrolled and trained in an internal medicine program. If a resident was
formally enrolled in an internal medicine program (either preliminary
or categorical), even if that resident switched programs during their
first year of training, then we would consider that resident to have
had previous training in that same specialty. Conversely, if an
individual was a resident in a specialty other than internal medicine,
and that resident switched into the new internal medicine program and
began training in the new internal medicine program as a PGY1, then
that resident would not be considered to have had previous training in
the same specialty, and would be counted as a brand new resident.
(Note, we are distinguishing between a resident that is not enrolled in
an internal medicine program but may have done a rotation in internal
medicine as part of the requirements for a different specialty, from a
resident that actually was enrolled and participated in an internal
medicine program, consistent with the definition of ``resident'' at 42
CFR 413.75(b). In this example, we are generally focusing on
individuals who were accepted, enrolled, and participated in internal
medicine; we are generally not concerned with an individual that was
enrolled, accepted, and participated in a program other than internal
medicine but did a rotation in internal medicine.) We propose that the
proportion of brand new residents in a residency program would be
determined by the MAC based on all the individuals (not FTEs) that
enter the program as a whole at any point during the 5-year cap
building period, after the end of the 5 years.
We are proposing a threshold of 90 percent for new residents as
that is generally consistent with the concept of an ``overwhelming
majority,'' and because we have precedent for such a threshold in the
regulations for section 5506 of the Affordable Care Act, which State
that a hospital is considered to have taken over an ``entire'' program
from a closed hospital if it can demonstrate that it took in 90 percent
or more of the FTE residents in that program. Accordingly, for a
program to be considered ``new'' for the purpose of determining if a
hospital can receive additional direct GME and/or IME cap slots for
that program, we propose that at least 90 percent of the individual
resident trainees (not FTEs) in the program as a whole must not have
had previous training in the same specialty as the new program. If more
than 10 percent of the trainees (not FTEs) transferred from another
program at a different hospital/sponsor in the same specialty, even
during their first year of training, we propose that this would render
the program as a whole (but not the entire hospital or its other new
programs, if applicable) ineligible for new cap slots.
In addition, we understand that there may be certain challenges
that are unique to small or rural-based programs in developing new
residencies, and that meeting a proposed threshold of 90 percent of
resident trainees with no previous training experience in the specialty
may be more difficult for those programs. Accordingly, we are
soliciting comments on what should be considered a ``small'' program
and what percentage threshold or other approach regarding new resident
trainees should be applied to these programs. We solicit comment on
defining a small residency program as a program accredited for 16 or
fewer resident positions, because 16 positions would encompass the
minimum number of resident positions required for accredited programs
in certain specialties, such as primary care and general surgery, that
have historically experienced physician shortages, and therefore have
been prioritized by Congress and CMS for receipt of slots under
sections 5503 and 5506 of the Affordable Care Act.
b. Newness of Faculty and Program Director--RFI (Request for
Information)
Regarding the selection of teaching staff and a program director,
we understand that it would be reasonable for a new program to wish to
hire some staff that already have experience teaching residents and
operating a program. Therefore, to accommodate the hiring of some
experienced staff, we believe that the percentage of faculty with no
previous experience teaching in a program in the same specialty should
probably be less than 90 percent, but we are uncertain what the
appropriate threshold should be. At one extreme, we can envision a
scenario where recruitment of most or all of the experienced staff from
a particular existing program may even result in the disintegration of
and possible closure of that existing program. Such a situation could
be chaotic to that hospital and leave residents scrambling for
alternative sites to complete their training. Consequently, we do
believe there should be some threshold for the relative proportion of
non-experienced and experienced staff at a new residency program, and
we are requesting information from commenters regarding what a
reasonable threshold might be. We also are seeking comment on the
variables involved in examining the
[[Page 36223]]
newness of teaching staff. We note that the ACGME defines ``Core
Faculty'' \156\ in its Glossary of Terms as physician teachers that
devote at least 15 hours per week to a residency program, or 10 hours
per week to a fellowship. However, in addition to other minimum hours
for staff, there may be other types of faculty or staff that CMS should
consider to be involved in a program. We are therefore soliciting
information from commenters regarding whether any threshold for
determining the newness of teaching staff for a new program should
consider only the ACGME's definition of ``Core Faculty'', or count non-
core faculty as well.
---------------------------------------------------------------------------
\156\ Core Faculty: All physician faculty members who have a
significant role in the education of residents/fellows and who have
documented qualifications to instruct and supervise. Core faculty
members devote at least 15 hours per week to resident, or 10 hours
per week to fellow, education and administration. All core faculty
members should evaluate the competency domains, work closely with
and support the program director, assist in developing and
implementing evaluation systems, and teach and advise residents/
fellows. (https://www.acgme.org/globalassets/pdfs/ab_acgmeglossary.pdf).
---------------------------------------------------------------------------
While we are uncertain what percentage the threshold for
experienced faculty should be, we are suggesting a threshold for
commenters to consider. We suggest that up to 50 percent of the
teaching staff in a new program may come from a previously existing
program in the same specialty, but if so, each of those staff members
should come from different previously existing programs. For example,
if there are 6 teaching staff total, then at least 3 must have no
previous experience teaching in the same specialty, while up to 3 may
come from previously existing programs in the same specialty; however,
each of the 3 experienced faculty would have to come from a different
previously existing program. That is, one may come from Hospital A's
existing program, another could come from Hospital B's existing
program, and a third could come from Hospital C's existing program; but
no more than one could come from any of Hospital A, Hospital B, or
Hospital C. If two were to come from Hospital A, we suggest that would
not be permissible.
We have also been asked whether it would make a difference if a
faculty member had previous teaching experience, but a certain amount
of time has passed since they taught in a program in the same specialty
(for example, because they accepted a non-teaching job in a different
hospital, or the program where they previously taught has ceased to
operate). As mentioned previously, we would want to avoid loss of most
or all of an existing program's experienced faculty. However, we
believe this concern might be mitigated if a faculty member has not
been associated with an existing program for a certain amount of time,
or if the program in question has closed.
In the August 27, 2009 Federal Register, we discussed the specific
scenario in which a hospital discontinued one of its previously
existing residency programs, and then established a program in the same
specialty at some time in the future:
``[I]f a hospital wishes to begin training residents in a
particular program in which it trained residents in the past, but the
program has not trained residents for the past 10 years, the program
could be subsequently considered a new program. We believe that a
program that is closed for several years and then reopens is separate
and distinct from the previous program, and would likely not involve
any residents that had trained in the previous program, even though, as
the commenter indicated, the directors and teaching staff may be the
same. (However, we note that it may be necessary to determine whether
the program director and the teaching staff have been training [dental]
residents during the past 10 years at another training site in order to
determine whether the program at the hospital that is beginning to
train residents after a 10-year hiatus is truly a new program)'' (74 FR
43916, emphasis added).
We continue to believe that if a hospital wishes to begin training
residents in a particular program in which it trained residents in the
past, but the program has not trained residents for the past 10 years,
the program could be subsequently considered a new program. More
generally, we believe that, in determining whether the presence of a
faculty member might jeopardize the newness of a new residency program,
it may make sense to consider whether a certain amount of time has
passed since that faculty member last taught in another program in the
same specialty. We are therefore soliciting comments on whether 10
years, or some other amount of time, would be an appropriate period
during which a faculty member should not have had experience teaching
in a program in the same specialty. For example, it might make sense to
consider whether a staff member taught in another program in the same
specialty at any point during the 5 years prior to their employment in
the ``new'' program, as 5 years is the time associated with building a
new FTE cap, but not to consider teaching experience from more than 5
years ago.
In addition, since we understand that a new teaching hospital may
also want to recruit an experienced program director, we are soliciting
comments on whether it would make sense to define a similar period of
time (for example, 10 years or 5 years) during which an individual must
not have been employed as the program director in a program in the same
specialty. In formulating suggestions, commenters may want to consider
whether the suggested period of time (for example, 10 years or 5 years)
aligns or conflicts with the ACGME common program requirements, which
State that program director qualifications ``must include specialty
expertise and at least three years of documented educational and/or
administrative experience, or qualifications acceptable to the Review
Committee'' (https://www.acgme.org/globalassets/pfassets/programrequirements/cprresidency_2023.pdf).
Finally, we understand that there may be unique issues that small
or rural residencies face in recruiting qualified program directors and
faculty to ensure success during the early years of the residency. In
small programs, when there may only be 2 or 3 core faculty members,
flexibility may be necessary in the proportions of new and experienced
teaching staff. As stated previously, we are soliciting comments on
what should be considered a ``small'' program (for example, programs
accredited for 16 or fewer positions), and what staff threshold or
other approach should be applied to small, which may include rural,
programs.
To summarize, we are soliciting comments on the following points
regarding the determination of whether the faculty and program director
are new:
What is a reasonable threshold for the relative
proportions of experienced and new teaching staff? Should there be
different thresholds for small, which may include rural, residency
programs?
Should a threshold for determining newness of teaching
staff for a new program consider only Core Faculty, or non-core faculty
(or key non-faculty staff) as well?
We seek feedback on our suggestion that 50 percent of the
teaching staff may come from a previously existing program in the same
specialty, but if so, the 50 percent should comprise staff that each
came from different previously existing programs in the specialty.
In considering whether the presence of a faculty member
might jeopardize the newness of a new program, would it be reasonable
to consider whether 10 years or 5 years, or some other amount of time,
has passed
[[Page 36224]]
during which that faculty member has not had experience teaching in a
program in the same specialty?
Would it make sense to define a similar period of time
(for example, 10 years or 5 years) during which an individual must not
have been employed as the program director in a program in the same
specialty? Should there be a different criterion for small, which may
include rural, residency programs?
c. Commingling of Residents in a New and an Existing Program--RFI
We have learned that it is not uncommon for residents in separately
accredited programs, but in the same specialty, to meet and share some
clinical and didactic training experiences, which for the purpose of
this discussion we refer to as ``commingling.'' For example, residents
in two separately accredited anesthesiology programs may receive
training simultaneously in a certain niche surgical competency, and may
collaborate in certain shared scholarly activities required for
completion of the anesthesiology residency. This is an issue different
from the newness of residents, as the residents in this case are
separately matched into distinct programs, yet have certain current
training experiences in common. We believe this cooperative approach
may be reasonable from an educational perspective, yet when taken to an
extreme, may result in the inappropriate creation of new cap slots for
a program that looks more like an expansion of an existing program
rather than the formation of a truly new program. As an extreme
example, we consider a hypothetical case in which a ``new'' program and
an existing program share 100% of resident rotations, using the same
faculty, and rotating simultaneously to the same locations. In this
case, the ``new'' program would be just a ``carbon copy'' of the
existing one. On the other hand, even a small percentage of shared
rotations can be concerning, as shown under the following scenario:
Assume New Teaching Hospital (NTH) A starts a new Family Medicine
residency program. Residents in the new program spend 90 percent of
their time at NTH Hospital A, and 10 percent at Existing Teaching
Hospital (ETH) B. ETH B has reclassified as rural under 42 CFR 412.103,
and is eligible for an IME cap adjustment for any portion of
participation in the new program. NTH A hires a brand new program
director and brand new faculty, and all the residents are new, so the
newness criteria we adopted in the August 27, 2009 Federal Register are
satisfied. However, during the 10 percent of total time they spend at
ETH B, residents in the program share their rotations with residents in
ETH B's existing Family Medicine program.
In this case, commingling accounts for only 10 percent of total
program time, but for 100 percent of the time at ETH B's existing
Family Medicine program. Under current regulations at 42 CFR
413.79(e)(1)(vi), ETH B would receive a one-tenth share of the overall
IME cap increase, even though that 10 percent of resident time is
functionally an expansion of its existing Family Medicine program. We
are soliciting comments on whether and what amount, if any, of
commingling is appropriate among residents in an existing program and
residents in a program where training is occurring at a hospital that
may be eligible for an FTE cap increase for training residents in a new
program.
d. One Hospital Sponsoring Two Programs in the Same Specialty--RFI
We have been asked whether it is permissible for one hospital to
operate two programs in the same specialty. We have heard this commonly
occurs in states with more sparsely populated areas, where there is
often one dominant academic medical center/sponsor of residency
programs in the state, and that sponsor creates more than one program
in a specialty to provide access to care in different areas of the
state. We have answered this question by saying that if each program in
fact has separate program directors, and separate staff, and separately
matched residents, then it is permissible for one hospital to sponsor
two programs in the same specialty.
However, we are taking the opportunity to solicit comments on why
hospitals might want to train residents in separately accredited
programs, but in the same specialty, and the degree to which this
happens in general, in both sparsely populated and more densely
populated areas. In conjunction with our solicitation of previous
comments regarding commingling of residents in different programs in
the same specialty, and our concerns regarding new FTE caps created for
programs that may not truly be new at hospitals with an urban-to-rural
reclassification, we are interested in hearing from commenters
regarding the reasons why hospitals may sponsor more than one program
in the same specialty, including but not limited to Rural Track
Programs, and the degree to which commingling may occur in these
programs.
4. Technical Fixes to the DGME Regulations
In the course of our ongoing implementation of policies concerning
payment for graduate medical education, we have become aware of the
existence of several technical errors in the direct GME regulations at
42 CFR 413.75 through 413.83. We therefore propose to correct these
technical errors, as discussed later.
a. Correction of Cross-References to Sec. 413.79(f)(7)
In the FY 2010 IPPS final rule (74 FR 43918 and 44001, August 27,
2009), we amended 42 CFR 413.79(f) by adding a new paragraph (f)(6) and
redesignating existing paragraph (f)(6) as paragraph (f)(7). The new
Sec. 413.79(f)(6) sets forth requirements for participation in a
Medicare GME affiliated group by a hospital that is new after July 1
and begins training residents for the first time after the July 1 start
date of an academic year, while the redesignated Sec. 413.79(f)(7)
contains the regulations pertaining to emergency Medicare GME
affiliated groups.
We have discovered that, after redesignating the former Sec.
413.79(f)(6) as Sec. 413.79(f)(7), we inadvertently did not update the
cross-references to this paragraph at Sec. Sec. 413.75(b) and 413.78.
Accordingly, in this proposed rule, we are proposing to revise the
language of the definition of ``Emergency Medicare GME affiliated
group'' under Sec. 413.75(b), as well as the language at Sec. Sec.
413.78(e)(3)(iii) and (f)(3)(iii), by correcting the cross-references
to read ``Sec. 413.79(f)(7).''
b. Removal of Obsolete Regulations Under Sec. 413.79(d)(6)
Under 42 CFR 413.79(h), a hospital may receive a temporary
adjustment to its FTE cap to reflect displaced residents added as a
result of the closure of another hospital or residency training
program. Furthermore, under Sec. 413.79(d)(6)(i) (previously Sec.
413.79(d)(6)), displaced residents counted under a temporary cap
adjustment are added to the receiving hospital's FTE count after
application of the three-year rolling average for the duration of the
time that the displaced residents are training at the receiving
hospital.
In the November 24, 2010 final rule (75 FR 72212 through 72238), we
implemented the provisions of section 5506 of the Affordable Care Act,
which directs the Secretary to redistribute Medicare GME residency
slots from teaching hospitals that close after March 23, 2008. A
hospital that had previously
[[Page 36225]]
accepted residents displaced by a teaching hospital closure and
received a temporary cap adjustment for training those residents under
Sec. 413.79(h) may subsequently apply for a permanent cap increase
under section 5506.
As part of the implementation of section 5506, we finalized several
ranking criteria to prioritize applications, and specified the dates on
which awards would become effective for hospitals that apply under each
of those criteria. In particular, we finalized Ranking Criteria One and
Three, which describe applicant hospitals that take over, respectively,
an entire residency program(s) or part of a residency program(s) from
the closed hospital. Consistent with the policy finalized in the
November 24, 2010 final rule, a permanent cap increase awarded under
Ranking Criterion One or Three would generally override any temporary
cap adjustment that the applying hospital may have received under Sec.
413.79(h), with the result that those resident slots would immediately
become subject to the three-year rolling average calculation (75 FR
72224).
We also stated, however, that we believed it would still be
appropriate to allow a hospital that ultimately would qualify to
receive slots permanently under any of the ranking criteria and that
took in displaced residents to receive temporary cap adjustments and,
in a limited manner, an exemption from the three-year rolling average.
Therefore, we finalized a policy that, in the first cost reporting
period in which the applying hospital takes in displaced residents and
the hospital closure occurs, the applying hospital could receive a
temporary cap adjustment and an exemption from the rolling average for
the displaced residents. Then, effective beginning with the cost
reporting period following the one in which the hospital closure
occurred, the applying hospital's permanent cap increase would take
effect, and there would be no exemption from the rolling average (75 FR
72225 and 72263).
Therefore, we amended Sec. 413.79(d) by redesignating the existing
paragraph (d)(6) as (d)(6)(i) and by adding new (d)(6)(ii), which
states stated that if a hospital received a permanent increase in its
FTE resident cap under Sec. 413.79(o)(1) due to redistribution of
slots from a closed hospital, the displaced FTE residents that the
hospital received would be added to the FTE count after applying the
averaging rules only in the first cost reporting period in which the
receiving hospital trained the displaced FTE residents. In subsequent
cost reporting periods, the displaced FTE residents would be included
in the receiving hospital's rolling average calculation.
Subsequently, in the FY 2013 IPPS final rule (77 FR 53437 through
53443, August 31, 2012), we finalized revisions to our policy
concerning the effective dates of section 5506 cap increases awarded
under the various ranking criteria. In particular, we finalized a
policy that slots awarded under Ranking Criteria One and Three become
effective seamlessly with the expiration of temporary cap adjustments
under Sec. 413.79(h) (that is, on the day after the graduation date(s)
of the displaced residents). As stated in that final rule, under this
revised policy, permanent cap increases under section 5506 would no
longer ``replace'' temporary cap adjustments under Sec. 413.79(h), and
exemptions from the three-year rolling average would no longer be
suspended as a consequence of the receipt of permanent slots (77 FR
53441).
Under the policy finalized in the FY 2013 IPPS final rule, there is
no longer any need for the regulation at Sec. 413.79(d)(6)(ii), which
would apply in the situation where a permanent cap increase under
section 5506 would otherwise have overridden a temporary cap adjustment
for displaced residents under Sec. 413.79(h). Instead, our policy is
that displaced residents are excluded from the receiving hospital's
rolling average calculation for the duration of the time that they are
training at the receiving hospital, as specified at Sec. 413.79(6)(i).
However, we have discovered that we neglected to make the appropriate
revisions to the regulations text to reflect our current policy.
Accordingly, we are proposing to amend Sec. 413.79(d)(6) by
removing the no longer applicable paragraph (d)(6)(ii), and by
redesignating existing (d)(6)(i) as (d)(6).
c. Correction of Typographical Errors at Sec. 413.79(k)(2)(i)
In the final rule published on December 27, 2021, as part of the
implementation of section 127 of the CAA, 2021 (Pub. L. 116-260), we
finalized various changes throughout the regulations text at 42 CFR
413.79(k), ``Residents training in rural track programs'' (86 FR 73445
through 73457 and 73514 through 73515). We have discovered that the
final sentence of Sec. 413.79(k)(2)(i), as amended in that rule,
incorrectly states, ``For Rural Track Programs prior to the start of
the urban or rural hospital's cost reporting period that coincides with
or follows the start of the sixth program year of the rural track's
existence . . .''
The beginning of the quoted sentence should instead refer to ``cost
reporting periods beginning on or after October 1, 2022,'' and should
otherwise be analogous to the similar text that appears at Sec.
413.79(k)(1)(i). Accordingly, we are proposing to revise Sec.
413.79(k)(2)(i) to read as follows: ``For cost reporting periods
beginning on or after October 1, 2022, before the start of the urban or
rural hospital's cost reporting period that coincides with or follows
the start of the sixth program year of the Rural Track Program's
existence, the rural track FTE limitation for each hospital will be the
actual number of FTE residents training in the Rural Track Program at
the urban or rural hospital and, subject to the requirements under
Sec. 413.78(g), at the rural nonprovider site(s).''
5. Notice of Closure of Teaching Hospital and Opportunity To Apply for
Available Slots
a. Background
Section 5506 of the Patient Protection and Affordable Care Act
(Pub. L. 111-148), as amended by the Health Care and Education
Reconciliation Act of 2010 (Pub. L. 111-152) (collectively,
``Affordable Care Act''), authorizes the Secretary to redistribute
residency slots after a hospital that trained residents in an approved
medical residency program closes. Specifically, section 5506 of the
Affordable Care Act amended the Act by adding subsection (vi) to
section 1886(h)(4)(H) of the Act and modifying language at section
1886(d)(5)(B)(v) of the Act, to instruct the Secretary to establish a
process to increase the FTE resident caps for other hospitals based
upon the full-time equivalent (FTE) resident caps in teaching hospitals
that closed on or after a date that is 2 years before the date of
enactment (that is, March 23, 2008). In the CY 2011 Outpatient
Prospective Payment System (OPPS) final rule with comment period (75 FR
72264), we established regulations at 42 CFR 413.79(o) and an
application process for qualifying hospitals to apply to CMS to receive
direct GME and IME FTE resident cap slots from the hospital that
closed. We made certain additional modifications to Sec. 413.79 in the
FY 2013 IPPS/LTCH PPS final rule (77 FR 53434), and we made changes to
the section 5506 application process in the FY 2015 IPPS/LTCH PPS final
rule (79 FR 50122 through 50134). The procedures we established apply
both to teaching hospitals that closed on or after March 23, 2008, and
on or before August 3, 2010, and to teaching hospitals that
[[Page 36226]]
close after August 3, 2010 (75 FR 72215).
b. Notice of Closure of McLaren St. Luke's Hospital Located in Maumee,
OH, and the Application Process--Round 21
CMS has learned of the closure of McLaren St. Luke's Hospital
Located in Maumee, OH (CCN 360090). Accordingly, this notice serves to
notify the public of the closure of this teaching hospital and initiate
another round of the section 5506 application and selection process.
This round will be the 21st round (``Round 21'') of the application and
selection process. The table in this section of this rule contains the
identifying information and IME and direct GME FTE resident caps for
the closed teaching hospital, which are part of the Round 21
application process under section 5506 of the Affordable Care Act.
[GRAPHIC] [TIFF OMITTED] TP02MY24.190
c. Notice of Closure of South City Hospital Located in St. Louis, MO,
and the Application Process--Round 22
CMS has learned of the closure of South City Hospital, located in
St. Louis, MO (CCN 260210). Accordingly, this notice serves to notify
the public of the closure of this teaching hospital and initiate
another round (``Round 22'') of the application and selection process.
This round will be the 22nd round (``Round 22'') of the application and
selection process. The table in this section of this rule contains the
identifying information and IME and direct GME FTE resident caps for
the closed teaching hospital, which are part of the Round 22
application process under section 5506 of the Affordable Care Act.
[GRAPHIC] [TIFF OMITTED] TP02MY24.191
d. Application Process for Available Resident Slots
The application period for hospitals to apply for slots under
section 5506 of the Affordable Care Act is 90 days following notice to
the public of a hospital closure (77 FR 53436). Therefore, hospitals
that wish to apply for and receive slots from the previously noted
hospitals' FTE resident caps must submit applications using the
electronic application intake system, Medicare Electronic Application
Request Information SystemTM (MEARISTM), with
application submissions for Round 21 and Round 22 due no later than
July 9, 2024. The Section 5506 application can be accessed at: https://mearis.cms.gov/public/home.
CMS will only accept Round 21 and Round 22 applications submitted
via MEARISTM. Applications submitted through any other
method will not be considered. Within MEARISTM, we have
built in several resources to support applicants:
Please refer to the ``Resources'' section for guidance
regarding the application submission process at: https://mearis.cms.gov/public/resources.
Technical support is available under ``Useful Links'' at
the bottom of the MEARISTM web page.
Application related questions can be submitted to CMS
using the form available under ``Contact'' at: https://mearis.cms.gov/public/resources.
Application submission through MEARISTM will not only
help CMS track applications and streamline the review process, but it
will also create efficiencies for applicants when compared to a paper
submission process.
We have not established a deadline by when CMS will issue the final
determinations to hospitals that receive slots under section 5506 of
the Affordable Care Act. However, we review all applications received
by the deadline and notify applicants of our determinations as soon as
possible.
We refer readers to the CMS Direct Graduate Medical Education
(DGME) website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/direct-graduate-medical-education-dgme. Hospitals should access this website for a list of additional
section 5506 guidelines for the policy and procedures for applying for
slots, and the redistribution of the slots under sections
1886(h)(4)(H)(vi) and 1886(d)(5)(B)(v) of the Act.
6. Reminder of Core-Based Statistical Area (CBSA) Changes and
Application to GME Policies
In section III.B. of the preamble of this proposed rule, we discuss
the proposed changes to the most recent OMB standards for delineating
statistical areas announced in the July 21, 2023 OMB Bulletin No. 23-
01. We refer to these statistical areas as Core-Based Statistical Areas
(CBSAs). As a result of the new OMB delineations, some teaching
hospitals may be redesignated
[[Page 36227]]
from being located in a rural CBSA to an urban CBSA, or from being
located in an urban CBSA to a rural CBSA. In the FY 2015 IPPS/LTCH PPS
final rule (79 FR 50111, August 22, 2014), we last discussed the
effects of the CBSA changes on IME and DGME payment policy, as at that
time, we implemented the changes to the statistical areas resulting
from the February 28, 2013, OMB Bulletin No. 13-01. We refer readers to
the FY 2015 IPPS/LTCH PPS final rule to learn more about CMS' policies
regarding changes to the CBSAs and how IME and DGME payments are
impacted. We emphasize that we are not currently proposing any
additional policies as a result of the latest CBSA changes; we are
merely providing a reference for readers that may have questions about
our existing policies. As a general overview, the FY 2015 IPPS/LTCH PPS
final rule discusses the effect on the FTE caps of a hospital that was
located in a rural CBSA, either at the time that it started training
residents in a new residency program, or was located in a rural area
when it received accreditation for a new program, but either prior to
actually starting the program or during the 5-year cap building period,
the CBSA in which the hospital was located became an urban CBSA (79 FR
50111 through 50113). We also discussed what happens to a rural
training track when a rural hospital that is participating as the rural
site is redesignated as urban, either during the period when the rural
track is being established, or after it has been established (79 FR
50113). (Note that under 42 CFR 413.75(b) and 413.79(k), we now refer
to rural training tracks as Rural Training Programs (RTPs)). We
provided for a transition period, wherein either the redesignated urban
hospital must reclassify as rural under Sec. 412.103 for purposes of
IME payment only (in addition, this reclassification option only
applies to IPPS hospitals (or CAHs under 42 CFR 412.103(a)(6)), not
other nonprovider sites), or the ``original'' urban hospital must have
found a new site in a geographically rural area that will serve as the
rural site for purposes of the rural track in order for the
``original'' urban hospital to receive payment under Sec. 413.79(k)(1)
or (k)(2). Also see DGME regulations at 42 CFR 413.79(c)(6), 42 CFR
413.79(k)(7), and for IME, at 42 CFR 412.105(f)(1)(iv)(D).
G. Reasonable Cost Payment for Nursing and Allied Health Education
Programs (Sec. Sec. 413.85 and 413.87)
a. General
Under section 1861(v) of the Act, Medicare has historically paid
providers for Medicare's share of the costs that providers incur in
connection with approved educational activities. Approved nursing and
allied health (NAH) education programs are those that are, in part,
operated by a provider, and meet State licensure requirements, or are
recognized by a national accrediting body. The costs of these programs
are excluded from the definition of ``inpatient hospital operating
costs'' and are not included in the calculation of payment rates for
hospitals or hospital units paid under the IPPS, IRF PPS, or IPF PPS,
and are excluded from the rate-of-increase ceiling for certain
facilities not paid on a PPS. These costs are separately identified and
``passed through'' (that is, paid separately on a reasonable cost
basis). Existing regulations on NAH education program costs are located
at 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 may receive
additional payments to account for MA enrollees. 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 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.
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), and subsequently implemented the BIPA provision
in the August 1, 2001 IPPS final rule (66 FR 39909 and 39910). In those
rules, 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
variables, 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)
[[Page 36228]]
of the Act 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 stated that 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 payments 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 are 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 this FY 2025 IPPS/LTCH PPS proposed rule, we are proposing the
rates for CY 2023. Consistent with the use of HCRIS data for past
calendar years, we are proposing to use data from cost reports ending
in FY 2021 HCRIS (the fiscal year that is 2 years prior to CY 2023) to
compile these national amounts: NAH pass-through payment, Part A
Inpatient Days, MA Inpatient Days.
For this proposed rule, we accessed the FY 2021 HCRIS data from the
fourth 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 proposed rule is CY 2023, 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 (CPI-U) increases for Part A direct GME). For CY 2023, the direct
GME projections are based on the fourth quarterly update of CY 2021
HCRIS, adjusted for the CPI-U and for increasing MA enrollment.
For CY 2023, the proposed national rates and percentages, and their
data sources, are set forth in this table. We intend to update these
numbers in the FY 2025 final rule based on the latest available cost
report data.
[GRAPHIC] [TIFF OMITTED] TP02MY24.192
H. Proposed Payment Adjustment for Certain Clinical Trial and Expanded
Access Use Immunotherapy Cases (Sec. Sec. 412.85 and 412.312)
Effective for FY 2021, we created MS-DRG 018 for cases that include
procedures describing CAR T-cell therapies, which were reported using
ICD-10-PCS procedure codes XW033C3 or XW043C3 (85 FR 58599 through
58600). Effective for FY 2022, we revised MS-DRG 018 to include cases
that report the procedure codes for CAR T-cell and non-CAR T-cell
therapies and other immunotherapies (86 FR 44798 through 448106).
Effective for FY 2021, we modified our relative weight methodology
for MS-DRG 018 in order to develop a relative weight that is reflective
of the typical costs of providing CAR T-cell therapies relative to
other IPPS services. Specifically, under our finalized policy we do not
include claims determined to be clinical trial claims that group to MS-
DRG 018 when calculating the average cost for MS-DRG 018 that is 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
[[Page 36229]]
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 the disease or
condition (21 CFR 312.305).\157\
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\157\ 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 42 CFR 412.312 (for capital
IPPS payments), for claims appropriately containing Z00.6, as described
previously, and reflects that the adjustment is also applied for cases
involving expanded access use immunotherapy, and that the payment
adjustment only applies to applicable clinical trial cases; that is,
the adjustment is not applicable to cases where the CAR T-cell, non-CAR
T-cell, or other immunotherapy product is purchased in the usual
manner, but the case involves a clinical trial of a different product.
The regulations at 42 CFR 412.85(c) also specify that the adjustment
factor will reflect the average cost for cases to be assigned to MS-DRG
018 that involve expanded access use of immunotherapy or are part of an
applicable clinical trial to the average cost for cases to be assigned
to MS-DRG 018 that do not involve expanded access use of immunotherapy
and are not part of a clinical trial (85 FR 58844).
For FY 2025, we are proposing to continue to apply an adjustment to
the payment amount for expanded access use of immunotherapy and
applicable clinical trial cases that would group to MS-DRG 018, as
calculated using the same methodology, as modified in the FY 2024 IPPS/
LTCH PPS final rule (88 FR 59062), that we are proposing to use to
adjust the case count for purposes of the relative weight calculations,
as described in section II.D. of the preamble of this proposed rule.
As discussed in the FY 2024 IPPS/LTCH PPS final rule, the MedPAR
claims data now includes a field that identifies whether or not the
claim includes expanded access use of immunotherapy. For the FY 2023
MedPAR data and for subsequent years, this field identifies 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 this proposed
rule for further discussion of our methodology for identifying clinical
trial claims and expanded access use claims in MS-DRG 018 and our
methodology used to adjust the case count for purposes of the relative
weight calculations, as modified in the FY 2024 IPPS/LTCH PPS final
rule.
Using the same methodology that we are proposing to use to adjust
the case count for purposes of the relative weight calculations, we are
proposing 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''.
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 this
proposed rule for further discussion of our methodology.
Consistent with our calculation of the proposed adjustor for the
relative weight calculations, for this proposed rule we propose to
calculate this adjustor based on the December 2023 update of the FY
2023 MedPAR file for purposes of establishing the FY 2025 payment
amount. Specifically, in accordance with 42 CFR 412.85 (for operating
IPPS payments) and 42 CFR 412.312 (for capital IPPS payments), we
propose to multiply the FY 2025 relative weight for MS-DRG 018 by a
proposed adjustor of 0.34 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 propose to update the value of the adjustor based on more recent
data for the final rule.
I. Proposed Changes to the Calculation of the IPPS Add-On Payment for
Certain End-Stage Renal Disease (ESRD) Discharges (Sec. 412.104)
Under existing regulations at Sec. 412.104, we provide an
additional payment to a hospital for inpatient services provided to
certain Medicare beneficiaries with ESRD who receive a dialysis
treatment during a hospital stay, if the hospital's ESRD Medicare
beneficiary discharges, excluding discharges classified into the MS-
DRGs listed at Sec. 412.104(a), where the beneficiary received
dialysis services during the inpatient stay, are 10 percent or more of
its total Medicare discharges. The additional payment (referred to as
the ESRD add-on payment) is intended to lessen the impact of the added
costs for hospitals that deliver inpatient dialysis services to a high
concentration of ESRD Medicare beneficiaries (76 FR 51692). The
additional payment is based on the average length of stay for ESRD
beneficiaries in the facility times a factor based on the average
direct cost of furnishing dialysis services during a
[[Page 36230]]
usual beneficiary stay (49 FR 34747). The payment to a hospital equals
the average length of stay of ESRD beneficiaries in the hospital,
expressed as a ratio to 1 week, times the estimated weekly cost of
dialysis multiplied by the number of ESRD beneficiary discharges not
excluded under Sec. 412.104(a). The average direct cost of dialysis
was determined from data obtained in connection with establishing the
composite rate reimbursement for outpatient maintenance dialysis (49 FR
34747).
On January 1, 2011, we implemented the ESRD PPS, a case-mix
adjusted, bundled PPS for renal dialysis services furnished by ESRD
facilities as required by section 1881(b)(14) of the Act, as added by
section 153(b) of the Medicare Improvements for Patients and Providers
Act of 2008 (MIPPA) (Pub. L. 110-275). Section 1881(b)(14)(F) of the
Act, as added by section 153(b) of MIPPA, and amended by section
3401(h) of the Patient Protection and Affordable Care Act (the
Affordable Care Act) (Pub. L. 111-148), established that beginning CY
2012, and each subsequent year, the Secretary of the Department of
Health and Human Services (the Secretary) shall annually increase
payment amounts by an ESRD market basket percentage increase, reduced
by the productivity adjustment described in section
1886(b)(3)(B)(xi)(II) of the Act (74 FR 49927). The ESRD PPS replaced
the basic case-mix adjusted composite rate payment system and the
payment methodologies for separately billable outpatient renal dialysis
items and services. Payment under Medicare Part B for outpatient renal
dialysis services has been based entirely on the ESRD PPS since January
1, 2014 (78 FR 72160). The ESRD PPS pays ESRD facilities a case-mix-
adjusted, bundled payment, which includes former composite rate
services and ESRD-related drugs, laboratory services, and medical
equipment and supplies (80 FR 68973). The ESRD PPS base rate is
designed to reflect the average cost per-treatment of providing renal
dialysis services.\158\ The per treatment payment amount (that is, the
ESRD PPS base rate, subject to applicable adjustments) \159\ is
typically applied to a regimen of three hemodialysis treatments per
week. CMS updates the ESRD PPS base rate annually. We refer readers to
the August 12, 2010, ESRD PPS final rule (75 FR 49030 through 49214)
for additional details on the establishment of the ESRD PPS, including
a discussion of the transition from the basic case-mix adjusted
composite rate payment system to the ESRD PPS.
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\158\ 42 CFR 413.215(a) and 413.220.
\159\ Sec. 413.230.
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As described previously, under current regulations the ESRD add-on
payment is based on the average direct cost of furnishing dialysis
services determined from data obtained in connection with establishing
the composite rate. Under the current regulations, the average cost of
dialysis is reviewed and adjusted, if appropriate, at the time the
composite rate reimbursement for outpatient dialysis is reviewed. The
last time CMS updated the composite rate was in the CY 2013 ESRD PPS
final rule (77 FR 67454), as this was the final year in which payments
to ESRD facilities were based on a blend of the composite rate and the
ESRD PPS. In light of the time that has passed since the last update to
the composite rate, we are proposing to change the methodology used to
calculate the ESRD add-on payment under current regulations to the ESRD
PPS base rate used under the ESRD PPS. In addition, since the renal
dialysis services reflected in the ESRD PPS base rate do not include
those services that are not essential for the delivery of maintenance
dialysis (see Sec. 413.171), using the ESRD PPS base rate to calculate
the ESRD add-on payment would maintain consistency with the current
calculation, which is based on the average costs determined to be
directly related to the renal dialysis service, as determined from the
composite rate.
As described previously, under Sec. 412.104(b)(1), the ESRD add-on
payment is based on the estimated weekly cost of dialysis and the
average length of stay of ESRD beneficiaries for the hospital. We are
proposing that effective for cost reporting periods beginning on or
after October 1, 2024, the estimated weekly cost of dialysis would be
calculated as the applicable ESRD PPS base rate (as defined in 42 CFR
413.171) multiplied by three, which represents the typical number of
dialysis sessions per week. The ESRD PPS base rate is applicable for
renal dialysis services furnished during the calendar year (CY) (that
is, effective January 1 through December 31 each year) and updated
annually (see Sec. 413.196). Under this proposal, the annual CY ESRD
PPS base rate (as published in the applicable CY ESRD PPS final rule or
subsequent corrections, as applicable) multiplied by three would be
used to calculate the ESRD add-on payment for hospital cost reporting
periods that begin during the Federal FY for the same year. For
example, the CY 2025 ESRD PPS base rate would be used for all cost
reports beginning during Federal FY 2025 (that is, for cost reporting
periods starting on or after October 1, 2024, through September 30,
2025). The table that follows illustrates the applicable CY ESRD PPS
base rate that would be used to determine the add-on amount for
eligible discharges during the hospital's cost reporting periods
beginning on or after October 1, 2024 (FY 2025) and on or after October
1, 2025 (FY 2026) under this proposed methodology.
We note that use of the applicable CY ESRD PPS base rate to
determine the add-on payment amount for the hospital's discharges
occurring during the entire cost reporting period based on the cost
report's begin date would be consistent with the determination of
eligibility for the ESRD add-on payment, which occurs at cost report
settlement and is based on the discharges that occur during that cost
reporting period.
[GRAPHIC] [TIFF OMITTED] TP02MY24.193
[[Page 36231]]
Under this proposal, the payment to a hospital would continue to be
calculated as the average length of stay of ESRD beneficiaries in the
hospital, expressed as a ratio to 1 week, multiplied by the estimated
weekly cost of dialysis multiplied by the number of applicable ESRD
beneficiary discharges. Specifically, for cost reporting periods
beginning on or after October 1, 2024, the proposed payment to a
hospital would equal the average length of stay of ESRD beneficiaries
in the hospital, expressed as a ratio to 1 week, multiplied by the
estimated weekly cost of dialysis (calculated as the applicable ESRD
PPS base rate (as defined in 42 CFR 413.171), multiplied by 3)
multiplied by the number of ESRD beneficiary discharges except for
those excluded under Sec. 412.104(a).
We are proposing to revise the regulations under 42 CFR 412.104(b)
to reflect this proposed change to the calculation of the payment
amount for cost reporting periods beginning on or after October 1,
2024. We are proposing to revise Sec. 412.104(b)(2) to specify that,
effective for cost reporting periods beginning on or after October 1,
2024, the estimated weekly cost of dialysis is calculated as 3 dialysis
sessions per week multiplied by the applicable ESRD PPS base rate (as
defined in 42 CFR 413.171) that corresponds with the fiscal year in
which the cost reporting period begins. For example, the CY 2025 ESRD
PPS base rate (multiplied by 3 to determine the estimated weekly cost
of dialysis, as described previously) would apply for all hospital cost
reporting periods beginning during FY 2025 (that is, for cost reporting
periods beginning on or after October 1, 2024, through September 30,
2025). We are also proposing to make conforming changes to Sec.
