Federal Register: November 30, 2001 (Volume 66, Number 231)

[Federal Register: November 30, 2001 (Volume 66, Number 231)]
[Rules and Regulations]
[Page 59855-59904]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr30no01-30]

To assist readers in referencing sections contained in this
document, we are providing the following table of contents.

Outline of Contents

I. Background

A. Authority
B. Summary of Rulemaking
C. Summary of Changes in the August 24, 2001 Proposed Rule
1. Changes Required by BIPA 2000
2. Additional Changes
3. Provider-Based Changes
D. Public Comments and Responses to the August 24, 2001
Proposed Rule
II. Changes to the Ambulatory Payment Classification (APC) Groups
and Relative Weights
A. Recommendations of the Advisory Panel on APC Groups
1. Establishment of the Advisory Panel
2. Specific Recommendations of the Advisory Panel and Our
Responses
B. Additional APC Changes Resulting from BIPA Provisions
1. Coverage of Glaucoma Screening
2. APCs for Contrast Enhanced Diagnostic Procedures
3. Coding and Payment for Mammography Services
a. Screening Mammography
b. Diagnostic Mammography
c. Coding and Payment for New Technology Mammography Services
C. Other Changes Affecting the APCs
1. Changes in Revenue Code Packaging
2. Special Revenue Code Packaging for Specific Types of
Procedures
3. Limit on Variation of Costs of Services Classified Within a
Group
4. Observation Services
5. List of Procedures That Will Be Paid Only As Inpatient
Procedures
6. Additional New Technology APC Groups
D. Recalibration of APC Weights for CY 2002
III. Wage Index Changes
IV. Copayment Changes
A. BIPA 2000 Coinsurance Limit
B. Impact of BIPA 2000 Payment Rate Increase on Coinsurance
C. Coinsurance and Copayment Changes Resulting from Change in an
APC Group
V. Outlier Policy Changes

VI. Other Policy Decisions and Changes
A. Change in Services Covered Within the Scope of the OPPS
B. Categories of Hospitals Subject To and Excluded from the OPPS
C. Conforming Changes: Additional Payments on a Reasonable Cost
Basis
D. Hospital Coding for Evaluation and Management Services
E. Annual Drug Pricing Update
F. Definition of Single-Use Devices
G. Criteria for New Technology APCs
1. Background
2. Modifications to the Criteria and Process for Assigning
Services to New Technology APCs
a. Services Paid Under New Technology APCs
b. Criteria for Assignment to New Technology APC
c. Revision of Application for New Technology Status
d. Length of Time in a New Technology APC
VII. Transitional Pass-Through Payment Issues
A. Background
B. Discussion of Pro-Rata Reduction
C. Reducing Transitional Pass-Through Payments to Offset Costs
Packaged into APC Groups
VIII. Conversion Factor Update for CY 2002
IX. Summary of and Responses to MedPAC Recommendations
X. Provider-Based Issues

A. Background and April 7, 2000 Regulations
B. Provider-Based Issues/Frequently Asked Questions
C. Medicare, Medicaid, and SCHIP Benefits Improvement and
Protection Act of 2000
1. Two-Year "Grandfathering"
2. Geographic Location Criteria
3. Criteria for Temporary Treatment as Provider-Based
D. Commitment to Re-examine EMTALA Applicability to Off-Campus
Locations, and to Further Revise Provider-Based Regulations
E. Changes to Provider-Based Regulations
1. Clarification of Requirements for Adequate Cost Data and Cost
Finding
2. Scope and Definitions
3. BIPA Provisions on Grandfathering and Temporary Treatment as
Provider-Based
4. Reporting
5. Geographic Location Criteria
6. Notice to Beneficiaries of Coinsurance Liability
7. Clarification of Protocols for Off-Campus Departments
8. Other Changes
F. Comments on Other Issues
XI. Summary of the Final Rule
A. Changes Required by BIPA
B. Additional Changes
C. Technical Corrections
XII. Collection of Information Requirements
XIII. Regulatory Impact Analysis Regulations Text

Addenda

Addendum A List of Ambulatory Payment Classifications (APCs) with
Status Indicators, Relative Weights, Payment Rates,
and Copayment Amounts
Addendum B Payment Status by HCPCS Code, and Related Information
Addendum C Hospital Outpatient Payment for Procedures by APC:
Displayed on Website Only
Addendum D Payment Status Indicators for the Hospital Outpatient
Prospective Payment System
Addendum E CPT Codes Which Would Be Paid Only As Inpatient
Procedures
Addendum G Service Mix Indices by Hospital: Displayed on Website
only
Addendum H Wage Index for Urban Areas

Addendum I Wage Index for Rural Areas
Addendum J Wage Index for Hospitals That Are Reclassified

[[Page 59855]]

-----------------------------------------------------------------------

Part III

Department of Health and Human Services

-----------------------------------------------------------------------

Centers for Medicare & Medicaid Services

-----------------------------------------------------------------------

42 CFR Parts 413, 419, and 489

Medicare Program; Changes to the Hospital Outpatient Prospective
Payment System for Calendar Year 2002; Final Rule

[[Page 59856]]

-----------------------------------------------------------------------

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 413, 419, and 489

[CMS-1159-F2]
RIN 0938-AK54

Medicare Program; Changes to the Hospital Outpatient Prospective
Payment System for Calendar Year 2002

AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: This final rule revises the Medicare hospital outpatient

prospective payment system to implement applicable statutory
requirements, including relevant provisions of the Medicare, Medicaid,
and SCHIP Benefits Improvement and Protection Act of 2000, and changes
arising from our continuing experience with this system. In addition,
it describes changes to the amounts and factors used to determine the
payment rates for Medicare hospital outpatient services paid under the
prospective payment system. This final rule also announces a uniform
reduction of 68.9 percent to be applied to each of the transitional
pass-through payments. These changes are applicable to services
furnished on or after January 1, 2002.

EFFECTIVE DATE: This final rule is effective January 1, 2002 and is
applicable to services furnished on or after January 1, 2002.

FOR FURTHER INFORMATION CONTACT: George Morey (410) 786-4653, for
provider-based issues; and Nancy Edwards (410) 786-0378, for all other
issues.

SUPPLEMENTARY INFORMATION:

Availability of Copies and Electronic Access

Copies: To order copies of the Federal Register containing this
document, send your request to: New Orders, Superintendent of
Documents, P.O. Box 371954, Pittsburgh, PA 15250-7954. Specify the date
of the issue requested and enclose a check or money order payable to
the Superintendent of Documents, or enclose your Visa or Master Card
number and expiration date. Credit card orders can also be placed by
calling the order desk at (202) 512-1800 or by faxing to (202) 512-
2250. The cost for each copy is $9. As an alternative, you can view and
photocopy the Federal Register document at most libraries designated as
Federal Depository Libraries and at many other public and academic
libraries throughout the country that receive the Federal Register.
This Federal Register document is also available from the Federal
Register online database through GPO Access, a service of the U.S.
Government Printing Office. The Web site address is: http://
www.access.gpo.gov/nara/index.html.
Information on the outpatient prospective payment system can be
found on our homepage. You can access these data by using the following
directions:
1. Go to CMS homepage.
2. Click on "Professionals."

3. Under the heading "Physicians and Health Care Professionals,"
click on "Medicare Coding and Payment Systems."
4. Select Hospital Outpatient Prospective Payment System.
Or, you can go directly to the Hospital Outpatient Prospective
Payment System page.