412.104(b)(3) and Sec. 412.104(b)(4) to reflect the proposed change in
methodology for calculating the ESRD add-on payment amount for cost
reporting periods beginning on or after October 1, 2024.
J. Separate IPPS Payment for Establishing and Maintaining Access to
Essential Medicines
1. Overview
As discussed in the CY 2024 OPPS/ASC proposed rule (88 FR 49867),
on January 26, 2021, President Biden issued Executive Order 14001, ``A
Sustainable Public Health Supply Chain'' (86 FR 7219), which launched a
whole-of-government effort to strengthen the resilience of medical
supply chains, especially for pharmaceuticals and simple medical
devices. This effort was bolstered subsequently by Executive Orders
14005, 14017, and 14081 (86 FR 7475, 11849, and 25711, respectively).
In June 2021, as tasked in Executive Order 14017 on ``America's Supply
Chains,'' the Department of Health and Human Services released a review
of pharmaceuticals and active pharmaceutical ingredients, analyzing
risks in these supply chains and recommending solutions to increase
their reliability.\160\ In July 2021, as tasked in Executive Order
14001, the Biden-Harris Administration also released the National
Strategy for a Resilient Public Health Supply Chain, which laid out a
roadmap to support reliable access to products for public health in the
future, including through prevention and mitigation of medical product
shortages.\161\
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\160\ Department of Health and Human Services, Review of
Pharmaceuticals and Active Pharmaceutical Ingredients (pp. 207-250),
June 2021: https://www.whitehouse.gov/wp-content/uploads/2021/06/100-day-supply-chain-review-report.pdf.
\161\ Department of Health and Human Services, National Strategy
for a Resilient Public Health Supply Chain, July 2021: https://www.phe.gov/Preparedness/legal/Documents/National-Strategy-for-Resilient-Public-Health-Supply-Chain.pdf.
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Over the last several years, shortages for critical medical
products have persisted, with the average drug shortage lasting about
1.5 years.\162\ For pharmaceuticals, even before the COVID-19 pandemic,
nearly two-thirds of hospitals reported more than 20 drug shortages at
any one time--from antibiotics used to treat severe bacterial
infections to crash cart drugs necessary to stabilize and resuscitate
critically ill adults.\163\ The frequency and severity of these supply
disruptions has only been exacerbated over the last few years.\164\
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\162\ Senate Committee on Homeland Security & Governmental
Affairs, Short Supply: The Health and National Security Risks of
Drug Shortages, March 2023: https://www.hsgac.senate.gov/wp-content/uploads/2023-06-06-HSGAC-Majority-Draft-Drug-Shortages-Report.-FINAL-CORRECTED.pdf.
\163\ Vizient, Drug Shortages and Labor Costs: Measuring the
Hidden Costs of Drug Shortages on U.S. Hospitals, June 2019: https://wieck-vizient-production.s3.us-west-1.amazonaws.com/page-Brum/attachment/c9dba646f40b9b5def8032480ea51e1e85194129.
\164\ Department of Health and Human Services, National Strategy
for a Resilient Public Health Supply Chain, July 2021: https://www.phe.gov/Preparedness/legal/Documents/National-Strategy-for-Resilient-Public-Health-Supply-Chain.pdf.
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Recent data suggests that hospitals are estimated to spend more
than 8.6 million personnel hours and $360 million per year to address
drug shortages,\165\ which will likely further result in treatment
delays and denials, changes in treatment regimens, medication
errors,166 167 168 as well as higher rates of hospital-
acquired infections and in-hospital mortality.169 170 The
additional time, labor, and resources required to navigate drug
shortages and supply chain disruptions also increase health care
costs.171 172
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\165\ Vizient, Drug Shortages and Labor Costs: Measuring the
Hidden Costs of Drug Shortages on U.S. Hospitals, June 2019: https://wieck-vizient-production.s3.us-west-1.amazonaws.com/page-Brum/attachment/c9dba646f40b9b5def8032480ea51e1e85194129.
\166\ American Journal of Health System Pharmacology, National
Survey on the Effect of Oncology Drug Shortages on Cancer Care,
2013: https://pubmed.ncbi.nlm.nih.gov/23515514/.
\167\ JCO Oncology Practice, National Survey on the Effect of
Oncology Drug Shortages in Clinical Practice, 2022: https://pubmed.ncbi.nlm.nih.gov/35544740/.
\168\ Journal of the American Medical Association, Association
between U.S. Norepinephrine Shortage and Mortality Among Patients
with Septic Shock, 2017: https://pubmed.ncbi.nlm.nih.gov/28322415/.
\169\ Clinical Infectious Diseases, The Effect of a
Piperacillin/Tazobactam Shortage on Antimicrobial Prescribing and
Clostridium difficile Risk in 88 US Medical Centers, 2017: https://pubmed.ncbi.nlm.nih.gov/28444166/.
\170\ New England Journal of Medicine, The Impact of Drug
Shortages on Children with Cancer: The Example of Mechlorethamine,
2012: https://pubmed.ncbi.nlm.nih.gov/23268661/.
\171\ Senate Committee on Homeland Security & Governmental
Affairs, Short Supply: The Health and National Security Risks of
Drug Shortages, March 2023: https://www.hsgac.senate.gov/wp-content/uploads/2023-06-06-HSGAC-Majority-Draft-Drug-Shortages-Report.-FINAL-CORRECTED.pdf.
\172\ Department of Health and Human Services, ASPE Report to
Congress: Impact of Drug Shortages on Consumer Costs, May 2023:
https://aspe.hhs.gov/reports/drug-shortages-impacts-consumer-costs.
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Hospitals' procurement preferences can be leveraged to help foster
a more resilient supply of lifesaving drugs and biologicals. With
respect to shortages, supply chain resiliency includes having
sufficient inventory that can be leveraged in the event of a supply
disruption or demand increase--as opposed to relying on ``just-in-
time'' inventory-management efficiency at the manufacturer level that
can leave supply chains vulnerable to shortage.173 174 This
concept is especially true for essential medicines, which generally
comprise products that are medically necessary to have available at all
times in an amount adequate to serve patient needs and in the
appropriate dosage forms. A hospital's resilient supply can also
[[Page 36232]]
include essential medicines from multiple manufacturers, including the
availability of domestic pharmaceutical manufacturing capacity, to
diversify the sourcing of essential medicines. We believe it is
necessary to support practices that can mitigate the impact of
pharmaceutical shortages of essential medicines and promote resiliency
to safeguard and improve the care hospitals are able to provide to
beneficiaries. Additionally, sustaining sources of domestically sourced
medical supplies can help support continued availability in the event
of public health emergencies and other disruptions. This concept is
consistent with our current policy for domestic National Institute for
Occupational Safety and Health (NIOSH) approved surgical N95
respirators (87 FR 72037). Hospitals, as major purchasers and users in
the U.S. of essential medicines, can support the existence of domestic
sources by sourcing domestically made essential medicines.
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\173\ Department of Health and Human Services, Review of
Pharmaceuticals and Active Pharmaceutical Ingredients (pp. 207-250),
June 2021: https://www.whitehouse.gov/wp-content/uploads/2021/06/100-day-supply-chain-review-report.pdf.
\174\ Department of Health and Human Services, National Strategy
for a Resilient Public Health Supply Chain, July 2021: https://www.phe.gov/Preparedness/legal/Documents/National-Strategy-for-Resilient-Public-Health-Supply-Chain.pdf.
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When hospitals have insufficient supply of essential medicines,
such as during a shortage, care for Medicare beneficiaries can be
negatively impacted. To mitigate negative care outcomes in the event of
insufficient supply, hospitals can adopt procurement strategies that
foster a consistent, safe, stable, and resilient supply of these
essential medicines. Such procurement strategies can include provisions
to maintain or otherwise provide for extra stock of product (for
example, either to maintain or to hold directly at the hospital,
arrange contractually for a distributor to hold off-site, or arrange
contractually with a wholesaler for a manufacturer to hold product)
which can act as a buffer in the event of an unexpected increase in
product use or disruption to supply. In the event an essential medicine
goes into shortage without existing procurement or substitution
strategies for affected drugs, negative patient care outcomes can
result in reduced quality of care and, in some instances, increased
costs by the Medicare program to provide payment for unnecessary
services that could have been avoided had the drug been available to
the hospital.
In the CY 2024 OPPS/ASC proposed rule (88 FR 49867), CMS requested
public comments on a potential Medicare payment policy that would
provide separate payment to hospitals under the IPPS for Medicare's
share of the inpatient costs of establishing and maintaining access to
a 3-month buffer stock of one or more of 86 essential medicines
(referred to herein as the ``CY 2024 Request for Comment''). Under this
potential policy, the allowable costs would have included the
hospital's reasonable costs of establishing and maintaining buffer
stock(s) of the essential medicines but not the cost of the medicines
themselves. We stated that we expected that the resources required to
establish and maintain access to a buffer stock of essential medicines
would generally be greater than the resources required to establish and
maintain access to these medicines without such a buffer stock. While
CMS did not finalize any policy regarding payment under the IPPS and
OPPS for establishing and maintaining access to essential medicines, we
stated we intended to propose new Conditions of Participation in
forthcoming notice and comment rulemaking addressing hospital processes
for pharmaceutical supply and that we would continue to consider
policies related to buffer stock.
As discussed in the CY 2024 OPPS/ASC final rule, many commenters on
the CY 2024 Request for Comment supported CMS's efforts to promote
resiliency but expressed concerns regarding the potential for such a
payment policy to induce or exacerbate drug shortages through demand
shocks to the supply chain. Some commenters stated that a 3-month
buffer stock may be inadequate to insulate hospitals from drug
shortages, and that the policy may encourage hoarding behaviors and
further fragment the existing supply of essential medicines, which
would primarily disadvantage smaller, less resourced hospitals (88 FR
82129 through 82130). While commenters stated that a 3-month buffer
stock may be inadequate to insulate hospitals from shortages given the
duration of many drug shortages, some commenters further stated that
even a 6-month buffer stock may not fully protect hospitals in the
event of a shortage. Commenters cautioned that drug shortages are
difficult to predict and often due to problems at the manufacturer
level, which can be compounded by panic buying and hoarding behaviors.
Some commenters stated that any buffer stock would need to be
sufficiently large to account for the ramp up time that manufacturers
need to reestablish supply of a given drug in shortage.
As a first step in this initiative, and based on consideration of
the comments we received on the CY 2024 Request for Comment, for cost
reporting periods beginning on or after October 1, 2024, we are
proposing to establish a separate payment under the IPPS to small (100
beds or fewer), independent hospitals for the estimated additional
resource costs of voluntarily establishing and maintaining access to 6-
month buffer stocks of essential medicines to foster a more reliable,
resilient supply of these medicines for these hospitals. This proposed
separate payment could be provided biweekly or as a lump sum at cost
report settlement. As discussed further in section V.J.3. of the
preamble of this proposed rule, we are focusing this proposal on small,
independent hospitals, many of which are rural, that may lack the
resources available to larger hospitals and hospital chains to
establish and maintain buffer stocks of essential medicines for use in
the event of drug shortages. We believe by limiting separate payment to
smaller, independent hospitals, we can also mitigate concerns raised by
commenters regarding large demand driven shocks to the supply chain.
The appropriate time to establish a buffer stock for a drug is
before it goes into shortage or after a shortage period has ended. In
order to further mitigate any potential for the proposed policy to
exacerbate existing shortages or contribute to commenters' concerns of
hoarding, if an essential medicine is listed as ``Currently in
Shortage'' on the FDA Drug Shortages Database,\175\ we are proposing
that a hospital that newly establishes a buffer stock of that medicine
while it is in shortage would not be eligible for separate buffer stock
payment for that medicine for the duration of the shortage. However, if
a hospital had already established and was maintaining a buffer stock
of that medicine prior to the shortage, we are proposing that the
hospital would continue to be eligible for separate buffer stock
payment for that medicine for the duration of the shortage. We are
proposing that hospital would continue to be eligible even if the
number of months of supply of that medicine in the buffer stock were to
drop to less than 6 months as the hospital draws down that buffer
stock. Once an essential medicine is no longer listed as ``Currently in
Shortage'' in the FDA Drug Shortages Database, our proposed policy does
not differentiate that essential medicine from other essential
medicines and hospitals would be eligible to establish and maintain
buffer stocks for the medicine as they would have before the shortage.
CMS will conduct provider education regarding additions and deletions
to the publicly available FDA Drug Shortages Database to assist
hospitals with this proposed policy.
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\175\ https://www.accessdata.fda.gov/scripts/drugshortages/default.cfm.
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As described in sections V.J.2. and .4. of the preamble of this
proposed rule, we are proposing that if the number of
[[Page 36233]]
months of supply of medicine in the buffer stock were to drop to less
than 6 months for a reason other than the essential medicine(s)
actively being listed as ``Currently in Shortage,'' any separate
payment to a hospital under this policy would be adjusted based on the
proportion of the cost reporting period for which the hospital did
maintain the 6-month buffer stock of that essential medicine.
We are proposing to make this separate payment under the IPPS for
the additional resource costs of establishing and maintaining access to
buffer stocks of essential medicines under section 1886(d)(5)(I) of the
Act, which authorizes the Secretary to provide by regulation for such
other exceptions and adjustments to the payment amounts under section
1886(d) of the Act as the Secretary deems appropriate. We are not
proposing to make this payment adjustment budget neutral under the
IPPS.
2. Proposed List of Essential Medicines
The report Essential Medicines Supply Chain and Manufacturing
Resilience Assessment, as developed by the U.S. Department of Health
and Human Services (HHS) Office of the Assistant Secretary for
Preparedness and Response (ASPR) with the Advanced Regenerative
Manufacturing Institute's (ARMI's) Next Foundry for American
Biotechnology, prioritized 86 essential medicines (hereinafter referred
to as the ``ARMI List'' or ``ARMI's List'') from the Executive Order
13944 List of Essential Medicines, Medical Countermeasures, and
Critical Inputs (hereinafter referred to as the ``E.O. 13944 List''),
as developed under the E.O. by the U.S. Food and Drug Administration
(FDA).\176\
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\176\ https://www.fda.gov/about-fda/reports/executive-order-13944-list-essential-medicines-medical-countermeasures-and-critical-inputs.
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The ARMI List is a prioritized list of 86 medicines that are either
critical for minimum patient care in acute settings or important for
acute care with no comparable alternatives available. The medicines
included in the ARMI List were considered, by consensus, to be most
critically needed for typical acute patient care. In this context,
acute patient care was defined as: rescue and/or lifesaving use (that
is, Intensive Care Units, Cardiac/Coronary Care Units, and Emergency
Departments), stabilizing patients in hospital continued care to enable
discharge, and urgent or emergency surgery.
Development of the ARMI List focused on assessing the clinical
criticality and supply chains of small molecules and therapeutic
biologics. The development of the ARMI List was informed by meetings
with multiple key pharmaceutical supply chain stakeholders (for
example, manufacturers, group purchasing organizations, wholesale
distributors, providers, pharmacies), surveys and workshops with groups
of clinicians and industry stakeholders, public feedback on the E.O.
13944 List (provided during a public comment period starting in October
2020), and other research.
We are proposing that for purposes of the proposed separate payment
under the IPPS, the costs of buffer stocks that would be eligible for
separate payment are the additional resource costs of establishing and
maintaining access to a 6-month buffer stock for any eligible medicines
on ARMI's List of 86 essential medicines, including any subsequent
revisions to that list of medicines. As previously discussed, the ARMI
List represents a prioritized list of 86 medicines that were
considered, by consensus, to be most critically needed for typical
acute patient care. At this time, we believe that the ARMI List
constitutes an appropriate set of medicines to initially prioritize
under this proposed payment policy in order to help insulate small,
independent hospitals, and the inpatient care they provide, from the
negative effects of drug shortages.
As noted earlier, the appropriate time to establish a buffer stock
for a drug is before it goes into shortage or after a shortage period
has ended. If an essential medicine is listed as ``Currently in
Shortage'' on the FDA Drug Shortages Database, we are proposing that a
hospital that newly establishes a buffer stock of that medicine while
it is in shortage would not be eligible for separate buffer stock
payment for that medicine for the duration of the shortage. However, if
a hospital had already established and was maintaining a buffer stock
of that medicine prior to the shortage, we are proposing that the
hospital would continue to be eligible for separate buffer stock
payment for that medicine for the duration of the shortage as the
hospital draws down that buffer stock even if the number of months of
supply of that medicine in the buffer stock were to drop to less than 6
months. By limiting eligibility in this way, we believe that we can
both insulate smaller hospitals from short-term drug shortages and
mitigate the potential for the proposed policy to exacerbate existing
shortages or contribute to concerns of hoarding.
As an illustrative example, suppose a hospital established and
maintained 6-month buffer stocks for five essential medicines. However,
one of those essential medicines was subsequently listed as ``Currently
in Shortage'' on the FDA Drug Shortages Database. The hospital would no
longer be required to maintain a 6-month buffer stock of the essential
medicine that is in shortage to receive separate payment for
maintaining the buffer stock of that essential medicine during the
period of shortage. The hospital would continue to be eligible for the
separate payment from CMS for the buffer stock for that medicine during
the period of shortage as it draws down its established buffer stock of
the medicine in shortage as needed. However, the hospital would be
required to maintain buffer stocks of no less than 6 months for the
other four essential medicines that are not in shortage to be eligible
to receive separate payment for those four medicines.
Because medicine can remain on the FDA Drug Shortage Database for
years, we request comments on the duration that CMS should continue to
pay hospitals for the maintenance of a less than 6-month buffer stock
of the essential medicine if it is ``Currently in Shortage.'' We also
request comments on if there is a quantity or dosage minimum floor
where CMS should no longer pay to maintain a 6-month buffer stock of
the essential medicine if it is ``Currently in Shortage.'' For example,
if a hospital has one remaining dose of a drug ``Currently in
Shortage'' and that drug remains in shortage on the FDA Drug Shortage
Database for 5 years, should there be limits on how much and for how
long CMS would pay a hospital for a 6-month buffer stock?
We are proposing that if the ARMI List is updated to add or remove
any essential medicines, all medicines on the updated list would be
eligible for separate payment under this policy for the IPPS shares of
the costs of establishing and maintaining access to 6-month buffer
stocks as of the date the updated ARMI List is published. To the extent
that in the future other medicines or lists are identified for
eligibility in future iterations of this policy, we seek comment on the
potential mechanism and timing for incorporating those updates.
Comments may consider, among other factors, medicines that were
excluded from the ARMI List, the E.O. 13944 List, or both. For example,
some categories from the E.O. 13944 List--including Blood and Blood
Products, Fractionated Plasma Products, Vaccines, and Volume
Expanders--were excluded from the ARMI List due to
[[Page 36234]]
differences in their supply chains. Additionally, other categories were
identified as not needed for routine/typical acute patient care (that
is, Biological Threat Medical Countermeasures, Burn and Blast Injuries,
Chemical Threat Medical Countermeasures, Pandemic Influenza Medical
Countermeasures, Radiologic-Nuclear Threat Medical Countermeasures).
The ARMI List does not include certain medicines that have recently
been in shortage and that may be considered essential and are more
prevalent in specific care settings other than an inpatient hospital,
such as drugs used in oncology care on an outpatient basis. Further,
there are medicines that are not included on the ARMI List nor the E.O.
13944 List, such as buprenorphine-based medications for treatment of
substance use disorder. We seek comment on whether eligibility for
separate payment for the IPPS share of the costs of establishing and
maintaining access to 6-month buffer stocks of essential medicines
should include oncology drugs or other types of drugs not currently on
the ARMI List.
As noted earlier, CMS will conduct provider education regarding
additions and deletions to the publicly available FDA Drug Shortages
Database to assist hospitals with this proposed policy.
3. Hospital Eligibility
Commenters on the CY 2024 Request for Comment (88 FR 82129 through
82130) raised a number of concerns relating to access to essential
medicines for small hospitals and potential hoarding behaviors among
better resourced hospitals. Commenters also cautioned against the
potential for the policy to cause demand-driven shocks to the
pharmaceutical supply chain, exacerbating pharmaceutical access issues
for hospitals, which they claimed would disproportionately impact
smaller hospitals due to their smaller purchasing power. As hospitals
and hospital systems increase in size through expansion of bed count
and/or consolidation and vertical integration with other hospitals and
health systems, they accrue bargaining leverage for payment
negotiations and thereby increase their purchasing power.\177\ Those
smaller (and often rural) hospitals that lack this increased purchasing
power are faced with potentially lower payments from payers and less
operating capital.\178\ To address this concern, and attempt to better
insulate these smaller, independent hospitals against future supply
disruptions of essential medicines, we are proposing to limit
eligibility for separate payment for the resource costs of establishing
and maintaining access to buffer stocks of essential medicines to
small, independent hospitals that are paid under the IPPS, as defined
later in this section. As many of these small, independent hospitals
are located in rural areas, we also expect this policy to support rural
hospitals, in line with the rural health strategy of the Biden-Harris
Administration.\179\ \180\
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\177\ U.S. Congress, U.S. House of Representatives Committee on
Ways and Means, Subcommittee on Health, Health Care Consolidation:
The Changing Landscape of the U.S. Health Care System, May 2023:
https://www.rand.org/content/dam/rand/pubs/testimonies/CTA2700/CTA2770-1/RAND_CTA2770-1.pdf.
\178\ American Hospital Association, Rural Hospital Closures
Threaten Access: Solutions to Preserve Care in Local Communities,
September 2022: https://www.aha.org/system/files/media/file/2022/09/rural-hospital-closures-threaten-access-report.pdf.
\179\ The White House, The Biden-Harris Administration is taking
actions to improve the health of rural communities and help rural
health care providers stay open, November 2023: https://www.hhs.gov/about/news/2023/11/03/department-health-human-services-actions-support-rural-america-rural-health-care-providers.html.
\180\ The White House, Fact Sheet: Biden Administration Takes
Steps to Address Covid-19 in Rural America and Build Rural Health
Back Better, August 2021: https://www.whitehouse.gov/briefing-room/statements-releases/2021/08/13/fact-sheet-biden-administration-takes-steps-to-address-covid-19-in-rural-america-and-build-rural-health-back-better/.
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We believe that by focusing eligibility on small, independent
hospitals, we can both support these types of hospitals in their
efforts to provide patient care during drug shortages and lessen any
potential demand shocks to the pharmaceutical supply chain because the
buffer stocks these hospitals would require are likely smaller compared
to larger hospitals and hospital chains. As discussed further in the
regulatory impact analysis associated with this proposed policy in
section I.G.6. of Appendix A of this proposed rule, we identified 493
potentially eligible hospitals based on FY 2021 hospital cost report
data. Of these hospitals, 249 were identified as geographically rural,
6 were identified as geographically urban but reclassified as rural
(under our reclassification regulations at Sec. 412.103), and 238 were
identified as geographically urban without a reclassification as rural.
These hospitals had 216,557 Medicare discharges in total and an average
of 442 Medicare discharges per hospital for the FY 2021 cost reporting
year.
Small Hospital: For the purposes of this policy, we propose to
define a small hospital as one with not more than 100 beds. This
definition is consistent with the definition of a small hospital used
for Medicare-dependent, small rural hospitals (MDH) in section
1886(d)(5)(G)(iv)(II) of the Act. Consistent with the MDH regulations
at Sec. 412.108(a)(1)(ii), we propose that a hospital would need to
have 100 or fewer beds as defined in Sec. 412.105(b) during the cost
reporting period for which it is seeking the payment adjustment to be
considered a small hospital for purposes of this payment adjustment. We
request comment on using criteria other than the MDH bed size criterion
to identify small hospitals for the purposes of this proposed payment
policy.
Independent Hospital: For the purposes of this policy, we propose
to define an independent hospital as one that is not part of a chain
organization, as defined for purposes of hospital cost reporting. A
chain organization is defined as a group of two or more health care
facilities which are owned, leased, or through any other device,
controlled by one organization. This proposed definition is the
definition of chain organization in CMS Pub 15-1, Provider
Reimbursement Manual, Chapter 21, Cost Related to Patient Care Sec.
2150: ``Home Office Costs--Chain Operations'' and used by a hospital
when completing its cost report.
Because this proposed definition is the definition of chain
organization used by a hospital when filling out its cost report, to
operationalize our proposed separate payment policy, we propose that
any hospital that appropriately answers ``yes'' (denoted ``Y'') to line
140 column 1 or fills out any part of lines 141 through line 143 on
Worksheet S-2, Part I, on Form CMS-2552-10 is considered to be part of
a chain organization and not independent, and therefore not eligible
for separate payment under this proposal. Please see Table V.J.-01 for
a partial example of this section of Form CMS-2552-10.
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Thus, we propose that in order to be eligible for this separate
payment, under this policy, a hospital would need to be a small
hospital with 100 or fewer beds and meet the definition of independent
described previously. We seek comment on our proposed eligibility
criteria and proposed definition of a small, independent hospital.
We note that critical access hospitals (CAHs) are paid for
inpatient and outpatient services at 101 percent of Medicare's share of
reasonable costs, including Medicare's share of the reasonable costs of
establishing and maintaining access to buffer stocks of medicines. We
seek comment on the use of buffer stocks by CAHs, including the
medicines in the buffer stocks, the costs of establishing and
maintaining the buffer stocks, whether CAHs tend to contract out this
activity, and any barriers that CAHs may face in establishing and
maintaining access to buffer stocks.
4. Size of the Buffer Stock
As summarized in the CY 2024 OPPS/ASC final rule and section V.J.1.
of the preamble of this proposed rule, some commenters on the CY 2024
Request for Comment expressed concerns that a 3-month supply of
essential medicines may not be sufficient to adequately insulate
hospitals from the detrimental effects of future drug shortages.
Commenters stated that drug shortages often persist for durations of
time in excess of 3 months, such that a 3-month buffer stock may be
inadequate to insulate hospitals from the longer-term effects of drug
shortages. As noted in section V.J.1. of the preamble of this proposed
rule, drug shortages generally persist for many months, and some
research suggests that these shortages last for an average of 1.5
years. Accordingly, we believe a buffer stock of at least 6 months
would better support small, independent hospitals in contending with
future shortages. To better address commenters' concerns and hospital
needs during drug shortages, we are proposing separate payment for the
costs of establishing and maintaining access to a buffer stock that is
sufficient for no less than a 6-month period of time for each of one or
more essential medicines. As discussed in section V.J.5 of the preamble
of this proposed rule, we are also seeking comments on whether a phase-
in approach that, for example, would provide separate payment for
establishing and maintaining access to a 3-month supply for the first
year in which the policy is implemented and a 6-month supply for all
subsequent years would be appropriate.
In estimating the amount of a buffer stock needed for each
essential medicine, the hospital should consider that the amount needed
to maintain a buffer stock could vary month to month and throughout the
applicable months of the cost reporting period; that is, a hospital's
historical use of a medicine may indicate that it is typically needed
more often in January than June, for example. Accordingly, the size of
the buffer stock should reflect this anticipated variation and be based
on a reasonable estimate of the hospital's need for that essential
medicine in the upcoming 6-month period. This estimate would be
determined by the hospital and could be based on the historical usage
of the essential medicine by the hospital for that 6-month period in a
prior year, or another reasonable method to estimate its need for that
upcoming period. If a hospital did not maintain a 6-month buffer stock
of an essential medicine for an entire cost reporting period, any
separate payment to the hospital under this policy would be adjusted
based on the proportion of the cost reporting period for which the
hospital did maintain the 6-month buffer stock of that essential
medicine. As described in section V.J.2 of the preamble of this
proposed rule, in the event that a hospital is not able to maintain a
buffer stock of at least 6 months due to one or more of their chosen
medicine(s) being listed as ``Currently in Shortage'' on the FDA's Drug
Shortage Database after establishment of the buffer stock under this
policy, the hospital would continue to be eligible for the buffer stock
payment for the medicine(s) in shortage as the hospital draws down the
buffer stock even if the number of months of supply of that medicine in
the buffer stock were to drop to less than 6 months. Hospitals would be
permitted to use multiple contracts to establish and maintain at least
a 6-month buffer stock for any given essential medicine.
5. Proposed Separate Payment Under IPPS for Establishing and
Maintaining Access to Buffer Stocks of Essential Medicines
As discussed in the CY 2024 Request for Comment, CMS requested
public comments on a potential separate payment under the IPPS for the
additional, reasonable costs of establishing and maintaining a 3-month
buffer stock of one or more essential medicine(s). We stated that
participating hospitals could establish and maintain their buffer
stocks directly, or through contractual arrangements with
pharmaceutical distributors, intermediaries, or manufacturers.
We received comments in response to the CY 2024 Request for Comment
stating that hospitals that maintain buffer stocks of essential
medicines typically do so through upstream entities, such as
pharmaceutical group purchasing organizations and manufacturers.
Furthermore, these commenters stated that hospitals typically lack the
capacity to stockpile large quantities of essential medicines directly.
Some of these commenters
[[Page 36236]]
stated that any buffer stocks established under the potential policy
should be maintained by upstream intermediaries or a neutral third
party instead of directly maintained by hospitals, as they stated that
these upstream intermediaries are generally better positioned and
equipped to maintain these buffer stocks. While other commenters were
receptive to directly maintaining their buffer stock(s) or indicated
that they already maintained substantial buffer stocks of medicines,
these commenters were generally larger, better resourced hospitals or
hospital systems.
We agree with commenters that pharmaceutical intermediaries and
manufacturers are generally better positioned to establish and maintain
larger (for example, 6-month or greater) buffer stocks of essential
medicines, as small, independent hospitals may generally lack the
space, staff, and specific equipment (like large-scale refrigeration
and large, onsite storage) to directly maintain 6-month buffer stock(s)
of essential medicine(s). While we anticipate that most hospitals that
elect to establish and maintain buffer stocks under this policy will do
so through contractual arrangements with pharmaceutical intermediaries,
manufacturers, and distributors, we are proposing that the additional
resource costs associated with directly maintaining 6-month buffer
stock(s) of essential medicine(s) would also be eligible for separate
payment under this policy. Accordingly, we are proposing that for
purposes of the proposed separate payment under the IPPS to small,
independent hospitals for the estimated additional resource costs of
voluntarily establishing and maintaining access to 6-month buffer
stocks of essential medicines, those costs associated with establishing
and maintaining access to 6-month buffer stocks either directly or
through contractual arrangements with pharmaceutical manufacturers,
intermediaries, or distributors would be eligible for additional
payment under this policy. These costs do not include the cost of the
medicines themselves which would continue to be paid in the current
manner. We also note that the proposed payment is only for the IPPS
share of the costs of establishing and maintaining access to buffer
stock(s) of one or more essential medicine(s).
The costs associated with directly establishing and maintaining a
buffer stock may include utilities like cold chain storage and heating,
ventilation, and air conditioning, warehouse space, refrigeration,
management of stock including stock rotation, managing expiration
dates, and managing recalls, administrative costs related to
contracting and record-keeping, and dedicated staff for maintaining the
buffer stock(s). We request comments on other types of costs intrinsic
to directly establishing buffer stocks of essential medicines that
should be considered eligible for purposes of separate payment under
this policy. We also request comment regarding whether staff costs
would increase with the number of essential medicines in buffer stock,
and whether there would be efficiencies if multiple hospitals elect to
establish buffer stocks of essential medicines with the same
pharmaceutical manufacturer, intermediary, or distributor.
We also request comment on whether this proposed policy should be
phased in by the size of the buffer stock to address concerns about
infrastructure investments that may be needed to store and maintain the
supply. For example, under a phased approach, separate payment could be
made available for establishing and maintaining access to a 3-month
supply for the first year in which the policy is implemented and a 6-
month supply for all subsequent years. We also refer readers to the
Collection of Information Requirements in section XII.B.2. of the
preamble of this proposed rule regarding the estimated burden
associated with this policy proposal and seek comment on whether there
are any other potential methods for hospitals to report costs included
under this policy besides the forthcoming supplemental cost reporting
worksheet.
Currently, payment for the resources required to establish and
maintain access to medically reasonable and necessary drugs and
biologicals is generally part of the IPPS payment. As noted in section
V.J.2. of the preamble of this proposed rule, we expect that the
resources required to establish and maintain access to buffer stocks of
essential medicines will generally be greater than the resources
required to establish and maintain access to these medicines without
such buffer stocks. Given these additional resource costs and our
concern that small, independent hospitals may lack the resources
available to larger hospitals and hospital chains to establish buffer
stocks of essential medicines, we believe it is appropriate to propose
to pay these hospitals separately for the additional resource costs
associated with voluntarily establishing and maintaining access, either
directly or through contractual arrangements, to buffer stocks of
essential medicines. As also noted in section V.J.2 of the preamble of
this proposed rule, we are proposing that if the ARMI List is updated
to add or remove any essential medicines, all medicines on the updated
list would be eligible for separate payment under this policy for the
IPPS shares of the costs of establishing and maintaining access to 6-
month buffer stocks as of the date the updated ARMI List is published.
Any medicine(s) that are removed from the ARMI List in any future
updates to the list would no longer be eligible for separate payment
under this policy for the IPPS shares of the costs of establishing and
maintaining access to 6-month buffer stocks as of the date the updated
ARMI List is published.
CMS is proposing to base the IPPS payment under this policy on the
IPPS shares of the additional reasonable costs of a hospital to
establish and maintain access to its buffer stock. The use of IPPS
shares in this payment adjustment would be consistent with the use of
these shares for the payment adjustment for domestic NIOSH approved
surgical N95 respirators, which is based on the IPPS and OPPS shares of
the difference in cost between domestic and non-domestic NIOSH approved
surgical N95 respirators for the cost reporting period in which costs
are claimed (87 FR 72037). The hospital would report these costs to CMS
on the forthcoming supplemental cost reporting worksheet associated
with this proposed policy. The hospital's costs may include costs
associated with contractual arrangements between the hospital and a
manufacturer, distributor, or intermediary or costs associated with
directly establishing and maintaining buffer stock(s). These costs
would not include the costs of the essential medicine itself, which
would continue to be paid in the current manner.
If a hospital establishes and maintains access to buffer stock(s)
of essential medicine(s) through contractual arrangements with
pharmaceutical manufacturers, intermediaries, or distributors, the
hospital would be required to disaggregate the costs specific to
establishing and maintaining the buffer stock(s) from the remainder of
the costs present on the contract for purposes of reporting these
disaggregated costs under this proposed policy. This disaggregated
information, reported by the hospital on the new supplemental cost
reporting worksheet, along with existing information already collected
on the cost report, would be used to calculate a Medicare payment for
the IPPS share of the hospital's costs of establishing and maintaining
access to the buffer stock(s) of essential medicine(s).
[[Page 36237]]
If a hospital contracts with one or more manufacturers or
wholesalers or other intermediaries to establish and maintain 6-month
buffer stocks of one or more essential medicines, the hospital must
clearly identify those costs separately from the costs of other
provisions of the contract(s). As a simplified example for purposes of
illustration, suppose a hospital has a $500,000 contract with a
pharmaceutical wholesaler. The contract is for pharmaceutical products,
50 of which are qualifying essential medicines. Additionally, the
contract contains a provision for the wholesaler to establish and
maintain 6-month buffer stocks of those 50 essential medicines on the
hospital's behalf. The contract further specifies that $10,000 of the
$500,000 is for the provision of the contract that establishes and
maintains the 6-month buffer stocks of those 50 essential medicines.
This $10,000 amount does not include any costs to the hospital for the
drugs themselves which, as previously noted, would continue to be paid
in the current manner. Under this proposal, the hospital would report
the $10,000 cost for establishing and maintaining the 6-month buffer
stocks of the 50 essential medicines on the supplemental cost reporting
worksheet. That $10,000 cost, in addition to other information already
existing on the cost report, would be used to calculate the additional
payment under this policy including the hospital-specific Medicare IPPS
share percentage of this cost, expressed as the percentage of inpatient
Medicare costs to total hospital costs. On average for the small,
independent hospitals that are eligible for this policy, the Medicare
IPPS share percentage is approximately 11 percent.
If a hospital chooses to directly establish and maintain buffer
stock(s) of one or more essential medicines, the hospital would be
required to report the additional costs associated with establishing
and maintaining its buffer stock(s) on the supplemental cost reporting
form. The hospital should clearly specify the total additional resource
costs to establish and maintain its 6-month buffer stock(s) of
essential medicine(s). As in the previous example, this amount should
not include the cost of the essential medicine(s) themselves and would
be used, along with other information already existing on the cost
report, to calculate the additional payment under this policy.
Additionally, we would anticipate that when a hospital contracts
with one or more manufacturers or wholesalers or other intermediaries
to establish and maintain 6-month buffer stocks of one or more
essential medicines, it would ensure that a discrete buffer stock is
maintained for that hospital. For example, if two hospitals held
contracts with a manufacturer arranging for 6-month buffer stocks of
certain essential medicines, the hospitals would verify that the
manufacturer is maintaining sufficient total buffer stock to account
for the 6-month demand of both hospitals in aggregate.
We seek to support the establishment of buffer stocks when drugs
are not currently in shortage in order to promote the overall
resiliency of drug supply chains. As previously discussed, we are
proposing that buffer stocks for any of the essential medicines on the
ARMI List that are listed as ``Currently in Shortage'' on the FDA Drug
Shortages Database would not be eligible for additional payment under
this policy for a hospital's cost reporting period unless the hospital
had already established and was maintaining a buffer stock of that
medicine prior to the shortage.
Additionally, we are proposing that any essential medicine(s) for
which a hospital has successfully established and maintained a buffer
stock(s) of at least 6 months that is subsequently listed as
``Currently in Shortage'' on the FDA Drug Shortages Database would be
exempt from the requirement to maintain a 6-month supply of such
essential medicine(s) for the duration of the period in which the
medicine is in shortage. We are interested in public comments on the
burden associated with hospitals' monitoring of the FDA Drug Shortage
Database, and excluding from the cost report any resource costs
associated with maintaining a buffer stock of an essential medicine
that was listed as ``Currently in Shortage,'' except where the hospital
had already established and was maintaining a 6-month buffer stock of
that medicine prior to the shortage. As of the date that medicine is no
longer listed as ``Currently in Shortage,'' eligibility for separate
payment to the hospital for the drug in shortage would be prospectively
adjusted based on the proportion of the cost reporting period for which
the hospital does maintain the 6-month buffer stock of that essential
medicine. Once an essential medicine is no longer listed as ``Currently
in Shortage'' in the FDA Drug Shortages Database, our proposed policy
does not differentiate that essential medicine from other essential
medicines. However, we also seek comment on whether some minimum
period, such as 6 months, should elapse after a shortage of a given
essential medicine is resolved before that medicine can become eligible
for separate payment under this proposed policy.
We are proposing to make separate payments for the IPPS shares of
these additional resource costs of establishing and maintaining access
to buffer stocks of essential medicines. Payment could be provided as a
lump sum at cost report settlement or biweekly as interim lump-sum
payments to the hospital, which would be reconciled at cost report
settlement. In accordance with the principles of reasonable cost as set
forth in section 1861(v)(1)(A) of the Act and in 42 CFR 413.1 and
413.9, Medicare could make a lump-sum payment for Medicare's share of
these additional inpatient costs at cost report settlement.
Alternatively, a provider may make a request for biweekly interim lump
sum payments for an applicable cost reporting period, as provided under
42 CFR 413.64 (Payments to providers: Specific rules) and 42 CFR
412.116(c) (Special interim payments for certain costs). These payment
amounts would be determined by the Medicare Administrative Contractor
(MAC) consistent with existing policies and procedures. In general,
interim payments are determined by estimating the reimbursable amount
for the year using Medicare principles of cost reimbursement and
dividing it into 26 equal biweekly payments. The estimated amount would
be based on the most current cost data available, which will be
reviewed and, if necessary, adjusted at least twice during the
reporting period. (See CMS Pub 15-1 Sec. 2405.2 for additional
information). The MACs would determine the interim lump-sum payments
based on the data the hospital may provide that reflects the
information that would be included on the new supplemental cost
reporting form. CMS will separately seek comment through the Paperwork
Reduction Act (PRA) process on a supplemental cost reporting form that
would be used for this purpose. In future years, the MACs could
determine the interim biweekly lump-sum payments utilizing information
from the prior year's cost report, which may be adjusted based on the
most current data available. This is consistent with the current
policies for medical education costs, and bad debts for uncollectible
deductibles and coinsurance paid on interim biweekly basis as noted in
CMS Pub 15-1 Sec. 2405.2. It is also consistent with the payment
adjustment for domestically sourced NIOSH approved surgical N95
respirators (87 FR 72037).
We are proposing to codify this payment adjustment in the
regulations
[[Page 36238]]
by adding new paragraph (g) to 42 CFR 412.113 to state the following:
Essential medicines are the 86 medicines prioritized in
the report Essential Medicines Supply Chain and Manufacturing
Resilience Assessment developed by the U.S. Department of Health and
Human Services Office of the Assistant Secretary for Preparedness and
Response and published in May of 2022, and any subsequent revisions to
that list of medicines. A buffer stock of essential medicines for a
hospital is a supply, for no less than a 6-month period, of one or more
essential medicines.
The additional resource costs of establishing and
maintaining access to a buffer stock of essential medicines for a
hospital are the additional resource costs incurred by the hospital to
directly hold a buffer stock of essential medicines for its patients or
arrange contractually for such a buffer stock to be held by another
entity for use by the hospital for its patients. The additional
resource costs of establishing and maintaining access to a buffer stock
of essential medicines does not include the resource costs of the
essential medicines themselves.
For cost reporting periods beginning on or after October
1, 2024, a payment adjustment to a small, independent hospital for the
additional resource costs of establishing and maintaining access to
buffer stocks of essential medicines is made as described in paragraph
(g)(4) of this section. For purposes of this section, a small,
independent hospital is a hospital with 100 or fewer beds as defined in
Sec. 412.105(b) during the cost reporting period that is not part of a
chain organization, defined as a group of two or more health care
facilities which are owned, leased, or through any other device,
controlled by one organization.
The payment adjustment is based on the estimated
reasonable cost incurred by the hospital for establishing and
maintaining access to buffer stocks of essential medicines during the
cost reporting period.
We are also proposing to make conforming changes to 42 CFR 412.1(a)
and 412.2(f) to reflect this proposed payment adjustment for small,
independent hospitals for the additional resource costs of establishing
and maintaining access to buffer stocks of essential medicines.
In summary, for cost reporting periods beginning on or after
October 1, 2024, we are proposing to establish a separate payment under
the IPPS to small, independent hospitals for the additional resource
costs involved in voluntarily establishing and maintaining access to 6-
month buffer stocks of essential medicines, either directly or through
contractual arrangements with a manufacturer, distributor, or
intermediary. We are proposing that the costs of buffer stocks that are
eligible for separate payment are the costs of buffer stocks for one or
more of the medicines on ARMI's List of 86 essential medicines. The
separate payment would be for the IPPS share of the additional costs
and could be issued in a lump sum, or as biweekly payments to be
reconciled at cost report settlement. The separate payment would not
apply to buffer stocks of any of the essential medicines on the ARMI
List that are currently listed as ``Currently in Shortage'' on the FDA
Drug Shortages Database unless a hospital had already established and
was maintaining a 6-month buffer stock of that medicine prior to the
shortage. Once an essential medicine is no longer listed as ``Currently
in Shortage'' in the FDA Drug Shortages Database, our proposed policy
does not differentiate that essential medicine from other essential
medicines and hospitals would be eligible to establish and maintain
buffer stocks for the medicine as they would have before the shortage.
CMS will separately seek comment through the PRA process on a
supplemental cost reporting form for this proposed payment.
K. Hospital Readmissions Reduction Program
1. Regulatory Background
Section 3025 of the Patient Protection and Affordable Care Act, as
amended by section 10309 of the Patient Protection and Affordable Care
Act, added section 1886(q) to the Act, which establishes the Hospital
Readmissions Reduction Program effective for discharges from applicable
hospitals beginning on or after October 1, 2012. Under the Hospital
Readmissions Reduction Program, payments to applicable hospitals may be
reduced to account for certain excess readmissions. We refer readers to
the FY 2016 IPPS/LTCH PPS final rule (80 FR 49530 through 49543) and
the FY 2018 IPPS/LTCH PPS final rule (82 FR 38221 through 38240) for a
general overview of the Hospital Readmissions Reduction Program. We
also refer readers to 42 CFR 412.152 through 412.154 for codified
Hospital Readmissions Reduction Program requirements.
2. Notice of No Program Proposals or Updates
There are no proposals or updates in this proposed rule for the
Hospital Readmissions Reduction Program. We refer readers to section
I.G.7. of Appendix A of the proposed rule for an updated estimate of
the financial impact of using the proportion of dually eligible
beneficiaries, ERRs, and aggregate payments for each condition/
procedure and all discharges for applicable hospitals from the FY 2025
Hospital Readmissions Reduction Program applicable period (that is,
July 1, 2020, through June 30, 2023).
L. Hospital Value-Based Purchasing (VBP) Program
1. Background
a. Overview
For background on the Hospital VBP Program, we refer readers to the
CMS website at: https://www.cms.gov/medicare/quality/initiatives/hospital-quality-initiative/hospital-value-based-purchasing. We also
refer readers to our codified requirements for the Hospital VBP Program
at 42 CFR 412.160 through 412.168.
b. FY 2025 Program Year Payment Details
Under section 1886(o)(7)(C)(v) of the Act, the applicable percent
for the FY 2025 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 2025 is approximately $1.7 billion, based on
the December 2023 update of the FY 2023 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 are publishing proxy value-based incentive payment adjustment
factors in Table 16 associated with this proposed rule (which is
available via the internet on the CMS website). We note that these
proxy adjustment factors will not be used to adjust hospital payments.
These proxy value-based incentive payment adjustment factors were
calculated using the historical baseline and performance periods for
the FY 2024 Hospital VBP Program. These proxy factors were calculated
using the December 2023 update to the FY 2023 MedPAR file. The slope of
the linear exchange function used to calculate
[[Page 36239]]
these proxy factors was 4.7270521828, and the estimated amount
available for value-based incentive payments to hospitals for FY 2025
is approximately $1.7 billion. We intend to include an update to this
table, as Table 16A, with the FY 2025 IPPS/LTCH PPS final rule, to
reflect changes based on the March 2024 update to the FY 2023 MedPAR
file. 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 2025 Hospital VBP Program. We expect that
Table 16B will be posted on the CMS website in Fall 2024.
2. Previously Adopted Quality Measures for the Hospital VBP Program
We refer readers to the FY 2023 IPPS/LTCH PPS final rule (87 FR
49110 through 49111) for summaries of previously adopted measures for
the FY 2025 and FY 2026 program years and to the FY 2024 IPPS/LTCH PPS
final rule for summaries of newly adopted measures beginning with the
FY 2026 program year (88 FR 59081 through 59083). We are not proposing
any changes to the measure set. Table V.L.-01 summarizes the previously
adopted Hospital VBP Program measure set for the FY2025 program year.
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As discussed in section IX.B.2.g(2) of the preamble of this
proposed rule, we are proposing to adopt updates to the HCAHPS Survey
measure beginning with the FY 2030 program year. We are also proposing
to adopt updates to the HCAHPS Survey measure in the Hospital Inpatient
Quality Reporting (IQR) Program, beginning with the FY 2027 program
year, as described in section IX.B.2.e of the preamble of this proposed
rule. We are also proposing to modify Hospital VBP Program scoring of
the HCAHPS Survey for the FY 2027 through FY 2029 program years to
score hospitals on only those dimensions of the survey that would
remain unchanged from the current version, as
[[Page 36240]]
described in section IX.B.2.f of the preamble of this proposed rule.
Lastly, we are also proposing to modify the scoring in FY 2030 to
account for the adoption of the proposed modifications to the HCAHPS
Survey measure that would result in a total of nine survey dimensions
for the updated HCAHPS Survey measure in the Hospital VBP Program,
which is described in section IX.B.2.g(3) of the preamble of this
proposed rule. Table V.L.-02 summarizes the previously adopted Hospital
VBP Program measures for the FY 2026 through FY 2030 program years.
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3. Baseline and Performance Periods for the FY 2026 Through FY 2030
Program Years
a. Background
We refer readers to the FY 2024 IPPS/LTCH PPS final rule (88 FR
59084 through 59087) for previously adopted baseline and performance
periods for the FY 2025 through FY 2029 program years. We also refer
readers to the FY 2017 IPPS/LTCH PPS final rule (81 FR 56998) in which
we finalized a schedule for all future baseline and performance periods
for all measures.
b. Summary of Baseline and Performance Periods for the FY 2026 Through
FY 2030 Program Years
Tables V.L.-03, V.L.-04, V.L.-05, V.L.-06, and V.L.-07 summarize
the baseline and performance periods that we have previously adopted.
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4. Performance Standards for the Hospital VBP Program
a. Background
We refer readers to the FY 2023 IPPS/LTCH PPS final rule (87 FR
49115 through 49118) for previously established performance standards
for the FY 2025 program year. We also refer readers to the FY 2024
IPPS/LTCH PPS final rule (88 FR 59089 through 59090) for the previously
established performance standards for the FY 2026 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. Previously and Newly Estimated Performance Standards 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 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 and newly estimated performance standards for
the FY 2027 program year are set out in Tables V.L.-08 and V.L.-09.
[[Page 36244]]
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As discussed in section IX.B.2.f of the preamble of this proposed
rule, we are proposing to modify the scoring of the HCAHPS Survey for
the FY 2027 through FY 2029 program years while the proposed updates to
the survey would be publicly reported under the Hospital IQR Program.
Scoring would be modified to only score hospitals on the six Hospital
VBP Program dimensions of the HCAHPS Survey that would remain unchanged
from the current version. These six dimensions of the HCAHPS Survey for
the Hospital VBP Program would be:
``Communication with Nurses,''
``Communication with Doctors,''
``Communication about Medicines,''
``Discharge Information,''
``Cleanliness and Quietness,'' and
``Overall Rating.''
We are proposing to exclude the ``Responsiveness of Hospital
Staff'' and ``Care Transition'' dimensions from scoring in the Hospital
VBP Program's HCAHPS Survey measure in the Person and Community
Engagement domain for the FY 2027 through FY 2029 program years. This
would allow hospitals to be scored on only those dimensions of the
survey in the Hospital VBP Program that would remain unchanged from the
current version of the survey while the updated HCAHPS Survey is
publicly reported on under the Hospital IQR Program for one year as
required by statute. We are also proposing to adopt the updated version
of the HCAHPS Survey measure for use in the Hospital VBP Program
beginning in FY 2030 as outlined in section IX.B.2.g of this proposed
rule.
Scoring would be modified such that for each of the six dimensions
listed previously, Achievement Points (0-10 points) and Improvement
Points (0-9 points) would be calculated, the larger of which would be
summed across these six dimensions to create a pre-normalized HCAHPS
Base Score of 0-60 points (as compared to 0-80 points with the current
eight dimensions). The pre-normalized HCAHPS Base Score would then be
multiplied by \8/6\ (1.3333333) and rounded according to standard rules
(values of 0.5 and higher are rounded
[[Page 36245]]
up, values below 0.5 are rounded down) to create the normalized HCAHPS
Base Score. Each of the six dimensions would be of equal weight, so
that, as currently scored, the normalized HCAHPS Base Score would range
from 0 to 80 points. HCAHPS Consistency Points would be calculated in
the same manner as the current method and would continue to range from
0 to 20 points. Like the Base Score, the Consistency Points Score would
consider scores across the six unchanged dimensions of the Person and
Community Engagement domain. The final element of the scoring formula,
which would remain unchanged from the current formula, would be the sum
of the HCAHPS Base Score and the HCAHPS Consistency Points Score for a
total score that ranges from 0 to 100 points. The method for
calculating the performance standards for the six dimensions would
remain unchanged. We refer readers to the Hospital Inpatient VBP
Program final rule (76 FR 26511 through 26513) for our methodology for
calculating performance standards. The estimated performance standards
for the six dimensions that are proposed to be scored on for the FY
2027 program year are set out in Table V.L.-09.
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c. 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). 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.L.-10.
[[Page 36246]]
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d. Previously Established Performance Standards for Certain Measures
for the FY 2029 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 2024 IPPS/LTCH PPS final rule (88 FR 59091 through
59092), we established performance standards for the FY 2029 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). 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.L.-11.
[[Page 36247]]
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e. Newly Established Performance Standards for Certain Measures for the
FY 2030 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 2030
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.L.-12.
[[Page 36248]]
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M. 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 50709) for a general overview of the HAC Reduction
Program and a detailed discussion of the statutory basis for the
Program. We also refer readers to 42 CFR 412.170 through 412.172 for
codified HAC Reduction Program requirements.
2. Measures for FY 2025 and Subsequent Years in the HAC Reduction
Program
The previously finalized measures for the HAC Reduction Program are
shown in table V.M.-01. Technical specifications for the CMS PSI 90
measure can be found on the QualityNet website available at: https://qualitynet.cms.gov/inpatient/measures/psi/resources. Technical
specifications for the CDC National Healthcare Safety Network (NHSN)
HAI measures can be found at the CDC's NHSN website at http://www.cdc.gov/nhsn/acute-care-hospital/index.html and on the QualityNet
website available at: https://qualitynet.cms.gov/inpatient/measures/hai/resources. These web pages provide measure updates and other
information necessary to guide hospitals participating in the
collection of HAC Reduction Program data.
[[Page 36249]]
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We are not making any proposals or updates for the HAC Reduction
Program in this proposed rule. We refer readers to section I.G.9. of
Appendix A of this proposed rule for an updated estimate of the impact
of the Program policies on the proportion of hospitals in the worst
performing quartile of the Total HAC Scores for the FY 2025 HAC
Reduction Program.
N. Rural Community Hospital Demonstration Program
1. Introduction
The Rural Community Hospital Demonstration was originally
authorized by section 410A of the Medicare Prescription Drug,
Improvement, and Modernization Act of 2003 (MMA) (Pub. L. 108-173). The
demonstration has been extended three times since the original 5-year
period mandated by the MMA, each time for an additional 5 years. These
extensions were authorized by sections 3123 and 10313 of the Affordable
Care Act (Pub. L. 111-148), section 15003 of the 21st Century Cures Act
(Pub. L. 114-255) (Cures Act) enacted in 2016, and most recently, by
section 128 of the Consolidated Appropriations Act, 2021 (Pub. L. 116-
260). In the preamble of this proposed rule, we summarize the status of
the demonstration program, and the current methodologies for
implementation and calculating budget neutrality.
We are also proposing the amount to be applied to the national IPPS
payment rates to account for the costs of the demonstration in FY 2025,
and, in addition, we are proposing to include the reconciled amount of
demonstration costs for FY 2019 in the FY 2025 IPPS/LTCH final rule. We
expect all finalized cost reports for this earlier year to be available
by that time.
2. Background
Section 410A(a) of the MMA (Pub. L. 108-173) required the Secretary
to establish a demonstration program to test the feasibility and
advisability of establishing rural community hospitals to furnish
covered inpatient hospital services to Medicare beneficiaries. The
demonstration pays rural community hospitals under a reasonable cost-
based methodology for Medicare payment purposes for covered inpatient
hospital services furnished to Medicare beneficiaries. A rural
community hospital, as defined in section 410A(f)(1), is a hospital
that--
Is located in a rural area (as defined in section
1886(d)(2)(D) of the Act) or is treated as being located in a rural
area under section 1886(d)(8)(E) of the Act;
Has fewer than 51 beds (excluding beds in a distinct part
psychiatric or rehabilitation unit) as reported in its most recent cost
report;
Provides 24-hour emergency care services; and
Is not designated or eligible for designation as a CAH
under section 1820 of the Act.
Our policy for implementing the 5-year extension period authorized
by the CAA, 2021 (Pub. L. 116-260) follows upon the previous extensions
under the Affordable Care Act (Pub. L. 111-148) and the Cures Act (Pub.
L. 114-255). Section 410A of the MMA (Pub. L. 108-173) initially
required a 5-year period of performance. Subsequently, sections 3123
and 10313 of the Affordable Care Act (Pub. L. 111-148) required the
Secretary to conduct the demonstration program for an additional 5-year
period, to begin on the date immediately following the last day of the
initial 5-year period. In addition, the Affordable Care Act (Pub. L.
111-148) limited the number of hospitals participating to no more than
30. Section 15003 of the Cures Act (Pub. L. 114-255) required a 10-year
extension period in place of the 5-year extension period under the
Affordable Care Act (Pub. L. 111-148), thereby extending the
demonstration for another 5 years. Section 128 of CAA, 2021 (Pub. L.
116-260), in turn, revised the statute to indicate a 15-year extension
period, instead of the 10-year extension period mandated by the Cures
Act (Pub. L. 114-255).
Please refer to the FY 2023 IPPS proposed and final rules (87 FR
28454 through 28458 and 87 FR 49138 through 49142, respectively) for an
account of hospitals entering into and withdrawing from the
demonstration with these re-authorizations. There are currently 23
hospitals participating in the demonstration.
2. Budget Neutrality
a. Statutory Budget Neutrality Requirement
Section 410A(c)(2) of the MMA (Pub. L. 108-173) requires that, in
conducting the demonstration program under this section, the Secretary
shall ensure that
[[Page 36250]]
the aggregate payments made by the Secretary do not exceed the amount
that the Secretary would have paid if the demonstration program under
this section was not implemented. This requirement is commonly referred
to as ``budget neutrality.'' Generally, when we implement a
demonstration program on a budget neutral basis, the demonstration
program is budget neutral on its own terms; in other words, the
aggregate payments to the participating hospitals do not exceed the
amount that would be paid to those same hospitals in the absence of the
demonstration program. We note that the payment methodology for this
demonstration, that is, cost-based payments to participating small
rural hospitals, makes it unlikely that increased Medicare outlays will
produce an offsetting reduction to Medicare expenditures elsewhere.
Therefore, in the IPPS final rules spanning the period from FY 2005
through FY 2016, we adjusted the national IPPS rates by an amount
sufficient to account for the added costs of this demonstration
program, thus applying budget neutrality across the payment system as a
whole rather than merely across the participants in the demonstration
program. (We applied a different methodology for FY 2017, with the
demonstration expected to end prior to the Cures Act extension.) As we
discussed in the FYs 2005 through 2017 IPPS/LTCH PPS final rules (69 FR
49183; 70 FR 47462; 71 FR 48100; 72 FR 47392; 73 FR 48670; 74 FR 43922,
75 FR 50343, 76 FR 51698, 77 FR 53449, 78 FR 50740, 77 FR 50145; 80 FR
49585; and 81 FR 57034, respectively), we believe that the statutory
language of the budget neutrality requirements permits the agency to
implement the budget neutrality provision in this manner.
We resumed this methodology of offsetting demonstration costs
against the national payment rates in the IPPS final rules from FY 2018
through FY 2024. Please see the FY 2024 IPPS final rule for an account
of how we applied the budget neutrality requirement for these fiscal
years (88 FR 59114 through 59116).
b. General Budget Neutrality Methodology
We have generally incorporated two components into the budget
neutrality offset amounts identified in the final IPPS rules in
previous years. First, we have estimated the costs of the demonstration
for the upcoming fiscal year, generally determined from historical,
``as submitted'' cost reports for the hospitals participating in that
year. Update factors representing nationwide trends in cost and volume
increases have been incorporated into these estimates, as specified in
the methodology described in the final rule for each fiscal year.
Second, as finalized cost reports became available, we determined the
amount by which the actual costs of the demonstration for an earlier,
given year differed from the estimated costs for the demonstration set
forth in the final IPPS rule for the corresponding fiscal year, and
incorporated that amount into the budget neutrality offset amount for
the upcoming fiscal year. If the actual costs for the demonstration for
the earlier fiscal year exceeded the estimated costs of the
demonstration identified in the final rule for that year, this
difference was added to the estimated costs of the demonstration for
the upcoming fiscal year when determining the budget neutrality
adjustment for the upcoming fiscal year. Conversely, if the estimated
costs of the demonstration set forth in the final rule for a prior
fiscal year exceeded the actual costs of the demonstration for that
year, this difference was subtracted from the estimated cost of the
demonstration for the upcoming fiscal year when determining the budget
neutrality adjustment for the upcoming fiscal year.
We note that we have calculated this difference for FYs 2005
through 2018 between the actual costs of the demonstration as
determined from finalized cost reports once available, and estimated
costs of the demonstration as identified in the applicable IPPS final
rules for these years.
c. Budget Neutrality Methodology for the Extension Period Authorized by
CAA, 2021
For the most-recently enacted extension period, under the CAA,
2021, we have continued upon the general budget neutrality methodology
used in previous years, as described above in the citations to earlier
IPPS final rules. In this proposed rule, we outline the methodology to
be used for determining the offset to the national IPPS payment rates
for FY 2025.
(1) Methodology for Estimating Demonstration Costs for FY 2025
Consistent with the general methodology from previous years, we are
estimating the costs of the demonstration for the upcoming fiscal year,
and proposing to incorporate this estimate into the budget neutrality
offset amount to be applied to the national IPPS rates for the upcoming
fiscal year, that is, FY 2025. We are conducting this estimate for FY
2025 based on the 23 currently participating hospitals. The methodology
for calculating this amount for FY 2025 proceeds according to the
following steps:
Step 1: For each of these 23 hospitals, we identify the reasonable
cost amount calculated under the reasonable cost-based methodology for
covered inpatient hospital services, including swing beds, as indicated
on the ``as submitted'' cost report for the most recent cost reporting
period available. For each of these hospitals, the ``as submitted''
cost report is that with cost report period end date in CY 2022. We sum
these hospital-specific amounts to arrive at a total general amount
representing the costs for covered inpatient hospital services,
including swing beds, across the total 23 hospitals eligible to
participate during FY 2025.
Then, we multiply this amount by the FYs 2023, 2024, and 2025 IPPS
market basket percentage increases, which are calculated by the CMS
Office of the Actuary. (We are using the proposed market basket
percentage increase for FY 2025, which can be found at section V.B.1.
of the preamble to this proposed rule). The result for the 23 hospitals
is the general estimated reasonable cost amount for covered inpatient
hospital services for FY 2025.
Consistent with our methods in previous years for formulating this
estimate, we are applying the IPPS market basket percentage increases
for FYs 2023 through 2025 to the applicable estimated reasonable cost
amount (previously described) to model the estimated FY 2025 reasonable
cost amount under the demonstration. We believe that the IPPS market
basket percentage increases appropriately indicate the trend of
increase in inpatient hospital operating costs under the reasonable
cost methodology for the years involved.
Step 2: For each of the participating hospitals, we identify the
estimated amount that would otherwise be paid in FY 2025 under
applicable Medicare payment methodologies for covered inpatient
hospital services, including swing beds (as indicated on the same set
of ``as submitted'' cost reports as in Step 1), if the demonstration
were not implemented. We sum these hospital-specific amounts, and, in
turn, multiply this sum by the FYs 2023, 2024, and 2025 IPPS applicable
percentage increases. (For FY 2025, we are using the proposed
applicable percentage increase, per section V.B.1. of the preamble of
this proposed rule). This methodology differs from Step 1, in which we
apply the market basket percentage increases to the hospitals'
applicable estimated reasonable cost
[[Page 36251]]
amount for covered inpatient hospital services. We believe that the
IPPS applicable percentage increases are appropriate factors to update
the estimated amounts that generally would otherwise be paid without
the demonstration. This is because IPPS payments constitute the
majority of payments that would otherwise be made without the
demonstration and the applicable percentage increase is the factor used
under the IPPS to update the inpatient hospital payment rates.
Step 3: We subtract the amount derived in Step 2 from the amount
derived in Step 1. According to our methodology, the resulting amount
indicates the total difference for the 23 hospitals (for covered
inpatient hospital services, including swing beds), which will be the
general estimated amount of the costs of the demonstration for FY 2025.
For this proposed rule, the resulting amount is $49,522,206, to be
incorporated into the budget neutrality offset adjustment for FY 2025.
This estimated amount is based on the specific assumptions regarding
the data sources used, that is, recently available ``as submitted''
cost reports and historical update factors for cost and payment. If
updated data become available prior to the final rule, we will use them
as appropriate to estimate the costs for the demonstration program for
FY 2025 in accordance with our methodology for determining the budget
neutrality estimate. We will also incorporate any statutory change that
might affect the methodology for determining hospital costs either with
or without the demonstration.
(2) Reconciling Actual and Estimated Costs of the Demonstration for
Previous Years
As described earlier, we have calculated the difference for FYs
2005 through 2018 between the actual costs of the demonstration, as
determined from finalized cost reports once available, and estimated
costs of the demonstration as identified in the applicable IPPS final
rules for these years.
At this time, for the FY 2025 proposed rule, not all of the
finalized cost reports are available for the 26 hospitals that
completed cost report periods beginning in FY 2019 under the
demonstration payment methodology. We expect all of these finalized
cost reports to be available by the time of the final rule, and thus we
are proposing to include the difference between the actual cost of the
demonstration for FY 2019 as determined from finalized cost reports
within the budget neutrality offset amount in the FY 2025 final rule.
(3) Total Proposed Budget Neutrality Offset Amount for FY 2025
Therefore, for this FY 2025 IPPS/LTCH PPS proposed rule, the
proposed budget neutrality offset amount for FY 2025 is the amount
determined under section X.2.c.(2) of the preamble of this proposed
rule, representing the difference applicable to FY 2025 between the sum
of the estimated reasonable cost amounts that would be paid under the
demonstration for covered inpatient services to the 23 hospitals
eligible to participate in the fiscal year and the sum of the estimated
amounts that would generally be paid if the demonstration had not been
implemented. This estimated amount is $49,522,206.
However, we note, that the overall amount might change if there are
any revisions prior to the final rule to the data used to formulate
this estimate. We also expect to revise the budget neutrality offset
amount upon calculating the actual costs of the demonstration for FY
2019, after receiving all of the finalized cost reports for that fiscal
year.
VI. Proposed Changes to the IPPS for Capital Related Costs
A. Overview
Section 1886(g) of the Act requires the Secretary to pay for the
capital-related costs of inpatient acute hospital services in
accordance with a prospective payment system established by the
Secretary. Under the statute, the Secretary has broad authority in
establishing and implementing the IPPS for acute care hospital
inpatient capital-related costs. We initially implemented the IPPS for
capital-related costs in the FY 1992 IPPS final rule (56 FR 43358). In
that final rule, we established a 10-year transition period to change
the payment methodology for Medicare hospital inpatient capital-related
costs from a reasonable cost-based payment methodology to a prospective
payment methodology (based fully on the Federal rate).
FY 2001 was the last year of the 10-year transition period that was
established to phase in the IPPS for hospital inpatient capital-related
costs. For cost reporting periods beginning in FY 2002, capital IPPS
payments are based solely on the Federal rate for almost all acute care
hospitals (other than hospitals receiving certain exception payments
and certain new hospitals). (We refer readers to the FY 2002 IPPS final
rule (66 FR 39910 through 39914) for additional information on the
methodology used to determine capital IPPS payments to hospitals both
during and after the transition period.)
The basic methodology for determining capital prospective payments
using the Federal rate is set forth in the regulations at 42 CFR
412.312. For the purpose of calculating capital payments for each
discharge, the standard Federal rate is adjusted as follows:
(Standard Federal Rate) x (DRG Weight) x (Geographic Adjustment Factor
(GAF) x (COLA for hospitals located in Alaska and Hawaii) x (1 +
Capital DSH Adjustment Factor + Capital IME Adjustment Factor, if
applicable).
In addition, under Sec. 412.312(c), hospitals also may receive
outlier payments under the capital IPPS for extraordinarily high-cost
cases that qualify under the thresholds established for each fiscal
year.
B. Additional Provisions
1. Exception Payments
The regulations at 42 CFR 412.348 provide for certain exception
payments under the capital IPPS. The regular exception payments
provided under Sec. 412.348(b) through (e) were available only during
the 10-year transition period. For a certain period after the
transition period, eligible hospitals may have received additional
payments under the special exceptions provisions at Sec. 412.348(g).
However, FY 2012 was the final year hospitals could receive special
exceptions payments. For additional details regarding these exceptions
policies, we refer readers to the FY 2012 IPPS/LTCH PPS final rule (76
FR 51725).
Under Sec. 412.348(f), a hospital may request an additional
payment if the hospital incurs unanticipated capital expenditures in
excess of $5 million due to extraordinary circumstances beyond the
hospital's control. Additional information on the exception payment for
extraordinary circumstances in Sec. 412.348(f) can be found in the FY
2005 IPPS final rule (69 FR 49185 and 49186).
2. New Hospitals
Under the capital IPPS, the regulations at 42 CFR 412.300(b) define
a new hospital as a hospital that has operated (under previous or
current ownership) for less than 2 years and lists examples of
hospitals that are not considered new hospitals. In accordance with
Sec. 412.304(c)(2), under the capital IPPS, a new hospital is paid 85
percent of its allowable Medicare inpatient
[[Page 36252]]
hospital capital related costs through its first 2 years of operation,
unless the new hospital elects to receive full prospective payment
based on 100 percent of the Federal rate. We refer readers to the FY
2012 IPPS/LTCH PPS final rule (76 FR 51725) for additional information
on payments to new hospitals under the capital IPPS.
3. Payments for Hospitals Located in Puerto Rico
In the FY 2017 IPPS/LTCH PPS final rule (81 FR 57061), we revised
the regulations at 42 CFR 412.374 relating to the calculation of
capital IPPS payments to hospitals located in Puerto Rico beginning in
FY 2017 to parallel the change in the statutory calculation of
operating IPPS payments to hospitals located in Puerto Rico, for
discharges occurring on or after January 1, 2016, made by section 601
of the Consolidated Appropriations Act, 2016 (Pub. L. 114-113). Section
601 of Public Law 114-113 increased the applicable Federal percentage
of the operating IPPS payment for hospitals located in Puerto Rico from
75 percent to 100 percent and decreased the applicable Puerto Rico
percentage of the operating IPPS payments for hospitals located in
Puerto Rico from 25 percent to zero percent, applicable to discharges
occurring on or after January 1, 2016. As such, under revised Sec.
412.374, for discharges occurring on or after October 1, 2016, capital
IPPS payments to hospitals located in Puerto Rico are based on 100
percent of the capital Federal rate.
C. Proposed Annual Update for FY 2025
The proposed annual update to the national capital Federal rate, as
provided for in 42 CFR 412.308(c), for FY 2025 is discussed in section
III. of the Addendum to this FY 2025 IPPS/LTCH PPS proposed rule.
VII. Changes for Hospitals Excluded From the IPPS
A. Proposed Rate-of-Increase in Payments to Excluded Hospitals for FY
2025
Certain hospitals excluded from a prospective payment system,
including children's hospitals, 11 cancer hospitals, and hospitals
located outside the 50 States, the District of Columbia, and Puerto
Rico (that is, hospitals located in the U.S. Virgin Islands, Guam, the
Northern Mariana Islands, and American Samoa) receive payment for
inpatient hospital services they furnish on the basis of reasonable
costs, subject to a rate-of-increase ceiling. A per discharge limit
(the target amount, as defined in Sec. 413.40(a) of the regulations)
is set for each hospital based on the hospital's own cost experience in
its base year, and updated annually by a rate-of-increase percentage.
For each cost reporting period, the updated target amount is multiplied
by total Medicare discharges during that period and applied as an
aggregate upper limit (the ceiling as defined in Sec. 413.40(a)) of
Medicare reimbursement for total inpatient operating costs for a
hospital's cost reporting period. In accordance with Sec. 403.752(a)
of the regulations, religious nonmedical health care institutions
(RNHCIs) also are subject to the rate-of-increase limits established
under Sec. 413.40 of the regulations discussed previously.
Furthermore, in accordance with Sec. 412.526(c)(3) of the regulations,
extended neoplastic disease care hospitals also are subject to the
rate-of-increase limits established under Sec. 413.40 of the
regulations discussed previously.
As explained in the FY 2006 IPPS final rule (70 FR 47396 through
47398), beginning with FY 2006, we have used the percentage increase in
the IPPS operating market basket to update the target amounts for
children's hospitals, the 11 cancer hospitals, and RNHCIs.
Consistent with the regulations at Sec. Sec. 412.23(g) and
413.40(a)(2)(ii)(A) and (c)(3)(viii), we also have used the percentage
increase in the IPPS operating market basket to update target amounts
for short-term acute care hospitals located in the U.S. Virgin Islands,
Guam, the Northern Mariana Islands, and American Samoa. In the FY 2018
IPPS/LTCH PPS final rule, we rebased and revised the IPPS operating
market basket to a 2014 base year, effective for FY 2018 and subsequent
fiscal years (82 FR 38158 through 38175), and finalized the use of the
percentage increase in the 2014-based IPPS operating market basket to
update the target amounts for children's hospitals, the 11 cancer
hospitals, RNHCIs, and short-term acute care hospitals located in the
U.S. Virgin Islands, Guam, the Northern Mariana Islands, and American
Samoa for FY 2018 and subsequent fiscal years. As discussed in section
IV. of the preamble of the FY 2022 IPPS/LTCH PPS final rule (86 FR
45194 through 45207), we rebased and revised the IPPS operating market
basket to a 2018 base year. Therefore, we used the percentage increase
in the 2018-based IPPS operating market basket to update the target
amounts for children's hospitals, the 11 cancer hospitals, RNHCIs, and
short-term acute care hospitals located in the U.S. Virgin Islands,
Guam, the Northern Mariana Islands, and American Samoa for FY 2022 and
subsequent fiscal years.
For this FY 2025 IPPS/LTCH PPS proposed rule, based on IGI's 2023
fourth quarter forecast, we estimate that the 2018-based IPPS operating
market basket percentage increase for FY 2025 is 3.0 percent (that is,
the estimate of the market basket rate-of-increase). Based on this
estimate, the FY 2025 rate-of-increase percentage that will be applied
to the FY 2024 target amounts in order to calculate the FY 2025 target
amounts for children's hospitals, the 11 cancer hospitals, RNCHIs, and
short-term acute care hospitals located in the U.S. Virgin Islands,
Guam, the Northern Mariana Islands, and American Samoa is 3.0 percent,
in accordance with the applicable regulations at 42 CFR 413.40.
However, we are proposing that if more recent data become available for
the FY 2025 IPPS/LTCH PPS final rule, we would use such data, if
appropriate, to calculate the final IPPS operating market basket update
for FY 2025.
In addition, payment for inpatient operating costs for hospitals
classified under section 1886(d)(1)(B)(vi) of the Act (which we refer
to as ``extended neoplastic disease care hospitals'') for cost
reporting periods beginning on or after January 1, 2015, is to be made
as described in 42 CFR 412.526(c)(3), and payment for capital costs for
these hospitals is to be made as described in 42 CFR 412.526(c)(4).
(For additional information on these payment regulations, we refer
readers to the FY 2018 IPPS/LTCH PPS final rule (82 FR 38321 through
38322).) Section 412.526(c)(3) provides that the hospital's Medicare
allowable net inpatient operating costs for that period are paid on a
reasonable cost basis, subject to that hospital's ceiling, as
determined under Sec. 412.526(c)(1), for that period. Under Sec.
412.526(c)(1), for each cost reporting period, the ceiling was
determined by multiplying the updated target amount, as defined in
Sec. 412.526(c)(2), for that period by the number of Medicare
discharges paid during that period. Section 412.526(c)(2)(i) describes
the method for determining the target amount for cost reporting periods
beginning during FY 2015. Section 412.526(c)(2)(ii) specifies that, for
cost reporting periods beginning during fiscal years after FY 2015, the
target amount will equal the hospital's target amount for the previous
cost reporting period updated by the applicable annual rate-of-increase
percentage specified in Sec. 413.40(c)(3) for the subject cost
reporting period (79 FR 50197).
For FY 2025, in accordance with Sec. Sec. 412.22(i) and
412.526(c)(2)(ii) of the
[[Page 36253]]
regulations, for cost reporting periods beginning during FY 2025, the
proposed update to the target amount for extended neoplastic disease
care hospitals (that is, hospitals described under Sec. 412.22(i)) is
the applicable annual rate-of-increase percentage specified in Sec.
413.40(c)(3), which is estimated to be the percentage increase in the
2018-based IPPS operating market basket (that is, the estimate of the
market basket rate-of-increase). Accordingly, the proposed update to an
extended neoplastic disease care hospital's target amount for FY 2025
is 3.0 percent, which is based on IGI's fourth quarter 2023 forecast.
Furthermore, we are proposing that if more recent data become available
for the FY 2025 IPPS/LTCH PPS final rule, we would use such data, if
appropriate, to calculate the IPPS operating market basket rate of
increase for FY 2025.
B. Critical Access Hospitals (CAHs)
1. Background
Section 1820 of the Act provides for the establishment of Medicare
Rural Hospital Flexibility Programs (MRHFPs), under which individual
States may designate certain facilities as critical access hospitals
(CAHs). Facilities that are so designated and meet the CAH conditions
of participation under 42 CFR part 485, subpart F, will be certified as
CAHs by CMS. Regulations governing payments to CAHs for services to
Medicare beneficiaries are located in 42 CFR part 413.
2. Frontier Community Health Integration Project Demonstration
a. Introduction
The Frontier Community Health Integration Project Demonstration was
originally authorized by section 123 of the Medicare Improvements for
Patients and Providers Act of 2008 (Pub. L. 110-275). The demonstration
has been extended by section 129 of the Consolidated Appropriations
Act, 2021 (Pub. L. 116-260) for an additional 5 years. In this proposed
rule, we are summarizing the status of the demonstration program, and
the ongoing methodologies for implementation and budget neutrality for
the demonstration extension period.
b. Background and Overview
As discussed in the FY 2024 IPPS/LTCH PPS final rule (88 FR 59119
through 591222), section 123 of the Medicare Improvements for Patients
and Providers Act of 2008, as amended by section 3126 of the Affordable
Care Act, authorized a demonstration project to allow eligible entities
to develop and test new models for the delivery of health care services
in eligible counties in order to improve access to and better integrate
the delivery of acute care, extended care and other health care
services to Medicare beneficiaries. The demonstration was titled
``Demonstration Project on Community Health Integration Models in
Certain Rural Counties,'' and commonly known as the Frontier Community
Health Integration Project (FCHIP) Demonstration.
The authorizing statute stated the eligibility criteria for
entities to be able to participate in the demonstration. An eligible
entity, as defined in section 123(d)(1)(B) of Public Law 110-275, as
amended, is a Medicare Rural Hospital Flexibility Program (MRHFP)
grantee under section 1820(g) of the Act (that is, a CAH); and is
located in a State in which at least 65 percent of the counties in the
state are counties that have 6 or less residents per square mile.
The authorizing statute stipulated several other requirements for
the demonstration. In addition, section 123(g)(1)(B) of Public Law 110-
275 required that the demonstration be budget neutral. Specifically,
this provision stated that, in conducting the demonstration project,
the Secretary shall ensure that the aggregate payments made by the
Secretary do not exceed the amount which the Secretary estimates would
have been paid if the demonstration project under the section were not
implemented. Furthermore, section 123(i) of Public Law 110-275 stated
that the Secretary may waive such requirements of titles XVIII and XIX
of the Act as may be necessary and appropriate for the purpose of
carrying out the demonstration project, thus allowing the waiver of
Medicare payment rules encompassed in the demonstration. CMS selected
CAHs to participate in four interventions, under which specific waivers
of Medicare payment rules would allow for enhanced payment for
telehealth, skilled nursing facility/nursing facility beds, ambulance
services, and home health services. These waivers were formulated with
the goal of increasing access to care with no net increase in costs.
Section 123 of Public Law 110-275 initially required a 3-year
period of performance. The FCHIP Demonstration began on August 1, 2016,
and concluded on July 31, 2019 (referred to in this section of the
proposed rule as the ``initial period''). Subsequently, section 129 of
the Consolidated Appropriations Act, 2021 (Pub. L. 116-260) extended
the demonstration by 5 years (referred to in this section of the
proposed rule as the ``extension period''). The Secretary is required
to conduct the demonstration for an additional 5-year period. CAHs
participating in the demonstration project during the extension period
began such participation in their cost reporting year that began on or
after January 1, 2022.