Outline of Contents [moved to top of this online copy]

Alphabetical List of Acronyms Appearing in the Proposed Rule

APC Ambulatory payment classification
APG Ambulatory patient group
ASC Ambulatory surgical center
AWP Average wholesale price
BBA 1997 Balanced Budget Act of 1997
BBRA 1999 Balanced Budget Refinement Act of 1999
BIPA 2000 Medicare, Medicaid, and SCHIP Benefits Improvement and
Protection Act of 2000
CAH Critical access hospital
CAT Computerized axial tomography
CCI Correct Coding Initiative
CCR Cost-to-charge ratio
CMHC Community mental health center
CMS Centers for Medicare & Medicaid Services (Formerly known as the
Health Care Financing Administration)
CORF Comprehensive outpatient rehabilitation facility
CPI Consumer Price Index
CPT (Physician's) Current Procedural Terminology, Fourth Edition,
2001, copyrighted by the American Medical Association
DME Durable medical equipment
DMEPOS DME, prosthetics (which include prosthetic devices and
implants), orthotics, and supplies
DRG Diagnosis-related group
EMTALA Emergency Medical Treatment and Active Labor Act
FDA Food and Drug Administration
FQHC Federally qualified health center
HCPCS Healthcare Common Procedure Coding System
HHA Home health agency
ICD-9-CM International Classification of Diseases, Ninth Edition,
Clinical Modification
IME Indirect medical education
JCAHO Joint Commission on Accreditation of Healthcare Organizations
MRI Magnetic resonance imaging
MSA Metropolitan statistical area
NECMA New England County Metropolitan Area
OPPS Hospital outpatient prospective payment system
PPS Prospective payment system
RFA Regulatory Flexibility Act
RHC Rural health clinic
RRC Rural referral center
SCH Sole community hospital
SNF Skilled nursing facility

I. Background

A. Authority

When the Medicare statute was originally enacted, Medicare payment
for hospital outpatient services was based on hospital-specific costs.
In an effort to ensure that Medicare and its beneficiaries pay
appropriately for services and to encourage more efficient delivery of
care, the Congress mandated replacement of the cost-based payment
methodology with a prospective payment system (PPS). The Balanced
Budget Act of 1997 (BBA) (Pub. L. 105-33), enacted on August 5, 1997,
added section 1833(t) to the Social Security Act (the Act) authorizing
implementation of a PPS for hospital outpatient services. The Balanced
Budget Refinement Act of 1999 (BBRA) (Pub. L. 106-113), enacted on
November 29, 1999, made major changes that affected the hospital
outpatient PPS (OPPS). The Medicare, Medicaid, and SCHIP Benefits
Improvement and Protection Act of 2000 (BIPA) (Pub. L. 106-554),
enacted on December 21, 2000, made further changes in the OPPS. The
BIPA provisions that affect the OPPS are summarized below, in section
I.C. The OPPS was first implemented for services furnished on or after
August 1, 2000.

B. Summary of Rulemaking

On September 8, 1998, we published a proposed rule (63 FR
47552) to establish in regulations a PPS for hospital outpatient
services, to eliminate the formula-driven overpayment for certain
hospital outpatient services, and to extend reductions in payment for
costs of hospital outpatient services. On June 30, 1999, we published a
correction notice (64 FR 35258) to correct a number of technical and
typographic errors in the September 1998 proposed rule including the
proposed amounts and factors used to determine the payment rates.
On April 7, 2000, we published a final rule with comment
period (65 FR 18438) that addressed the provisions of the PPS for
hospital outpatient services scheduled to be effective for services
furnished on or after July 1, 2000. Under this system, Medicare payment
for hospital outpatient services included in the PPS is made at a
predetermined, specific rate. These outpatient services are classified
according to a list of ambulatory payment classifications (APCs). The
April 7 final rule with comment period also established requirements
for provider departments and provider-based entities and prohibited

Medicare payment for nonphysician services furnished to a hospital
outpatient by a provider or supplier other than a hospital unless the
services are furnished under arrangement. In addition, this rule
extended reductions in payment for costs of hospital outpatient
services as required by the BBA of 1997 and amended by the BBRA of
1999. Medicare regulations governing the hospital OPPS are set forth at
42 CFR 419.
On June 30, 2000, we published a notice (65 FR 40535)
announcing a delay in implementation of the OPPS from July 1, 2000 to
August 1, 2000.
On August 3, 2000, we published an interim final rule with
comment period (65 FR 47670) that modified criteria that we use to
determine which medical devices are eligible for transitional pass-
through payments. The August 3, 2000 rule also corrected and clarified
certain provider-based provisions included in the April 7, 2000 rule.
On November 13, 2000, we published an interim final rule
with comment period (65 FR 67798). This rule provided for the annual
update to the amounts and factors for OPPS payment rates effective for
services furnished on or after January 1, 2001. We also responded to
public comments on those portions of the April 7, 2000 final rule that
implemented related provisions of the BBRA and public comments on the
August 3, 2000 rule.
On August 24, 2001, we published a proposed rule (66 FR
44672) that set forth proposed changes to the Medicare hospital OPPS
and calendar year (CY) 2002 payment rates. It also set forth proposed
changes to the amounts and factors used to determine these payment
rates.

C. Summary of Changes in the August 24, 2001 Proposed Rule

On August 24, 2001, we published a proposed rule (66 FR 44672) that
set forth proposed changes to the Medicare hospital OPPS and CY 2002
payment rates including changes to the amounts and factors used to
determine these payment rates.
The following is a summary of the major changes that we proposed
and the

[[Page 59858]]

issues we addressed in the August 24, 2001 proposed rule.
1. Changes Required by BIPA 2000
We proposed the following changes to the OPPS, to implement the
provisions of BIPA 2000:
Limit coinsurance to a specified percentage of APC payment
amounts.
Provide hold-harmless payments to children's hospitals.
Provide separate APCs for services that use contrast
agents and those that do not.
Payment for glaucoma screening as a covered service.
Payment for certain new technology used in diagnostic
mammograms.
2. Additional Changes
We proposed the following additional changes to the OPPS:
Add APCs, delete APCs, and modify the composition of
services within some existing APCs.
Add an APC group that would provide separate payment for
observation services in limited circumstances to patients having
specific diagnoses.
Recalibrate the relative payment weights of the APCs.
Update the conversion factor and wage index.
Revise the APC payment amounts to reflect the APC
reclassifications, the recalibration of payment weights and the other
required updates and adjustments.
Make reductions in pass-through payments for specific
drugs and categories of devices to account for the drug and device
costs that are included in the APC payment for associated procedures
and services.
Apply a standard procedure to calculate copayment amounts
when new APCs are created or when APC payment rates are increased or
decreased as a result of recalibrated relative weights.
Calculate outlier payments on a service-by-service basis
beginning in 2002. We also proposed a methodology for allocating
packaged services to individual APCs in determining costs of a service
and we proposed to use a hospital's overall outpatient cost-to-charge
ratio to convert charges to costs.
Set the threshold for outlier payments to require costs to
exceed 3 times the APC payment amount and payment at 50 percent of any
excess costs above the threshold.
Exclude hospitals located outside the 50 states, the
District of Columbia and Puerto Rico from the OPPS.
Exclude from payment under the OPPS certain services that
are furnished to inpatients of hospitals that do not submit claims for
outpatient services under Medicare Part B.
Make conforming changes to regulations text to reflect the
exclusion from the OPPS of certain items and services (for example, bad
debts, direct medical education and certain certified registered nurse
anesthetists services) that are paid on a cost basis.
Update the payments for pass-through radiopharmaceuticals,
drugs, and biologicals on a calendar year basis to reflect increases in
AWP.
Allow reprocessed single use devices to be considered
eligible for pass-through payments if the reprocessing process for
single use devices meets the FDA's most recent criteria.
Revise the criteria we will use to determine whether a
procedure or service is eligible to be assigned to a new technology
APC.
Revise the list of information that must be submitted to
request assignment of a service or procedure to a new technology APC.
Provide more flexibility in the amount of time a service
may be paid under a new technology APC.
A description of the Secretary's estimate of the total
amount of pass-through payments for CY 2002 and the need for a pro rata
reduction to those payments in that year.
3. Provider-Based Changes
We proposed to make changes to the provider-based regulations to
reflect the provisions of section 404 of BIPA and to codify certain
clarifications on provider-based status that were posted on the CMS Web
site.