As described in the FY 2024 IPPS/LTCH PPS final rule (88 FR 59119
through 59122), 10 CAHs were selected for participation in the
demonstration initial period. The selected CAHs were located in three
states--Montana, Nevada, and North Dakota--and participated in three of
the four interventions identified in the FY 2024 IPPS/LTCH PPS final
rule. Each CAH was allowed to participate in more than one of the
interventions. None of the selected CAHs were participants in the home
health intervention, which was the fourth intervention.
In the FY 2022 IPPS/LTCH PPS final rule (86 FR 45323 through
45328), CMS concluded that the initial period of the FCHIP
Demonstration (covering the performance period of August 1, 2016, to
July 31, 2019) had satisfied the budget neutrality requirement
described in section 123(g)(1)(B) of Public Law 110-275. Therefore, CMS
did not apply a budget neutrality payment offset policy for the initial
period of the demonstration.
Section 129 of Public Law 116-260, stipulates that only the 10 CAHs
that participated in the initial period of the FCHIP Demonstration are
eligible to participate during the extension period. Among the eligible
CAHs, five have elected to participate in the extension period. The
selected CAHs are located in two states--Montana and North Dakota--and
are implementing three of the four interventions. The eligible CAH
participants elected to change the number of interventions and payment
waivers they would participate in during the extension period. CMS
accepted and approved the CAHs intervention and payment waiver updates.
For the extension period, five CAHs are participants in the telehealth
intervention, three CAHs are participants in the skilled nursing
facility/nursing facility bed intervention, and three CAHs are
participants in the ambulance services intervention. As with the
initial period, each CAH was allowed to participate in more than one of
the interventions during the extension period. None of the selected
CAHs are participants in the home health intervention, which was the
fourth intervention.
[[Page 36254]]
c. Intervention Payment and Payment Waivers
As described in the FY 2024 IPPS/LTCH PPS final rule (88 FR 59119
through 59122), CMS waived certain Medicare rules for CAHs
participating in the demonstration initial period to allow for
alternative reasonable cost-based payment methods in the three distinct
intervention service areas: telehealth services, ambulance services,
and skilled nursing facility/nursing facility (SNF/NF) beds expansion.
The payments and payment waiver provisions only apply if the CAH is a
participant in the associated intervention. CMS Intervention Payment
and Payment Waivers for the demonstration extension period consist of
the following:
(1) Telehealth Services Intervention Payments
CMS waives section 1834(m)(2)(B) of the Act, which specifies the
facility fee to the originating site for Medicare telehealth services.
CMS modifies the facility fee payment specified under section
1834(m)(2)(B) of the Act to make reasonable cost-based reimbursement to
the participating CAH where the participating CAH serves as the
originating site for a telehealth service furnished to an eligible
telehealth individual, as defined in section 1834(m)(4)(B) of the Act.
CMS reimburses the participating CAH serving as the originating site at
101 percent of its reasonable costs for overhead, salaries and fringe
benefits associated with telehealth services at the participating CAH.
CMS does not fund or provide reimbursement to the participating CAH for
the purchase of new telehealth equipment.
CMS waives section 1834(m)(2)(A) of the Act, which specifies that
the payment for a telehealth service furnished by a distant site
practitioner is the same as it would be if the service had been
furnished in-person. CMS modifies the payment amount specified for
telehealth services under section 1834(m)(2)(A) of the Act to make
reasonable cost-based reimbursement to the participating CAH for
telehealth services furnished by a physician or practitioner located at
distant site that is a participating CAH that is billing for the
physician or practitioner professional services. Whether the
participating CAH has or has not elected Optional Payment Method II for
outpatient services, CMS would pay the participating CAH 101 percent of
reasonable costs for telehealth services when a physician or
practitioner has reassigned their billing rights to the participating
CAH and furnishes telehealth services from the participating CAH as a
distant site practitioner. This means that participating CAHs that are
billing under the Standard Method on behalf of employees who are
physicians or practitioners (as defined in section 1834(m)(4)(D) and
(E) of the Act, respectively) would be eligible to bill for distant
site telehealth services furnished by these physicians and
practitioners. Additionally, CAHs billing under the Optional Method
would be reimbursed based on 101 percent of reasonable costs, rather
than paid based on the Medicare physician fee schedule, for the distant
site telehealth services furnished by physicians and practitioners who
have reassigned their billing rights to the CAH. For distant site
telehealth services furnished by physicians or practitioners who have
not reassigned billing rights to a participating CAH, payment to the
distant site physician or practitioner would continue to be made as
usual under the Medicare physician fee schedule. Except as described
herein, CMS does not waive any other provisions of section 1834(m) of
the Act for purposes of the telehealth services intervention payments,
including the scope of Medicare telehealth services as established
under section 1834(m)(4)(F) of the Act.
(2) Ambulance Services Intervention Payments
CMS waives 42 CFR 413.70(b)(5)(i)(D) and section 1834(l)(8) of the
Act, which provides that payment for ambulance services furnished by a
CAH, or an entity owned and operated by a CAH, is 101 percent of the
reasonable costs of the CAH or the entity in furnishing the ambulance
services, but only if the CAH or the entity is the only provider or
supplier of ambulance services located within a 35-mile drive of the
CAH, excluding ambulance providers or suppliers that are not legally
authorized to furnish ambulance services to transport individuals to or
from the CAH. The participating CAH would be paid 101 percent of
reasonable costs for its ambulance services regardless of whether there
is any provider or supplier of ambulance services located within a 35-
mile drive of the participating CAH or participating CAH-owned and
operated entity. CMS would not make cost-based payment to the
participating CAH for any new capital (for example, vehicles)
associated with ambulance services. This waiver does not modify any
other Medicare rules regarding or affecting the provision of ambulance
services.
(3) SNF/NF Beds Expansion Intervention Payments
CMS waives 42 CFR 485.620(a), 42 CFR 485.645(a)(2), and section
1820(c)(2)(B)(iii) of the Act which limit CAHs to maintaining no more
than 25 inpatient beds, including beds available for acute inpatient or
swing bed services. CMS waives 1820(f) of the Act permitting
designating or certifying a facility as a critical access hospital for
which the facility at any time is furnishing inpatient beds which
exceed more than 25 beds. Under this waiver, if the participating CAH
has received swing bed approval from CMS, the participating CAH may
maintain up to ten additional beds (for a total of 35 beds) available
for acute inpatient or swing bed services; however, the participating
CAH may only use these 10 additional beds for nursing facility or
skilled nursing facility level of care. CMS would pay the participating
CAH 101 percent of reasonable costs for its SNF/NF services furnished
in the 10 additional beds.
d. Budget Neutrality
(1) Budget Neutrality Requirement
In the FY 2022 IPPS/LTCH PPS final rule (86 FR 45323 through
45328), we finalized a policy to address the budget neutrality
requirement for the demonstration initial period. As explained in the
FY 2022 IPPS/LTCH PPS final rule, we based our selection of CAHs for
participation in the demonstration with the goal of maintaining the
budget neutrality of the demonstration on its own terms meaning that
the demonstration would produce savings from reduced transfers and
admissions to other health care providers, offsetting any increase in
Medicare payments as a result of the demonstration. However, because of
the small size of the demonstration and uncertainty associated with the
projected Medicare utilization and costs, the policy we finalized for
the demonstration initial period of performance in the FY 2022 IPPS/
LTCH PPS final rule provides a contingency plan to ensure that the
budget neutrality requirement in section 123 of Public Law 110-275 is
met.
In the FY 2023 IPPS/LTCH PPS final rule (87 FR 49144 through
49147), we adopted the same budget neutrality policy contingency plan
used during the demonstration initial period to ensure that the budget
neutrality requirement in section 123 of Public Law 110 275 is met
during the demonstration extension period. If analysis of claims data
for Medicare beneficiaries receiving services at each of the
participating
[[Page 36255]]
CAHs, as well as from other data sources, including cost reports for
the participating CAHs, shows that increases in Medicare payments under
the demonstration during the 5-year extension period are not
sufficiently offset by reductions elsewhere, we would recoup the
additional expenditures attributable to the demonstration through a
reduction in payments to all CAHs nationwide.
As explained in the FY 2023 IPPS/LTCH PPS final rule, because of
the small scale of the demonstration, we indicated that we did not
believe it would be feasible to implement budget neutrality for the
demonstration extension period by reducing payments to only the
participating CAHs. Therefore, in the event that this demonstration
extension period is found to result in aggregate payments in excess of
the amount that would have been paid if this demonstration extension
period were not implemented, CMS policy is to comply with the budget
neutrality requirement finalized in the FY 2023 IPPS/LTCH PPS final
rule, by reducing payments to all CAHs, not just those participating in
the demonstration extension period.
In the FY 2023 IPPS/LTCH PPS final rule (87 FR 49144 through
49147), we stated that we believe it is appropriate to make any payment
reductions across all CAHs because the FCHIP Demonstration was
specifically designed to test innovations that affect delivery of
services by the CAH provider category. We explained our belief that the
language of the statutory budget neutrality requirement at section
123(g)(1)(B) of Public Law 110-275 permits the agency to implement the
budget neutrality provision in this manner. The statutory language
merely refers to ensuring that aggregate payments made by the Secretary
do not exceed the amount which the Secretary estimates would have been
paid if the demonstration project was not implemented and does not
identify the range across which aggregate payments must be held equal.
In the FY 2023 IPPS/LTCH PPS final rule, we finalized a policy that
in the event the demonstration extension period is found not to have
been budget neutral, any excess costs would be recouped within one
fiscal year. We explained our belief that this policy is a more
efficient timeframe for the government to conclude the demonstration
operational requirements (such as analyzing claims data, cost report
data or other data sources) to adjudicate the budget neutrality payment
recoupment process due to any excess cost that occurred as result of
the demonstration extension period.
(2) FCHIP Budget Neutrality Methodology and Analytical Approach
As explained in the FY 2022 IPPS/LTCH PPS final rule, we finalized
a policy to address the demonstration budget neutrality methodology and
analytical approach for the initial period of the demonstration. In the
FY 2023 IPPS/LTCH PPS final rule, we finalized a policy to adopt the
budget neutrality methodology and analytical approach used during the
demonstration initial period to ensure budget neutrality for the
extension period. The analysis of budget neutrality during the initial
period of the demonstration identified both the costs related to
providing the intervention services under the FCHIP Demonstration and
any potential downstream effects of the intervention-related services,
including any savings that may have accrued.
The budget neutrality analytical approach for the demonstration
initial period incorporated two major data components: (1) Medicare
cost reports; and (2) Medicare administrative claims. As described in
the FY 2022 IPPS/LTCH PPS final rule (86 FR 45323 through 45328), CMS
computed the cost of the demonstration for each fiscal year of the
demonstration initial period using Medicare cost reports for the
participating CAHs, and Medicare administrative claims and enrollment
data for beneficiaries who received demonstration intervention
services.
In addition, in order to capture the full impact of the
interventions, CMS developed a statistical modeling, Difference-in-
Difference (DiD) regression analysis to estimate demonstration
expenditures and compute the impact of expenditures on the intervention
services by comparing cost data for the demonstration and non-
demonstration groups using Medicare administrative claims across the
demonstration period of performance under the initial period of the
demonstration. The DiD regression analysis would compare the direct
cost and potential downstream effects of intervention services,
including any savings that may have accrued, during the baseline and
performance period for both the demonstration and comparison groups.
Second, the Medicare administrative claims analysis would be
reconciled using data obtained from auditing the participating CAHs'
Medicare cost reports. We would estimate the costs of the demonstration
using ``as submitted'' cost reports for each hospital's financial
fiscal year participation within each of the demonstration extension
period performance years. Each CAH has its own Medicare cost report end
date applicable to the 5-year period of performance for the
demonstration extension period. The cost report is structured to gather
costs, revenues and statistical data on the provider's financial fiscal
period. As a result, we finalized a policy in the FY 2023 IPPS/LTCH PPS
final rule that we would determine the final budget neutrality results
for the demonstration extension once complete data is available for
each CAH for the demonstration extension period.
e. Policies for Implementing the 5-Year Extension and Provisions
Authorized by Section 129 of the Consolidated Appropriations Act, 2021
(Pub. L. 116-260)
As stated in the FY 2024 IPPS/LTCH PPS final rule (88 FR 59119
through 59122), our policy for implementing the 5-year extension period
for section 129 of Public Law 116-260 follows same budget neutrality
methodology and analytical approach as the demonstration initial period
methodology. While we expect to use the same methodology that was used
to assess the budget neutrality of the FCHIP Demonstration during
initial period of the demonstration to assess the financial impact of
the demonstration during this extension period, upon receiving data for
the extension period, we may update and/or modify the FCHIP budget
neutrality methodology and analytical approach to ensure that the full
impact of the demonstration is appropriately captured.
f. Total Budget Neutrality Offset Amount for FY 2025
At this time, for the FY 2025 IPPS/LTCH PPS proposed rule, while
this discussion represents our anticipated approach to assessing the
financial impact of the demonstration extension period based on upon
receiving data for the full demonstration extension period, we may
update and/or modify the FCHIP Demonstration budget neutrality
methodology and analytical approach to ensure that the full impact of
the demonstration is appropriately captured.
Therefore, we do not propose to apply a budget neutrality payment
offset to payments to CAHs in FY 2025. This policy would have no impact
for any national payment system for FY 2025.
[[Page 36256]]
VIII. Proposed Changes to the Long-Term Care Hospital Prospective
Payment System (LTCH PPS) for FY 2025
A. Background of the LTCH PPS
1. Legislative and Regulatory Authority
Section 123 of the Medicare, Medicaid, and SCHIP (State Children's
Health Insurance Program) Balanced Budget Refinement Act of 1999 (BBRA)
(Pub. L. 106-113), as amended by section 307(b) of the Medicare,
Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000
(BIPA) (Pub. L. 106-554), provides for payment for both the operating
and capital-related costs of hospital inpatient stays in long-term care
hospitals (LTCHs) under Medicare Part A based on prospectively set
rates. The Medicare prospective payment system (PPS) for LTCHs applies
to hospitals that are described in section 1886(d)(1)(B)(iv) of the
Act, effective for cost reporting periods beginning on or after October
1, 2002.
Section 1886(d)(1)(B)(iv)(I) of the Act originally defined an LTCH
as a hospital that has an average inpatient length of stay (as
determined by the Secretary) of greater than 25 days.
Section 1886(d)(1)(B)(iv)(II) of the Act also provided an
alternative definition of LTCHs (``subclause II'' LTCHs). However,
section 15008 of the 21st Century Cures Act (Pub. L. 114-255) amended
section 1886 of the Act to exclude former ``subclause II'' LTCHs from
being paid under the LTCH PPS and created a new category of IPPS-
excluded hospitals, which we refer to as ``extended neoplastic disease
care hospitals,'' to be paid as hospitals that were formally classified
as ``subclause (II)'' LTCHs (82 FR 38298).
Section 123 of the BBRA requires the PPS for LTCHs to be a ``per
discharge'' system with a diagnosis-related group (DRG) based patient
classification system that reflects the differences in patient resource
use and costs in LTCHs.
Section 307(b)(1) of the BIPA, among other things, mandates that
the Secretary shall examine, and may provide for, adjustments to
payments under the LTCH PPS, including adjustments to DRG weights, area
wage adjustments, geographic reclassification, outliers, updates, and a
disproportionate share adjustment.
In the August 30, 2002 Federal Register (67 FR 55954), we issued a
final rule that implemented the LTCH PPS authorized under the BBRA and
BIPA. For the initial implementation of the LTCH PPS (FYs 2003 through
2007), the system used information from LTCH patient records to
classify patients into distinct long-term care-diagnosis-related groups
(LTCDRGs) based on clinical characteristics and expected resource
needs. Beginning in FY 2008, we adopted the Medicare severity-long-term
care-diagnosis related groups (MS-LTC-DRGs) as the patient
classification system used under the LTCH PPS. Payments are calculated
for each MS-LTC-DRG and provisions are made for appropriate payment
adjustments. Payment rates under the LTCH PPS are updated annually and
published in the Federal Register.
The LTCH PPS replaced the reasonable cost-based payment system
under the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA)
(Pub. L. 97248) for payments for inpatient services provided by an LTCH
with a cost reporting period beginning on or after October 1, 2002.
(The regulations implementing the TEFRA reasonable-cost-based payment
provisions are located at 42 CFR part 413.) With the implementation of
the PPS for acute care hospitals authorized by the Social Security
Amendments of 1983 (Pub. L. 98-21), which added section 1886(d) to the
Act, certain hospitals, including LTCHs, were excluded from the PPS for
acute care hospitals and paid their reasonable costs for inpatient
services subject to a per discharge limitation or target amount under
the TEFRA system. For each cost reporting period, a hospital specific
ceiling on payments was determined by multiplying the hospital's
updated target amount by the number of total current year Medicare
discharges. (Generally, in this section of the preamble of this
proposed rule, when we refer to discharges, we describe Medicare
discharges.) The August 30, 2002 final rule further details the payment
policy under the TEFRA system (67 FR 55954).
In the August 30, 2002 final rule, we provided for a 5-year
transition period from payments under the TEFRA system to payments
under the LTCH PPS. During this 5-year transition period, an LTCH's
total payment under the PPS was based on an increasing percentage of
the Federal rate with a corresponding decrease in the percentage of the
LTCH PPS payment that is based on reasonable cost concepts, unless an
LTCH made a one-time election to be paid based on 100 percent of the
Federal rate. Beginning with LTCHs' cost reporting periods beginning on
or after October 1, 2006, total LTCH PPS payments are based on 100
percent of the Federal rate.
In addition, in the August 30, 2002 final rule, we presented an in-
depth discussion of the LTCH PPS, including the patient classification
system, relative weights, payment rates, additional payments, and the
budget neutrality requirements mandated by section 123 of the BBRA. The
same final rule that established regulations for the LTCH PPS under 42
CFR part 412, subpart O, also contained LTCH provisions related to
covered inpatient services, limitation on charges to beneficiaries,
medical review requirements, furnishing of inpatient hospital services
directly or under arrangement, and reporting and recordkeeping
requirements. We refer readers to the August 30, 2002 final rule for a
comprehensive discussion of the research and data that supported the
establishment of the LTCH PPS (67 FR 55954).
In the FY 2016 IPPS/LTCH PPS final rule (80 FR 49601 through
49623), we implemented the provisions of the Pathway for Sustainable
Growth Rate (SGR) Reform Act of 2013 (Pub. L. 113-67), which mandated
the application of the ``site neutral'' payment rate under the LTCH PPS
for discharges that do not meet the statutory criteria for exclusion
beginning in FY 2016. For cost reporting periods beginning on or after
October 1, 2015, discharges that do not meet certain statutory criteria
for exclusion are paid based on the site neutral payment rate.
Discharges that do meet the statutory criteria continue to receive
payment based on the LTCH PPS standard Federal payment rate. For more
information on the statutory requirements of the Pathway for SGR Reform
Act of 2013, we refer readers to the FY 2016 IPPS/LTCH PPS final rule
(80 FR 49601 through 49623) and the FY 2017 IPPS/LTCH PPS final rule
(81 FR 57068 through 57075).
In the FY 2018 IPPS/LTCH PPS final rule, we implemented several
provisions of the 21st Century Cures Act (``the Cures Act'') (Pub. L.
114-255) that affected the LTCH PPS. (For more information on these
provisions, we refer readers to (82 FR 38299).)
In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41529), we made
conforming changes to our regulations to implement the provisions of
section 51005 of the Bipartisan Budget Act of 2018 (Pub. L. 115-123),
which extends the transitional blended payment rate for site neutral
payment rate cases for an additional 2 years. We refer readers to
section VII.C. of the preamble of the FY 2019 IPPS/LTCH PPS final rule
for a discussion of our final policy. In addition, in the FY 2019 IPPS/
LTCH PPS final rule, we removed the 25-
[[Page 36257]]
percent threshold policy under 42 CFR 412.538, which was a payment
adjustment that was applied to payments for Medicare patient LTCH
discharges when the number of such patients originating from any single
referring hospital was in excess of the applicable threshold for given
cost reporting period.
In the FY 2020 IPPS/LTCH PPS final rule (84 FR 42439), we further
revised our regulations to implement the provisions of the Pathway for
SGR Reform Act of 2013 (Pub. L. 113-67) that relate to the payment
adjustment for discharges from LTCHs that do not maintain the requisite
discharge payment percentage and the process by which such LTCHs may
have the payment adjustment discontinued.
2. Criteria for Classification as an LTCH
a. Classification as an LTCH
i. General
Under the regulations at Sec. 412.23(e)(1), to qualify to be paid
under the LTCH PPS, a hospital must have a provider agreement with
Medicare. Furthermore, Sec. 412.23(e)(2)(i), which implements section
1886(d)(1)(B)(iv) of the Act, requires that a hospital have an average
Medicare inpatient length of stay of greater than 25 days to be paid
under the LTCH PPS. In accordance with section 1206(a)(3) of the
Pathway for SGR Reform Act of 2013 (Pub. L. 113-67), as amended by
section 15007 of Public Law 114-255, we amended our regulations to
specify that Medicare Advantage plans' and site neutral payment rate
discharges are excluded from the calculation of the average length of
stay for all LTCHs, for discharges occurring in cost reporting period
beginning on or after October 1, 2015.
ii. Proposed Technical Clarification
As explained more fully previously, LTCHs are required to have an
average length of stay (ALOS) of greater than 25 days. Prior to a
hospital being classified as an LTCH, the hospital must first
participate in Medicare as a hospital (typically a hospital paid under
the IPPS) during which time ALOS data is gathered. This data is used to
determine whether the hospital has an ALOS of greater than 25 days,
which is required to be classified as an LTCH. We generally refer to
the period during which a hospital seeks to establish the required ALOS
as a ``qualifying period.'' The qualifying period is the 6-month period
immediately preceding the hospital's conversion to an LTCH, and it has
been our policy that the requisite ALOS must be demonstrated based on
patient data from at least 5 consecutive months of this period. For
example, for a hospital seeking to become an LTCH effective January 1,
2025, the qualifying period would be July 1, 2024 through December 31,
2024 (that is, the 6 months immediately preceding the conversion to an
LTCH). In order for the hospital to convert to an LTCH, the ALOS must
be demonstrated for a period of at least 5 consecutive months (for
example, July 1, 2024 through November 30, 2024 or July 15, 2024 to
December 14, 2024) of the 6 month qualifying period.
It has been our general policy to allow a hospital to be classified
as an LTCH after only the 6-month qualifying period (as opposed to
requiring the completion of the more typical 12-month cost reporting
period). We have also referred to the ability of a hospital to be
classified as an LTCH after a 6-month qualifying period in preamble
previously (73 FR 29705), and the Provider Reimbursement Manual at
3001.4 refers to using data from a 6-month period for hospitals which
have not yet filed a cost report. However, our regulations have never
explicitly articulated how the qualifying period policy applies to a
hospital seeking classification as an LTCH. Therefore, we are proposing
to revise our regulations at 42 CFR 412.23(e)(4) to explicitly state
that a hospital that seeks to be classified as an LTCH may do so after
completion of a 6-month qualifying period, provided that the hospital
demonstrates an average length of stay (calculated under our existing
regulations) of greater than 25 days during at least five consecutive
months of the 6-month qualifying period (which is the same timeframe as
the ``cure period'' for existing LTCHs). Specifically, we are proposing
to add new paragraph Sec. 412.23(e)(4)(iv) to explain the qualifying
period for hospitals seeking LTCH classification.
Further, we are proposing to revise certain paragraphs and reorder
certain paragraphs in Sec. 412.23(e) to improve the clarity of the
regulation by clarifying how provisions apply to existing LTCHs and
which provisions apply to hospitals seeking classification as an LTCH.
First, we are proposing to revise paragraph Sec. 412.23(e)(3)(i) to
incorporate a reference that includes new subparagraphs Sec.
412.23(e)(4)(iv) and (e)(4)(v). Second, we are proposing to revise
paragraph Sec. 412.23(e)(3)(iii) to clarify that it applies in cases
of hospitals that have already obtained LTCH classification when the
LTCH would not otherwise maintain an average Medicare inpatient length
of stay of greater than 25 days. Third, we are proposing to reserve
Sec. 412.23(e)(3)(iv) and move that text to new (e)(4)(v) in order to
clarify that this regulation applies to hospitals seeking new LTCH
classification. Fourth, we are proposing to revise Sec. 412.23(e)(4)
to clarify that the provisions of paragraph (e)(3), with the exception
of subparagraphs (e)(3)(iii) and (v) apply to hospitals seeking new
LTCH classification. Fifth, we are proposing to revise paragraph Sec.
412.23(e)(4)(i) to reflect the addition of new Sec. 412.23(e)(4)(iv)
and (e)(4)(v) and clarify existing regulatory language.
We note that none of these proposed revisions reflect a change to
our existing policy; instead, we believe these revisions will improve
the clarity of the regulatory text and better reflect our existing
policy.
b. Hospitals Excluded From the LTCH PPS
The following hospitals are paid under special payment provisions,
as described in Sec. 412.22(c) and, therefore, are not subject to the
LTCH PPS rules:
Veterans Administration hospitals.
Hospitals that are reimbursed under State cost control
systems approved under 42 CFR part 403.
Hospitals that are reimbursed in accordance with
demonstration projects authorized under section 402(a) of the Social
Security Amendments of 1967 (Pub. L. 90-248) (42 U.S.C. 1395b-1),
section 222(a) of the Social Security Amendments of 1972 (Pub. L. 92-
603) (42 U.S.C. 1395b1 (note)) (Statewide-all payer systems, subject to
the rate-of increase test at section 1814(b) of the Act), or section
3021 of the Patient Protection and Affordable Care Act (Pub. L. 111-
148) (42 U.S.C. 1315a).
Nonparticipating hospitals furnishing emergency services
to Medicare beneficiaries.
3. Limitation on Charges to Beneficiaries
In the August 30, 2002 final rule, we presented an in-depth
discussion of beneficiary liability under the LTCH PPS (67 FR 55974
through 55975). This discussion was further clarified in the RY 2005
LTCH PPS final rule (69 FR 25676). In keeping with those discussions,
if the Medicare payment to the LTCH is the full LTC-DRG payment amount,
consistent with other established hospital prospective payment systems,
Sec. 412.507 currently provides that an LTCH may not bill a Medicare
beneficiary for more than the deductible and coinsurance amounts as
specified under Sec. Sec. 409.82, 409.83, and 409.87, and for items
and services specified under Sec. 489.30(a). However, under the LTCH
PPS, Medicare will
[[Page 36258]]
only pay for services. furnished during the days for which the
beneficiary has coverage until the short-stay outlier (SSO) threshold
is exceeded. If the Medicare payment was for a SSO case (in accordance
with Sec. 412.529), and that payment was less than the full LTC-DRG
payment amount because the beneficiary had insufficient coverage as a
result of the remaining Medicare days, the LTCH also is currently
permitted to charge the beneficiary for services delivered on those
uncovered days (in accordance with Sec. 412.507). In the FY 2016 IPPS/
LTCH PPS final rule (80 FR 49623), we amended our regulations to
expressly limit the charges that may be imposed upon beneficiaries
whose LTCHs' discharges are paid at the site neutral payment rate under
the LTCH PPS. In the FY 2017 IPPS/LTCH PPS final rule (81 FR 57102), we
amended the regulations under Sec. 412.507 to clarify our existing
policy that blended payments made to an LTCH during its transitional
period (that is, an LTCH's payment for discharges occurring in cost
reporting periods beginning in FYs 2016 through 2019) are considered to
be site neutral payment rate payments.
B. Medicare Severity Long-Term Care Diagnosis-Related Group (MS-LTC-
DRG) Classifications and Relative Weights for FY 2025
1. Background
Section 123 of the BBRA required that the Secretary implement a PPS
for LTCHs to replace the cost-based payment system under TEFRA. Section
307(b)(1) of the BIPA modified the requirements of section 123 of the
BBRA by requiring that the Secretary examine the feasibility and the
impact of basing payment under the LTCH PPS on the use of existing (or
refined) hospital DRGs that have been modified to account for different
resource use of LTCH patients.
Under both the IPPS and the LTCH PPS, the DRG-based classification
system uses information on the claims for inpatient discharges to
classify patients into distinct groups (for example, DRGs) based on
clinical characteristics and expected resource needs. When the LTCH PPS
was implemented for cost reporting periods beginning on or after
October 1, 2002, we adopted the same DRG patient classification system
utilized at that time under the IPPS. We referred to this patient
classification system as the ``long-term care diagnosis-related groups
(LTC-DRGs).'' As part of our efforts to better recognize severity of
illness among patients, in the FY 2008 IPPS final rule with comment
period (72 FR 47130), we adopted the MS-DRGs and the Medicare severity
long-term care diagnosis-related groups (MS-LTC-DRGs) under the IPPS
and the LTCH PPS, respectively, effective beginning October 1, 2007 (FY
2008). For a full description of the development, implementation, and
rationale for the use of the MS-DRGs and MS-LTC-DRGs, we refer readers
to the FY 2008 IPPS final rule with comment period (72 FR 47141 through
47175 and 47277 through 47299). (We note that, in that same final rule,
we revised the regulations at Sec. 412.503 to specify that for LTCH
discharges occurring on or after October 1, 2007, when applying the
provisions of 42 CFR part 412, subpart O, applicable to LTCHs for
policy descriptions and payment calculations, all references to LTC-
DRGs would be considered a reference to MS-LTC-DRGs. For the remainder
of this section, we present the discussion in terms of the current MS-
LTC-DRG patient classification system unless specifically referring to
the previous LTC-DRG patient classification system that was in effect
before October 1, 2007.)
Consistent with section 123 of the BBRA, as amended by section
307(b)(1) of the BIPA, and Sec. 412.515 of the regulations, we use
information derived from LTCH PPS patient records to classify LTCH
discharges into distinct MS-LTC-DRGs based on clinical characteristics
and estimated resource needs. As noted previously, we adopted the same
DRG patient classification system utilized at that time under the IPPS.
The MS-DRG classifications are updated annually, which has resulted in
the number of MS-DRGs changing over time. For FY 2025, there would be
773 MS-DRG, and by extension, MS-LTC-DRG, groupings based on the
proposed changes, as discussed in section II.E. of the preamble of this
proposed rule.
Although the patient classification system used under both the LTCH
PPS and the IPPS are the same, the relative weights are different. The
established relative weight methodology and data used under the LTCH
PPS result in relative weights under the LTCH PPS that reflect the
differences in patient resource use of LTCH patients, consistent with
section 123(a)(1) of the BBRA. That is, we assign an appropriate weight
to the MS-LTC-DRGs to account for the differences in resource use by
patients exhibiting the case complexity and multiple medical problems
characteristic of LTCH patients.
2. Patient Classifications Into MS-LTC-DRGs
a. Background
The MS-DRGs (used under the IPPS) and the MS-LTC-DRGs (used under
the LTCH PPS) are based on the CMS DRG structure. As noted previously
in this section, we refer to the DRGs under the LTCH PPS as MS-LTC-DRGs
although they are structurally identical to the MS-DRGs used under the
IPPS.
The MS-DRGs are organized into 25 major diagnostic categories
(MDCs), most of which are based on a particular organ system of the
body; the remainder involve multiple organ systems (such as MDC 22,
Burns). Within most MDCs, cases are then divided into surgical DRGs and
medical DRGs. Surgical DRGs are assigned based on a surgical hierarchy
that orders operating room (O.R.) procedures or groups of O.R.
procedures by resource intensity. The GROUPER software program does not
recognize all ICD-10-PCS procedure codes as procedures affecting DRG
assignment. That is, procedures that are not surgical (for example,
EKGs) or are minor surgical procedures (for example, a biopsy of skin
and subcutaneous tissue (procedure code 0JBH3ZX)) do not affect the MS-
LTC-DRG assignment based on their presence on the claim.
Generally, under the LTCH PPS, a Medicare payment is made at a
predetermined specific rate for each discharge that varies based on the
MS-LTC-DRG to which a beneficiary's discharge is assigned. Cases are
classified into MS-LTC-DRGs for payment based on the following six data
elements:
Principal diagnosis.
Additional or secondary diagnoses.
Surgical procedures.
Age.
Sex.
Discharge status of the patient.
Currently, for claims submitted using the version ASC X12 5010
standard, up to 25 diagnosis codes and 25 procedure codes are
considered for an MS-DRG assignment. This includes one principal
diagnosis and up to 24 secondary diagnoses for severity of illness
determinations. (For additional information on the processing of up to
25 diagnosis codes and 25 procedure codes on hospital inpatient claims,
we refer readers to section II.G.11.c. of the preamble of the FY 2011
IPPS/LTCH PPS final rule (75 FR 50127).)
Under the HIPAA transactions and code sets regulations at 45 CFR
parts 160 and 162, covered entities must comply with the adopted
transaction standards and operating rules specified in subparts I
through S of part 162.
[[Page 36259]]
Among other requirements, on or after January 1, 2012, covered entities
are required to use the ASC X12 Standards for Electronic Data
Interchange Technical Report Type 3--Health Care Claim: Institutional
(837), May 2006, ASC X12N/005010X223, and Type 1 Errata to Health Care
Claim: Institutional (837) ASC X12 Standards for Electronic Data
Interchange Technical Report Type 3, October 2007, ASC X12N/
005010X233A1 for the health care claims or equivalent encounter
information transaction (45 CFR 162.1102(c)).
HIPAA requires covered entities to use the applicable medical data
code sets when conducting HIPAA transactions (45 CFR 162.1000).
Currently, upon the discharge of the patient, the LTCH must assign
appropriate diagnosis and procedure codes from 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, both of which were required to be
implemented October 1, 2015 (45 CFR 162.1002(c)(2) and (3)). For
additional information on the implementation of the ICD-10 coding
system, we refer readers to section II.F.1. of the preamble of the FY
2017 IPPS/LTCH PPS final rule (81 FR 56787 through 56790) and section
II.E.1. of the preamble of this proposed rule. Additional coding
instructions and examples are published in the AHA's Coding Clinic for
ICD-10-CM/PCS.
To create the MS-DRGs (and by extension, the MS-LTC-DRGs), base
DRGs were subdivided according to the presence of specific secondary
diagnoses designated as complications or comorbidities (CCs) into one,
two, or three levels of severity, depending on the impact of the CCs on
resources used for those cases. Specifically, there are sets of MS-DRGs
that are split into 2 or 3 subgroups based on the presence or absence
of a CC or a major complication or comorbidity (MCC). We refer readers
to section II.D. of the preamble of the FY 2008 IPPS final rule with
comment period for a detailed discussion about the creation of MS-DRGs
based on severity of illness levels (72 FR 47141 through 47175).
Medicare Administrative Contractors (MACs) enter the clinical and
demographic information submitted by LTCHs into their claims processing
systems and subject this information to a series of automated screening
processes called the Medicare Code Editor (MCE). These screens are
designed to identify cases that require further review before
assignment into a MS-LTC-DRG can be made. During this process, certain
types of cases are selected for further explanation (74 FR 43949).
After screening through the MCE, each claim is classified into the
appropriate MS-LTC-DRG by the Medicare LTCH GROUPER software on the
basis of diagnosis and procedure codes and other demographic
information (age, sex, and discharge status). The GROUPER software used
under the LTCH PPS is the same GROUPER software program used under the
IPPS. Following the MS-LTC-DRG assignment, the MAC determines the
prospective payment amount by using the Medicare PRICER program, which
accounts for hospital-specific adjustments. Under the LTCH PPS, we
provide an opportunity for LTCHs to review the MS-LTC-DRG assignments
made by the MAC and to submit additional information within a specified
timeframe as provided in Sec. 412.513(c).
The GROUPER software is used both to classify past cases to measure
relative hospital resource consumption to establish the MS-LTC-DRG
relative weights and to classify current cases for purposes of
determining payment. The records for all Medicare hospital inpatient
discharges are maintained in the MedPAR file. The data in this file are
used to evaluate possible MS-DRG and MS-LTC-DRG classification changes
and to recalibrate the MS-DRG and MS-LTC-DRG relative weights during
our annual update under both the IPPS (Sec. 412.60(e)) and the LTCH
PPS (Sec. 412.517), respectively.
b. Proposed Changes to the MS-LTC-DRGs for FY 2025
As specified by our regulations at Sec. 412.517(a), which require
that the MS-LTC-DRG classifications and relative weights be updated
annually, and consistent with our historical practice of using the same
patient classification system under the LTCH PPS as is used under the
IPPS, in this proposed rule, we are proposing to update the MS-LTC-DRG
classifications effective October 1, 2024 through September 30, 2025
(FY 2025) consistent with the proposed changes to specific MS-DRG
classifications presented in section II.F. of the preamble of this
proposed rule. Accordingly, the proposed MS-LTC-DRGs for FY 2025 are
the same as the MS-DRGs being proposed for use under the IPPS for FY
2025. In addition, because the proposed MS-LTC-DRGs for FY 2025 are the
same as the proposed MS-DRGs for FY 2025, the other proposed changes
that affect MS-DRG (and by extension MS-LTC-DRG) assignments under
proposed GROUPER Version 42, as discussed in section II.E. of the
preamble of this proposed rule, including the proposed changes to the
MCE software and the ICD-10-CM/PCS coding system, are also applicable
under the LTCH PPS for FY 2025.
3. Proposed Development of the FY 2025 MS-LTC-DRG Relative Weights
a. General Overview of the MS-LTC-DRG Relative Weights
One of the primary goals for the implementation of the LTCH PPS is
to pay each LTCH an appropriate amount for the efficient delivery of
medical care to Medicare patients. The system must be able to account
adequately for each LTCH's case-mix to ensure both fair distribution of
Medicare payments and access to adequate care for those Medicare
patients whose care is costlier (67 FR 55984). To accomplish these
goals, we have annually adjusted the LTCH PPS standard Federal
prospective payment rate by the applicable relative weight in
determining payment to LTCHs for each case. Under the LTCH PPS,
relative weights for each MS-LTC-DRG are a primary element used to
account for the variations in cost per discharge and resource
utilization among the payment groups (Sec. 412.515). To ensure that
Medicare patients classified to each MS-LTC-DRG have access to an
appropriate level of services and to encourage efficiency, we calculate
a relative weight for each MS-LTC-DRG that represents the resources
needed by an average inpatient LTCH case in that MS-LTC-DRG. For
example, cases in an MS-LTC-DRG with a relative weight of 2 would, on
average, cost twice as much to treat as cases in an MS-LTC-DRG with a
relative weight of 1.
The established methodology to develop the MS-LTC-DRG relative
weights is generally consistent with the methodology established when
the LTCH PPS was implemented in the August 30, 2002 LTCH PPS final rule
(67 FR 55989 through 55991). However, there have been some
modifications of our historical procedures for assigning relative
weights in cases of zero volume or nonmonotonicity or both resulting
from the adoption of the MS-LTC-DRGs. We also made a modification in
conjunction with the implementation of the dual rate LTCH PPS payment
structure beginning in FY 2016 to use LTCH claims data from only LTCH
PPS standard Federal payment rate cases (or LTCH PPS cases that would
have qualified for payment under the LTCH
[[Page 36260]]
PPS standard Federal payment rate if the dual rate LTCH PPS payment
structure had been in effect at the time of the discharge). We also
adopted, beginning in FY 2023, a 10-percent cap policy on the reduction
in a MS-LTC-DRG's relative weight in a given year. (For details on the
modifications to our historical procedures for assigning relative
weights in cases of zero volume and nonmonotonicity or both, we refer
readers to the FY 2008 IPPS final rule with comment period (72 FR 47289
through 47295) and the FY 2009 IPPS final rule (73 FR 48542 through
48550). For details on the change in our historical methodology to use
LTCH claims data only from LTCH PPS standard Federal payment rate cases
(or cases that would have qualified for such payment had the LTCH PPS
dual payment rate structure been in effect at the time) to determine
the MS-LTC-DRG relative weights, we refer readers to the FY 2016 IPPS/
LTCH PPS final rule (80 FR 49614 through 49617). For details on our
adoption of the 10-percent cap policy, we refer readers to the FY 2023
IPPS/LTCH PPS final rule (87 FR 49152 through 49154).)