D. Public Comments Received in Response to the August 24, 2001 Proposed
Rule

We received approximately 400 timely items of correspondence
containing multiple comments on the proposed rule. Major issues
addressed by the commenters included the following:
The implementation of a uniform reduction in the
transitional pass-through payments for CY 2002.
Changes to APC classifications and weights for certain
outpatient services including mammography, stereotactic radiosurgery
and intensity modulated radiation therapy, and positive emission
tomography (PET) scans.
Changes to the eligibility criteria for payment as a new
technology service.
On November 2, 2001, we published a final rule (66 FR 55857) that
responded to the comments on the Secretary's estimate of the total
amount of transitional pass-through payments for CY 2002 and the need
for a uniform reduction in the pass-through payments for that year as
well as comments on the proposed conversion factor for CY 2002. That
final rule announced that the conversion factor for CY 2002 is $50.904
and that the Secretary is implementing a pro rata reduction in 2002
(expected to be between 65 and 70 percent) to each pass-through payment
(we stated that we would announce the exact amount of the reduction
before the beginning of 2002).
Summaries of the remaining public comments received and our
responses to those comments are set forth below under the appropriate
heading. In addition, we are announcing that the pro rata reduction is
68.9 percent.

II. Changes to the APC Groups and Relative Weights

Under the OPPS, we pay for hospital outpatient services on a rate
per service basis that varies according to the APC group to which the
service is assigned. Each APC weight represents the median hospital
cost of the services included in that APC relative to the median
hospital cost of the services included in APC 0601, Mid-Level Clinic
Visits. As described in the April 7, 2000 final rule (65 FR 18484), the
APC weights are scaled to APC 0601 because a mid-level clinic visit is
one of the most frequently performed services in the outpatient
setting.
Section 1833(t)(9)(A) of the Act requires the Secretary to review
the components of the OPPS not less often than annually and to revise
the groups and related payment adjustment factors to take into account
changes in medical practice, changes in technology, and the addition of
the new services, new cost data, and other relevant information.
Section 1833(t)(9)(A) of the Act requires the Secretary, beginning in
2001, to consult with an outside panel of experts when annually
reviewing and updating the APC groups and the relative weights.
Finally, section 1833(t)(2) of the Act provides that, subject to
certain exceptions, the items and services within an APC group cannot
be considered comparable with respect to the use of resources if the
highest median or mean cost item or service in the group is more than 2
times greater than the lowest median or mean cost item or service
within the same group (referred to as the "2 times rule"). We use the
median cost of the item or service in implementing this provision. The
statute authorizes the Secretary to make exceptions to the 2 times rule
"in

[[Page 59859]]

unusual cases, such as low volume items and services."
For the proposed rule and for this final rule, we analyzed the APC
groups within this statutory framework.

A. Recommendations of the Advisory Panel on APC Groups

1. Establishment of the Advisory Panel
Section 1833(t)(9)(A) of the Act, which requires that we consult
with an outside panel of experts when annually reviewing and updating
the APC groups and the relative weights, specifies that the panel will
act in an advisory capacity. The expert panel, which is to be composed
of representatives of providers, is to review and advise us about the
clinical integrity of the APC groups and their weights. The Panel is
not restricted to using our data and may use data collected or
developed by organizations outside the Department in conducting its
review.
On November 21, 2000, the Secretary signed the charter establishing
an "Advisory Panel on APC Groups" (the Panel). The Panel is technical
in nature and is governed by the provisions of the Federal Advisory
Committee Act (FACA) as amended (Public Law 92-463). To establish the
Panel, we solicited members in a notice published in the Federal
Register on December 5, 2000 (65 FR 75943). We received applications
from more than 115 individuals nominating either themselves or a
colleague. After carefully reviewing the applications, CMS chose 15
highly qualified individuals to serve on the Panel. The Panel was
convened for the first time on February 27, February 28, and March 1,
2001. We published a notice in the Federal Register on February 12,
2001 (66 FR 9857) to announce the location and time of the Panel
meeting, a list of agenda items, and that the meeting was open to the
public. We also provided additional information through a press release
and our website.
2. Specific Recommendations of the Advisory Panel and Our Responses
In the proposed rule, we summarized the issues considered by the
Panel, the Panel's APC recommendations, and our subsequent action with
regard to the Panel's recommendations. The data used by the Panel in
making its recommendation are the 1996 claims that were used to set the
APC weights and payment rates for CY 2000 and 2001. In the proposed
rule, we provided a detailed summary of the Panel discussion and
recommendations (66 FR 44675-44686). See the proposed rule for more
details regarding these discussions.
As discussed below, the Panel sometimes declined to recommend a
change in an APC even though the APC violated the 2 times rule. In
section II.C.3 of this preamble, we discuss our policies regarding the
2 times rule based on the data we are using to recalibrate the 2002 APC
relative weights (that is, claims for services furnished on or after
July 1, 1999 and before July 1, 2000). That section also details the
criteria we use in deciding to make an exception to the 2 times rule.
We asked the Panel to review many of the exceptions we implemented in
2000 and 2001. The exceptions are referred to as "violations of the 2
times" rule in the following discussion.
We did not receive comments on the APC changes we proposed based on
the recommendations of the Panel except for our proposal regarding
stereotactic radiosurgery (APCs 0300 and 0302). We discuss that
proposal in detail below along with the comments and our responses. For
all other APC Panel proposed changes, we briefly discuss the Panel's
recommendation, our proposal, and the final changes we have made. We
also received comments on APCs and the assignment of codes to APCs for
which we made no specific proposal in the proposed rule. We address
those comments below in section II.A.3. of this preamble.

APC 0016: Level V Debridement & Destruction

APC 0017: Level VI Debridement & Destruction

We asked the Panel to review the current placement of CPT code
56501, Destruction of lesion(s), vulva; simple, any method, in APC 0016
because the APC violates the 2 times rule. Because the procedure is a
simple destruction of skin and superficial subcutaneous tissues, we
will not expect it to have a median cost of $500. Thus, we believe that
the higher costs associated with this code were the result of incorrect
coding. To ensure that procedures in APC 0016 comply with the 2 times
rule, we asked the Panel to consider one of the following clinical
options:
Move CPT code 56501 to APC 0017.
Retain CPT code 56501 in APC 0016 but split APC 0016 into
three APCs to distinguish simple destruction lesions from extensive
destruction lesions.
The Panel recommended the following:
Move CPT code 56501 from APC 0016 to APC 0017.
Move CPT code 46917 from APC 0014 to APC 0017.
After considerable discussion the Panel recommended these changes
to achieve clinical coherence and resource similarity among the
procedures assigned to these APCs. Because CPT code 46917 is performed
using laser equipment and requires anesthesia, the Panel believed it
appropriate to move this procedure to APC 0017. Although the Panel
considered the reassignment of CPT code 54055 to APC 0017, it did not
recommend this change. The Panel's recommended changes will group in
APC 0017 simple destruction of lesion procedures that use laser or
surgical techniques with extensive destruction of lesion procedures.
We proposed to accept the Panel's recommendation regarding CPT code
56501 and to revise the APC accordingly. We are adopting these changes
in final; however, as shown below in Table 3, we are making additional
changes to these APCs because of the 2 times rule.