For purposes of determining the MS-LTC-DRG relative weights, under
our historical methodology, there are three different categories of MS-
LTC-DRGs based on volume of cases within specific MS-LTC-DRGs: (1) MS-
LTC-DRGs with at least 25 applicable LTCH cases in the data used to
calculate the relative weight, which are each assigned a unique
relative weight; (2) low-volume MS-LTC-DRGs (that is, MS-LTC-DRGs that
contain between 1 and 24 applicable LTCH cases that are grouped into
quintiles (as described later in this section in Step 3 of our proposed
methodology) and assigned the relative weight of the quintile); and (3)
no-volume MS-LTC-DRGs that are cross-walked to other MS-LTC-DRGs based
on the clinical similarities and assigned the relative weight of the
cross-walked MS-LTC-DRG (as described later in this section in Step 8
of our proposed methodology). For FY 2025, we are proposing to continue
to use applicable LTCH cases to establish the same volume-based
categories to calculate the FY 2025 MS-LTC-DRG relative weights.
b. Development of the MS-LTC-DRG Relative Weights for FY 2025
In this section, we present our proposed methodology for
determining the MS-LTC-DRG relative weights for FY 2025. We first list
and provide a brief description of our proposed steps for determining
the FY 2025 MS-LTC-DRG relative weights. We then, later in this
section, discuss in greater detail each step. We note that, as we did
in FY 2024, we are proposing to use our historical relative weight
methodology as described in the FY 2021 IPPS/LTCH PPS final rule (85 FR
58898 through 58907), subject to a ten percent cap as described in the
FY 2023 IPPS/LTCH PPS final rule (87 FR 49162).
Step 1--Prepare data for MS-LTC-DRG relative weight
calculation. In this step, we select and group the applicable claims
data used in the development of the proposed MS-LTC-DRG relative
weights.
Step 2--Remove cases with a length of stay of 7 days or
less. In this step, we trim the applicable claims data to remove cases
with a length of stay of 7 days or less.
Step 3--Establish low-volume MS-LTC-DRG quintiles. In this
step, we employ our established quintile methodology for low-volume MS-
LTC-DRGs (that is, MS-LTC-DRGs with fewer than 25 cases).
Step 4--Remove statistical outliers. In this step, we trim
the applicable claims data to remove statistical outlier cases.
Step 5--Adjust charges for the effects of Short Stay
Outliers (SSOs). In this step, we adjust the number of applicable cases
in each MS-LTC-DRG (or low-volume quintile) for the effect of SSO
cases.
Step 6--Calculate the relative weights on an iterative
basis using the hospital-specific relative weights methodology. In this
step, we use our established hospital-specific relative value (HSRV)
methodology, which is an iterative process, to calculate the relative
weights.
Step 7--Adjust the relative weights to account for
nonmonotonically increasing relative weights. In this step, we make
adjustments that ensure that within each base MS-LTC-DRG, the relative
weights increase by MS-LTC-DRG severity.
Step 8--Determine a relative weight for MS-LTC-DRGs with
no applicable LTCH cases. In this step, we cross-walk each no-volume
MS-LTC-DRG to another MS-LTC-DRG for which we calculated a relative
weight.
Step 9--Budget neutralize the uncapped relative weights.
In this step, to ensure budget neutrality in the annual update to the
MS-LTC-DRG classifications and relative weights, we adjust the relative
weights by a normalization factor and a budget neutrality factor that
ensures estimated aggregate LTCH PPS payments will be unaffected by the
updates to the MS-LTC-DRG classifications and relative weights.
Step 10--Apply the 10-percent cap to decreases in MS-LTC-
DRG relative weights. In this step we limit the reduction of the
relative weight for a MS-LTC-DRG to 10 percent of its prior year value.
This 10-percent cap does not apply to zero-volume MS-LTC-DRGs or low-
volume MS-LTC-DRGs.
Step 11--Budget neutralize the application of the 10-
percent cap policy. In this step, to ensure budget neutrality in the
application of the MS-LTC-DRG cap policy, we adjust the relative
weights by a budget neutrality factor that ensures estimated aggregate
LTCH PPS payments will be unaffected by our application of the cap to
the MS-LTC-DRG relative weights.
We next describe each of the 11 proposed steps for calculating the
proposed FY 2025 MS-LTC-DRG relative weights in greater detail.
Step 1--Prepare data for MS-LTC-DRG relative weight calculation.
For this FY 2025 IPPS/LTCH PPS proposed rule, we obtained total
charges from FY 2023 Medicare LTCH claims data from the December 2023
update of the FY 2023 MedPAR file and used proposed Version 42 of the
GROUPER to classify LTCH cases. Consistent with our historical
practice, we are proposing that if better data become available, we
would use those data and the finalized Version 42 of the GROUPER in
establishing the FY 2025 MS-LTC-DRG relative weights in the final rule.
To calculate the FY 2025 MS-LTC-DRG relative weights under the dual
rate LTCH PPS payment structure, we are proposing to continue to use
applicable LTCH data, which includes our policy of only using cases
that meet the criteria for exclusion from the site neutral payment rate
(or would have met the criteria had they been in effect at the time of
the discharge) (80 FR 49624). Specifically, we began by first
evaluating the LTCH claims data in the December 2023 update of the FY
2023 MedPAR file to determine which LTCH cases would meet the criteria
for exclusion from the site neutral payment rate under Sec. 412.522(b)
or had the dual rate LTCH PPS payment structure applied to those cases
at the time of discharge. We identified the FY 2023 LTCH cases that
were not assigned to MS-LTC-DRGs 876, 880, 881, 882, 883, 884, 885,
886, 887, 894, 895, 896, 897, 945, and 946, which identify LTCH cases
that do not have a principal diagnosis relating to a psychiatric
diagnosis or to rehabilitation; and that either--
The admission to the LTCH was ``immediately preceded'' by
discharge from a subsection (d) hospital and the immediately preceding
stay in that
[[Page 36261]]
subsection (d) hospital included at least 3 days in an ICU, as we
define under the ICU criterion; or
The admission to the LTCH was ``immediately preceded'' by
discharge from a subsection (d) hospital and the claim for the LTCH
discharge includes the applicable procedure code that indicates at
least 96 hours of ventilator services were provided during the LTCH
stay, as we define under the ventilator criterion. Claims data from the
FY 2023 MedPAR file that reported ICD-10-PCS procedure code 5A1955Z
were used to identify cases involving at least 96 hours of ventilator
services in accordance with the ventilator criterion. (We note that
section 3711(b)(2) of the CARES Act provided a waiver of the
application of the site neutral payment rate for LTCH cases admitted
during the COVID-19 PHE period. The COVID-19 PHE expired on May 11,
2023. Therefore, all LTCH PPS cases in FY 2023 with admission dates on
or before the PHE expiration date were paid the LTCH PPS standard
Federal rate regardless of whether the discharge met the statutory
patient criteria. However, for purposes of setting rates for LTCH PPS
standard Federal rate cases for FY 2025 (including MS-LTC-DRG relative
weights), we used FY 2023 cases that meet the statutory patient
criteria without consideration to how those cases were paid in FY
2023.)
Furthermore, consistent with our historical methodology, we
excluded any claims in the resulting data set that were submitted by
LTCHs that were all-inclusive rate providers and LTCHs that are paid in
accordance with demonstration projects authorized under section 402(a)
of Public Law 90-248 or section 222(a) of Public Law 92-603. In
addition, consistent with our historical practice and our policies, we
excluded any Medicare Advantage (Part C) claims in the resulting data.
Such claims were identified based on the presence of a GHO Paid
indicator value of ``1'' in the MedPAR files.
In the FY 2023 IPPS/LTCH PPS final rule (87 FR 49448), we discussed
the abnormal charging practices of an LTCH (CCN 312024) in FY 2021 that
led to the LTCH receiving an excessive amount of high cost outlier
payments. In that rule, we stated our belief, based on information we
received from the provider, that these abnormal charging practices
would not persist into FY 2023. Therefore, we did not include their
cases in our model for determining the FY 2023 outlier fixed-loss
amount. In the FY 2024 IPPS/LTCH PPS final rule (88 FR 59127 through
59128), we stated that the FY 2022 MedPAR claims also reflect the
abnormal charging practices of this LTCH. Therefore, we removed claims
from CCN 312024 when determining the FY 2024 MS-LTC-DRG relative
weights and from all other FY 2024 ratesetting calculations, including
the calculation of the area wage level adjustment budget neutrality
factor and the fixed-loss amount for LTCH PPS standard Federal payment
rate cases. Given recent actions by the Department of Justice regarding
CCN 312024 (see https://www.justice.gov/opa/pr/new-jersey-hospital-and-investors-pay-united-states-306-million-alleged-false-claims-related),
we are proposing to again remove claims from CCN 312024 when
determining the FY 2025 MS-LTC-DRG relative weights and all other FY
2025 ratesetting calculations, including the calculation of the area
wage level adjustment budget neutrality factor and the fixed-loss
amount for LTCH PPS standard Federal payment rate cases.
In summary, in general, we identified the claims data used in the
development of the FY 2025 MS-LTC-DRG relative weights in this proposed
rule by trimming claims data that were paid the site neutral payment
rate or would have been paid the site neutral payment rate had the
provisions of the CARES Act not been in effect. We trimmed the claims
data of all-inclusive rate providers reported in the December 2023
update of the FY 2023 MedPAR file and any Medicare Advantage claims
data. There were no data from any LTCHs that are paid in accordance
with a demonstration project reported in the December 2023 update of
the FY 2023 MedPAR file, but had there been any, we would have trimmed
the claims data from those LTCHs as well, in accordance with our
established policy. We also removed all claims from CCN 312024.
We used the remaining data (that is, the applicable LTCH data) in
the subsequent proposed steps to calculate the proposed MS-LTC-DRG
relative weights for FY 2025.
Step 2--Remove cases with a length of stay of 7 days or less.
The next step in our proposed calculation of the proposed FY 2025
MS-LTC-DRG relative weights is to remove cases with a length of stay of
7 days or less. The MS-LTC-DRG relative weights reflect the average of
resources used on representative cases of a specific type. Generally,
cases with a length of stay of 7 days or less do not belong in an LTCH
because these stays do not fully receive or benefit from treatment that
is typical in an LTCH stay, and full resources are often not used in
the earlier stages of admission to an LTCH. If we were to include stays
of 7 days or less in the computation of the proposed FY 2025 MS-LTC-DRG
relative weights, the value of many relative weights would decrease
and, therefore, payments would decrease to a level that may no longer
be appropriate. We do not believe that it would be appropriate to
compromise the integrity of the payment determination for those LTCH
cases that actually benefit from and receive a full course of treatment
at an LTCH by including data from these very short stays. Therefore,
consistent with our existing relative weight methodology, in
determining the proposed FY 2025 MS-LTC-DRG relative weights, we are
proposing to remove LTCH cases with a length of stay of 7 days or less
from applicable LTCH cases. (For additional information on what is
removed in this step of the relative weight methodology, we refer
readers to 67 FR 55989 and 74 FR 43959.)
Step 3--Establish low-volume MS-LTC-DRG quintiles.
To account for MS-LTC-DRGs with low-volume (that is, with fewer
than 25 applicable LTCH cases), consistent with our existing
methodology, we are proposing to continue to employ the quintile
methodology for low-volume MS-LTC-DRGs, such that we grouped the ``low-
volume MS-LTC-DRGs'' (that is, MS-LTC-DRGs that contain between 1 and
24 applicable LTCH cases into one of five categories (quintiles) based
on average charges (67 FR 55984 through 55995; 72 FR 47283 through
47288; and 81 FR 25148)).
In this proposed rule, based on the best available data (that is,
the December 2023 update of the FY 2023 MedPAR file), we identified 236
MS-LTC-DRGs that contained between 1 and 24 applicable LTCH cases. This
list of MS-LTC-DRGs was then divided into 1 of the 5 low-volume
quintiles. We assigned the low-volume MS-LTC-DRGs to specific low-
volume quintiles by sorting the low-volume MS-LTC-DRGs in ascending
order by average charge in accordance with our established methodology.
Based on the data available for this proposed rule, the number of MS-
LTC-DRGs with less than 25 applicable LTCH cases was not evenly
divisible by 5. The quintiles each contained at least 47 MS-LTC-DRGs
(236/5 = 47 with a remainder of 1). We are proposing to employ our
historical methodology of assigning each remainder low-volume MS-LTC-
DRG to the low-volume quintile that contains an MS-LTC-DRG with an
average charge closest to that of the remainder low-volume MS-LTC-DRG.
In cases where these initial assignments of low-volume MS-LTC-DRGs to
quintiles
[[Page 36262]]
results in nonmonotonicity within a base-DRG, we are proposing to make
adjustments to the resulting low-volume MS-LTC-DRGs to preserve
monotonicity, as discussed in Step 7 of our proposed methodology.
To determine the FY 2025 relative weights for the low-volume MS-
LTC-DRGs, consistent with our historical practice, we are proposing to
use the five low-volume quintiles described previously. We determined a
relative weight and (geometric) average length of stay for each of the
five low-volume quintiles using the methodology described in Step 6 of
our proposed methodology. We assigned the same relative weight and
average length of stay to each of the low-volume MS-LTC-DRGs that make
up an individual low-volume quintile. We note that, as this system is
dynamic, it is possible that the number and specific type of MS-LTC-
DRGs with a low-volume of applicable LTCH cases would vary in the
future. Furthermore, we note that we continue to monitor the volume
(that is, the number of applicable LTCH cases) in the low-volume
quintiles to ensure that our quintile assignments used in determining
the MS-LTC-DRG relative weights result in appropriate payment for LTCH
cases grouped to low-volume MS-LTC-DRGs and do not result in an
unintended financial incentive for LTCHs to inappropriately admit these
types of cases.
For this proposed rule, we are providing the list of the
composition of the proposed low-volume quintiles for low-volume MS-LTC-
DRGs in a supplemental data file for public use posted via the internet
on the CMS website for this proposed rule at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html
to streamline the information made available to the public that is used
in the annual development of Table 11.
Step 4--Remove statistical outliers.
The next step in our proposed calculation of the proposed FY 2025
MS-LTC-DRG relative weights is to remove statistical outlier cases from
the LTCH cases with a length of stay of at least 8 days. Consistent
with our existing relative weight methodology, we are proposing to
continue to define statistical outliers as cases that are outside of
3.0 standard deviations from the mean of the log distribution of both
charges per case and the charges per day for each MS-LTC-DRG. These
statistical outliers are removed prior to calculating the relative
weights because we believe that they may represent aberrations in the
data that distort the measure of average resource use. Including those
LTCH cases in the calculation of the relative weights could result in
an inaccurate relative weight that does not truly reflect relative
resource use among those MS-LTC-DRGs. (For additional information on
what is removed in this step of the relative weight methodology, we
refer readers to 67 FR 55989 and 74 FR 43959.) After removing cases
with a length of stay of 7 days or less and statistical outliers, in
each set of claims, we were left with applicable LTCH cases that have a
length of stay greater than or equal to 8 days. In this proposed rule,
we refer to these cases as ``trimmed applicable LTCH cases.''
Step 5--Adjust charges for the effects of Short Stay Outliers
(SSOs).
As the next step in the proposed calculation of the proposed FY
2025 MS-LTC-DRG relative weights, consistent with our historical
approach, we are proposing to adjust each LTCH's charges per discharge
for those remaining cases (that is, trimmed applicable LTCH cases) for
the effects of SSOs (as defined in Sec. 412.529(a) in conjunction with
Sec. 412.503). Specifically, we are proposing to make this adjustment
by counting an SSO case as a fraction of a discharge based on the ratio
of the length of stay of the case to the average length of stay of all
cases grouped to the MS-LTC-DRG. This has the effect of proportionately
reducing the impact of the lower charges for the SSO cases in
calculating the average charge for the MS-LTC-DRG. This process
produces the same result as if the actual charges per discharge of an
SSO case were adjusted to what they would have been had the patient's
length of stay been equal to the average length of stay of the MS-LTC-
DRG.
Counting SSO cases as full LTCH cases with no adjustment in
determining the proposed FY 2025 MS-LTC-DRG relative weights would
lower the relative weight for affected MS-LTC-DRGs because the
relatively lower charges of the SSO cases would bring down the average
charge for all cases within a MS-LTC-DRG. This would result in an
``underpayment'' for non-SSO cases and an ``overpayment'' for SSO
cases. Therefore, we propose to continue to adjust for SSO cases under
Sec. 412.529 in this manner because it would result in more
appropriate payments for all LTCH PPS standard Federal payment rate
cases. (For additional information on this step of the relative weight
methodology, we refer readers to 67 FR 55989 and 74 FR 43959.)
Step 6--Calculate the relative weights on an iterative basis using
the hospital-specific relative value methodology.
By nature, LTCHs often specialize in certain areas, such as
ventilator-dependent patients. Some case types (MS-LTC-DRGs) may be
treated, to a large extent, in hospitals that have, from a perspective
of charges, relatively high (or low) charges. This nonrandom
distribution of cases with relatively high (or low) charges in specific
MS-LTC-DRGs has the potential to inappropriately distort the measure of
average charges. To account for the fact that cases may not be randomly
distributed across LTCHs, consistent with the methodology we have used
since the implementation of the LTCH PPS, in this FY 2025 IPPS/LTCH PPS
proposed rule, we are proposing to continue to use a hospital-specific
relative value (HSRV) methodology to calculate the MS-LTC-DRG relative
weights for FY 2025. We believe that this method removes this hospital-
specific source of bias in measuring LTCH average charges (67 FR
55985). Specifically, under this methodology, we reduced the impact of
the variation in charges across providers on any particular MS-LTC-DRG
relative weight by converting each LTCH's charge for an applicable LTCH
case to a relative value based on that LTCH's average charge for such
cases.
Under the HSRV methodology, we standardize charges for each LTCH by
converting its charges for each applicable LTCH case to hospital-
specific relative charge values and then adjusting those values for the
LTCH's case-mix. The adjustment for case-mix is needed to rescale the
hospital-specific relative charge values (which, by definition, average
1.0 for each LTCH). The average relative weight for an LTCH is its
case-mix; therefore, it is reasonable to scale each LTCH's average
relative charge value by its case-mix. In this way, each LTCH's
relative charge value is adjusted by its case-mix to an average that
reflects the complexity of the applicable LTCH cases it treats relative
to the complexity of the applicable LTCH cases treated by all other
LTCHs (the average LTCH PPS case-mix of all applicable LTCH cases
across all LTCHs). In other words, by multiplying an LTCH's relative
charge values by the LTCH's case-mix index, we account for the fact
that the same relative charges are given greater weight at an LTCH with
higher average costs than they would at an LTCH with low average costs,
which is needed to adjust each LTCH's relative charge value to reflect
its case-mix relative to the average case-mix for all LTCHs. By
standardizing charges in this manner, we count charges for a Medicare
patient at an
[[Page 36263]]
LTCH with high average charges as less resource-intensive than they
would be at an LTCH with low average charges. For example, a $10,000
charge for a case at an LTCH with an average adjusted charge of $17,500
reflects a higher level of relative resource use than a $10,000 charge
for a case at an LTCH with the same case-mix, but an average adjusted
charge of $35,000. We believe that the adjusted charge of an individual
case more accurately reflects actual resource use for an individual
LTCH because the variation in charges due to systematic differences in
the markup of charges among LTCHs is taken into account.
Consistent with our historical relative weight methodology, we
propose to calculate the proposed FY 2025 MS-LTC-DRG relative weights
using the HSRV methodology, which is an iterative process. Therefore,
in accordance with our established methodology, for FY 2025, we are
proposing to continue to standardize charges for each applicable LTCH
case by first dividing the adjusted charge for the case (adjusted for
SSOs under Sec. 412.529 as described in Step 5 of our proposed
methodology) by the average adjusted charge for all applicable LTCH
cases at the LTCH in which the case was treated. The average adjusted
charge reflects the average intensity of the health care services
delivered by a particular LTCH and the average cost level of that LTCH.
The average adjusted charge is then multiplied by the LTCH's case-mix
index to produce an adjusted hospital-specific relative charge value
for the case. We used an initial case-mix index value of 1.0 for each
LTCH.
For each proposed MS-LTC-DRG, we calculated the FY 2025 relative
weight by dividing the SSO-adjusted average of the hospital-specific
relative charge values for applicable LTCH cases for the MS-LTC-DRG
(that is, the sum of the hospital-specific relative charge value, as
previously stated, divided by the sum of equivalent cases from Step 5
for each MS-LTC-DRG) by the overall SSO-adjusted average hospital-
specific relative charge value across all applicable LTCH cases for all
LTCHs (that is, the sum of the hospital-specific relative charge value,
as previously stated, divided by the sum of equivalent applicable LTCH
cases from Step 5 for each MS-LTC-DRG). Using these recalculated MS-
LTC-DRG relative weights, each LTCH's average relative weight for all
of its SSO-adjusted trimmed applicable LTCH cases (that is, it's case-
mix) was calculated by dividing the sum of all the LTCH's MS-LTC-DRG
relative weights by its total number of SSO-adjusted trimmed applicable
LTCH cases. The LTCHs' hospital-specific relative charge values (from
previous) are then multiplied by the hospital-specific case-mix
indexes. The hospital-specific case-mix adjusted relative charge values
are then used to calculate a new set of MS-LTC-DRG relative weights
across all LTCHs. This iterative process continued until there was
convergence between the relative weights produced at adjacent steps,
for example, when the maximum difference was less than 0.0001.
Step 7--Adjust the relative weights to account for nonmonotonically
increasing relative weights.
The MS-DRGs contain base DRGs that have been subdivided into one,
two, or three severity of illness levels. Where there are three
severity levels, the most severe level has at least one secondary
diagnosis code that is referred to as an MCC (that is, major
complication or comorbidity). The next lower severity level contains
cases with at least one secondary diagnosis code that is a CC (that is,
complication or comorbidity). Those cases without an MCC or a CC are
referred to as ``without CC/MCC.'' When data do not support the
creation of three severity levels, the base MS-DRG is subdivided into
either two levels or the base MS-DRG is not subdivided. The two-level
subdivisions may consist of the MS-DRG with CC/MCC and the MS-DRG
without CC/MCC. Alternatively, the other type of two-level subdivision
may consist of the MS-DRG with MCC and the MS-DRG without MCC.
In those base MS-LTC-DRGs that are split into either two or three
severity levels, cases classified into the ``without CC/MCC'' MS-LTC-
DRG are expected to have a lower resource use (and lower costs) than
the ``with CC/MCC'' MS-LTC-DRG (in the case of a two-level split) or
both the ``with CC'' and the ``with MCC'' MS-LTC-DRGs (in the case of a
three-level split). That is, theoretically, cases that are more severe
typically require greater expenditure of medical care resources and
would result in higher average charges. Therefore, in the three
severity levels, relative weights should increase by severity, from
lowest to highest. If the relative weights decrease as severity
increases (that is, if within a base MS-LTC-DRG, an MS-LTC-DRG with CC
has a higher relative weight than one with MCC, or the MS-LTC-DRG
``without CC/MCC'' has a higher relative weight than either of the
others), they are nonmonotonic. We continue to believe that utilizing
nonmonotonic relative weights to adjust Medicare payments would result
in inappropriate payments because the payment for the cases in the
higher severity level in a base MS-LTC-DRG (which are generally
expected to have higher resource use and costs) would be lower than the
payment for cases in a lower severity level within the same base MS-
LTC-DRG (which are generally expected to have lower resource use and
costs). Therefore, in determining the proposed FY 2025 MS-LTC-DRG
relative weights, consistent with our historical methodology, we are
proposing to continue to combine MS-LTC-DRG severity levels within a
base MS-LTC-DRG for the purpose of computing a relative weight when
necessary to ensure that monotonicity is maintained. For a
comprehensive description of our existing methodology to adjust for
nonmonotonicity, we refer readers to the FY 2010 IPPS/RY 2010 LTCH PPS
final rule (74 FR 43964 through 43966). Any adjustments for
nonmonotonicity that were made in determining the proposed FY 2025 MS-
LTC-DRG relative weights by applying this methodology are denoted in
Table 11, which is listed in section VI. of the Addendum to this
proposed rule and is available via the internet on the CMS website.
Step 8--Determine a relative weight for MS-LTC-DRGs with no
applicable LTCH cases.
Using the trimmed applicable LTCH cases, consistent with our
historical methodology, we identified the MS-LTC-DRGs for which there
were no claims in the December 2023 update of the FY 2023 MedPAR file
and, therefore, for which no charge data was available for these MS-
LTC-DRGs. Because patients with a number of the diagnoses under these
MS-LTC-DRGs may be treated at LTCHs, consistent with our historical
methodology, we generally assign a relative weight to each of the no-
volume MS-LTC-DRGs based on clinical similarity and relative costliness
(with the exception of ``transplant'' MS-LTC-DRGs, ``error'' MS-LTC-
DRGs, and MS-LTC-DRGs that indicate a principal diagnosis related to a
psychiatric diagnosis or rehabilitation (referred to as the
``psychiatric or rehabilitation'' MS-LTC-DRGs), as discussed later in
this section of this proposed rule). (For additional information on
this step of the relative weight methodology, we refer readers to 67 FR
55991 and 74 FR 43959 through 43960.)
Consistent with our existing methodology, we are proposing to
cross-walk each no-volume proposed MS-LTC-DRG to another proposed MS-
LTC-DRG for which we calculated a relative weight (determined in
accordance with the methodology as previously described). Then, the
``no-volume'' proposed MS-LTC-DRG is assigned the same relative weight
(and
[[Page 36264]]
average length of stay) of the proposed MS-LTC-DRG to which it was
cross-walked (as described in greater detail in this section of this
proposed rule).
Of the 773 proposed MS-LTC-DRGs for FY 2025, we identified 425 MS-
LTC-DRGs for which there were no trimmed applicable LTCH cases. The 425
MS-LTC-DRGs for which there were no trimmed applicable LTCH cases
includes the 11 ``transplant'' MS-LTC-DRGs, the 2 ``error'' MS-LTC-
DRGs, and the 15 ``psychiatric or rehabilitation'' MS-LTC-DRGs, which
are discussed in this section of this rule, such that we identified 397
MS-LTC-DRGs that for which, we are proposing to assign a relative
weight using our existing ``no-volume'' MS-LTC-DRG methodology (that
is, 425-11-2-15 = 397). We are proposing to assign relative weights to
each of the 397 no-volume MS-LTC-DRGs based on clinical similarity and
relative costliness to 1 of the remaining 348 (773-425 = 348) MS-LTC-
DRGs for which we calculated relative weights based on the trimmed
applicable LTCH cases in the FY 2023 MedPAR file data using the steps
described previously. (For the remainder of this discussion, we refer
to the ``cross-walked'' MS-LTC-DRGs as one of the 348 MS-LTC-DRGs to
which we cross-walked each of the 397 ``no-volume'' MS-LTC-DRGs.) Then,
in general, we are proposing to assign the 397 no-volume MS-LTC-DRGs
the relative weight of the cross-walked MS-LTC-DRG (when necessary, we
made adjustments to account for nonmonotonicity).
We cross-walked the no-volume MS-LTC-DRG to a MS-LTC-DRG for which
we calculated relative weights based on the December 2023 update of the
FY 2023 MedPAR file, and to which it is similar clinically in intensity
of use of resources and relative costliness as determined by criteria
such as care provided during the period of time surrounding surgery,
surgical approach (if applicable), length of time of surgical
procedure, postoperative care, and length of stay. (For more details on
our process for evaluating relative costliness, we refer readers to the
FY 2010 IPPS/RY 2010 LTCH PPS final rule (73 FR 48543).) We believe in
the rare event that there would be a few LTCH cases grouped to one of
the no-volume MS-LTC-DRGs in FY 2025, the relative weights assigned
based on the cross-walked MS-LTC-DRGs would result in an appropriate
LTCH PPS payment because the crosswalks, which are based on clinical
similarity and relative costliness, would be expected to generally
require equivalent relative resource use.
Then we assigned the proposed relative weight of the cross-walked
MS-LTC-DRG as the relative weight for the no-volume MS-LTC-DRG such
that both of these MS-LTC-DRGs (that is, the no-volume MS-LTC-DRG and
the cross-walked MS-LTC-DRG) have the same relative weight (and average
length of stay) for FY 2025. We note that, if the cross-walked MS-LTC-
DRG had 25 applicable LTCH cases or more, its relative weight
(calculated using the methodology as previously described in Steps 1
through 4) is assigned to the no-volume MS-LTC-DRG as well. Similarly,
if the MS-LTC-DRG to which the no-volume MS-LTC-DRG was cross-walked
had 24 or less cases and, therefore, was designated to 1 of the low-
volume quintiles for purposes of determining the relative weights, we
assigned the relative weight of the applicable low-volume quintile to
the no-volume MS-LTC-DRG such that both of these MS-LTC-DRGs (that is,
the no-volume MS-LTC-DRG and the cross-walked MS-LTC-DRG) have the same
relative weight for FY 2025. (As we noted previously, in the infrequent
case where nonmonotonicity involving a no-volume MS-LTC-DRG resulted,
additional adjustments are required to maintain monotonically
increasing relative weights.)
For this proposed rule, we are providing the list of the no-volume
MS-LTC-DRGs and the MS-LTC-DRGs to which each was cross-walked (that
is, the cross-walked MS-LTC-DRGs) for FY 2025 in a supplemental data
file for public use posted via the internet on the CMS website for this
proposed rule at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html to streamline the information made
available to the public that is used in the annual development of Table
11.
To illustrate this methodology for determining the proposed
relative weights for the FY 2025 MS-LTC-DRGs with no applicable LTCH
cases, we are providing the following example.
Example: There were no trimmed applicable LTCH cases in the FY 2023
MedPAR file that we are using for this proposed rule for proposed MS-
LTC-DRG 061 (Ischemic stroke, precerebral occlusion or transient
ischemia with thrombolytic agent with MCC). We determined that proposed
MS-LTC-DRG 064 (Intracranial hemorrhage or cerebral infarction with
MCC) is similar clinically and based on resource use to proposed MS-
LTC-DRG 061. Therefore, we are proposing to assign the same relative
weight (and average length of stay) of proposed MS-LTC-DRG 064 of
1.3009 for FY 2025 to proposed MS-LTC-DRG 061 (we refer readers to
Table 11, which is listed in section VI. of the Addendum to this
proposed rule and is available via the internet on the CMS website).
Again, we note that, as this system is dynamic, it is entirely
possible that the number of MS-LTC-DRGs with no volume would vary in
the future. Consistent with our historical practice, we are proposing
to use the best available claims data to identify the trimmed
applicable LTCH cases from which we determine the relative weights in
the final rule.
For FY 2025, consistent with our historical relative weight
methodology, we are proposing to establish a relative weight of 0.0000
for the following transplant MS-LTC-DRGs: Heart Transplant or Implant
of Heart Assist System with MCC (MS-LTC-DRG 001); Heart Transplant or
Implant of Heart Assist System without MCC (MS-LTC-DRG 002); Liver
Transplant with MCC or Intestinal Transplant (MS-LTC-DRG 005); Liver
Transplant without MCC (MS-LTC-DRG 006); Lung Transplant (MS-LTC-DRG
007); Simultaneous Pancreas and Kidney Transplant (MS-LTC-DRG 008);
Simultaneous Pancreas and Kidney Transplant with Hemodialysis (MS-LTC-
DRG 019); Pancreas Transplant (MS-LTC-DRG 010); Kidney Transplant (MS-
LTC-DRG 652); Kidney Transplant with Hemodialysis with MCC (MS-LTC-DRG
650), and Kidney Transplant with Hemodialysis without MCC (MS LTC DRG
651). This is because Medicare only covers these procedures if they are
performed at a hospital that has been certified for the specific
procedures by Medicare and presently no LTCH has been so certified. At
the present time, we include these 11 transplant MS-LTC-DRGs in the
GROUPER program for administrative purposes only. Because we use the
same GROUPER program for LTCHs as is used under the IPPS, removing
these MS-LTC-DRGs would be administratively burdensome. (For additional
information regarding our treatment of transplant MS-LTC-DRGs, we refer
readers to the RY 2010 LTCH PPS final rule (74 FR 43964).) In addition,
consistent with our historical policy, we are proposing to establish a
relative weight of 0.0000 for the 2 ``error'' MS-LTC-DRGs (that is, MS-
LTC-DRG 998 (Principal Diagnosis Invalid as Discharge Diagnosis) and
MS-LTC-DRG 999 (Ungroupable)) because applicable LTCH cases grouped to
these MS-LTC-DRGs cannot be properly assigned to an MS-LTC-DRG
according to the grouping logic.
Additionally, we are proposing to establish a relative weight of
0.0000 for
[[Page 36265]]
the following ``psychiatric or rehabilitation'' MS-LTC-DRGs: MS-LTC-DRG
876 (O.R. Procedures with Principal Diagnosis of Mental Illness); MS-
LTC-DRG 880 (Acute Adjustment Reaction & Psychosocial Dysfunction); MS-
LTC-DRG 881 (Depressive Neuroses); MS-LTC-DRG 882 (Neuroses Except
Depressive); MS-LTC-DRG 883 (Disorders of Personality & Impulse
Control); MS-LTC-DRG 884 (Organic Disturbances & Intellectual
Disability); MS-LTC-DRG 885 (Psychoses); MS-LTC-DRG 886 (Behavioral &
Developmental Disorders); MS-LTC-DRG 887 (Other Mental Disorder
Diagnoses); MS-LTC-DRG 894 (Alcohol, Drug Abuse or Dependence, Left
AMA); MS-LTC-DRG 895 (Alcohol, Drug Abuse or Dependence with
Rehabilitation Therapy); MS-LTC-DRG 896 (Alcohol, Drug Abuse or
Dependence without Rehabilitation Therapy with MCC); MS-LTC-DRG 897
(Alcohol, Drug Abuse or Dependence without Rehabilitation Therapy
without MCC); MS-LTC-DRG 945 (Rehabilitation with CC/MCC); and MS-LTC-
DRG 946 (Rehabilitation without CC/MCC). We are proposing to establish
a relative weight of 0.0000 for these 15 ``psychiatric or
rehabilitation'' MS-LTC-DRGs because the blended payment rate and
temporary exceptions to the site neutral payment rate would not be
applicable for any LTCH discharges occurring in FY 2025, and as such
payment under the LTCH PPS would be no longer be made in part based on
the LTCH PPS standard Federal payment rate for any discharges assigned
to those MS-LTC-DRGs.
Step 9--Budget neutralize the uncapped relative weights.
In accordance with the regulations at Sec. 412.517(b) (in
conjunction with Sec. 412.503), the annual update to the MS-LTC-DRG
classifications and relative weights is done in a budget neutral manner
such that estimated aggregate LTCH PPS payments would be unaffected,
that is, would be neither greater than nor less than the estimated
aggregate LTCH PPS payments that would have been made without the MS-
LTC-DRG classification and relative weight changes. (For a detailed
discussion on the establishment of the budget neutrality requirement
for the annual update of the MS-LTC-DRG classifications and relative
weights, we refer readers to the RY 2008 LTCH PPS final rule (72 FR
26881 and 26882).
To achieve budget neutrality under the requirement at Sec.
412.517(b), under our established methodology, for each annual update
the MS-LTC-DRG relative weights are uniformly adjusted to ensure that
estimated aggregate payments under the LTCH PPS would not be affected
(that is, decreased or increased). Consistent with that provision, we
are proposing to continue to apply budget neutrality adjustments in
determining the proposed FY 2025 MS-LTC-DRG relative weights so that
our proposed update of the MS-LTC-DRG classifications and relative
weights for FY 2025 are made in a budget neutral manner. For FY 2025,
we are proposing to apply two budget neutrality factors to determine
the MS-LTC-DRG relative weights. In this step, we describe the
determination of the budget neutrality adjustment that accounts for the
proposed update of the MS-LTC-DRG classifications and relative weights
prior to the application of the ten-percent cap. In steps 10 and 11, we
describe the application of the 10-percent cap policy (step 10) and the
determination of the proposed budget neutrality factor that accounts
for the application of the 10-percent cap policy (step 11).
In this proposed rule, to ensure budget neutrality for the proposed
update to the MS-LTC-DRG classifications and relative weights prior to
the application of the 10-percent cap (that is, uncapped relative
weights), under Sec. 412.517(b), we are proposing to continue to use
our established two-step budget neutrality methodology. Therefore, in
the first step of our MS-LTC-DRG update budget neutrality methodology,
for FY 2025, we calculated and applied a proposed normalization factor
to the recalibrated relative weights (the result of Steps 1 through 8
discussed previously) to ensure that estimated payments are not
affected by changes in the composition of case types or the changes to
the classification system. That is, the normalization adjustment is
intended to ensure that the recalibration of the MS-LTC-DRG relative
weights (that is, the process itself) neither increases nor decreases
the average case-mix index.
To calculate the proposed normalization factor for FY 2025, we
propose to use the following three steps: (1.a.) use the applicable
LTCH cases from the best available data (that is, LTCH discharges from
the FY 2023 MedPAR file) and group them using the proposed FY 2025
GROUPER (that is, Version 42 for FY 2025) and the proposed recalibrated
FY 2025 MS-LTC-DRG uncapped relative weights (determined in Steps 1
through 8 discussed previously) to calculate the average case-mix
index; (1.b.) group the same applicable LTCH cases (as are used in Step
1.a.) using the FY 2024 GROUPER (Version 41) and FY 2024 MS-LTC-DRG
relative weights in Table 11 of the FY 2024 IPPS/LTCH PPS final rule
and calculate the average case-mix index; and (1.c.) compute the ratio
of these average case-mix indexes by dividing the average case-mix
index for FY 2024 (determined in Step 1.b.) by the average case-mix
index for FY 2025 (determined in Step 1.a.). As a result, in
determining the proposed MS-LTC-DRG relative weights for FY 2025, each
recalibrated MS-LTC-DRG uncapped relative weight is multiplied by the
proposed normalization factor of 1.27356 (determined in Step 1.c.) in
the first step of the budget neutrality methodology, which produces
``normalized relative weights.''
In the second step of our MS-LTC-DRG update budget neutrality
methodology, we calculated a proposed budget neutrality adjustment
factor consisting of the ratio of estimated aggregate FY 2025 LTCH PPS
standard Federal payment rate payments for applicable LTCH cases before
reclassification and recalibration to estimated aggregate payments for
FY 2025 LTCH PPS standard Federal payment rate payments for applicable
LTCH cases after reclassification and recalibration. That is, for this
proposed rule, for FY 2025, we propose to determine the budget
neutrality adjustment factor using the following three steps: (2.a.)
simulate estimated total FY 2025 LTCH PPS standard Federal payment rate
payments for applicable LTCH cases using the uncapped normalized
relative weights for FY 2025 and proposed GROUPER Version 42; (2.b.)
simulate estimated total FY 2025 LTCH PPS standard Federal payment rate
payments for applicable LTCH cases using the FY 2024 GROUPER (Version
41) and the FY 2024 MS-LTC-DRG relative weights in Table 11 of the FY
2024 IPPS/LTCH PPS final rule; and (2.c.) calculate the ratio of these
estimated total payments by dividing the value determined in Step 2.b.
by the value determined in Step 2.a. In determining the proposed FY
2025 MS-LTC-DRG relative weights, each uncapped normalized relative
weight is then multiplied by a proposed budget neutrality factor of
0.988292 (the value determined in Step 2.c.) in the second step of the
budget neutrality methodology.
Step 10--Apply the 10-percent cap to decreases in MS-LTC-DRG
relative weights.
To mitigate the financial impacts of significant year-to-year
reductions in MS-LTC-DRGs relative weights, beginning in FY 2023, we
adopted a policy that applies, in a budget neutral manner, a 10-percent
cap on annual relative weight decreases for MS-LTC-
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DRGs with at least 25 applicable LTCH cases (Sec. 412.515(b)). Under
this policy, in cases where CMS creates new MS-LTC-DRGs or modifies the
MS-LTC-DRGs as part of its annual reclassifications resulting in
renumbering of one or more MS-LTC-DRGs, the 10-percent cap does not
apply to the relative weight for any new or renumbered MS-LTC-DRGs for
the fiscal year. We refer readers to section VIII.B.3.b. of the
preamble of the FY 2023 IPPS/LTCH PPS final rule with comment period
for a detailed discussion on the adoption of the 10-percent cap policy
(87 FR 49152 through 49154).