APC 0024: Level I Skin Repair

APC 0025: Level II Skin Repair

APC 0026: Level III Skin Repair

APC 0027: Level IV Skin Repair

The composition of procedures in APCs 0025 and 0027 results in
these APCs violating the 2 times rule. Therefore, we requested the
Panel's advice in exploring other clinical options for reconfiguring
the four skin repair APCs to achieve clinical and resource homogeneity
among the procedures assigned to APCs 0025 and 0027 while retaining
clinical and resource homogeneity for APCs 0024 and 0026. We asked the
Panel to consider the following clinical options to achieve this
result:
Rearrange the procedures assigned to APCs 0024 through
0027 based on the size or the length of the skin incision.
Rearrange the procedures assigned to APCs 0024 through
0027 based on the complexity of the repair, such as distinguishing
repairs that involve layers of skin, flaps, or grafts from those that
do not.
The Panel reviewed the various options presented, which were
modeled based on the 1996 claims data used in constructing the current
APC groups and payment rates. The Panel recommended the following:
Make no changes to APCs 0024 and 0027.
Reevaluate these APCs with new data when the Panel meets
in 2002.
The Panel, in preparation for the 2002 meeting, will
discuss options with and gather clinical and utilization information
from their respective hospitals regarding these procedures.

[[Page 59860]]

We proposed to accept the Panel's recommendations. We are adopting
these recommendations as final; however, as discussed below in section
II.C., we are making additional changes to these APCs based on the use
of new data and application of the 2 times rule.

APC 0058: Level I Strapping and Casting Application

APC 0059: Level II Strapping and Casting Application

APC 0058 (which consists of the simpler casting, splinting, and
strapping procedures) violates the 2 times rule. The median costs for
high volume procedures in APC 0058 vary widely, ranging from $27 to
$83. The median costs associated with presumably more resource-
intensive procedures in APC 0059 are fairly uniform, ranging from $69
to $119. To limit the cost variation in APC 0058, we asked the Panel to
consider the following options:
Move the following four codes from APC 0058 to APC 0059:
CPT code 29515, Application of short splint (calf to foot); CPT code
29520, Strapping; hip; CPT code 29530, Strapping; knee; and CPT code
29590, Denis-Brown splint strapping.
Create a new APC to include a third level of strapping and
casting application procedures by regrouping all procedures assigned to
both APCs 0058 and 0059 based on the following clinical distinctions:
removal/revision, strapping/splinting, and casting.
Package certain CPT codes assigned to APC 0058 with
relevant procedures.
The Panel recommended that we do the following:
Make no changes to APC 0058.
Provide appropriate education and guidance to hospitals
regarding appropriate use and billing of codes in APC 0058.
Resubmit APC 0058 to the Panel for reevaluation when later
data are available.
We proposed to accept the Panel's recommendations except that we
proposed to move CPT code 29515 to APC 0059 due to the 2 times rule and
the newer data we are using for this rule. These changes have been
adopted as final in this document.

APC 0079: Ventilation Initiation and Management

The codes in APC 0079 represent respiratory treatment and support
provided in the outpatient setting. The cost variation among the
assigned procedures in this APC raises concern about hospital coding
practices. The median costs for these procedures range from $40 to
$315. We asked the Panel to clarify whether these procedures are
performed on outpatients or if they are performed on patients who come
to the emergency room and are later admitted to the hospital as
inpatients.
The Panel recommended the following:
Remove CPT code 94660 from APC 0079 and create a new APC
for this one procedure.
We proposed to accept the Panel's recommendation by creating a new
APC 0065, CPAP Initiation. We have adopted this change in this final
rule.

APC 0094: Resuscitation and Cardioversion

We requested the Panel's assistance in determining whether it is
clinically appropriate to remove the cardioversion procedures from APC
0094 because the rest of the procedures assigned to APC 0094 are
emergency procedures rather than elective. We proposed that the Panel
consider the creation of a new APC for the cardioversion procedures or
reassignment of the procedures to another APC that would be more
appropriate in terms of clinical coherence and resource similarity.
Splitting APC 0094 into two distinct groups, one for resuscitation
procedures and the other for internal and external electrical
cardioversion procedures, would not result in a significant difference
in the APC payment rate for either of the new APCs.
The Panel recommended that the only action we take would be to move
CPT code 92961, Cardioversion, elective, electrical conversion of
arrhythmia; internal (separate procedure) from APC 0094 to APC 0087,
Cardiac Electrophysiology Recording/Mapping.
We proposed to accept the APC Panel recommendation. We are adopting
this change as final.

APC 0102: Electronic Analysis of Pacemakers/Other Devices

The neurologic procedures included in APC 0102 (CPT codes 95970
through 95975), are significantly more complex than the routine cardiac
pacemaker programming codes also assigned to this APC. Because we
believe these codes are clinically different, we asked the Panel to
consider the following:
Create a new APC for the neurologic codes.
Move the neurologic codes to APC 0215, Level I Nerve and
Muscle Tests.
The Panel recommended the following reorganization of APC 0102 to
better reflect clinical coherence:
Split APC 0102 into four new APCs: one APC for analysis
and programming of infusion pumps and CSF shunts; a second for analysis
and programming of neurostimulators; a third for analysis and
programming of pacemakers and internal loop recorders; and a fourth for
analysis and programming of cardioverter-defibrillators.
We proposed to accept the Panel's recommendations and proposed to
create four new APCs as follows:

APC 0689: Electronic Analysis of Cardioverter-Defibrillator
APC 0690: Electronic Analysis of Pacemakers and Other Cardiac Devices
APC 0691: Electronic Analysis of Programmable Shunts/Pumps
APC 0692: Electronic Analysis of Neurostimulator Pulse Generators.

We have made these changes final in this rule.

APC 0110: Transfusion

APC 0111: Blood Product Exchange

APC 0112: Extracorporeal Photopheresis

The procedures included in APC 0110 are those related only to the
services associated with performing the blood transfusion and
monitoring the patient during the transfusion; the costs associated
with the blood products themselves are not included in APC 0110. We
advised the Panel that we were not certain that cost data for blood
transfusions excluded the costs of the blood products because the APC
0110 median cost of $289 seemed excessive. We expressed concern about
hospital coding and billing practices for blood products, blood
processing, storage, and transportation charges as represented in the
1996 data. We asked the Panel to advise us on how to clarify hospital
billing and coding practices for blood transfusions; we also asked if
the Panel members believe that the median costs for transfusion
procedures include the costs for blood products and, if so, how the
procedures should be adjusted to eliminate these costs.
After considerable discussion, the Panel recommended the following:
Take no action on APC 0110.
Move CPT code 36521 from APC 0111 to APC 0112 to achieve
clinical coherence and resource similarity with photopheresis
procedures included in APC 0112. However, the Panel cautioned that the
payment for APC 0112 captured the cost of the entire procedure
including the cost of the adsorption column. For this reason, any
additional payment for the adsorption column through the transitional
pass-through payment mechanism will be a duplicate payment. Therefore,
the Panel asked that CMS address this problem when considering their
recommendation.

[[Page 59861]]

We proposed to accept the Panel's recommendations. We noted that
effective April 1, 2001, the Prosorba column is no longer eligible for
a transitional pass-through payment (see PMA-01-40 issued on March 27,
2001).
We have adopted the proposed changes in final in this document.

APC 0116: Chemotherapy Administration by Other Technique Except
Infusion

APC 0117: Chemotherapy Administration by Infusion Only

APC 0118: Chemotherapy Administration by Both Infusion and Other
Technique

Based on previous comments we had received, we asked the Panel to
review whether oral delivery of chemotherapy and delivery of
chemotherapy by infusion pumps and reservoirs should be recognized for
payment under the OPPS.
In summary, the Panel recommended the following:
Allow hospitals to bill for patient education on the
administration of oral anticancer agents under the appropriate clinic
codes.
Assign CPT codes 96520 and 96530 to a new APC.
Continue to use the current HCPCS Level II Q codes for
chemotherapy administration.
There is no need to develop a new HCPCS code for

"extended chemotherapy infusions."
CMS should consider developing a new HCPCS code for
flushing of ports and reservoirs.
We proposed to accept all the Panel's recommendations except for
the recommendation regarding flushing of ports and reservoirs. Flushing
is performed in conjunction with either a chemotherapy administration
service or an outpatient clinic visit. In the first case, flushing is
part of the chemotherapy administration and its costs are adequately
captured in the costs of the chemotherapy administration code. In the
second case, we believe that the costs of flushing are adequately
captured in the costs of the clinic visit and need not be paid
separately. We proposed to create a new APC 0125, Refilling of Infusion
Pump.
We are adopting these changes as final in this rule.

APC 0123: Bone Marrow Harvesting and Bone Marrow/Stem Cell
Transplant

In APC 0123, the 1996 median cost for CPT code 38230, Bone marrow
harvesting for transplantation, was only $15. We believe that this cost
is lower than the actual cost of the procedure. Further, we do not have
sufficient data to determine how often bone marrow and stem cell
transplant procedures are performed on an outpatient basis. For these
reasons, we requested the Panel's advice in clarifying the resources
used in performing the procedures assigned to APC 0123, and the extent
to which these procedures are performed on an outpatient basis.
The Panel recommended the following:
Make no changes in the procedures assigned to APC 0123 in
the absence of sufficient data to support such modifications.
The two presenters on this APC issue should submit cost
data for the Panel to use in reevaluating this issue at its 2002
meeting.
We noted in the proposed rule that our analysis of the more recent
claims data we are using to reclassify and recalibrate the APCs reveals
a significant increase in costs for this APC resulting in a payment
rate that is double the current rate. However, very few procedures
(fewer than 20) were billed on an outpatient basis. As we indicated in
the proposed rule, we will have the Panel review this APC again at
their next meeting.

APC 0142: Small Intestine Endoscopy

APC 0143: Lower GI Endoscopy

APC 0145: Therapeutic Anoscopy

APC 0147: Level II Sigmoidoscopy

APC 0148: Level I Anal/Rectal Procedures

APC 0149: Level II Anal/Rectal Procedures

APC 0150: Level III Anal/Rectal Procedures

We presented these seven APCs to the Panel because of the
inconsistencies in the median costs for some procedures included in
APCs 0142, 0143, 0145, and 0147. We advised the Panel that our cost
data do not show a progression of median costs proportional to
increases in clinical complexity as we would expect. For example, the
data indicate that a therapeutic anoscopy assigned to APC 0145 costs
more than twice as much as a flexible or rigid sigmoidoscopy assigned
to APC 0147. We stated our concern that cost disparity could provide
incentives to use inappropriate procedures. Because of these concerns,
we asked the Panel's advice in determining whether one of the following
actions should be taken:
Divide the codes in APC 0142 into separate APCs
representing ileoscopy and small intestine procedures.
Combine diagnostic anoscopy and Level I sigmoidoscopy.
Merge APCs 0143, 0145, and 0147 into one APC.
We also asked the Panel whether the costs associated with codes in
APC 0145 appeared to be valid.
The Panel recommended that we do the following:
Make no changes to APCs 0142, 0143, 0145, and 0147.
Provide information and guidance to better assist
hospitals in understanding how to bill appropriately for services
included in APCs 0142, 0143, 0145, and 0147.
Resubmit these APCs to the Panel for review when newer
data are available.
We proposed to accept the Panel's recommendations.
We have adopted these recommendations in this final rule.

APC 0151: Endoscopic Retrograde Cholangio-Pancreatography (ERCP)

We advised the Panel that we have received comments that indicate
that it is inappropriate to assign both diagnostic and therapeutic ERCP
procedures to the same APC. The commenters allege that virtually every
hospital performs diagnostic ERCPs but only teaching hospitals perform
therapeutic ERCPs. Based on our current data, if we created two APCs
for ERCP procedures, the APC payment rate for therapeutic ERCPs would
be lower than that for diagnostic ERCPs (approximately $526 and $535,
respectively). Therefore, we requested the Panel's advice to help us
determine whether to create separate APCs for diagnostic and
therapeutic ERCP procedures.
The Panel recommended that we do the following:
Do not reconfigure the ERCP procedures in APC 0151.
Resubmit this issue to the Panel for review when more
recent data are available.
Explore the feasibility of using multiple claims rather
than single claims to calculate appropriate APC payment rates for ERCP
procedures.
We proposed to accept the Panel's recommendations. As we stated in
the proposed rule, we are reviewing the potential for using multiple
claims data for determining payment rates for ERCP procedures. As a
first step in the process, in the proposed rule, we determined a
payment rate for ERCP procedures based on both single claims for ERCP
procedures and, because ERCP procedures are typically done under
radiologic guidance, on claims that included both an ERCP procedure and
a radiologic supervision or guidance procedure in this APC. We

[[Page 59862]]

accomplished this by changing the status indicator for radiologic
guidance and supervision codes to "N", which results in these codes
being packaged. Using these additional claims resulted in significantly
increasing the number of claims used to determine the payment rate for
this APC and in a much higher payment rate (about $780 in this final
rule).
We will be presenting this issue again to the APC Panel at their
next meeting.

APC 0160: Level I Cystourethroscopy and other Genitourinary
Procedures

APC 0161: Level II Cystourethroscopy and other Genitourinary
Procedures

APC 0162: Level III Cystourethroscopy and Other Genitourinary
Procedures

APC 0163: Level IV Cystourethroscopy and Other Genitourinary
Procedures APC 0169: Lithotripsy

We advised the Panel that we had previously received a number of
comments that advocated moving CPT code 52337, Cystoscopy, with
ureteroscopy and/or pyeloscopy; with lithotripsy (ureteral
catheterization is included), from APC 0162 to APC 0163. (We note that
CPT code 52337 was deleted for 2001 and replaced with an identical CPT
code, 52353. We will use the new code in the following discussion.)
Because of these comments, we sought the Panel's advice in examining
the clinical and resource distinctions between CPT code 52353 and other
procedures assigned to APC 0162. Other information shared with the
Panel noted that most of the procedures included in APC 0162 are
complicated cystourethroscopies while those assigned to APC 0163 are
largely prostate procedures.
The Panel recommended that we move CPT code 52353 from APC 0162 to
APC 0169 because both codes 52353 and 50590 are lithotripsy procedures.
We reviewed the Panel discussion very carefully and noted the close
vote. After careful consideration, we proposed to disagree with the
Panel's recommendation and move code 52353 to APC 0163. The 1999-2000
cost data used for the proposed rule, which contained over 400 single
claims for code 52353 (reported under code 52337) and over 6,000 single
claims for code 50590, showed that the median cost for code 52353 is
much more similar to the median cost of other procedures in APC 0163
than it is to the median cost of APC 0169. Although both codes involve
lithotripsy, the type of equipment used in the two procedures is very
different. Clinically, the surgical approach used for code 52353 and
the resources used (e.g., anesthesia and operating room costs) are much
more similar to other procedures in APC 0163 than to those for code
50590. Additionally, the median cost for code 50590, which was $700
higher than that of code 52353, is dependent on the widely variable
arrangements hospitals make for use of the extracorporeal lithotriptor.
Therefore, we believe that placing code 52353 in APC 0163 maintains its
clinical coherence and similar use of resources.
Based on the updated 1999-2000 data base available for the final
rule, we find that the cost relationship between codes 52353 and 50590
continues to reflect a difference. There are now almost 500 single
claims for code 52353 and almost 7,000 single claims for code 50590.
The median cost for 50590 remains about $700 higher than the median
cost for code 52353. Therefore, we are adopting as final our proposal
to move code 52353 to APC 0163.