Applying the 10-percent cap to MS-LTC-DRGs with 25 or more cases
results in more predictable and stable MS-LTC-DRG relative weights from
year to year, especially for high-volume MS-LTC-DRGs that generally
have the largest financial impact on an LTCH's operations. For this
proposed rule, in cases where the relative weight for a MS-LTC-DRG with
25 or more applicable LTCH cases would decrease by more than 10-percent
in FY 2025 relative to FY 2024, we are proposing to limit the reduction
to 10-percent. Under this policy, we do not apply the 10 percent cap to
the proposed low-volume MS-LTC-DRGs identified in Step 3 or the
proposed no-volume MS-LTC-DRGs identified in Step 8.
Therefore, in this step, for each proposed FY 2025 MS-LTC-DRG with
25 or more applicable LTCH cases (excludes low-volume and zero-volume
MS-LTC-DRGs) we compared its FY 2025 relative weight (after application
of the proposed normalization and proposed budget neutrality factors
determined in Step 9), to its FY 2024 MS-LTC-DRG relative weight. For
any MS-LTC-DRG where the FY 2025 relative weight would otherwise have
declined more than 10 percent, we established a proposed capped FY 2025
MS-LTC-DRG relative weight that would be equal to 90 percent of that
MS-LTC-DRG's FY 2024 relative weight (that is, we set the proposed FY
2025 relative weight equal to the FY 2024 weight x 0.90).
In section II.E. of the preamble of this proposed rule, we discuss
our proposed changes to the MS-DRGs, and by extension the MS-LTC-DRGs,
for FY 2025. As discussed previously, under our current policy, the 10-
percent cap does not apply to the relative weight for any new or
renumbered MS-LTC-DRGs. We are not proposing any changes to this policy
for FY 2025, and as such any proposed new or renumbered MS-LTC-DRGs for
FY 2025 would not be eligible for the 10-percent cap.
Step 11--Budget neutralize application of the 10-percent cap
policy.
Under the requirement at existing Sec. 412.517(b) that aggregate
LTCH PPS payments will be unaffected by annual changes to the MS-LTC-
DRG classifications and relative weights, consistent with our
established methodology, we are proposing to continue to apply a budget
neutrality adjustment to the MS-LTC-DRG relative weights so that the
10-percent cap on relative weight reductions (step 10) is implemented
in a budget neutral manner. Therefore, we are proposing to determine
the proposed budget neutrality adjustment factor for the 10-percent cap
on relative weight reductions using the following three steps: (a)
simulate estimated total FY 2025 LTCH PPS standard Federal payment rate
payments for applicable LTCH cases using the proposed capped relative
weights for FY 2025 (determined in Step 10) and proposed GROUPER
Version 42; (b) simulate estimated total FY 2025 LTCH PPS standard
Federal payment rate payments for applicable LTCH cases using the
proposed uncapped relative weights for FY 2025 (determined in Step 9)
and proposed GROUPER Version 42; and (c) calculate the ratio of these
estimated total payments by dividing the value determined in step (b)
by the value determined in step (a). In determining the proposed FY
2025 MS-LTC-DRG relative weights, each capped relative weight is then
multiplied by a proposed budget neutrality factor of 0.9946599 (the
value determined in step (c)) to achieve the budget neutrality
requirement.
Table 11, which is listed in section VI. of the Addendum to this
proposed rule and is available via the internet on the CMS website,
lists the proposed MS-LTC-DRGs and their respective proposed relative
weights, proposed geometric mean length of stay, and proposed five-
sixths of the geometric mean length of stay (used to identify SSO cases
under Sec. 412.529(a)) for FY 2025. We also are making available on
the website the proposed MS-LTC-DRG relative weights prior to the
application of the 10 percent cap on MS-LTC-DRG relative weight
reductions and corresponding proposed cap budget neutrality factor.
C. Proposed Changes to the LTCH PPS Payment Rates and Other Proposed
Changes to the LTCH PPS for FY 2025
1. Overview of Development of the Proposed LTCH PPS Standard Federal
Payment Rates
The basic methodology for determining LTCH PPS standard Federal
payment rates is currently set forth at 42 CFR 412.515 through 412.533
and 412.535. In this section, we discuss the factors that we are
proposing to use to update the LTCH PPS standard Federal payment rate
for FY 2025, that is, effective for LTCH discharges occurring on or
after October 1, 2024, through September 30, 2025. Under the dual rate
LTCH PPS payment structure required by statute, beginning with
discharges in cost reporting periods beginning in FY 2016, only LTCH
discharges that meet the criteria for exclusion from the site neutral
payment rate are paid based on the LTCH PPS standard Federal payment
rate specified at 42 CFR 412.523. (For additional details on our
finalized policies related to the dual rate LTCH PPS payment structure
required by statute, we refer readers to the FY 2016 IPPS/LTCH PPS
final rule (80 FR 49601 through 49623).)
Prior to the implementation of the dual payment rate system in FY
2016, all LTCH discharges were paid similarly to those now exempt from
the site neutral payment rate. That legacy payment rate was called the
standard Federal rate. For details on the development of the initial
standard Federal rate for FY 2003, we refer readers to the August 30,
2002 LTCH PPS final rule (67 FR 56027 through 56037). For subsequent
updates to the standard Federal rate from FYs 2003 through 2015, and
LTCH PPS standard Federal payment rate from FY 2016 through present, as
implemented under 42 CFR 412.523(c)(3), we refer readers to the FY 2020
IPPS/LTCH PPS final rule (84 FR 42445 through 42446).
In this FY 2025 IPPS/LTCH PPS proposed rule, we present our
proposed policies related to the annual update to the LTCH PPS standard
Federal payment rate for FY 2025.
The proposed update to the LTCH PPS standard Federal payment rate
for FY 2025 is presented in section V.A. of the Addendum to this
proposed rule. The components of the proposed annual update to the LTCH
PPS standard Federal payment rate for FY 2025 are discussed in this
section, including the statutory reduction to the annual update for
LTCHs that fail to submit quality reporting data for FY 2025 as
required by the statute (as discussed in section VIII.C.2.c. of the
preamble of this
[[Page 36267]]
proposed rule). We are proposing to make an adjustment to the LTCH PPS
standard Federal payment rate to account for the estimated effect of
the changes to the area wage level for FY 2025 on estimated aggregate
LTCH PPS payments, in accordance with 42 CFR 412.523(d)(4) (as
discussed in section V.B. of the Addendum to this proposed rule).
2. Proposed FY 2025 LTCH PPS Standard Federal Payment Rate Annual
Market Basket Update
a. Overview
Historically, the Medicare program has used a market basket to
account for input price increases in the services furnished by
providers. The market basket used for the LTCH PPS includes both
operating and capital-related costs of LTCHs because the LTCH PPS uses
a single payment rate for both operating and capital-related costs. We
adopted the 2017-based LTCH market basket for use under the LTCH PPS
beginning in FY 2021 (85 FR 58907 through 58909). As discussed in
section VIII.D. of the preamble of this proposed rule, we are proposing
to rebase and revise the 2017-based LTCH market basket to reflect a
2022 base year. For additional details on the historical development of
the market basket used under the LTCH PPS, we refer readers to the FY
2013 IPPS/LTCH PPS final rule (77 FR 53467 through 53476), and for a
complete discussion of the LTCH market basket and a description of the
methodologies used to determine the operating and capital-related
portions of the 2017-based LTCH market basket, we refer readers to the
FY 2021 IPPS/LTCH PPS final rule (85 FR 58909 through 58926).
Section 3401(c) of the Affordable Care Act provides for certain
adjustments to any annual update to the LTCH PPS standard Federal
payment rate and refers to the timeframes associated with such
adjustments as a ``rate year.'' We note that, because the annual update
to the LTCH PPS policies, rates, and factors now occurs on October 1,
we adopted the term ``fiscal year'' (FY) rather than ``rate year'' (RY)
under the LTCH PPS beginning October 1, 2010, to conform with the
standard definition of the Federal fiscal year (October 1 through
September 30) used by other PPSs, such as the IPPS (75 FR 50396 through
50397). Although the language of sections 3004(a), 3401(c), 10319, and
1105(b) of the Affordable Care Act refers to years 2010 and thereafter
under the LTCH PPS as ``rate year,'' consistent with our change in the
terminology used under the LTCH PPS from ``rate year'' to ``fiscal
year,'' for purposes of clarity, when discussing the annual update for
the LTCH PPS standard Federal payment rate, including the provisions of
the Affordable Care Act, we use ``fiscal year'' rather than ``rate
year'' for 2011 and subsequent years.
b. Proposed Annual Update to the LTCH PPS Standard Federal Payment Rate
for FY 2025
As previously noted, for FY 2025, we are proposing to rebase and
revise the 2017-based LTCH market basket to reflect a 2022 base year.
The proposed 2022-based LTCH market basket is primarily based on the
Medicare cost report data submitted by LTCHs and, therefore,
specifically reflects the cost structures of LTCHs. As described in
more detail in section VIII.D.1 of the preamble of this proposed rule,
we are proposing to use data from cost reporting periods beginning on
and after April 1, 2021, and prior to April 1, 2022 because these data
reflect the most recent information that are most representative of FY
2022. We believe that the proposed 2022-based LTCH market basket
appropriately reflects the cost structure of LTCHs, as discussed in
greater detail in section VIII.D. of the preamble of this proposed
rule. In this proposed rule, we are proposing to use the proposed 2022-
based LTCH market basket to update the LTCH PPS standard Federal
payment rate for FY 2025.
Section 1886(m)(3)(A) of the Act provides that, beginning in FY
2010, any annual update to the LTCH PPS standard Federal payment rate
is reduced by the adjustments specified in clauses (i) and (ii) of
subparagraph (A), as applicable. Clause (i) of section 1886(m)(3)(A) of
the Act provides for a reduction, for FY 2012 and each subsequent rate
year, by ``the productivity adjustment'' described in section
1886(b)(3)(B)(xi)(II) of the Act. 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 multifactor
productivity (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 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/data-research/statistics-trends-and-reports/medicare-program-rates-statistics/market-basket-research-and-information. Clause (ii) of
section 1886(m)(3)(A) of the Act provided for a reduction, for each of
FYs 2010 through 2019, by the ``other adjustment'' described in section
1886(m)(4)(F) of the Act; therefore, it is not applicable for FY 2025.
Section 1886(m)(3)(B) of the Act provides that the application of
paragraph (3) of section 1886(m) of the Act may result in the annual
update being less than zero for a rate year, and may result in payment
rates for a rate year being less than such payment rates for the
preceding rate year.
c. Proposed Adjustment to the LTCH PPS Standard Federal Payment Rate
Under the Long-Term Care Hospital Quality Reporting Program (LTCH QRP)
In accordance with section 1886(m)(5) of the Act, the Secretary
established the Long-Term Care Hospital Quality Reporting Program (LTCH
QRP). The reduction in the annual update to the LTCH PPS standard
Federal payment rate for failure to report quality data under the LTCH
QRP for FY 2014 and subsequent fiscal years is codified under 42 CFR
412.523(c)(4). The LTCH QRP, as required for FY 2014 and subsequent
fiscal years by section 1886(m)(5)(A)(i) of the Act, requires that a
2.0 percentage points reduction be applied to any update under 42 CFR
412.523(c)(3) for an LTCH that does not submit quality reporting data
to the Secretary in accordance with section 1886(m)(5)(C) of the Act
with respect to such a year (that is, in the form and manner and at the
time specified by the Secretary under the LTCH QRP) (42 CFR
412.523(c)(4)(i)). Section 1886(m)(5)(A)(ii) of the Act provides that
the application of the 2.0 percentage points reduction may result in an
annual update that is less than 0.0 for a year, and may result in LTCH
PPS payment rates for a year being less than
[[Page 36268]]
such LTCH PPS payment rates for the preceding year. Furthermore,
section 1886(m)(5)(B) of the Act specifies that the 2.0 percentage
points reduction is applied in a noncumulative manner, such that any
reduction made under section 1886(m)(5)(A) of the Act shall apply only
with respect to the year involved, and shall not be taken into account
in computing the LTCH PPS payment amount for a subsequent year. These
requirements are codified in the regulations at 42 CFR 412.523(c)(4).
(For additional information on the history of the LTCH QRP, including
the statutory authority and the selected measures, we refer readers to
section IX. of the preamble of this proposed rule.)
d. Proposed Annual Market Basket Update Under the LTCH PPS for FY 2025
Consistent with our historical practice, we estimate the market
basket percentage increase and the productivity adjustment based on IHS
Global Inc.'s (IGI's) forecast using the most recent available data.
Based on IGI's fourth quarter 2023 forecast, the proposed FY 2025
market basket percentage increase for the LTCH PPS using the proposed
2022-based LTCH market basket is 3.2 percent. The proposed productivity
adjustment for FY 2025 based on IGI's fourth quarter 2023 forecast is
0.4 percentage point.
For FY 2025, section 1886(m)(3)(A)(i) of the Act requires that any
annual update to the LTCH PPS standard Federal payment rate be reduced
by the productivity adjustment, described in section
1886(b)(3)(B)(xi)(II) of the Act. Consistent with the statute, we are
proposing to reduce the FY 2025 market basket percentage increase by
the FY 2025 productivity adjustment. To determine the proposed market
basket update for LTCHs for FY 2025 we subtracted the proposed FY 2025
productivity adjustment from the proposed FY 2025 market basket
percentage increase. (For additional details on our established
methodology for adjusting the market basket percentage increase by the
productivity adjustment, we refer readers to the FY 2012 IPPS/LTCH PPS
final rule (76 FR 51771).) In addition, for FY 2025, section 1886(m)(5)
of the Act requires that, for LTCHs that do not submit quality
reporting data as required under the LTCH QRP, any annual update to an
LTCH PPS standard Federal payment rate, after application of the
adjustments required by section 1886(m)(3) of the Act, shall be further
reduced by 2.0 percentage points.
In this FY 2025 IPPS/LTCH PPS proposed rule, in accordance with the
statute, we are proposing to reduce the proposed FY 2025 market basket
percentage increase of 3.2 percent (based on IGI's fourth quarter 2023
forecast of the proposed 2022-based LTCH market basket) by the proposed
FY 2025 productivity adjustment of 0.4 percentage point (based on IGI's
fourth quarter 2023 forecast). Therefore, under the authority of
section 123 of the BBRA as amended by section 307(b) of the BIPA,
consistent with 42 CFR 412.523(c)(3)(xvii), we are proposing to
establish an annual market basket update to the LTCH PPS standard
Federal payment rate for FY 2025 of 2.8 percent (that is, the LTCH PPS
market basket increase of 3.2 percent less the productivity adjustment
of 0.4 percentage point). For LTCHs that fail to submit quality
reporting data under the LTCH QRP, under 42 CFR 412.523(c)(3)(xvii) in
conjunction with 42 CFR 412.523(c)(4), we are proposing to further
reduce the annual update to the LTCH PPS standard Federal payment rate
by 2.0 percentage points, in accordance with section 1886(m)(5) of the
Act. Accordingly, we are proposing to establish an annual update to the
LTCH PPS standard Federal payment rate of 0.8 percent (that is, the
proposed 2.8 percent LTCH market basket update minus 2.0 percentage
points) for FY 2025 for LTCHs that fail to submit quality reporting
data as required under the LTCH QRP. Consistent with our historical
practice, we are proposing to use a more recent estimate of the market
basket percentage increase and the productivity adjustment, if
appropriate, to establish an annual update to the LTCH PPS standard
Federal payment rate for FY 2025 in the final rule. We note that,
consistent with historical practice, we are also proposing to adjust
the FY 2025 LTCH PPS standard Federal payment rate by an area wage
level budget neutrality factor in accordance with 42 CFR 412.523(d)(4)
(as discussed in section V.B.5. of the Addendum to this proposed rule).
D. Proposed Rebasing of the LTCH Market Basket
1. Background
The input price index (that is, the market basket) that was used to
develop the LTCH PPS for FY 2003 was the ``excluded hospital with
capital'' market basket. That market basket was based on 1997 Medicare
cost report data and included data for Medicare-participating IRFs,
IPFs, LTCHs, cancer hospitals, and children's hospitals. Although the
term ``market basket'' technically describes the mix of goods and
services used in providing hospital care, this term is also commonly
used to denote the input price index (that is, cost category weights
and price proxies combined) derived from that mix. Accordingly, the
term ``market basket,'' as used in this section, refers to an input
price index.
Since the LTCH PPS inception, the market basket used to update LTCH
PPS payments has been rebased and revised to reflect more recent data.
We last rebased and revised the market basket applicable to the LTCH
PPS in the FY 2021 IPPS/LTCH PPS final rule (85 FR 58909 through
58926), where we adopted a 2017-based LTCH market basket. References to
the historical market baskets used to update LTCH PPS payments are
listed in the FY 2021 LTCH PPS final rule (85 FR 58909 through 58910).
For this FY 2025 IPPS/LTCH proposed rule, we propose to rebase and
revise the 2017-based LTCH market basket to reflect a 2022 base year,
which would maintain our historical frequency of rebasing the market
basket every 4 years. The proposed 2022-based LTCH market basket is
primarily based on Medicare cost report data for LTCHs for FY 2022,
specifically for cost reporting periods beginning on and after April 1,
2021, and prior to April 1, 2022. For the 2017-based LTCH market, we
used Medicare cost report data for LTCHs from cost reporting periods
beginning on and after October 1, 2016, and before October 1, 2017, or
reports that began in FY 2017. The majority of LTCHs have a cost report
begin date of September 1 and so those LTCHs with a cost report begin
date of September 1, 2021 have the majority of their expenses occurring
in the FY 2022 time period. We are proposing to use data from cost
reporting periods beginning on and after April 1, 2021, and prior to
April 1, 2022 because these data reflect the most recent Medicare cost
report data for LTCHs at the time of rulemaking where the majority of
their costs are occurring in FY 2022 while still maintaining our
historical frequency of rebasing the market basket every 4 years.
We are unable to use data from the FY 2022 HCRIS file, which
reflects cost reporting periods beginning on and after October 1, 2021
and prior to September 30, 2022, as most reporters have a begin date of
September 1, so the dataset in the file is not yet complete. In the
interest of utilizing the most recent, complete data available, we are
proposing to combine data from multiple HCRIS files to obtain a 2022
base year. We are proposing to use a composite timeframe of cost
reporting periods beginning on and after April 1, 2021 and prior to
April 1, 2022, because
[[Page 36269]]
April 1 reflects the middle of the fiscal year and this timeframe would
allow data from 2022 to be included in this rebasing. Using this
proposed method, the weighted average of costs occurring in FY 2022
(accounting for the distribution of providers by Medicare cost report
begin date) is 82 percent. Therefore, we believe our proposed
methodology of using Medicare cost report data based on cost reporting
periods beginning on or after April 1, 2021 and prior to April 1, 2022
reflects the most recent information that is most representative of FY
2022.
As described in the FY 2023 IPPS/LTCH final rule (87 FR 49164
through 49165), we received comments on the FY 2023 IPPS/LTCH PPS
proposed rule where stakeholders expressed concern that the proposed
market basket update was inadequate relative to input price inflation
experienced by LTCHs, particularly as a result of the COVID-19 PHE.
These commenters stated that the PHE, along with inflation, has
significantly driven up operating costs. Specifically, some commenters
noted changes to the labor markets that led to the use of more contract
labor. As described in more detail later in this section, we verified
this trend when analyzing the Medicare cost reports submitted by LTCHs
through 2022. Therefore, we believe it is appropriate to incorporate
more recent data to reflect updated cost structures for LTCHs, and so
we propose to use 2022 as the base year because we believe that the
Medicare cost reports for this year represent the most recent, complete
set of Medicare cost report data available for developing the proposed
LTCH market basket at the time of this rulemaking. Given the recent
trends in the major cost weights derived from the Medicare cost report
data as discussed later in this section, we will continue to monitor
these data going forward and any additional changes to the LTCH market
basket will be proposed in future rulemaking.
In the following discussion, we provide an overview of the proposed
LTCH market basket, describe the proposed methodologies for developing
the operating and capital portions of the proposed 2022-based LTCH
market basket, and provide information on the proposed price proxies.
Then, we present the proposed FY 2025 market basket update and labor-
related share based on the proposed 2022-based LTCH market basket.
2. Overview of the Proposed 2022-Based LTCH Market Basket
Similar to the 2017-based LTCH market basket, the proposed 2022-
based LTCH market basket is a fixed-weight, Laspeyres-type price index.
A Laspeyres price index measures the change in price, over time, of the
same mix of goods and services purchased in the base period. Any
changes in the quantity or mix (that is, intensity) of goods and
services purchased over time relative to the base period are not
measured. The index itself is constructed using three steps. First, a
base period is selected (in this proposed rule, we propose to use 2022
as the base period) and total base period costs are estimated for a set
of mutually exclusive and exhaustive spending categories, with the
proportion of total costs that each category represents being
calculated. These proportions are called cost weights. Second, each
cost category is matched to an appropriate price or wage variable,
referred to as a ``price proxy.'' In almost every instance, these price
proxies are derived from publicly available statistical series that are
published on a consistent schedule (preferably at least on a quarterly
basis). Finally, the cost weight for each cost category is multiplied
by the level of its respective price proxy. The sum of these products
(that is, the cost weights multiplied by their price index levels) for
all cost categories yields the composite index level of the market
basket in a given period. Repeating this step for other periods
produces a series of market basket levels over time. Dividing an index
level for a given period by an index level for an earlier period
produces a rate of growth in the input price index over that timeframe.
As previously noted, the market basket is described as a fixed-weight
index because it represents the change in price over time of a constant
mix (quantity and intensity) of goods and services needed to furnish
hospital services. The effects on total costs resulting from changes in
the mix of goods and services purchased subsequent to the base period
are not measured. For example, a hospital hiring more nurses to
accommodate the needs of patients would increase the volume of goods
and services purchased by the hospital but would not be factored into
the price change measured by a fixed-weight hospital market basket.
Only when the index is rebased would changes in the quantity and
intensity be captured, with those changes being reflected in the cost
weights. Therefore, we rebase the market basket periodically so that
the cost weights reflect recent changes in the mix of goods and
services that hospitals purchase to furnish inpatient care between base
periods.
3. Development of the Proposed 2022-Based LTCH Market Basket Cost
Categories and Weights
We are inviting public comments on our proposed methodology,
discussed in this section of this rule, for deriving the proposed 2022-
based LTCH market basket.
a. Use of Medicare Cost Report Data
The major types of costs underlying the proposed 2022-based LTCH
market basket are derived from the Medicare cost reports (CMS Form
2552-10, OMB Control Number 0938-0050) for LTCHs. Specifically, we use
the Medicare cost reports for seven specific costs: Wages and Salaries,
Employee Benefits, Contract Labor, Pharmaceuticals, Professional
Liability Insurance (PLI), Home Office/Related Organization Contract
Labor, and Capital. A residual category is then estimated and reflects
all remaining costs not captured in the seven types of costs identified
previously. The 2017-based LTCH market basket similarly used the
Medicare cost reports.
Medicare cost report data include costs for all patients (including
but not limited to those covered by Medicare, Medicaid, and private
insurance). Because our goal is to measure cost shares for facilities
that serve Medicare beneficiaries and are reflective of case mix and
practice patterns associated with providing services to Medicare
beneficiaries in LTCHs, we propose to limit our selection of Medicare
cost reports to those from LTCHs that have a Medicare average length of
stay (LOS) that is within a comparable range of their total facility
average LOS. We define the Medicare average LOS based on data reported
on the Medicare cost report (CMS Form 2552-10, OMB Control Number 0938-
0050) Worksheet S-3, Part I, line 14. We believe that applying the LOS
edit results in a more accurate reflection of the structure of costs
associated with Medicare covered days as our proposed edit excludes
those LTCHs that had an average total facility LOS that were notably
different than the average Medicare LOS. For the 2017-based LTCH market
basket, we used the cost reports submitted by LTCHs with Medicare
average LOS within 25 percent (that is, 25 percent higher or lower) of
the total facility average LOS for the hospital. Based on our analysis
of the 2022 Medicare cost reports, for the proposed 2022-based LTCH
market basket, we propose to again use the cost reports submitted by
LTCHs with Medicare average LOS within 25 percent (that is, 25 percent
higher or lower) of the total facility
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average LOS for the hospital. The universe of LTCHs had an average
Medicare LOS of 26 days, an average total facility LOS of 35 days, and
aggregate Medicare utilization (as measured by Medicare inpatient LTCH
days as a percentage of total facility inpatient LTCH days) of 34
percent in 2022. Applying the proposed trim excludes 11 percent of LTCH
providers and results in a subset of LTCH Medicare cost reports with an
average Medicare LOS of 26 days, average facility LOS of 30 days, and
aggregate Medicare utilization (based on days) of 40 percent. The 11
percent of providers that are excluded had an average Medicare LOS of
29 days, average facility LOS of 71 days, and aggregate Medicare
utilization of 14 percent.
We are proposing to use the cost reports for LTCHs that meet this
requirement to calculate the costs for the seven major cost categories
(Wages and Salaries, Employee Benefits, Contract Labor, Professional
Liability Insurance, Pharmaceuticals, Home Office/Related Organization
Contract Labor, and Capital) for the market basket. Also, as described
in section VIII.D.3.d. of the preamble of this proposed rule, and as
done for the 2017-based LTCH market basket, we are also proposing to
use the Medicare cost report data to calculate the detailed capital
cost weights for the Depreciation, Interest, Lease, and Other Capital-
Related cost categories.
(1) Wages and Salaries Costs
We propose to derive Wages and Salaries costs as the sum of routine
inpatient salaries, ancillary salaries, and a proportion of overhead
(or general service cost center) salaries as reported on Worksheet A,
column 1. Because overhead salary costs are attributable to the entire
LTCH, we propose to only include the proportion attributable to the
Medicare allowable cost centers. For the 2022-based LTCH market basket,
we propose that routine and ancillary Wages and Salaries costs would be
equal to salary costs as reported on Worksheet A, column 1, lines 30
through 35, 50 through 76 (excluding 52 and 75), 90 through 91, and 93.
Then, we are proposing to estimate the proportion of overhead salaries
that are attributed to Medicare allowable costs centers. We propose to
first calculate overhead salaries as the sum of Worksheet A, column 1,
lines 4 through 18. We then calculate the ``Medicare allowable ratio''
equal to routine and ancillary Wages and Salaries divided by total non-
overhead salaries (Worksheet A, column 1, line 200 less overhead
salaries). We propose to multiply this Medicare allowable ratio by
overhead salaries to determine the overhead salaries attributed to
Medicare allowable cost centers. The sum of routine salaries, ancillary
salaries, and the estimated Medicare allowable portion of overhead
salaries represent Wages and Salaries costs. A similar methodology was
used to derive Wages and Salaries costs in the 2017-based LTCH market
basket.
(2) Employee Benefits Costs
Similar to the 2017-based LTCH market basket, we propose to
calculate Employee Benefits costs using data from Worksheet S-3, part
II, column 4, lines 17, 18, 20, and 22. The completion of Worksheet S-
3, part II is only required for IPPS hospitals. For 2022, we found that
approximately 42 percent of LTCHs voluntarily reported the Employee
Benefits data, which has increased from the approximately 20 percent of
LTCHs that reported these data that were used for the 2017-based LTCH
market basket. Our analysis of the Worksheet S-3, part II data
submitted by these LTCHs indicates that we continue to have a large
enough sample to enable us to produce a reasonable Employee Benefits
cost weight. Specifically, we found that when we recalculated the cost
weight after weighting to reflect the characteristics of the universe
of LTCHs (such as by type of ownership--nonprofit, for-profit, and
government--and by region), the recalculation did not have a material
effect on the resulting cost weight. Therefore, we propose to use
Worksheet S-3, part II data (as was done for the 2017-based LTCH market
basket) to calculate the Employee Benefits cost weight in the proposed
2022-based LTCH market basket.
We note that, effective with the implementation of CMS Form 2552-
10, OMB Control Number 0938-0050, we began collecting Employee Benefits
and Contract Labor data on Worksheet S-3, part V, which is applicable
to LTCHs. However, approximately 12 percent of LTCHs reported data on
Worksheet S-3, part V for 2022, which has fallen since 2017 when
roughly 17 percent of LTCHs reported these data. Because a greater
percentage of LTCHs continue to report data on Worksheet S-3, part II
than Worksheet S-3, part V, we are not proposing to use the Employee
Benefits and Contract Labor data reported on Worksheet S-3, part V to
calculate the Employee Benefits and Contract Labor cost weights in the
proposed 2022-based LTCH market basket. We continue to encourage all
providers to report Employee Benefits and Contract Labor data on
Worksheet S-3, part V.
(3) Contract Labor Costs
Contract Labor costs reported on the Medicare cost reports are
primarily associated with direct patient care services. Contract Labor
costs for services such as accounting, billing, and legal are estimated
using other government data sources as described in this section of
this proposed rule. Approximately 40 percent of LTCHs voluntarily
reported Contract Labor costs on Worksheet S-3, part II, which was
similar to the percentage obtained from 2017 Medicare cost reports.
As was done for the 2017-based LTCH market basket, we propose to
derive the Contract Labor costs for the proposed 2022-based LTCH market
basket using voluntarily reported data from Worksheet S-3, part II. Our
analysis of these data indicates that we have a large enough sample to
enable us to produce a representative Contract Labor cost weight.
Specifically, we found that when we recalculated the cost weight after
weighting to reflect the characteristics of the universe of LTCHs by
region, the recalculation did not have a material effect on the
resulting cost weight. Therefore, we propose to use data from Worksheet
S-3, part II, column 4, lines 11 and 13 to calculate the Contract Labor
cost weight in the proposed 2022-based LTCH market basket.
(4) Pharmaceuticals Costs
We propose to calculate Pharmaceuticals costs using non-salary
costs reported for the pharmacy cost center (line 15) and drugs charged
to patients cost center (line 73). We propose to calculate these costs
as Worksheet A, column 7, less Worksheet A, column 1 for each of these
lines. A similar methodology was used for the 2017-based LTCH market
basket.
(5) Professional Liability Insurance Costs
We propose that Professional Liability Insurance (PLI) costs (often
referred to as malpractice costs) be equal to premiums, paid losses and
self-insurance costs reported on Worksheet S-2, part I, columns 1
through 3, line 118. A similar methodology was used for the 2017-based
LTCH market basket.
(6) Home Office/Related Organization Contract Labor Costs
We propose to calculate the Home Office/Related Organization
Contract Labor costs using data reported on Worksheet S-3, part II,
column 4, lines 1401, 1402, 2550, and 2551 for those LTCH providers
reporting total salaries on Worksheet S-3, part II, line 1. A
[[Page 36271]]
similar methodology was used for the 2017-based LTCH market basket.
(7) Capital Costs
We propose that Capital costs be equal to Medicare allowable
capital costs as reported on Worksheet B, part II, column 26, lines 30
through 35, 50 through 76 (excluding 52 and 75), 90 through 91 and 93.
A similar methodology was used for the 2017-based LTCH market basket.
b. Final Major Cost Category Computation
After we derive costs for the major cost categories for each
provider using the Medicare cost report data as previously described,
we propose to trim the data for outliers. For each of the seven major
cost categories, we are first proposing to divide the calculated costs
for the category by total Medicare allowable costs calculated for the
provider to obtain cost weights for the universe of LTCH providers. For
the 2022-based LTCH market basket (similar to the approach used for the
2017-based LTCH market basket), we propose that total Medicare
allowable costs would be equal to the total costs as reported on
Worksheet B, part I, column 26, lines 30 through 35, 50 through 76
(excluding 52 and 75), 90 through 91, and 93.
For the Wages and Salaries, Employee Benefits, Contract Labor,
Pharmaceuticals, Professional Liability Insurance, and Capital cost
weights, after excluding cost weights that are less than or equal to
zero, we propose to then remove those providers whose derived cost
weights fall in the top and bottom 5 percent of provider specific
derived cost weights to ensure the exclusion of outliers. We note that
missing values are assumed to be zero consistent with the methodology
for how missing values were treated in the 2017-based LTCH market
basket. After the outliers have been excluded, we sum the costs for
each category across all remaining providers. We are proposing to
divide this by the sum of total Medicare allowable costs across all
remaining providers to obtain a cost weight for the 2022-based LTCH
market basket for the given category. This trimming process is done for
each cost weight separately.
For the Home Office/Related Organization Contract Labor cost
weight, we propose to apply a 1-percent top only trimming methodology.
We believe, as the Medicare cost report data (Worksheet S-2, part I,
line 140) indicate, that not all LTCHs have a home office. LTCHs
without a home office can incur these expenses directly by having their
own staff, for which the costs would be included in the Wages and
Salaries and Employee Benefits cost weights. Alternatively, LTCHs
without a home office could also purchase related services from
external contractors for which these expenses would be captured in the
residual ``All Other'' cost weight. We believe this 1-percent top-only
trimming methodology is appropriate as it addresses outliers while
allowing providers with zero Home Office/Related Organization Contract
Labor costs to be included in the Home Office/Related Organization
Contract Labor cost weight calculation. If we applied both the top and
bottom 5 percent trimming methodology, we would exclude providers who
have zero Home Office/Related Organization Contract Labor costs.
Finally, we propose to calculate the residual ``All Other'' cost
weight that reflects all remaining costs that are not captured in the
seven cost categories listed. We refer readers to Table EEEE 1 for the
resulting proposed cost weights for these major cost categories.
[GRAPHIC] [TIFF OMITTED] TP02MY24.208
The Wages and Salaries and Employee Benefits cost weights
calculated from the Medicare cost reports for the proposed 2022-based
LTCH market basket are similar to the Wages and Salaries and Employee
Benefits cost weights for the 2017-based LTCH market basket. The
proposed Contract Labor cost weight, however, is approximately 8
percentage points higher than the Contract Labor cost weight in the
2017-based LTCH market basket. The proposed 2022-based Pharmaceuticals
and Capital cost weights are lower than the 2017-based LTCH market
basket by 1.7 percentage points and 1.4 percentage points,
respectively. The proposed 2022-based Home Office/Related Organization
Contract Labor cost weight has increased by 1.8 percentage points
compared to the 2017-based LTCH market basket.
As we did for the 2017-based LTCH market basket, we propose to
allocate the Contract Labor cost weight to the Wages and Salaries and
Employee Benefits cost weights based on their relative proportions
under the assumption that Contract Labor costs are comprised of both
Wages and Salaries and Employee Benefits. The Contract Labor allocation
proportion for Wages and Salaries is equal to the Wages and Salaries
cost weight as a percent of the sum of the Wages and Salaries cost
weight and the Employee Benefits cost weight. This rounded percentage
is 87 percent. Therefore, we propose to allocate 87 percent of the
Contract Labor cost weight to the Wages and Salaries cost weight and 13
percent to the Employee Benefits cost weight. We refer readers to Table
EEEE 2 that shows the proposed Wages and Salaries and
[[Page 36272]]
Employee Benefits cost weights after Contract Labor cost weight
allocation for both the proposed 2022-based LTCH market basket and the
2017-based LTCH market basket.
[GRAPHIC] [TIFF OMITTED] TP02MY24.209
After the allocation of the Contract Labor cost weight, the
proposed 2022-based Wages and Salaries cost weight is 7.2 percentage
points higher and the Employee Benefits cost weight is 1.4 percentage
points higher, relative to the respective cost weights for the 2017-
based LTCH market basket. As a result, in the proposed 2022-based LTCH
market basket, the compensation cost weight is 8.6 percentage points
higher than the Compensation cost weight for the 2017-based LTCH market
basket.
c. Derivation of the Detailed Operating Cost Weights
To further divide the residual ``All Other'' cost weight estimated
from the 2022 Medicare cost report data into more detailed cost
categories, we propose to use the 2017 Benchmark I-O ``The Use Table
(Supply-Use Framework)'' data for NAICS 622000, Hospitals, published by
the Bureau of Economic Analysis (BEA). These data are publicly
available at the following website: https://www.bea.gov/industry/input-output-accounts-data. For the 2017-based LTCH market basket, we used
the 2012 Benchmark I-O data, the most recent data available at the time
(85 FR 58913).
The BEA Benchmark I-O data are scheduled for publication every 5
years with the most recent data available for 2017. The 2017 Benchmark
I-O data are derived from the 2017 Economic Census and are the building
blocks for BEA's economic accounts. Therefore, they represent the most
comprehensive and complete set of data on the economic processes or
mechanisms by which output is produced and distributed.\181\ BEA also
produces Annual I-O estimates. However, while based on a similar
methodology, these estimates reflect less comprehensive and less
detailed data sources and are subject to revision when benchmark data
becomes available. Instead of using the less detailed Annual I-O data,
we propose to inflate the 2017 Benchmark I-O data forward to 2022 by
applying the annual price changes from the respective price proxies to
the appropriate market basket cost categories that are obtained from
the 2017 Benchmark I-O data, and calculated the cost shares that each
cost category represents using the inflated data. These resulting 2022
cost shares were applied to the residual ``All Other'' cost weight to
obtain the detailed cost weights for the proposed 2022-based LTCH
market basket. For example, the cost for Food: Direct Purchases
represents 4.3 percent of the sum of the residual ``All Other'' 2017
Benchmark I-O Hospital Expenditures inflated to 2022. Therefore, the
Food: Direct Purchases cost weight represents 4.3 percent of the
proposed 2022-based LTCH market basket's residual ``All Other'' cost
category (20.8 percent), yielding a ``final'' Food: Direct Purchases
proposed cost weight of 0.9 percent in the proposed 2022-based LTCH
market basket (0.043 x 20.8 percent = 0.9 percent).
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\181\ http://www.bea.gov/papers/pdf/IOmanual_092906.pdf.
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Using this methodology, we propose to derive seventeen detailed
LTCH market basket cost category weights within the proposed 2022-based
LTCH market basket residual ``All Other'' cost weight (20.8 percent).
These categories are: (1) Electricity and Other Non-Fuel Utilities; (2)
Fuel: Oil and Gas; (3) Food: Direct Purchases; (4) Food: Contract
Services; (5) Chemicals; (6) Medical Instruments; (7) Rubber and
Plastics; (8) Paper and Printing Products; (9) Miscellaneous Products;
(10) Professional Fees: Labor-Related; (11) Administrative and
Facilities Support Services; (12) Installation, Maintenance, and Repair
Services; (13) All Other Labor-Related Services; (14) Professional
Fees: Nonlabor-Related; (15) Financial Services; (16) Telephone
Services; and (17) All Other Nonlabor-Related Services. We note that
these are the same categories as were used in the 2017-based LTCH
market basket (with several cost categories being renamed for
clarification purposes).
d. Derivation of the Detailed Capital Cost Weights
As described in section VIII.D.3.b. of the preamble of this
proposed rule, we are proposing a Capital-Related cost weight of 8.5
percent in the proposed 2022-based LTCH market basket as calculated
from the 2022 Medicare cost reports for LTCHs after applying the
proposed trims as previously described. We propose to then separate
this total Capital-Related cost weight into more detailed cost
categories. Using Worksheet A-7 in the 2022 Medicare cost reports, we
are able to group capital-related costs into the following categories:
Depreciation, Interest, Lease, and Other Capital-Related costs, as
shown in Table VIII.D-03, which is the same methodology used for the
2017-based LTCH market basket.
We also are proposing to allocate lease costs, which are 65 percent
of total capital costs in the proposed 2022-based LTCH market basket,
across each of the remaining detailed capital-related cost categories
as was done in the 2017-based LTCH market basket. This would result in
three primary capital-related cost categories in the proposed 2022
based LTCH market basket: Depreciation, Interest, and Other Capital-
Related costs. Lease costs are unique in that they are not broken out
as a separate cost category in the proposed 2022-based LTCH market
basket. Rather, we propose to proportionally distribute these costs
among the cost categories of Depreciation, Interest, and Other Capital-
Related, reflecting the assumption that the underlying cost structure
of leases is similar to that of capital-related costs in general. As
was done for the 2017-based LTCH market basket, we propose to assume
that 10 percent of the lease costs represents
[[Page 36273]]
overhead and to assign those costs to the Other Capital-Related cost
category accordingly. Therefore, we are assuming that approximately 6.5
percent (65.0 percent x 0.1) of total capital-related costs represent
lease costs attributable to overhead, and we propose to add this 6.5
percentage points to the 7.3 percent Other Capital-Related cost
category weight. We are also proposing to distribute the remaining
lease costs (58.5 percent, or 65.0 percent less 6.5 percentage points)
proportionally across the three cost categories (Depreciation,
Interest, and Other Capital-Related) based on the proportion that these
categories comprise of the sum of the Depreciation, Interest, and Other
Capital-Related cost categories (excluding lease expenses). For
example, the Other Capital-Related cost category represented 21.0
percent of all three cost categories (Depreciation, Interest, and Other
Capital-Related) prior to any lease expenses being allocated. This 21.0
percent is applied to the 58.5 percent of remaining lease expenses so
that another 12.3 percentage points of lease expenses as a percent of
total capital-related costs is allocated to the Other Capital-Related
cost category. Therefore, the resulting proposed Other Capital-Related
cost weight is 26.1 percent (7.3 percent + 6.5 percent + 12.3 percent).