APC 0191: Level I Female Reproductive Procedures

APC 0192: Level II Female Reproductive Procedures

APC 0193: Level III Female Reproductive Procedures

APC 0194: Level IV Female Reproductive Procedures

APC 0195: Level V Female Reproductive Procedures

This group of APCs was presented to the Panel because APC 0195
violates the 2 times rule. To facilitate the Panel's review of this
issue, we distributed cost data on all the female reproductive
procedures assigned to these five APCs. These data showed that the
median costs for procedures assigned to APC 0195 ranged from a low of
$365 to a high of $1,817. The CPT code 57288, Sling operation for
stress incontinence (e.g., fascia or synthetic), which is assigned to
APC 0195, has the highest median cost of the procedures in this group.
We discussed with the Panel two clinical options for rearranging the
procedures assigned to APC 0195 to comply with the 2 times rule. The
first option would split APC 0195 into two separate APCs by separating
vaginal procedures from abdominal procedures. The second option would
split APC 0195 into three distinct APCs by retaining the separate APCs
for abdominal and vaginal procedures and further distinguishing vaginal
procedures based on whether they are simple or complex.
The Panel closely reviewed the four APCs for female reproductive
procedures (APCs 0191, 0192, 0193, and 0194) to ensure each was
clinically homogeneous. As a result of this review, the Panel
recommended a number of changes for these APCs. These recommendations
and those for APC 0195 are as follows:
Move CPT codes 56350, Hysteroscopy, diagnostic, and 58555,
Hysterosocopy, diagnostic/separate procedure, from APC 0191 to APC 0194
(In 2001, CPT code 56350 was replaced with CPT code 58555.)
Divide APC 0195 into two APCs to distinguish vaginal
procedures from abdominal procedures.
Retain the following vaginal procedures in APC 0195:

------------------------------------------------------------------------
CPT code Descriptor
------------------------------------------------------------------------
57555............................ Excision of cervical stump, vaginal
approach: with anterior and/or
posterior repair.
58800............................ Drainage of ovarian cyst(s),
unilateral or bilateral, (separate
procedure); vaginal approach.
58820............................ Drainage of ovarian abscess; vaginal
approach, open.
57310............................ Closure of urethrovaginal fistula;
57320............................ Closure of vesicovaginal fistula;
vaginal approach
57530............................ Trachelectomy (cervicectomy),
amputation of cervix (separate
procedure).
57291............................ Construction of artificial vagina;
without graft.
57220............................ Plastic operation on urethral
sphincter, vaginal approach (e.g.,
Kelly urethral plication).
57550............................ Excision of cervical stump, vaginal
approach.
57556............................ Excision of cervical stump, vaginal
approach; with repair of enterocele.
57289............................ Pereyra procedure, including anterior
colporrhapy.
57300............................ Closure of rectovaginal fistula;
vaginal or transanal approach.

[[Page 59863]]

57284............................ Paravaginal defect repair (including
repair of cystocele, stress urinary
incontinence, and/or incomplete
vaginal prolapse).
57265............................ Combined anteroposterior
colporrhaphy; with enterocele
repair.
57268............................ Repair of enterocele vaginal approach
(separate procedure).
56625............................ Vulvectomy simple; complete.
58145............................ Myomectomy excision of fibroid tumor
of uterus, single or multiple
(separate procedure); vaginal
approach.
57260............................ Combined anteroposterior
colporrhaphy;
57240............................ Anterior colporrhaphy, repair of
cystocele with or without repair of
urethrocele.
57250............................ Posterior colporrhaphy, repair of
rectocele with or without
perineorrhaphy.
56620............................ Vulvectomy simple; partial.
57522............................ Conization of cervix, with or without
fulguration, with or without
dilation and curettage, with or
without repair; loop electrode
excision.
------------------------------------------------------------------------

Include the following abdominal procedures in a new APC
titled "Level VI Female Reproductive Procedures."

------------------------------------------------------------------------
CPT code Descriptor
------------------------------------------------------------------------
58920............................ Wedge resection or bisection of
ovary, unilateral or bilateral.
58900............................ Biopsy of ovary, unilateral or
bilateral (separate procedure).
58925............................ Ovarian cystectomy, unilateral or
bilateral.
57288............................ Sling operation for stress
incontinence (e.g., fascia or
synthetic).
57287............................ Removal or revision of sling for
stress incontinence (e.g., fascia or
synthetic).
------------------------------------------------------------------------

Move CPT code 57107 from APC 0194 to APC 0195, Level V
Female Reproductive Procedures.
Move CPT code 57109, Vaginectomy with removal of
paravaginal tissue (radical vaginectomy) with bilateral total pelvic
lymphadenectomy and para-aortic lymph node sampling (biopsy), from APC
0194 to the new APC, Level VI Female Reproductive Procedures.
We proposed to accept all of these Panel recommendations. These
APCs would be reconfigured and renumbered as APCs 0188 to 0194. We also
proposed to add new APCs for Level VII and Level VIII Female
Reproductive Procedures (APCs 0195 and 0202, respectively) based on the
1999-2000 claims data and the 2 times rule. These proposed changes have
been adopted as final in this document.

APC 0210: Spinal Tap

APC 0211: Level I Nervous System Injections

APC 0212: Level II Nervous System Injections

The Panel heard testimony from two presenters regarding the merits
of modifying these three APCs. The first presenter, speaking on behalf
of a manufacturer, discussed a new code for 2001, CPT code 64614,
Chemodenervation of muscles; extremities and/or trunk muscles (e.g.,
for dystonia, cerebral palsy, multiple sclerosis).
The second presenter, representing a specialty society, proposed
regrouping the procedures assigned to APCs 0210, 0211, and 0212 based
on similar levels of complexity and median costs. The presenter's
proposal also included reassignment to these APCs of interventional
pain procedures currently assigned to APCs 040, Arthrocentesis and
Ligament/Tendon Injection, 0105, Revision/Removal of Pacemakers, AICD,
or Vascular Device, and 0971. The presenter proposed establishing the
following five levels of interventional pain procedures by regrouping
the procedures into new APCs as stated below:
Level I Nerve Injections (to include Trigger Point, Joint,
Other Injections, and Lower Complexity Nerve Blocks):

------------------------------------------------------------------------
Reassigned
CPT code from APC
------------------------------------------------------------------------
20550...................................................... 040
20600...................................................... 040
20605...................................................... 040
20610...................................................... 040
64612...................................................... 0211
64613...................................................... 0211
64614...................................................... 0971
64400-64418................................................ 0211
64425...................................................... 0211
64430...................................................... 0211
64435...................................................... 0211
64445...................................................... 0211
64450...................................................... 0211
64505...................................................... 0211
64508...................................................... 0211
------------------------------------------------------------------------

Level II Nerve Injections (to include Moderate Complexity
Nerve Blocks and Epidurals):

Level III Nerve Injections (to include Moderately High
Complexity Epidurals, Facet Blocks, and Disk Injections):

------------------------------------------------------------------------
Reassigned
CPT Code from APC
------------------------------------------------------------------------
62280-62282................................................ 0212
62290...................................................... (\1\)
62291...................................................... (\1\)
64420-64421................................................ 0211
64470...................................................... 0211
64472...................................................... 0211
64475-64476................................................ 0211
64479...................................................... 0211
64480...................................................... 0211
64483-64484................................................ 0211
64510...................................................... 0211
64520...................................................... 0211
64530...................................................... 0211
64630...................................................... 0211
64640...................................................... 0211
------------------------------------------------------------------------
\1\ Currently packaged.