This is the same methodology used for the 2017-based LTCH market
basket. The proposed allocation of these lease expenses are shown in
Table VIII.D-03.
Finally, we propose to further divide the Depreciation and Interest
cost categories. We propose to separate Depreciation cost category into
the following two categories: (1) Building and Fixed Equipment and (2)
Movable Equipment. We also propose to separate the Interest cost
category into the following two categories: (1) Government/Nonprofit;
and (2) For profit.
To disaggregate the Depreciation cost weight, we needed to
determine the percent of total depreciation costs for LTCHs (after the
allocation of lease costs) that are attributable to Building and Fixed
equipment, which we hereafter refer to as the ``fixed percentage.'' We
propose to use depreciation and lease data from Worksheet A-7 of the
2022 Medicare cost reports, which is the same methodology used for the
2017-based LTCH market basket. Based on the 2022 LTCH Medicare cost
report data, we have determined that depreciation costs for building
and fixed equipment account for 39 percent of total depreciation costs,
while depreciation costs for movable equipment account for 61 percent
of total depreciation costs. As previously mentioned, we propose to
allocate lease expenses among the Depreciation, Interest, and Other
Capital-Related cost categories. We determined that leasing building
and fixed equipment expenses account for 94 percent of total leasing
expenses, while leasing movable equipment expenses account for 6
percent of total leasing expenses. We propose to sum the depreciation
and leasing expenses for building and fixed equipment, as well as sum
the depreciation and leasing expenses for movable equipment. This
results in the proposed Building and Fixed Equipment Depreciation cost
weight (after leasing costs are included) representing 78 percent of
total depreciation costs and the Movable Equipment Depreciation cost
weight (after leasing costs are included) representing 22 percent of
total depreciation costs.
To disaggregate the Interest cost weight, we determine the percent
of total interest costs for LTCHs that are attributable to government
and nonprofit facilities, which we hereafter refer to as the
``nonprofit percentage,'' because price pressures associated with these
types of interest costs tend to differ from those for for-profit
facilities. We propose to use interest costs data from Worksheet A-7 of
the 2022 Medicare cost reports for LTCHs, which is the same methodology
used for the 2017-based LTCH market basket. The nonprofit percentage
determined using this method is 48 percent.
Table VIII.D-03 provides the proposed detailed capital cost shares
obtained from the Medicare cost reports. Ultimately, if finalized,
these detailed capital cost shares would be applied to the total
Capital-Related cost weight determined in section VIII.D.3.b. of the
preamble of this proposed rule to separate the total Capital-Related
cost weight of 8.5 percent into more detailed cost categories and
weights.
BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TP02MY24.210
[[Page 36274]]
e. Proposed 2022-Based LTCH Market Basket Cost Categories and Weights
Table VIII.D-04 shows the proposed cost categories and weights for
the proposed 2022-based LTCH market basket compared to the 2017-based
LTCH market basket.
[GRAPHIC] [TIFF OMITTED] TP02MY24.211
BILLING CODE 4210-01-C
4. Selection of Proposed Price Proxies
After developing the proposed cost weights for the 2022-based LTCH
market basket, we selected the most appropriate wage and price proxies
currently available to represent the rate
[[Page 36275]]
of price change for each cost category. For the majority of the cost
weights, we base the price proxies on U.S. Bureau of Labor Statistics
(BLS) data and group them into one of the following BLS categories:
Employment Cost Indexes. Employment Cost Indexes (ECIs)
measure the rate of change in employment wage rates and employer costs
for employee benefits per hour worked. These indexes are fixed-weight
indexes and strictly measure the change in wage rates and employee
benefits per hour. ECIs are superior to Average Hourly Earnings (AHE)
as price proxies for input price indexes because they are not affected
by shifts in occupation or industry mix, and because they measure pure
price change and are available by both occupational group and by
industry. The industry ECIs are based on the NAICS and the occupational
ECIs are based on the Standard Occupational Classification System
(SOC).
Producer Price Indexes. Producer Price Indexes (PPIs)
measure the average change over time in the selling prices received by
domestic producers for their output. The prices included in the PPI are
from the first commercial transaction for many products and some
services (https://www.bls.gov/ppi/).
Consumer Price Indexes. Consumer Price Indexes (CPIs)
measure the average change over time in the prices paid by urban
consumers for a market basket of consumer goods and services (https://www.bls.gov/cpi/). CPIs are only used when the purchases are similar to
those of retail consumers rather than purchases at the producer level,
or if no appropriate PPIs are available.
We evaluate the price proxies using the criteria of reliability,
timeliness, availability, and relevance:
Reliability. Reliability indicates that the index is based
on valid statistical methods and has low sampling variability. Widely
accepted statistical methods ensure that the data were collected and
aggregated in a way that can be replicated. Low sampling variability is
desirable because it indicates that the sample reflects the typical
members of the population. (Sampling variability is variation that
occurs by chance because only a sample was surveyed rather than the
entire population.)
Timeliness. Timeliness implies that the proxy is published
regularly, preferably at least once a quarter. The market baskets are
updated quarterly, and therefore, it is important for the underlying
price proxies to be up-to-date, reflecting the most recent data
available. We believe that using proxies that are published regularly
(at least quarterly, whenever possible) helps to ensure that we are
using the most recent data available to update the market basket. We
strive to use publications that are disseminated frequently, because we
believe that this is an optimal way to stay abreast of the most current
data available.
Availability. Availability means that the proxy is
publicly available. We prefer that our proxies are publicly available
because this will help ensure that our market basket updates are as
transparent to the public as possible. In addition, this enables the
public to be able to obtain the price proxy data on a regular basis.
Relevance. Relevance means that the proxy is applicable
and representative of the cost category weight to which it is applied.
We believe that the CPIs, PPIs, and ECIs that we have selected meet
these criteria. Therefore, we believe that they continue to be the best
measure of price changes for the cost categories to which they would be
applied.
Table VIII.D-07 lists all price proxies that we propose to use for
the 2022-based LTCH market basket. The next section of the rule
contains a detailed explanation of the price proxies we are proposing
for each cost category weight.
a. Price Proxies for the Operating Portion of the Proposed 2022-Based
LTCH Market Basket
(1) Wages and Salaries
We propose to continue to use the ECI for Wages and Salaries for
All Civilian workers in Hospitals (BLS series code CIU1026220000000I)
to measure the wage rate growth of this cost category. This is the same
price proxy used in the 2017-based LTCH market basket (85 FR 58917).
(2) Employee Benefits
We propose to continue to use the ECI for Total Benefits for All
Civilian workers in Hospitals to measure price growth of this category.
This ECI is calculated using the ECI for Total Compensation for All
Civilian workers in Hospitals (BLS series code CIU1016220000000I) and
the relative importance of wages and salaries within total
compensation. This is the same price proxy used in the 2017-based LTCH
market basket (85 FR 58917).
(3) Electricity and Other Non-Fuel Utilities
We propose to continue to use the PPI Commodity Index for
Commercial Electric Power (BLS series code WPU0542) to measure the
price growth of this cost category. This is the same price proxy used
in the 2017-based LTCH market basket (85 FR 58917).
(4) Fuel: Oil and Gas
For the 2022-based LTCH market basket, we propose to use a blend of
the PPI Industry for Petroleum Refineries (NAICS 3241), PPI for Other
Petroleum and Coal Products (NAICS 32419) and the PPI Commodity for
Natural Gas. Our analysis of the Bureau of Economic Analysis' 2017
Benchmark I-O data for NAICS 622000 Hospitals shows that Petroleum
Refineries expenses account for approximately 86 percent, Other
Petroleum and Coal Products expenses account for about 7 percent and
Natural Gas expenses account for approximately 7 percent of Hospitals'
(NAICS 622000) total Fuel: Oil and Gas expenses. Therefore, we propose
to use a blend of 86 percent of the PPI Industry for Petroleum
Refineries (BLS series code PCU324110324110), 7 percent of the PPI for
Other Petroleum and Coal Products (BLS series code PCU32419) and 7
percent of the PPI Commodity Index for Natural Gas (BLS series code
WPU0531) as the price proxy for this cost category. The 2017-based LTCH
market basket used a 90/10 blend of the PPI Industry for Petroleum
Refineries and PPI Commodity for Natural Gas, reflecting the 2012 I-O
data (85 FR 58917). We believe that the three proposed price proxies
are the most technically appropriate indices available to measure the
price growth of the Fuel: Oil and Gas cost category in the 2022-based
LTCH market basket.
(5) Professional Liability Insurance
We propose to continue to use the CMS Hospital Professional
Liability Index as the price proxy for PLI costs in the proposed 2022-
based LTCH market basket. To generate this index, we collect commercial
insurance medical liability premiums for a fixed level of coverage
while holding non-price factors constant (such as a change in the level
of coverage). This is the same proxy used in the 2017-based LTCH market
basket (85 FR 58917).
(6) Pharmaceuticals
We propose to continue to use the PPI Commodity for Pharmaceuticals
for Human Use, Prescription (BLS series code WPUSI07003) to measure the
price growth of this cost category. This is the same proxy used in the
2017-based LTCH market basket (85 FR 58917).
(7) Food: Direct Purchases
We propose to continue to use the PPI Commodity for Processed Foods
and Feeds (BLS series code WPU02) to measure the price growth of this
cost
[[Page 36276]]
category. This is the same price proxy used in the 2017-based LTCH
market basket (85 FR 58917).
(8) Food: Contract Purchases
We propose to continue to use the CPI for Food Away From Home (BLS
series code CUUR0000SEFV) to measure the price growth of this cost
category. This is the same proxy used in the 2017-based LTCH market
basket (85 FR 58917).
(9) Chemicals
Similar to the 2017-based LTCH market basket, we propose to use a
four-part blended PPI as the proxy for the chemical cost category in
the 2022-based LTCH market basket. The proposed blend is composed of
the PPI Industry for Industrial Gas Manufacturing, Primary Products
(BLS series code PCU325120325120P), the PPI Industry for Other Basic
Inorganic Chemical Manufacturing (BLS series code PCU32518-32518), the
PPI Industry for Other Basic Organic Chemical Manufacturing (BLS series
code PCU32519-32519), and the PPI Industry for Other Miscellaneous
Chemical Product Manufacturing (BLS series code PCU325998325998). For
the 2022-based LTCH market basket, we propose to derive the weights for
the PPIs using the 2017 Benchmark I-O data. The 2017-based LTCH market
basket used the 2012 Benchmark I-O data to derive the weights for the
four PPIs (85 FR 58917 through 58918).
[GRAPHIC] [TIFF OMITTED] TP02MY24.212
(10) Medical Instruments
We propose to use a blended price proxy for the Medical Instruments
category. The 2017 Benchmark I-O data shows the majority of medical
instruments and supply costs are for NAICS 339112--Surgical and medical
instrument manufacturing costs (approximately 64 percent) and NAICS
339113--Surgical appliance and supplies manufacturing costs
(approximately 36 percent). To proxy the price changes associated with
NAICS 339112, we propose to use the PPI for Surgical and medical
instruments (BLS series code WPU1562). This is the same price proxy we
used in the 2017-based LTCH market basket. To proxy the price changes
associated with NAICS 339113, we propose to use a 50/50 blend of the
PPI for Medical and surgical appliances and supplies (BLS series code
WPU1563) and the PPI for Miscellaneous products, Personal safety
equipment and clothing (BLS series code WPU1571). We propose to include
the latter price proxy as it would reflect personal protective
equipment including but not limited to face shields and protective
clothing. The 2017 Benchmark I-O data does not provide specific
expenses for these products; however, we recognize that this category
reflects costs faced by LTCHs. For the 2017-based LTCH market basket,
we used a blend composed of 57 percent of the commodity-based PPI
Commodity for Surgical and Medical Instruments (BLS series code
WPU1562) and 43 percent of the PPI Commodity for Medical and Surgical
Appliances and Supplies (BLS series code WPU1563) reflecting the 2012
Benchmark I-O data (85 FR 58918).
(11) Rubber and Plastics
We propose to continue to use the PPI Commodity for Rubber and
Plastic Products (BLS series code WPU07) to measure price growth of
this cost category. This is the same proxy used in the 2017-based LTCH
market basket (85 FR 58918).
(12) Paper and Printing Products
We are proposing to use a 61/39 blend of the PPI Commodity for
Publications Printed Matter and Printing Material (BLS Series Code
WPU094) and the PPI Commodity for Converted Paper and Paperboard
Products (BLS series code WPU0915) to measure the price growth of this
cost category. The 2017 Benchmark I-O data shows that 61 percent of
paper and printing expenses are for Printing (NAICS 323110) and the
remaining expenses are for Paper manufacturing (NAICS 322). The 2017-
based LTCH market basket (85 FR 58918) used the PPI Commodity for
Converted Paper and Paperboard Products (BLS series code WPU0915) as
this comprised the majority of expenses as reported in the 2012
Benchmark I-O data.
(13) Miscellaneous Products
We propose to continue to use the PPI Commodity for Finished Goods
Less Food and Energy (BLS series code WPUFD4131) to measure the price
growth of this cost category. This is the same proxy used in the 2017-
based LTCH market basket (85 FR 58918).
(14) Professional Fees: Labor-Related
We propose to continue to use the ECI for Total Compensation for
Private Industry workers in Professional and Related (BLS series code
CIU2010000120000I) to measure the price growth of this category. This
is the same proxy used in the 2017-based LTCH market basket (85 FR
58918).
(15) Administrative and Facilities Support Services
We propose to continue to use the ECI for Total Compensation for
Private Industry workers in Office and Administrative Support (BLS
series code CIU2010000220000I) to measure the price growth of this
category. This is the same proxy used in the 2017-based LTCH market
basket (85 FR 58918).
(16) Installation, Maintenance, and Repair Services
We propose to continue to use the ECI for Total Compensation for
All Civilian
[[Page 36277]]
workers in Installation, Maintenance, and Repair (BLS series code
CIU1010000430000I) to measure the price growth of this cost category.
This is the same proxy used in the 2017-based LTCH market basket (85 FR
58918).
(17) All Other: Labor-Related Services
We propose to continue to use the ECI for Total Compensation for
Private Industry workers in Service Occupations (BLS series code
CIU2010000300000I) to measure the price growth of this cost category.
This is the same proxy used in the 2017-based LTCH market basket (85 FR
58918).
(18) Professional Fees: Nonlabor-Related
We propose to continue to use the ECI for Total Compensation for
Private Industry workers in Professional and Related (BLS series code
CIU2010000120000I) to measure the price growth of this category. This
is the same proxy used in the 2017-based LTCH market basket (85 FR
58919).
(19) Financial Services
We propose to continue to use the ECI for Total Compensation for
Private Industry workers in Financial Activities (BLS series code
CIU201520A000000I) to measure the price growth of this cost category.
This is the same proxy used in the 2017-based LTCH market basket (85 FR
58919).
(20) Telephone Services
We propose to continue to use the CPI for Telephone Services (BLS
series code CUUR0000SEED) to measure the price growth of this cost
category. This is the same proxy used in the 2017-based LTCH market
basket (85 FR 58919).
(21) All Other: Nonlabor-Related Services
We propose to continue to use the CPI for All Items Less Food and
Energy (BLS series code CUUR0000SA0L1E) to measure the price growth of
this cost category. This is the same proxy used in the 2017-based LTCH
market basket (85 FR 58919).
b. Price Proxies for the Capital Portion of the Proposed 2022-Based
LTCH Market Basket
(1) Capital Price Proxies Prior to Vintage Weighting
We propose to continue to use the same price proxies for the
capital-related cost categories as were applied in the 2017-based LTCH
market basket, which are provided in Table VIII.D-07 and described in
this section of this rule. Specifically, we propose to proxy:
Depreciation: Building and Fixed Equipment cost category
by BEA's Chained Price Index for Nonresidential Construction for
Hospitals and Special Care Facilities (BEA Table 5.4.4. Price Indexes
for Private Fixed Investment in Structures by Type).
Depreciation: Movable Equipment cost category by the PPI
Commodity for Machinery and Equipment (BLS series code WPU11).
Nonprofit Interest cost category by the average yield on
domestic municipal bonds (Bond Buyer 20-bond index).
For-profit Interest cost category by the average yield of
the iBoxx AAA Corporate Bond Yield index.
Other Capital-Related cost category by the CPI-U for Rent
of Primary Residence (BLS series code CUUS0000SEHA).
We believe these are the most appropriate proxies for LTCH capital-
related costs that meet our selection criteria of relevance,
timeliness, availability, and reliability. We are also proposing to
continue to vintage weight the capital price proxies for Depreciation
and Interest in order to capture the long-term consumption of capital.
This vintage weighting method is similar to the method used for the
2017-based LTCH market basket and is described in section
VIII.D.4.b.(2). of the preamble of this proposed rule.
(2) Vintage Weights for Price Proxies
Because capital is acquired and paid for over time, capital-related
expenses in any given year are determined by both past and present
purchases of physical and financial capital. The vintage-weighted
capital-related portion of the proposed 2022-based LTCH market basket
is intended to capture the long-term consumption of capital, using
vintage weights for depreciation (physical capital) and interest
(financial capital). These vintage weights reflect the proportion of
capital-related purchases attributable to each year of the expected
life of building and fixed equipment, movable equipment, and interest.
We propose to use vintage weights to compute vintage-weighted price
changes associated with depreciation and interest expenses.
Capital-related costs are inherently complicated and are determined
by complex capital-related purchasing decisions, over time, based on
such factors as interest rates and debt financing. In addition, capital
is depreciated over time instead of being consumed in the same period
it is purchased. By accounting for the vintage nature of capital, we
are able to provide an accurate and stable annual measure of price
changes. Annual nonvintage price changes for capital are unstable due
to the volatility of interest rate changes and, therefore, do not
reflect the actual annual price changes for LTCH capital-related costs.
The capital-related component of the proposed 2022-based LTCH market
basket reflects the underlying stability of the capital-related
acquisition process.
The methodology used to calculate the vintage weights for the
proposed 2022-based LTCH market basket is the same as that used for the
2017-based LTCH market basket with the only difference being the
inclusion of more recent data. To calculate the vintage weights for
depreciation and interest expenses, we first need a time series of
capital-related purchases for building and fixed equipment and movable
equipment. We found no single source that provides an appropriate time
series of capital-related purchases by hospitals for all of the
previously mentioned components of capital purchases. The early
Medicare cost reports did not have sufficient capital-related data to
meet this need. Data we obtained from the American Hospital Association
(AHA) do not include annual capital-related purchases. However, the AHA
does provide a consistent database of total expenses from 1963 to
2020--the latest available data. Consequently, we propose to use data
from the AHA Panel Survey and the AHA Annual Survey to obtain a time
series of total expenses for hospitals. We are also proposing to use
data from the AHA Panel Survey supplemented with the ratio of
depreciation to total hospital expenses obtained from the Medicare cost
reports to derive a trend of annual depreciation expenses for 1963
through 2020. We propose to separate these depreciation expenses into
annual amounts of building and fixed equipment depreciation and movable
equipment depreciation as previously determined. From these annual
depreciation amounts we derive annual end-of-year book values for
building and fixed equipment and movable equipment using the expected
life for each type of asset category. While data are not available that
are specific to LTCHs, we believe this information for all hospitals
serves as a reasonable proxy for the pattern of depreciation for LTCHs.
To continue to calculate the vintage weights for depreciation and
interest expenses, we also needed to account for the expected lives for
building and fixed equipment, movable equipment, and interest for the
proposed 2022-based LTCH market basket. We propose to calculate the
expected lives using Medicare cost report data for LTCHs.
[[Page 36278]]
The expected life of any asset can be determined by dividing the value
of the asset (excluding fully depreciated assets) by its current year
depreciation amount. This calculation yields the estimated expected
life of an asset if the rates of depreciation were to continue at
current year levels, assuming straight-line depreciation. Using this
proposed method, we determined the average expected life of building
and fixed equipment to be equal to 16 years, and the average expected
life of movable equipment to be equal to 9 years. For the expected life
of interest, we believe that vintage weights for interest should
represent the average expected life of building and fixed equipment
because, based on previous research described in the FY 1997 IPPS final
rule (61 FR 46198), the expected life of hospital debt instruments and
the expected life of buildings and fixed equipment are similar. We note
that for the 2017-based LTCH-specific market basket, we derived an
expected average life of building and fixed equipment of 18 years and
an expected average life of movable equipment of 9 years (85 FR 58920).
Multiplying these expected lives by the annual depreciation amounts
results in annual year-end asset costs for building and fixed equipment
and movable equipment. Then we calculated a time series, beginning in
1964, of annual capital purchases by subtracting the previous year's
asset costs from the current year's asset costs.
For the building and fixed equipment and movable equipment vintage
weights, we propose to use the real annual capital-related purchase
amounts for each asset type to capture the actual amount of the
physical acquisition, net of the effect of price inflation. These real
annual capital-related purchase amounts are produced by deflating the
nominal annual purchase amount by the associated price proxy as
previously provided. For the interest vintage weights, we propose to
use the total nominal annual capital-related purchase amounts to
capture the value of the debt instrument (including, but not limited
to, mortgages and bonds). Using these capital-related purchase time
series specific to each asset type, we propose to calculate the vintage
weights for building and fixed equipment, for movable equipment, and
for interest.
The vintage weights for each asset type are deemed to represent the
average purchase pattern of the asset over its expected life (in the
case of building and fixed equipment and interest, 16 years, and in the
case of movable equipment, 9 years). For each asset type, we used the
time series of annual capital-related purchase amounts available from
2020 back to 1964. These data allow us to derive forty-two 16-year
periods of capital-related purchases for building and fixed equipment
and interest, and forty-nine 9-year periods of capital-related
purchases for movable equipment. For each 16-year period for building
and fixed equipment and interest, or 9-year period for movable
equipment, we propose to calculate annual vintage weights by dividing
the capital-related purchase amount in any given year by the total
amount of purchases over the entire 16-year or 9-year period. This
calculation is done for each year in the 16-year or 9-year period and
for each of the periods for which we have data. Then we are proposing
to calculate the average vintage weight for a given year of the
expected life by taking the average of these vintage weights across the
multiple periods of data.
The vintage weights for the capital-related portion of the proposed
2022-based LTCH market basket and the 2017-based LTCH market basket are
presented in Table EEEE 6.
[[Page 36279]]
[GRAPHIC] [TIFF OMITTED] TP02MY24.213
The process of creating vintage-weighted price proxies requires
applying the vintage weights to the price proxy index where the last
applied vintage weight in Table VIII.D-06 is applied to the most recent
data point. We have provided on the CMS website an example of how the
vintage weighting price proxies are calculated, using example vintage
weights and example price indices. The example can be found at the
following link: http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/MedicareProgramRatesStats/MarketBasketResearch.html in the zip file titled ``Weight Calculations
as described in the IPPS FY 2010 Proposed Rule.''
c. Summary of Price Proxies of the Proposed 2022-Based LTCH Market
Basket
Table VIII.D-07 shows both the operating and capital price proxies
for the proposed 2022-based LTCH market basket.
BILLING CODE 4120-01-P
[[Page 36280]]
[GRAPHIC] [TIFF OMITTED] TP02MY24.214
BILLING CODE 4120-01-C
5. Proposed FY 2025 Market Basket Update for LTCHs
For FY 2025 (that is, October 1, 2024 through September 30, 2025),
we propose to use an estimate of the proposed 2022-based LTCH market
basket to update payments to LTCHs based on the best available data.
Consistent with historical practice, we estimate the LTCH market basket
update
[[Page 36281]]
for the LTCH PPS based on IHS Global, Inc.'s (IGI) forecast using the
most recent available data. IGI is a nationally recognized economic and
financial forecasting firm with which CMS contracts to forecast the
components of the market baskets and total factor productivity (TFP).
Based on IGI's fourth quarter 2023 forecast with history through
the third quarter of 2023, the projected market basket update for FY
2025 is 3.2 percent. This projected 2022-based LTCH market basket
update reflects an increase in compensation prices (proxied by the ECIs
for All Civilian workers in Hospitals) of 3.7 percent. IGI's forecast
of the ECIs 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 note that the 10-year historical average (FY 2014 through
FY 2023) growth rate of the proposed 2022-based LTCH market basket is
2.7 percent with a 10-year historical average growth rate of
compensation prices equal to 2.9 percent over this same time period.
Consistent with our historical practice of estimating market basket
increases based on the best available data, we are proposing a market
basket update of 3.2 percent for FY 2025. Furthermore, because the
proposed FY 2025 annual update is based on the most recent market
basket estimate for the 12-month period (currently 3.2 percent), we
also are proposing that if more recent data become subsequently
available (for example, a more recent estimate of the market basket),
we would use such data, if appropriate, to determine the FY 2025 annual
update in the final rule. (The proposed annual update to the LTCH PPS
standard payment rate for FY 2025 is discussed in greater detail in
section V.A.2. of the Addendum to this proposed rule.)
Using the current 2017-based LTCH market basket and IGI's fourth
quarter 2023 forecast for the market basket components, the FY 2025
market basket update would be 3.1 percent (before taking into account
any statutory adjustment). Therefore, the update based on the proposed
2022-based LTCH market basket is currently projected to be 0.1
percentage point higher for FY 2025 compared to the current 2017-based
LTCH market basket. This higher update is primarily due to the higher
Compensation cost weight in the proposed 2022-based market basket (61.8
percent) compared to the 2017-based LTCH market basket (53.2 percent).
This is partially offset by the lower cost weight associated with All
Other Services (such as Professional Fees and Installation,
Maintenance, and Repair Services) for the proposed 2022-based LTCH
market basket relative to the 2017-based LTCH market basket. Table
VIII.D-08 compares the proposed 2022-based LTCH market basket and the
2017-based LTCH market basket percent changes.
[GRAPHIC] [TIFF OMITTED] TP02MY24.215
Over the historical time period covering FY 2020 through FY 2023,
the average growth rate of the proposed 2022-based LTCH market basket
is the same as the average growth rate of the 2017-based LTCH market
basket. Over the forecasted time period covering FY 2024 through FY
2027, the average growth rate of the proposed 2022-based LTCH market
basket is 0.1 percentage point higher than the average growth rate of
the 2017-based LTCH market basket. This is driven by higher projected
growth for FY 2024 and FY 2025 for the proposed 2022-based LTCH market
basket, which is primarily a result of the higher proposed Compensation
cost weight combined with faster projected growth in Compensation
prices for FY 2024 and FY 2025 relative to projected prices for All
Other Services. In FY 2026 and FY 2027 prices for these two aggregate
cost categories are projected to grow at similar rates.
6. Proposed FY 2025 Labor-Related Share
As discussed in section V.B. of the Addendum to this proposed rule,
under the authority of section 123 of the BBRA as amended by section
307(b) of the BIPA, we established an adjustment to the LTCH PPS
payments to account for differences in LTCH area wage levels (Sec.
412.525(c)). The labor-related portion of the LTCH PPS standard Federal
payment rate, hereafter referred to as the labor-related share, is
adjusted to account for geographic differences in area wage levels by
applying the applicable LTCH PPS wage index. The labor-related share is
determined by identifying the national average proportion of total
costs that are related
[[Page 36282]]
to, influenced by, or vary with the local labor market. As discussed in
more detail in this section of this rule and similar to the 2017-based
LTCH market basket, we classify a cost category as labor-related and
include it in the labor-related share if the cost category is defined
as being labor-intensive and its cost varies with the local labor
market. As stated in the FY 2024 IPPS/LTCH PPS final rule (88 FR
58988), the labor-related share for FY 2024 was defined as the sum of
the FY 2024 relative importance of Wages and Salaries; Employee
Benefits; Professional Fees: Labor-Related Services; Administrative and
Facilities Support Services; Installation, Maintenance, and Repair
Services; All Other: Labor-related Services; and a portion of the
Capital-Related Costs from the 2017-based LTCH market basket.
We propose to continue to classify a cost category as labor-related
if the costs are labor-intensive and vary with the local labor market.
Given this, based on our definition of the labor-related share and the
cost categories in the proposed 2022-based LTCH market basket, we
propose to include in the labor-related share for FY 2025 the sum of
the FY 2025 relative importance of Wages and Salaries; Employee
Benefits; Professional Fees: Labor-Related; Administrative and
Facilities Support Services; Installation, Maintenance, and Repair
Services; All Other: Labor-Related Services; and a portion of the
Capital-Related cost weight from the proposed 2022-based LTCH market
basket.
Similar to the 2017-based LTCH market basket, the proposed 2022-
based LTCH market basket includes two cost categories for nonmedical
Professional fees (including but not limited to, expenses for legal,
accounting, and engineering services). These are Professional Fees:
Labor-Related and Professional Fees: Nonlabor-Related. For the proposed
2022-based LTCH market basket, we propose to estimate the labor-related
percentage of non-medical professional fees (and assign these expenses
to the Professional Fees: Labor-Related services cost category) based
on the same method that was used to determine the labor-related
percentage of professional fees in the 2017-based LTCH market basket.
As was done for the 2017-based LTCH market basket, we propose to
determine the proportion of legal, accounting and auditing,
engineering, and management consulting services that meet our
definition of labor-related services based on a survey of hospitals
conducted by CMS in 2008. We notified the public of our intent to
conduct this survey on December 9, 2005 (70 FR 73250) and did not
receive any public comments in response to the notice (71 FR 8588). A
discussion of the composition of the survey and post-stratification can
be found in the FY 2010 IPPS/LTCH PPS final rule (74 FR 43850 through
43856). Based on the weighted results of the survey, we determined that
hospitals purchase, on average, the following portions of contracted
professional services outside of their local labor market:
34 percent of accounting and auditing services.
30 percent of engineering services.
33 percent of legal services.
42 percent of management consulting services.
For the proposed 2022-based LTCH market basket, we propose to apply
each of these percentages to the respective 2017 Benchmark I-O cost
category underlying the professional fees cost category to determine
the Professional Fees: Nonlabor-Related costs. The Professional Fees:
Labor-Related costs were determined to be the difference between the
total costs for each Benchmark I-O category and the Professional Fees:
Nonlabor-Related costs. This is the same methodology that we used to
separate the 2017-based LTCH market basket professional fees category
into Professional Fees: Labor-Related and Professional Fees: Nonlabor-
Related cost categories.
Effective for transmittal 18 (https://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/Transmittals/r18p240i), the hospital
Medicare Cost Report (CMS Form 2552-10, OMB No. 0938-0050) is
collecting information on whether a hospital purchased professional
services (for example, legal, accounting, tax preparation, bookkeeping,
payroll, advertising, and/or management/consulting services) from an
unrelated organization and if the majority of these expenses were
purchased from unrelated organizations located outside of the main
hospital's local area labor market. We encourage all providers to
provide this information so we can potentially use these more recent
data in future rulemaking to determine the labor-related share.
In the proposed 2022-based LTCH market basket, nonmedical
professional fees that were subject to allocation based on these survey
results represent approximately 3.6 percent of total costs (and are
limited to those fees related to Accounting and Auditing, Legal,
Engineering, and Management Consulting services). Based on our survey
results, we propose to apportion approximately 2.3 percentage points of
the 3.6 percentage point figure into the Professional Fees: Labor-
Related cost category and designate the remaining approximately 1.3
percentage points into the Professional Fees: Nonlabor-Related cost
category.
In addition to the professional services as previously listed, for
the 2022-based LTCH market basket, we propose to allocate a proportion
of the Home Office/Related Organization Contract Labor cost weight,
calculated using the Medicare cost reports as previously stated, into
the labor-related and nonlabor-related cost categories. We propose to
classify these expenses as labor-related and nonlabor-related as many
facilities are not located in the same geographic area as their home
office and, therefore, do not meet our definition for the labor-related
share that requires the services to be purchased in the local labor
market.
Similar to the 2017-based LTCH market basket, we propose for the
2022-based LTCH market basket to use the Medicare cost reports for
LTCHs to determine the home office labor-related percentages. The
Medicare cost report requires a hospital to report information
regarding their home office provider. Using information on the Medicare
cost report, we compare the location of the LTCH with the location of
the LTCH's home office. We propose to classify a LTCH with a home
office located in their respective labor market if the LTCH and its
home office are located in the same Metropolitan Statistical Area
(MSA). Then we determine the proportion of the Home Office/Related
Organization Contract Labor cost weight that should be allocated to the
labor-related share based on the percent of total Home Office/Related
Organization Contract Labor costs for those LTCHs that had home offices
located in their respective MSA of total Home Office/Related
Organization Contract Labor costs for LTCHs with a home office. We
determined a LTCH's and its home office's MSA using their zip code
information from the Medicare cost report. Using this methodology with
the 2022 Medicare cost reports, we determined that 4 percent of LTCHs'
Home Office/Related Organization Contract Labor costs were for home
offices located in their respective MSA, or local labor markets.
Therefore, we are allocating 4 percent of the Home Office/Related
Organization Contract Labor cost weight (0.1 percentage point = 3.7
percent x 4 percent) to the Professional Fees: Labor-Related cost
weight and 96 percent of the Home Office/Related Organization Contract
Labor cost weight to the Professional Fees: Nonlabor-Related cost
weight (3.6 percentage
[[Page 36283]]
points = 3.7 percent x 96 percent). For comparison, for the 2017-based
LTCH market basket we also allocated 4 percent of the Home Office/
Related Organization Contract Labor cost weight to the Professional
Fees: Labor-Related cost weight (85 FR 58924).
In summary, based on the two allocations mentioned earlier, we
apportioned 2.4 percentage points (2.3 percentage points + 0.1
percentage point) of the Professional Fees and Home Office/Related
Organization Contract Labor cost weights into the Professional Fees:
Labor-Related cost category. This amount was added to the portion of
professional fees that we already identified as labor-related using the
I-O data such as contracted advertising and marketing costs
(approximately 0.6 percentage point of total costs) resulting in a
total Professional Fees: Labor-Related cost weight of 3.0 percent.
As previously stated, we propose to include in the labor-related
share the sum of the relative importance of Wages and Salaries;
Employee Benefits; Professional Fees: Labor-Related; Administrative and
Facilities Support Services; Installation, Maintenance, and Repair
Services; All Other: Labor-Related Services; and a portion of the
Capital-Related cost weight from the proposed 2022-based LTCH market
basket. The relative importance reflects the different rates of price
change for these cost categories between the base year (2022) and FY
2025. Based on IGI's fourth quarter 2023 forecast of the proposed 2022-
based LTCH market basket, the sum of the FY 2025 relative importance
for operating costs (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) is 68.9 percent. The portion of Capital costs
that is estimated to be influenced by the local labor market is 46
percent, which is the same percentage applied to the 2017-based LTCH
market basket. Since the relative importance for Capital is 8.4 percent
of the proposed 2022-based LTCH market basket in FY 2025, we took 46
percent of 8.4 percent to determine the proposed labor-related share of
Capital for FY 2025 of 3.9 percent. Therefore, we are proposing a total
labor-related share for FY 2025 of 72.8 percent (the sum of 68.9
percent for the operating cost and 3.9 percent for the labor-related
share of Capital). Table VIII.D-09 shows the FY 2025 labor-related
share using the proposed 2022-based LTCH market basket relative
importance and the FY 2024 labor-related share using the 2017-based
LTCH market basket.
[GRAPHIC] [TIFF OMITTED] TP02MY24.216
The total difference between the FY 2025 labor-related share using
the proposed 2022-based LTCH market basket (72.8 percent) and the FY
2024 labor-related share using the 2017-based LTCH market basket (68.5
percent) is 4.3 percentage points and this difference is primarily
attributable to the revision to the base year cost weights for those
categories included in the labor-related share. The 4.3 percentage
points revision to the base year cost weights is a result of: (1) an
8.6 percentage points upward revision to the base year Compensation
cost weight, which is derived using the LTCH Medicare cost report data;
(2) a 3.6 percentage points downward revision in the base year labor-
related categories associated with incorporating the 2017 Benchmark I-O
data; and (3) a 0.7 percentage point downward revision in the base year
labor-related portion of capital costs, which is derived using the LTCH
Medicare cost report data.
[[Page 36284]]
IX. Proposed Quality Data Reporting Requirements for Specific Providers
A. Overview
In section IX. of the preamble of this proposed rule, we are
seeking comment on and proposing changes to the following Medicare
quality reporting programs:
In section IX.B. of the preamble of this proposed rule, we
have the following crosscutting quality program proposals or request
for comment:
++ Proposed Adoption of the Patient Safety Structural Measure in
the Hospital IQR Program and PCHQR Program.
++ Proposed Modification to the Hospital Consumer Assessment of
Healthcare Providers and Systems (HCAHPS) Survey in the Hospital IQR
Program, Hospital VBP Program, and PCHQR Program.
++ Advancing Patient Safety and Outcomes Across the Hospital
Quality Programs--Request for Comment.
In section IX.C. of the preamble of this proposed rule,
the Hospital IQR Program.
In section IX.D. of the preamble of this proposed rule,
the PCHQR Program.
In section IX.E. of the preamble of this proposed rule,
the LTCH QRP.
In section IX.F. of the preamble of this proposed rule,
the Medicare Promoting Interoperability Program for Eligible Hospitals
and Critical Access Hospitals (CAHs) (previously known as the Medicare
EHR Incentive Program).
B. Crosscutting Quality Program Proposals and Request for Comment
1. Proposed Adoption of the Patient Safety Structural Measure Beginning
With the CY 2025 Reporting Period/FY 2027 Payment Determination for the
Hospital Inpatient Quality Reporting (IQR) Program and the CY 2025
Reporting Period/FY 2027 Program Year for the PPS-Exempt Cancer
Hospital Quality Reporting (PCHQR) Program
a. Background
A foundational commitment of providing healthcare services is to
ensure safety, as embedded in the centuries-old Hippocratic Oath,
``First, do no harm.'' Yet, the landmark reports To Err is Human \182\
and Crossing the Quality Chasm \183\ surfaced major deficits in
healthcare quality and safety. These reports resulted in widespread
awareness of the alarming prevalence of patient harm and, over the past
two decades, healthcare facilities implemented various interventions
and strategies to improve patient safety, with some documented
successes.\184\ However, progress has been slow, and preventable harm
to patients in the clinical setting resulting in significant morbidity
and mortality remains common. A recent systematic analysis of
literature concluded that preventable mortality among inpatients
results in approximately 22,165 preventable deaths annually.\185\ In
another recent study, researchers identified adverse events in almost
one-quarter of admissions and showed that more than one-fifth were
deemed preventable and almost one-third were considered serious (that
is, caused harm that required intervention or prolonged recovery).\186\
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\182\ Institute of Medicine (U.S.) Committee on Quality of
Health Care in America, Kohn, L. T., Corrigan, J. M., & Donaldson,
M. S. (Eds.). (2000). To Err is Human: Building a Safer Health
System. National Academies Press (U.S.).
\183\ Institute of Medicine (U.S.) Committee on Quality of
Health Care in America. (2001). Crossing the Quality Chasm: A New
Health System for the 21st Century. National Academies Press (U.S.).
\184\ Agency for Healthcare Research and Quality. (February
2021). National Healthcare Quality and Disparities Report chartbook
on patient safety. Rockville, MD. Available at: https://www.ahrq.gov/sites/default/files/wysiwyg/research/findings/nhqrdr/chartbooks/patientsafety/2019qdr-patient-safety-chartbook.pdf.
\185\ Rodwin BA, Bilan VP, Merchant NB, Steffens CG, Grimshaw
AA, Bastian LA, Gunderson CG. Rate of Preventable Mortality in
Hospitalized Patients: a Systematic Review and Meta-analysis. J Gen
Intern Med. 2020 Jul;35(7):2099-2106. doi: 10.1007/s11606-019-05592-
5. Epub 2020 Jan 21. PMID: 31965525; PMCID: PMC7351940.
\186\ Bates DW, Levine DM, Salmasian H, et al. The Safety of
Inpatient Health Care. New England Journal of Medicine.
2023;388(2):142-153. https://doi.org/10.1056/nejmsa2206117.
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Despite established patient safety protocols and quality measures,
the COVID-19 public health emergency (PHE) strained the healthcare
system substantially, introducing new safety risks and negatively
impacting patient safety in the normal delivery of care. Since the
onset of the COVID-19 PHE, the U.S. has seen marked declines in patient
safety metrics, as evidenced by considerable increases in healthcare-
associated infections (HAIs).187 188 Studies found that
central line-associated blood stream infections (CLABSIs) in hospitals
were 60 percent higher than predicted in the absence of COVID-19,
catheter-associated urinary tract infections (CAUTIs) were 43 percent
higher, and methicillin-resistant Staphylococcus aureus (MRSA)
bacteremia infections were 44 percent higher. Studies have shown that
these results were likely due at least in part to disrupted routine
infection control practices during the COVID-19
pandemic.189 190 Notably, recent reports demonstrate that
some HAI rates have begun to decrease towards pre-pandemic levels as
the U.S. saw a 9 percent overall decrease in CLABSI, a 12 percent
overall decrease in CAUTI and a 16 percent overall decrease in hospital
onset MRSA bacteremia between 2021 and 2022 in acute care hospital
settings.\191\
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\187\ Lastinger LM, Alvarez CR, Kofman A, Konnor RY, Kuhar DT,
Nkwata A, Patel PR, Pattabiraman V, Xu SY, Dudeck MA. Continued
increases in the incidence of healthcare-associated infection (HAI)
during the second year of the coronavirus disease 2019 (COVID-19)
pandemic. Infect Control Hosp Epidemiol. 2023 Jun;44(6):997-1001.
doi: 10.1017/ice.2022.116. Epub 2022 May 20. PMID: 35591782; PMCID:
PMC9237489.
\188\ Patel, PR, Weiner-Lastinger, LM, Dudeck, MA, et al. Impact
of COVID-19 pandemic on central-line-associated bloodstream
infections during the early months of 2020, National Healthcare
Safety Network. Infect Control Hosp Epidemiol 2021. doi: 10.1017/
ice.2021.108.
\189\ Baker MA, Sands KE, Huang SS, Kleinman K, Septimus EJ,
Varma N, Blanchard J, Poland RE, Coady MH, Yokoe DS, Fraker S,
Froman A, Moody J, Goldin L, Isaacs A, Kleja K, Korwek KM, Stelling
J, Clark A, Platt R, Perlin JB; CDC Prevention Epicenters Program.
The Impact of Coronavirus Disease 2019 (COVID-19) on Healthcare-
Associated Infections. Clin Infect Dis. 2022 May 30;74(10):1748-
1754. doi: 10.1093/cid/ciab688. PMID: 34370014; PMCID: PMC8385925.
\190\ Centers for Disease Control and Prevention. (2021). 2021
National and State Healthcare-Associated Infections Progress Report.
Available at: https://www.cdc.gov/hai/data/archive/2021-HAI-progress-report.html#2018.
\191\ Centers for Disease Control and Prevention. (2022). 2022
National and State Healthcare-Associated Infections Progress Report.
Available at: https://www.cdc.gov/hai/data/portal/progress-report.html.
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As healthcare facilities struggled to address the challenges posed
by the COVID-19 PHE, safety gaps and risks in healthcare delivery were
illuminated,\192\ revealing a lack of resiliency in the healthcare
system.193 194 Beyond HAIs, other preventable types of
patient harm that were brought to the forefront by the COVID-19 PHE
include occurrences of pressure injuries \195\ and patient falls \196\
among hospitalized patients.
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\192\ Agency for Healthcare Research and Quality. (2021). AHRQ
PSNet Annual Perspective: Impact of the COVID-19 Pandemic on Patient
Safety. https://psnet.ahrq.gov/perspective/ahrq-psnet-annual-perspective-impact-covid-19-pandemic-patient-safety.
\193\ Fleisher, L.A., Schreiber, M.D., Cardo, D., and
Srinivasan, M.D. (2022). Health care safety during the pandemic and
beyond--building a system that ensures resilience. N Engl J Med,
386: 609-611. https://www.nejm.org/doi/full/10.1056/NEJMp2118285.
\194\ Implications of the COVID-19 pandemic for patient safety:
a rapid review. Geneva: World Health Organization; 2022. Licence: CC
BY-NC-SA 3.0 IGO.
\195\ Li, Z., Lin, F., Thalib, L., & Chaboyer, W. (2020). Global
prevalence and incidence of pressure injuries in hospitalised adult
patients: A systematic review and meta-analysis. International
Journal of Nursing Studies, Vol. 105. https://doi.org/10.1016/j.ijnurstu.2020.103546.
\196\ Dykes, P. C., Curtin-Bowen, M., Lipsitz, S., Franz, C.,
Adelman, J., Adkison, L., Bogaisky, M., Carroll, D., Carter, E.,
Herlihy, L., Lindros, M. E., Ryan, V., Scanlan, M., Walsh, M. A.,
Wien, M., & Bates, D. W. (2023). Cost of Inpatient Falls and Cost-
Benefit Analysis of Implementation of an Evidence-Based Fall
Prevention Program. JAMA Health Forum, 4(1), e225125. https://doi.org/10.1001/jamahealthforum.2022.5125.
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[[Page 36285]]
In addition to safety issues illuminated during the COVID-19 PHE,
two other key patient safety indicators that are worth noting for their
prevalence are postoperative respiratory failure 197 198 199
and acute kidney injuries (AKI).200 201
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\197\ Sabate S., Mazo V., Canet J. (2014). Predicting
Postoperative Pulmonary Complications: Implications for Outcomes and
Costs. Case Reports in Anesthesiology. 27(2), 201-209.
\198\ Rosen, A. K., Loveland, S., Shin, M., Shwartz, M.,
Hanchate, A., Chen, Q., Kaafarani, H. M., & Borzecki, A. (2013).
Examining the impact of the AHRQ Patient Safety Indicators (PSIs) on
the Veterans Health Administration: the case of readmissions.Medical
Care,51(1), 37-44.
\199\ Lawson E.H., Hall B.L., Louie R., et al. (2013).
Association Between Occurrence of a Postoperative Complication and
Readmission: Implications for Quality Improvement and Cost Savings.
Annals of Surgery, 258(1),10-18.
\200\ Thongprayoon, C., Hansrivijit, P., Kovvuru, K., Kanduri,
S. R., Torres-Ortiz, A., Acharya, P., Gonzalez-Suarez, M. L.,
Kaewput, W., Bathini, T., & Cheungpasitporn, W. (2020). Diagnostics,
Risk Factors, Treatment and Outcomes of Acute Kidney Injury in a New
Paradigm.Journal of clinical medicine, 9(4), 1104.
\201\ Hoste, E. A., & Schurgers, M. (2008). Epidemiology of
acute kidney injury: how big is the problem? Critical care medicine,
36(4 Suppl), S146-S151.
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While the COVID-19 PHE may have disrupted routine infection control
practices, these key patient safety indicators nevertheless show the
importance of addressing gaps in safety in order to save lives, provide
equitable medical care, and ensure that the U.S. healthcare system is
resilient enough to withstand future challenges. Now is the time to
recommit to better safety practices for both patients and healthcare
workers, establish new protocols, and implement early interventions
that will save many lives from preventable harms.
To accomplish these goals, the federal government is taking a
multi-pronged approach to improve safety and reduce preventable harm to
patients. The Agency for Healthcare Research and Quality (AHRQ), on
behalf of HHS, has established the National Action Alliance to Advance
Patient and Workforce Safety as a public-private collaboration to
improve both patient and workforce safety.\202\ As described by AHRQ,
the National Action Alliance is a partnership between HHS and its
Federal agencies and private stakeholders, including healthcare
systems, clinicians, allied health professionals, patients, families,
caregivers, professional societies, patient and workforce safety
advocates, the digital healthcare sector, health services researchers,
employers, and payors interested in recommitting the U.S. to advancing
patient and workforce safety to move toward zero harm in
healthcare.\203\
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\202\ AHRQ. (2023). National Action Alliance To Advance Patient
and Workforce Safety. https://www.ahrq.gov/cpi/about/otherwebsites/action-alliance.html.
\203\ AHRQ. (2023). National Action Alliance To Advance Patient
and Workforce Safety. https://www.ahrq.gov/cpi/about/otherwebsites/action-alliance.html.
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In September 2023, the President's Council of Advisors on Science
and Technology (PCAST) published the ``Report to the President: A
Transformational Effort on Patient Safety,'' with a call to action to
renew ``our nation's commitment to improving patient safety.'' \204\
The PCAST report put forth the following recommendations as a part of
the call to action: (1) Establish and maintain Federal leadership for
the improvement of patient safety as a national priority; (2) Ensure
that patients receive evidence-based practices for preventing harm and
addressing risks; (3) Partner with patients and reduce disparities in
medical errors and adverse outcomes; and (4) Accelerate research and
deployment of practices, technologies, and exemplar systems of safe
care.\205\
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\204\ President's Council of Advisors on Science and Technology.
(2023). Report to the President: A Transformational Effort on
Patient Safety. https://www.whitehouse.gov/wp-content/uploads/2023/09/PCAST_Patient-Safety-Report_Sept2023.pdf.
\205\ President's Council of Advisors on Science and Technology.
(2023). Report to the President: A Transformational Effort on
Patient Safety. https://www.whitehouse.gov/wp-content/uploads/2023/09/PCAST_Patient-Safety-Report_Sept2023.pdf.
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As part of this national recommitment to safety in healthcare, we
are promoting the use of safety measures throughout our quality
programs to identify and measure quality gaps and processes, and to
make that information transparent and available to the public.
Effective measurement is paramount to monitoring harm events,
identifying key gaps, and tracking progress toward safer, more reliable
care. Within CMS' hospital quality measurement programs, there are a
number of outcome and process measures in use that capture specific
conditions or procedures such as the Severe Sepsis and Septic Shock:
Management Bundle measure, Patient Safety and Adverse Events Composite
measure, Severe Obstetric Complications electronic clinical quality
measure (eCQM), and the Safe Use of Opioids--Concurrent Prescribing
eCQM. While these metrics are important, they are not sufficient by
themselves to measure and incentivize investment in a resilient safety
culture or the infrastructure necessary for sustainable high
performance within the broad and complex domain of patient safety. The
systems-level approach to patient safety maintains that errors and
accidents in medical care are a reflection of system-level failures,
rather than failings on the part of individuals.\206\ There is a strong
alignment among patient safety experts to shift to a more holistic,
proactive, systems-based approach to patient
safety.207 208 209 210 211 212 While each of our existing
measures address processes and outcomes that encourage providers to
improve patient safety for specific conditions or related to specific
treatments, these measures do not address the overall culture in which
the care is provided. Including a systems-level measure would
contribute to a culture that improves performance on these individual
metrics as well as improves safety for all care provided within the
hospital.
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\206\ Patient Safety Network. Systems Approach. Agency for
Healthcare Research and Quality. Published September 7, 2019.
https://psnet.ahrq.gov/primer/systems-approach.
\207\ National Patient Safety Foundation. Free from Harm:
Accelerating Patient Safety Improvement Fifteen Years after To Err
Is Human. Boston, MA: National Patient Safety Foundation; 2015.
\208\ Gandhi, T. K., Feeley, D., & Schummers, D. (2020b). Zero
Harm in Health Care. NEJM Catalyst, 1(2). https://doi.org/10.1056/cat.19.1137.
\209\ Pronovost, P. Transforming patient safety: A sector-wide
systems approach. Published January 8, 2015.
\210\ Frankel A, Haraden C, Federico F, Lenoci-Edwards J. A
Framework for Safe, Reliable, and Effective Care. White Paper.
Cambridge, MA: Institute for Healthcare Improvement and Safe &
Reliable Healthcare; 2017. (Available on https://www.ihi.org/resources/white-papers/framework-safe-reliable-and-effective-care).
\211\ American College of Healthcare Executives and IHI/NPSF
Lucian Leape Institute. Leading a Culture of Safety: A Blueprint for
Success. Boston, MA: American College of Healthcare Executives and
Institute for Healthcare Improvement; 2017.
\212\ National Steering Committee for Patient Safety. Safer
Together: A National Action Plan to Advance Patient Safety. Boston,
Massachusetts: Institute for Healthcare Improvement; 2020.
(Available at www.ihi.org/SafetyActionPlan).
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To drive action and improvements in safety and address this gap in
systems-level measurement for safety within the Hospital IQR and PCHQR
Programs, we are proposing the adoption of the Patient Safety
Structural measure, a new attestation-based measure that assesses
whether hospitals demonstrate a structure, culture, and leadership
commitment that prioritize safety. The Patient Safety Structural
measure includes five complementary domains, each containing a related
set of statements that aim to capture the most salient, evidenced-
based, structural and cultural elements of safety. This measure is
intended to be a foundational measure and designed to assess hospital
implementation of a
[[Page 36286]]
systems-based approach to safety best practices, as demonstrated by:
leaders who prioritize and champion safety; organizational policies,
protocols, goals, and metrics reflecting safety as a core value; a
diverse group of patients and families meaningfully engaged with
healthcare providers as partners in safety; practices indicative of a
culture of safety; accountability and transparency in addressing
adverse events; and continuous learning and improvement. This Patient
Safety Structural measure is informed by the PCAST recommendations,
Safer Together: The National Action Plan to Advance Patient
Safety,\213\ developed by the National Steering Committee for Patient
Safety convened by the Institute for Healthcare Improvement (IHI), as
well as scientific evidence from existing patient safety literature,
and detailed input from patient safety experts, advocates, and
patients. Combining this leadership level structural measure with other
high priority safety outcome measures would result in a robust and
complementary patient safety measure set.
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\213\ National Steering Committee for Patient Safety. Safer
Together: A National Action Plan to Advance Patient Safety. Boston,
Massachusetts: Institute for Healthcare Improvement; 2020.
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We note that other safety measure adoption proposals in this FY
2025 IPPS/LTCH PPS proposed rule complement the goals we have outlined
for the Patient Safety Structural measure. Interested parties are
encouraged to review our proposals to adopt measures for Hospital
Harm--Falls with Injury (section IX.C.5.c of the preamble of this
proposed rule), Hospital Harm--Postoperative Respiratory Failure
(section IX.C.5.b of the preamble of this proposed rule), and the
adoption of two healthcare-associated infection measures (section
IX.C.5.d of the preamble of this proposed rule).
b. Measure Alignment to Strategy
In addition to the other Federal safety initiatives noted
previously, this measure also aligns with the CMS National Quality
Strategy. Specifically, the CMS National Quality Strategy identifies
four priority areas and eight goals, each with an identified objective,
success target, and initial action steps for advancing a ``high-
quality, safe, equitable, and resilient health care system for all
individuals.'' \214\ The Patient Safety Structural measure addresses
the priority area Safety and Resiliency, and aligns with the goals to
enable a responsive and resilient healthcare system to improve quality
and to achieve zero preventable harm. For example, attestation
statements within the measure require hospitals to confirm if their
strategic plan includes publicly sharing their commitment to patient
safety as a core value and outlines specific safety goals and
associated metrics, including the goal of ``zero preventable harm.''
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\214\ Centers for Medicare & Medicaid Services. (2023). CMS
National Quality Strategy Handout. Available at: https://www.cms.gov/files/document/cms-national-quality-strategy-handout.pdf.
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This measure aligns with our efforts under the CMS National Quality
Strategy's goal of advancing equity and whole-person care.\215\ As
stated in the measure attestation under Domain 2: Strategic Planning &
Organizational Policy (see Table VIII.B.1-01 of this proposed rule),
``Patient safety and equity in care are inextricable, and therefore
equity, with the goal of safety for all individuals, must be embedded
in safety planning, goal-setting, policy and processes.'' This measure
furthers a patient-centered approach by promoting conversations on
equity among hospital staff, leadership, and patients and caregivers
that take into account the diverse communities served by participants
in CMS programs and the particular needs of each hospital's own
community.
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\215\ Centers for Medicare & Medicaid Services. (2023). CMS
National Quality Strategy Handout. Available at: https://www.cms.gov/files/document/cms-national-quality-strategy-handout.pdf.
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The measure also aligns with our Meaningful Measures Framework,
which identifies high-priority areas for quality measurement and
improvement to assess core issues most critical to high-quality
healthcare and improving patient outcomes.\216\ In 2021, we launched
Meaningful Measures 2.0 to promote innovation and modernization of all
aspects of quality, and to address a wide variety of settings,
interested parties, and measure requirements.\217\ The Patient Safety
Structural measure supports these efforts and is aligned with the
Meaningful Measures Area of ``Safety'' and the Meaningful Measures 2.0
goal to ``Ensure Safe and Resilient Health Care Systems.'' This measure
also supports the Meaningful Measures 2.0 priority to ``promote a
safety culture within a health care organization.'' This attestation
measure focused on patient safety policies, processes, and activities
aims to help hospitals better understand priorities for improving
safety and serve as a prompt for action to invest in the infrastructure
and safety culture necessary to reduce preventable harm to patients.
When measure results are made public, patients and families would be
able to make informed decisions on what facilities are best for them.
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\216\ Centers for Medicare & Medicaid Services. Meaningful
Measures Framework. Available at: https://www.cms.gov/medicare/quality/meaningful-measures-initiative/meaningful-measures-20.
\217\ Centers for Medicare & Medicaid Services. (2021).
Meaningful Measures 2.0: Moving from Measure Reduction to
Modernization. Available at: https://www.cms.gov/meaningful-measures-20-moving-measure-reduction-modernization. We note that
Meaningful Measures 2.0 is still under development.
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c. Pre-Rulemaking Process and Measure Endorsement
As required under section 1890A of the Act, the Consensus-Based
Entity (CBE), currently Battelle, established the Partnership for
Quality Measurement (PQM) to convene members comprised of clinicians,
patients, measure experts, and health information technology
specialists, to participate in the pre-rulemaking process and the
measure endorsement process. The pre-rulemaking process, which we refer
to as the Pre-Rulemaking Measure Review (PRMR), includes a review of
measures published on the publicly available list of Measures Under
Consideration (MUC List),218 219 by one of several
committees convened by the PQM, for the purpose of providing multi-
stakeholder input to the Secretary on the selection of quality and
efficiency measures under consideration for use in certain Medicare
quality programs, including the PCHQR and Hospital IQR Programs. The
PRMR process includes opportunities for public comment through a 21-day
public comment period, as well as public listening sessions. The PQM
posts the compiled comments and listening session inputs received
during the public comment period and the listening sessions within 5
days of the close of the public comment period. More details regarding
the PRMR process may be found in the PQM Guidebook of Policies and
Procedures for Pre-Rulemaking Measure Review and Measure Set Review,
including details of the measure review processes in Chapter 3.
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\218\ Centers for Medicare & Medicaid Services. (December 1,
2023). 2023 Measures Under Consideration (MUC) List. Available at:
https://mmshub.cms.gov/sites/default/files/2023-MUC-List.xlsx.
\219\ Centers for Medicare & Medicaid Services. (December 2023).
Overview of the List of Measures Under Consideration. Available at:
https://mmshub.cms.gov/sites/default/files/2023-MUC-List-Overview.pdf.
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The CBE-established PQM also conducts the measure endorsement and
maintenance (E&M) process to ensure a measure submitted for endorsement
is evidence-based, reliable, valid, verifiable, relevant to enhanced
health outcomes, actionable at the caregiver level, feasible to collect
and report, and responsive to variations in patient characteristics--
such as health status, language capabilities, race or ethnicity, and
income level--and is consistent across types of health care providers,
including hospitals and physicians (see section 1890(b)(2) of the Act).
The PQM convenes several E&M project groups twice yearly, formally
called the E&M Committees, each comprised of an E&M Advisory Group and
an E&M Recommendations Group, to vote on whether a measure meets
certain quality measure criteria. More details regarding the E&M
process may be found in the PQM Endorsement and Maintenance (E&M)
Guidebook, including details of the measure endorsement process in the
section titled, ``Endorsement and Review Process.''
For the voting procedures of the PRMR and E&M processes, the PQM
utilizes the Novel Hybrid Delphi and Nominal Group (NHDNG) multi-step
process, which is an iterative consensus-building approach aimed at a
minimum of 75 percent agreement among voting members, rather than a
simple majority vote, and supports maximizing the time spent to build
consensus by focusing discussion on measures where there is
disagreement. For example, the PRMR Hospital Recommendation Group can
reach consensus and have the following voting results: (A) Recommend,
(B) Recommend with conditions (with 75 percent of the votes casted as
recommend with conditions or 75 percent between recommend and recommend
with conditions), and (C) Do not recommend. If no voting category
reaches 75 percent or greater (including the combined [A] recommend and
[B] recommend with conditions), the PRMR Hospital Recommendation Group
did not come to consensus and the voting result is `Consensus not
reached.' Consensus not reached signals continued disagreement amongst
the committee despite being presented with perspectives from public
comment, committee member feedback and discussion, and highlights the
multi-faceted assessments of quality measures. More details regarding
the PRMR voting procedures may be found in Chapter 4 of the PQM
Guidebook of Policies and Procedures for Pre-Rulemaking Measure Review
and Measure Set Review. More details regarding the E&M voting
procedures may be found in the PQM Endorsement and Maintenance (E&M)
Guidebook.
(1) Recommendation From the Pre-Rulemaking and Measure Review Process
As part of the PRMR process, the PRMR Hospital Recommendation Group
reviewed the Patient Safety Structural measure (MUC2023-188) during a
meeting on January 18 and 19, 2024. The Patient Safety Structural
measure was included for consideration in the Hospital IQR and PCHQR
Programs on the publicly available ``2023 Measures Under Consideration
List'' (MUC List).\220\
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\220\ Centers for Medicare & Medicaid Services. 2023 Measures
Under Consideration (MUC) List. Available at: https://mmshub.cms.gov/sites/default/files/2023-MUC-List.xlsx.
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The voting results of the PRMR Hospital Recommendation Group for
the Patient Safety Structural measure for the Hospital IQR Program
were: eight members of the group recommended adopting the measure into
the Hospital IQR Program without conditions; five members recommended
adoption with conditions; three committee members voted not to
recommend the measure for adoption. Additionally, nine members of the
group recommended adopting the measure into the PCHQR Program without
conditions; four members recommended adoption with conditions; three
committee members voted not to recommend the measure for adoption.
Taken together, 81.3 percent of the votes were recommended with
conditions for each program. Thus, the committee reached consensus and
recommended the Patient Safety Structural measure for the Hospital IQR
Program and the PCHQR Program with conditions.
As mentioned previously, five members of the voting committee
recommended the adoption of this measure into the Hospital IQR Program
with conditions and four members of the voting committee recommended
the adoption of this measure into the PCHQR Program with conditions.
Those conditions were: the publication of an implementation guide that
clearly documents how safety is to be measured; and using data to
narrow the scope before approving the measure for programs. An
attestation guide will be available at the time of the publication of
this proposal. Data obtained from the measure's national use would
allow us to evaluate the effectiveness of, and the potential to narrow
the future scope of, the proposed attestations. Therefore, we are
proposing this measure for adoption because we have adequately
addressed the conditions raised by the PRMR Hospital Recommendations
Group.
In addition to the formal voting results on the adoption of the
Patient Safety Structural measure, we note that the majority of public
comments received on this measure during the PRMR process were
supportive, with 91 out of 97 public comments (94%) either supporting
(81) adoption or supporting adoption with conditions (10). Comments in
support of this proposal included the need for a zero preventable harm
goal, robust hospital leadership, developing trust through
transparency, and the involvement of patients and their families in
safety work. We thank the large number of patients, family members, and
other interested parties who publicly participated in the PRMR process.
(2) Endorsement and Measure Review
We are proposing to adopt this measure into the Hospital IQR
Program and the PCHQR Program despite the measure not being endorsed by
the CBE. Section 1886(b)(3)(B)(viii)(IX)(aa) of the Act requires that
each measure specified by the Secretary for use in the Hospital IQR
Program be endorsed by the entity with a contract under section 1890(a)
of the Act, and section 1866(k)(3)(A) of the Act imposes the same
requirement for measures specified for use in the PCHQR Program.
Sections 1886(b)(3)(B)(viii)(IX)(bb) and 1866(k)(3)(B) of the Act
state, however, that in the case of a specified area or medical topic
determined appropriate by the Secretary for which a feasible and
practical measure has not been endorsed by the entity with a contract
under section 1890(a) of the Act, the Secretary may specify a measure
that is not so endorsed as long as due consideration is given to a
measure that has been endorsed or adopted by a consensus organization
identified by the Secretary.
We reviewed measures endorsed by both the CBE which currently holds
the contract under section 1890(a) of the Act and measures endorsed by
the entity which formerly held that contract and were unable to
identify any other CBE-endorsed measures on strategies and practices to
strengthen hospitals' systems and culture for safety. In light of the
lack of endorsed measures on this specified area or medical topic, we
have determined that it would be appropriate to use a measure that is
not endorsed by the CBE. This measure is relevant to enhanced health
outcomes. As described in the background section for this measure
(section IX.B.1.a. of this proposed rule), medical errors and
[[Page 36288]]
adverse events occur frequently and lead to adverse patient outcomes.
This measure is designed to identify hospitals that practice a system-
based approach to safety and embrace the importance of a safety
culture. Demonstrating a structure, culture, and leadership commitment
that prioritizes safety can improve care and outcomes for all
patients.\221\ The validity, feasibility and relevance of the measure
have been thoroughly vetted by a Technical Expert Panel (TEP) convened
by a CMS contractor and comprised of thought leaders in the field.\222\
In response to the question of whether the domains capture the most
important elements for advancing patient safety, most TEP members
agreed that they do.\223\ Furthermore, the measure developers engaged
the members of the TEP for their operational and clinical expertise to
assure that each domain was actionable and measurable.\224\ As noted,
the PRMR Hospital Committee received a total of 91 public comments
expressing support for the Patient Safety Structural measure.\225\ Most
commenters were patients and family members who described their
individual experiences with the medical system and preventable harms to
which they were exposed. These commenters then emphasized the
importance of the Patient Safety Structural measure's intent and
domains for improving patient safety related to these experiences.\226\
Due to the rigorous alignment with patient safety guidelines and
literature as noted within the Background section of this proposal, as
well as strong support from expert stakeholders, patients, and
caregivers as noted above, we are confident that the foundational
principles are sound, and the specifications are attainable,
measurable, and actionable. We intend to submit the measure for future
CBE endorsement.
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\221\ DiCuccio MH. The Relationship Between Patient Safety
Culture and Patient Outcomes: A Systematic Review. J Patient Saf.
2015;11(3):135-42. doi:10.1097/PTS.0000000000000058.
\222\ Yale New Haven Health Services Corporation--Center for
Outcomes Research and Evaluation. Summary of Technical Expert Panel
(TEP) Meetings Patient Safety Structural Measure (PSSM). Available
at: https://mmshub.cms.gov/sites/default/files/PSSM-TEP-Summary-Report-202306.pdf.
\223\ ibid.
\224\ ibid.
\225\ Battelle--Partnership for Quality Measurement. Compiled
MUC List Public Comment Posting. Available at: https://p4qm.org/sites/default/files/2024-01/Compiled-MUC-List-Public-Comment-Posting.xlsx.
\226\ Battelle--Partnership for Quality Measurement. 2023
Measures Under Consideration Public Comment Summary Hospital
Committee. Available at: https://p4qm.org/sites/default/files/2024-01/PRMR-Hospital-Public-Comments-Final-Summary.pdf.
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d. Measure Overview
The Patient Safety Structural measure is a structural measure
developed to assess how well hospitals have implemented strategies and
practices to strengthen their systems and culture for safety. The
Patient Safety Structural measure comprises a set of complementary
statements (or, attestations) that aim to capture the most salient,
systems-oriented actions to advance safety. These statements should
exemplify a culture of safety and leadership commitment to
transparency, accountability, patient and family engagement, and
continuous learning and improvement. Table IX.B.1-01 includes the five
attestation domains and the corresponding attestation statements.
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e. Measure Calculation
The Patient Safety Structural measure consists of five domains,
each representing a complementary but separate safety commitment. Each
of the five domains include five related attestation statements.
Hospitals would need to evaluate and determine whether they can
affirmatively attest to each domain. For a hospital to affirmatively
attest to a domain, and receive a point for that domain, a hospital
would evaluate and determine whether it engaged in each of the
statements that comprise the domain (see Table IX.B.1-01), for a total
of five possible points (one point per domain). A hospital would not be
able to receive partial points for a domain.
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\227\ Centers for Medicare & Medicaid Services, Patient Safety
Structural Measure Attestation Guide, version 1.0, available at
both: https://qualitynet.com.gov/inpatient/iqr/proposedmeasures and
https://qualitynet.com.gov/pch/pchqr/proposedmeasures. We note that
examples provided in this guide are for illustrative purposes.
\228\ A just culture is defined by the Agency for Healthcare
Research and Quality as a system that holds itself accountable,
holds staff members accountable, and has staff members that hold
themselves accountable. (The CUSP Method. https://www.ahrq.gov/hai/cusp/index.html.)
\229\ Agency for Healthcare Research and Quality. (2019,
September 7). Root Cause Analysis. https://psnet.ahrq.gov/primer/root-cause-analysis.
\230\ Agency for Healthcare Research and Quality. Federally-
Listed Patient Safety Organizations (PSOs). Retrieved January 5,
2024, from https://pso.ahrq.gov/pso/listed?f%5B0%5D=resources_provided%3A2.
\231\ Agency for Healthcare Research and Quality. (2022).
Communication and Optimal Resolution (CANDOR). https://www.ahrq.gov/patient-safety/settings/hospital/candor/index.html.
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For example, for Domain 2 (``Strategic Planning & Organizational
Policy''), a hospital would evaluate and determine whether it meets the
statements related to its strategic plan (Statement A), its safety
goals (Statement B), policies and protocols for a just culture
(Statement C), a patient safety curriculum and competencies for all
hospital staff (Statement D), and an action plan for workforce safety
(Statement E) (see Table IX.B.1-01). If its plan meets all five of
these statements, the hospital would attest ``yes'' to each of the 5
attestation statements and would receive one point for Domain 2. If,
for example, its plan only meets Statement A and Statement B, but does
not meet Statement C, Statement D, and Statement E, the hospital would
attest ``yes'' to Statement A and Statement B, attest ``no'' to
Statement C, Statement D, and Statement E, and receive zero points for
Domain 2. The hospital's overall score for the Patient Safety
Structural measure can range from a total of zero to five points. If a
hospital is comprised of more than one acute care hospital facility
under one CCN, all such facilities reporting under the same CCN would
need to satisfy these criteria in order for the hospital to
affirmatively attest and receive points.
For more details on the measure specifications and the attestation
guide for the Hospital IQR Program, we refer readers to the Proposed
Measures tab under the IQR Measures page on QualityNet at: https://qualitynet.com.gov/inpatient/iqr/proposedmeasures. For more details on
the measure specifications for the PCHQR Program, we refer readers to
the CMS Measures Inventory Tool (CMIT) with the file name ``Patient
Safety Structural Measure'' at: https://cmit.cms.gov/cmit/#/.
f. Data Submission and Reporting
We are proposing that hospitals would be required to submit
information for the Patient Safety Structural measure once annually
using the data submission and reporting standard procedures set forth
by the CDC for the National Healthcare Safety Network (NHSN).
Presently, hospitals report measure data to the CDC NHSN on a monthly
or quarterly basis, depending on the measure. Under the data submission
and reporting process for the Patient Safety Structural measure,
hospitals would be required to submit data once annually. We refer
readers to the CDC's NHSN website (https://www.cdc.gov/nhsn/index.html)
for data submission and reporting procedures; information more specific
to the Patient Safety Structural measure will be available through NHSN
should this proposal be finalized. We refer readers to sections IX.C.9.
and IX.D.4 of the preamble of this proposed rule for more details on
our previously finalized data submission and deadline requirements for
structural measures in the Hospital IQR Program and PCHQR Program,
respectively. We further refer readers to sections IX.C.9. and IX.D.4
of the preamble of this proposed rule for more details on our
previously finalized data submission requirements for measures
submitted via the CDC NHSN in the Hospital IQR Program and
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PCHQR Program, respectively. We propose to adopt the Patient Safety
Structural measure in the Hospital IQR Program beginning with the CY
2025 reporting period/FY 2027 payment determination and the PCHQR
Program beginning with the CY 2025 reporting period/FY 2027 program
year. Hospitals participating in the Hospital IQR Program and the PCHQR
Program would satisfy their reporting requirement for the measure as
long as they attest ``yes'' or ``no'' to each attestation statement in
all five domains.
We are proposing to publicly report the hospital's measure
performance score, which would range from 0 to 5 points, on an annual
basis on Care Compare beginning in fall 2026 and on the Provider Data
Catalog available at data.cms.gov for the PCHQR Program beginning in
fall 2026.
We invite public comment on this proposal.
2. Proposal To Modify the Hospital Consumer Assessment of Healthcare
Providers and Systems (HCAHPS) Survey Measure Beginning With the CY
2025 Reporting Period/FY 2027 Payment Determination for the Hospital
IQR Program, the CY 2025 Reporting Period/FY 2027 Program Year for the
PCHQR Program, and the FY 2030 Program Year for the Hospital VBP
Program
a. Background
We refer readers to the FY 2024 IPPS/LTCH PPS final rule for our
most recent updates to HCAHPS survey administration requirements and
additional background information for the Hospital VBP Program, the
Hospital IQR Program, and the PCHQR Program (88 FR 59083 through 59089,
88 FR 59196 through 59201, and 88 FR 59229 through 59232,
respectively). For more details including information about patient
eligibility for the HCAHPS Survey, please refer to the current HCAHPS
Quality Assurance Guidelines, which can be found on the official HCAHPS
website at: https://hcahpsonline.org/en/quality-assurance/.
The HCAHPS Survey measure (CBE #0166) asks recently discharged
patients questions about aspects of their hospital inpatient experience
that they are uniquely suited to respond to. The HCAHPS Survey as a
whole is termed as a single ``measure'' for purposes of the Hospital
IQR, PCHQR, and Hospital VBP Programs. We refer to the elements of the
HCAHPS Survey that are publicly reported as ``sub-measures'' and to the
questions within each sub-measure as survey ``questions,'' for the
Hospital IQR and PCHQR Programs. Sub-measures are comprised of one,
two, or three survey questions. For example, the sub-measure, ``Overall
Hospital Rating,'' consists of one survey question and the sub-measure
``Communication with Nurses'' consists of three survey questions. In
the Hospital VBP Program, the sub-measures of the HCAHPS Survey are
referred to as ``dimensions.'' We refer readers to the HCAHPS On-Line
website, www.HCAHPSonline.org, for a map of each question on the HCAHPS
Survey and its sub-measures.
The current HCAHPS Survey measure consists of 29 survey questions
that are organized into ten sub-measures in the Hospital IQR and PCHQR
Programs, including 19 questions that ask ``how often'' or whether
patients experienced a critical aspect of hospital care, rather than
whether they were ``satisfied'' with their care. The current survey
also includes three screener questions that direct patients to relevant
questions, five questions to adjust for the mix of patients across
hospitals, and two questions (race and ethnicity) that support
Congressionally mandated reports outlined in the Healthcare Research
and Quality Act of 1999.232 233 These components of the
survey are used to construct the ten publicly reported HCAHPS Survey
sub-measures in the Hospital IQR and PCHQR Programs. The survey
questions are organized into eight dimensions in the Person and
Community Engagement Domain for the Hospital VBP Program. We note that
the Hospital VBP Program uses 8 dimensions while the Hospital IQR and
PCHQR Programs use 10 sub-measures because ``Cleanliness'' and
``Quietness'' have been combined as a single dimension in the Hospital
VBP Program for scoring purposes and the ``Recommend Hospital'' sub-
measure is not included in the Hospital VBP Program. The rationale for
combining these elements of the survey is described further in section
IX.B.2.g(3) of the preamble of this proposed rule and can be found in
the Hospital Inpatient VBP Program final rule (76 FR 26497 through
26526). The current HCAHPS Survey can be found at https://hcahpsonline.org/en/survey-instruments/.
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\232\ Library of Congress. Healthcare Research and Quality Act
of 1999, Public Law 106-129, 113 Stat. 1653. Available at: https://www.congress.gov/106/plaws/publ129/PLAW-106publ129.pdf.
\233\ Agency for Healthcare Research and Quality. (2023) 2023
National Healthcare Quality and Disparities Report. Available at:
https://www.ahrq.gov/research/findings/nhqrdr/nhqdr23/index.html.
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b. Overview of Proposal To Modify the HCAHPS Survey Measure
The proposed updated HCAHPS Survey would result in a survey with 32
questions that make up a total of 11 sub-measures, with seven of those
sub-measures being multi-question sub-measures and the other four sub-
measures being single-question sub-measures. Four of the multi-question
sub-measures and three of the single-question sub-measures in the
updated version of the HCAHPS Survey would remain unchanged from those
that are in the current version of the HCAHPS Survey. We outline the
specific updates below. We are proposing to adopt the updated HCAHPS
Survey for the Hospital IQR and PCHQR Programs in section IX.B.2.e of
the preamble of this proposed rule. The updates would result in the
ability to use nine dimensions for the Hospital VBP Program, and we are
proposing to adopt those updates in the Hospital VBP Program in section
IX.B.2.g of the preamble of this proposed rule.
We identified the need for the updates to the HCAHPS Survey through
focus groups and cognitive interviews with patients and caregivers,
discussions with technical experts, and literature reviews that were
conducted by a CMS contractor who made recommendations to CMS. A
literature scan was used to compile and review items from existing
surveys, focusing on topics not covered in the current HCAHPS Survey.
CMS, patient, and provider stakeholders reviewed the questions
identified through the scan. Four patient focus groups were conducted
to assign importance to and inform the further development of potential
new questions, while also refining existing questions. This replicates
the approach taken during the original development of the HCAHPS
Survey. The focus groups included people with both planned and
unplanned hospital stays, a variety of racial and ethnic groups, and
both older and younger adults. The focus groups used both an
exploratory and confirmatory approach to explore new topics and confirm
the topics we had identified through the survey literature. The group
discussion explored what it means to have a quality patient experience
and what participants thought of their hospital stay--what went well
and what went poorly. Group discussions were conducted in English and
Spanish.
The findings from the focus group informed the development of the
updates to the HCAHPS Survey questions, including the newly developed
questions that were tested in
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cognitive interviews. Cognitive interviews were also conducted in
English and in Spanish. Lastly, a CMS contractor also conducted a
technical expert panel that provided feedback on the current survey
content and the new content areas.
We have determined that adopting the proposed updated version of
the HCAHPS Survey measure would amount to a minimal change in burden
because the combination of removals and additions of survey questions
would result in only an additional 45 seconds to complete the survey.
The time required to complete the 32-question survey is estimated to
average eight minutes. Additionally, prior to the removal of the
``Communication About Pain'' questions in the CY 2019 OPPS/ASC final
rule (83 FR 59140 through 59149), the HCAHPS Survey previously included
32 questions. We refer readers to sections XII.B.4, XII.B.6, and
XII.B.7 of the preamble of this proposed rule for more information on
our estimated changes to the information collection burden.
The proposed adoption of the updated version of the HCAHPS Survey
measure would not result in any changes to the survey administration,
the data submission and reporting requirements, or the data collection
protocols. The proposed updated version of the HCAHPS Survey measure
includes three new sub-measures: the multi-item ``Care Coordination''
sub-measure, the multi-item ``Restfulness of Hospital Environment''
sub-measure, and the ``Information About Symptoms'' single-item sub-
measure. The updated HCAHPS Survey measure also removes the existing
``Care Transition'' sub-measure and modifies the existing
``Responsiveness of Hospital Staff'' sub-measure. The seven new
questions are as follows:
During this hospital stay, how often were doctors, nurses
and other hospital staff informed and up-to-date about your care?