Level IV Nerve Injections (to include High Complexity
Lysis of Adhesions, Neurolytic Procedures, Removal of Implantable Pumps
and Stimulators):

------------------------------------------------------------------------
Reassigned
CPT Code from APC
------------------------------------------------------------------------
62263...................................................... 0212
64600...................................................... 0211
64605...................................................... 0211
64610...................................................... 0211
64620...................................................... 0211
64622-64623................................................ 0211
64626-64627................................................ 0211
64680...................................................... 0211
62355...................................................... 0105
62365...................................................... 0105
------------------------------------------------------------------------

Level V Nerve Injections (to include Highest Complexity
Disk and Spinal Endoscopies): CPT code 62287, Aspiration or
decompression procedure, percutaneous, of nucleus pulposus of
invertebral disk, any method, single or multiple levels, lumbar (e.g.,
manual or automated percutaneous diskectomy, percutaneous laser
diskectomy), reassigned from APC 0220, Level I Nerve Procedures.
The Panel recommended reassignment of CPT code 64614 from APC 0971
to APC 0211.
Concerning the suggested regrouping of interventional pain
procedures, the Panel agreed that the recommended division of these
procedures by clinical complexity would reflect resource use and was a
reasonable approach to take. It was pointed out to the Panel that the
costs for CPT codes 62290, Injection procedure for diskography, each
level; lumbar, and 62291, Injection procedure for diskography, each
level; cervical or thoracic, were packaged into the procedures with
which they were billed. Therefore, the Panel concurred with the
regrouping of procedures to establish

[[Page 59864]]

Levels I, II, III, and IV with the following exceptions:
The Panel recommended that we not include CPT codes 62290
and 62291 in Level III because they are packaged injections and should
not be unpackaged and paid separately.
The Panel opposed moving CPT codes 62355, Removal of
previously implanted intrathecal or epidural catheter, and 62365,
Removal of subcutaneous reservoir or pump, previously implanted for
intrathecal or epidural infusion, from APC 0105 to Level IV Nerve
Injections because they were neither clinically similar nor similar in
resource use to the other codes assigned to this APC.
The Panel opposed the creation of Level V Nerve Tests as
it included only one code and recommended that CPT code 62287 remain in
APC 220.
We proposed to accept the Panel's recommendations for
these services and we proposed to create new APCs 0203, 0204, 0206, and
0207 to accommodate these changes. We are adopting these proposed
changes as final.

APC 0215: Level I Nerve and Muscle Tests

APC 0216: Level II Nerve and Muscle Tests

APC 0217: Level III Nerve and Muscle Tests

We advised the Panel that we had received a comment contending that
assignment of CPT code 95863, Needle electromyography, three
extremities with or without related paraspinal areas, to APC 0216
created an inappropriate incentive to perform tests on three
extremities rather than two or four extremities. The payment of about
$144 for APC 0216 is greater than the payment of about $58 for the same
tests when performed on one, two, or four extremities. This is because
CPT codes 95860, 95861, and 95864, Needle electromyography, one, two,
and four extremities with or without related paraspinal areas,
respectively, are assigned to APC 0215. We distributed data to the
Panel that showed a median cost of about $141 for CPT code 95863, which
is more than 3 times that of the median cost of $41 for CPT code 95864.
We asked the Panel to consider the reassignment of CPT code 95863 from
APC 0216 to APC 0215 and advised the Panel that, based on cost data
available at the time of our meeting, this change could potentially
reduce the payment for APC 0216. It was also noted that this change
could result in a payment increase for APC 0215.
The Panel reviewed the cost data for APCs 0215 and 0216 and noted
that the median costs for both CPT codes 95863 and 95864 appeared
aberrant. Based on the information presented, the Panel recommended
that we move CPT code 95863 from APC 0216 to APC 0215. We proposed to
accept the Panel's recommendation with one exception. We proposed to
revise these APCs based on the 1999-2000 cost data and the 2 times
rule, and CPT code 95863 would be assigned to a reconfigured APC for
Level II Nerve and Muscle Tests (APC 0218).
The changes we proposed to APCs 0215, 0216, and 0217 have been
adopted as final in this document.

APC 0237: Level III Posterior Segment Eye Procedures

We advised the Panel that procedures assigned to APC 0237 are high
volume procedures and rank among the top outpatient procedures billed
under Medicare. We have received a number of comments disagreeing with
the assignment of CPT code 67027, Implantation of intravitreal drug
delivery system (e.g., ganciclovir implant), includes concomitant
removal of vitreous, to APC 0237. This procedure was added to the CPT
coding system after 1996 and, therefore, was not included in the 1996
data. We advised the Panel that ganciclovir, the drug implanted during
this procedure, is paid separately as a transitional pass-through item.
Because the drug is paid separately, it should not be included in
determining whether the resources associated with the surgical
procedure are similar to the resources required to perform the other
procedures assigned to APC 0237. We advised the Panel that, of the
procedures assigned to APC 0237, we believe that CPT code 67027 is
related to codes 65260, 65265, and 67005, all of which involve removal
of foreign bodies and vitreous from the eye. To ensure that CPT code
67027 is assigned to the appropriate APC, we asked the Panel to
consider creation of a new APC, Level IV Posterior Segment Eye
Procedures, for CPT codes 65260, 65265, 67005, and 67027. Based on the
APC rates effective January 1, 2001, the suggested change could lower
the APC rate for the four procedures by $400.
The Panel reviewed the data and did not believe it was sufficient
to support the creation of a new APC for these four procedures.
Therefore, the Panel recommended that APC 0237 remain intact and that
more recent claims data be analyzed to determine whether CPT code 67027
is similar to the other procedures assigned to APC 0237.
Based on the 1999-2000 claims data, we have determined that the
resources used for code 67027 are similar to other procedures in APC
0237. However, we will present APCs 0235, 0236, and 0237 to the Panel
at their next meeting to determine whether any further changes should
be made. We proposed to make various other changes to these APCs based
on the new data and the 2 times rule, which we are incorporating as
final in this document.

APC 0251: Level I ENT Procedures

This APC violates the 2 times rule because it consists of a wide
variety of minor ENT procedures, many of which are low volume services
or codes for nonspecific procedures. In order to correct this problem,
we recommended to the Panel that this APC be split by surgical site
(for example, nasal and oral). After reviewing cost data, the Panel
agreed that the APC should be split but that current data were
insufficient to determine how that split should be made. Therefore, the
Panel asked that this APC, along with more recent cost data, be placed
on the agenda at the next meeting.
We agree that this APC should be reviewed by the Panel at its next
meeting. However, our review of the more recent cost data indicates
that significant violations of the 2 times rule still exist. In order
to correct this problem, but keep the APC as intact as possible, we
proposed to move CPT codes 30300, Remove foreign body, intranasal;
office type procedure, 40804, Removal of embedded foreign body,
vestibule of mouth; simple, and 42809, Removal of foreign body from
pharynx, to APC 0340, Minor Ancillary Procedures. This APC consists of
procedures such as removal of earwax that require similar resources.
Based on the latest 1999-2000 data, we find that the reasons for our
proposed revision are still valid, therefore, we have incorporated
those changes as final in this rule.

APC 0264: Level II Miscellaneous Radiology Procedures

We asked the Panel to review this APC because it violated the 2
times rule and consisted of a wide variety of unrelated procedures.
Specifically, we believe that the costs associated with CPT codes
74740, Hysterosalpingography, radiological supervision and
interpretation, and 76102, Radiologic examination, complex motion
(e.g., hypercycloidal) body section (e.g., mastoid polytomography),
other than with urography; bilateral, were aberrant and that we would
significantly underpay these procedures if we moved them into a lower
paying APC. We also asked the Panel to determine whether this APC

[[Page 59865]]

and APC 0263, Level I Miscellaneous Radiology Procedures, should be
reconfigured by body system.
After considerable discussion, the Panel agreed that the procedures
in these APCs were not clinically homogeneous; however, it recommended
that we leave these APCs intact because the data do not support any
more coherent reorganization. The Panel requested that this APC be
placed on the agenda for the 2002 meeting.
We stated in the proposed rule that we agreed with the Panel's
recommendations with the following revisions. First, BIPA requires us
to assign procedures requiring contrast into different APCs from
procedures not requiring contrast. This required changes to a number of
radiologic APCs including APCs 0263 and 0264. In addition, we proposed
to move CPT code 75940, Percutaneous Placement of IVC filter,
radiologic supervision and interpretation, to a new APC 0187,
Placement/Reposition Miscellaneous Catheters, because its costs were
significantly higher than the costs of the procedures remaining in APC
0264.
We are adopting the changes discussed in the proposed rule as
final. However, as discussed in a comment and response below in section
II.A.3 of this preamble, we are revising the title and status indicator
for APC 0187.

APC 0269: Echocardiogram Except Transesophageal

APC 0270: Transesophageal Echocardiogram

We asked the Panel to consider splitting these APCs based on
whether or not 2D imaging is employed. After review of the data, the
Panel recommended that we leave these APCs intact.
We proposed to leave APC 0270 intact except for the addition of two
new codes for transesophageal echocardiography. We also proposed to
split APC 0269 into two APCs, APC 0269, Level I Echocardiogram Except
Transesophageal and APC 0697, Level II Echocardiogram Except
Transesophageal. One APC (0269) would include comprehensive
echocardiograms and the other APC (0697) would include limited/follow-
up echocardiograms and doppler add-on procedures.
We have included these proposed changes in the APCs set forth in
this final rule.

APC 0274: Myelography

We advised the Panel that APC 0274 is clinically homogeneous but
that it violates the 2 times rule. Procedures assigned to this APC
include radiological supervision and interpretation of diagnostic
studies of central nervous system structures (e.g., spinal cord and
spinal nerves) performed after injection of contrast material. We
shared data with the Panel that showed the median costs for the
procedures assigned to this APC ranged from a low of about $109 to a
high of about $295. We asked the Panel's recommendation for
reconfiguring APC 0274 to comply with the 2 times rule.
We informed the Panel members that we packaged the costs associated
with radiologic injection codes into the radiological supervision and
interpretation codes with which they were reported. The reason for
doing this is that hospitals incur expenses for providing both services
and they typically perform both an injection and a supervision and
interpretation procedure on the same patient. Therefore, since neither
an injection code nor a supervision and interpretation code should be
billed alone, it would not be appropriate for us to use single claims
data to determine the costs of performing these procedures. However, we
are using single claims data in order to accurately determine the costs
of performing procedures. Therefore, in order to accurately determine
the costs of a complete radiologic procedure, we had to package the
costs of the injection component into the cost of the supervision and
interpretation component with which it was billed.
The Panel recommended the following:
Make no changes to APC 0274.
Review new cost data to determine whether payment would
increase for APC 0274.
We proposed to accept the Panel's recommendation. We have made no
further changes in this APC.

APC 0279: Level I Diagnostic Angiography and Venography

APC 0280: Level II Diagnostic Angiography and Venography

We presented these codes to the Panel for several reasons. APC 0279
violates the 2 times rule, there are numerous codes in these APCs with
no cost data, there are numerous "add on" codes in these APCs, and
many of these procedures were performed infrequently in the outpatient
setting in 1996.
The Panel recommended the following:
Create a new APC (APC 0287, Complex Venography) with the
following CPT codes: 75831, 75840, 75842, 75860, 75870, 75872, and
75880.
Move CPT codes 75960, 75961, 75964, 75968, 75970, 75978,
75992, and 75995 from APC 0279 to APC 0280.
We proposed to accept the Panel's recommendations. We noted that,
as proposed, APC 0279 violated the 2 times rule because of the low cost
data for CPT code 75660, Angiography, external carotid, unilateral
selective, radiological supervision and interpretation. We believe
that, for these procedures, these cost data are aberrant. This code is
clinically similar to the other codes in APC 0279 and moving code 75660
to an APC with a lower weight could be an inappropriate APC assignment.
Therefore, we stated in the proposed rule that we believe that an
exception to the 2 times rule is warranted.
We are adopting the proposed changes as final. We note that APC
0279 continues to violate the 2 times rule due to the median cost of
CPT code 75660. However, we continue to believe an exception is
warranted.

APC 0300: Level I Radiation Therapy

APC 0302: Level III Radiation Therapy

As discussed in the proposed rule, we presented this APC to the
technical advisory Panel because we had received comments that the
assignment of CPT code 61793, Stereotactic radiosurgery (particle beam,
gamma ray, or linear accelerator), one or more sessions, to APC 0302
would result in inappropriate payment for this service. Many commenters
wrote that stereotactic radiosurgery and intensity modulated radiation
therapy (IMRT) required significantly more staff time, treatment time,
and resources than other types of radiation therapy. Other commenters
disagreed with our decision, effective January 1, 2001, to discontinue
recognizing CPT code 61793, and to create two HCPCS level 2 codes,
G0173, Stereotactic radiosurgery, complete course of therapy in one
session, and G0174, Intensity modulated radiation therapy (IMRT) plan,
per session, to report both stereotactic radiosurgery and IMRT.
We reported to the Panel that the APC assignment of these G codes
and their payment rate was based on our understanding that stereotactic
radiosurgery was generally performed on an inpatient basis and
delivered a complete course of treatment in a single session, while
IMRT was performed on an outpatient basis and required several sessions
to deliver a complete course of treatment. We also explained to the
Panel that it was our understanding that multiple CPT codes were billed
for each session of stereotactic radiosurgery and

[[Page 59866]]

IMRT. Therefore, we believed that the payment for APC 0302 was only a
fraction of the total payment a hospital received for performing
stereotactic radiosurgery or IMRT on an outpatient basis.
Radiosurgery equipment manufacturers, physician groups, and patient
advocacy groups submitted comments and provided testimony to the APC
Panel on these issues. These comments convinced us that we did not
clearly understand either the relationship of IMRT to stereotactic
radiosurgery or the various types of equipment used to perform these
services.
We proposed a new coding structure to more accurately reflect the
clinical use of these services and the resources required to perform
them. In the proposed rule, we stated that there are essentially two
services required to deliver stereotactic radiosurgery and IMRT. First,
there is "treatment planning," which includes such activities as
determining the location of all normal and abnormal tissues,
determining the amount of radiation to be delivered to the abnormal
tissue, determining the dose tolerances of normal tissues, and
determining how to deliver the required dose to abnormal tissue while
delivering a dose to adjacent normal tissues within their range of
tolerance. We noted that planning activities include the ability to
manufacture various treatment devices for protection of normal tissue
as well as the ability to ensure that the plan will deliver the
intended doses to normal and abnormal tissue by simulating the
treatment. Second, there is "treatment delivery," which is the actual
delivery of radiation to the patient in accordance with the treatment
plan and includes such activities as adjusting the collimator (a device
that filters the radiation beams), doing setup and verification images,
treating one or more areas, and performing quality control.
We noted that treatment planning for IMRT requires specialized
equipment including a duplicate of the actual equipment used to deliver
the treatment, the ability to perform a CT scan, various disposable
supplies, and involvement of various staff such as the physician, the
physicist, the dosimetrist, and the radiation technologist. Treatment
delivery requires specialized equipment to deliver the treatment and
the involvement of the radiation technologist. The physician and
physicist provide general oversight of this process.
Our proposal stated that although there are several types of
equipment, produced by several manufacturers, used to accomplish this
treatment, it was the consensus of the commenters and the Panel that
the most useful way to categorize stereotactic radiosurgery and IMRT is
by the source of radiation used for the treatment and not by the type
of equipment used. One reason for this is that the clinical indications
for stereotactic radiosurgery and IMRT overlap. Therefore, a single
disease process can be treated by either modality but the cost of
treatment varies by source of radiation used for the treatment. Second,
while both stereotactic radiosurgery and IMRT can deliver a complete
course of treatment in either one or multiple sessions, the cost of
treatment delivery per session is relatively fixed, and is closely
related to the source of radiation used for the treatment. On the basis
of this understanding we made the following proposal: Appropriate APC
assignment and payment were to be made by creating four HCPCS codes to
describe these services.
The proposed codes are as follows:
GXXX1 Multi-source photon stereotactic radiosurgery
(Cobalt 60 multi-source converging beams) plan, including dose volume
histograms for target and critical structure tolerances, plan
optimization performed for highly conformal distributions, plan
positional accuracy and dose verification, all lesions treated, per
course of treatment.
GXXX2 Multi-source photon stereotactic radiosurgery,
delivery including collimator changes and custom plugging, complete
course of treatment, per lesion.
G0174 Intensity modulated radiation therapy (IMRT)
delivery to one or more treatment areas, multiple couch angles/fields/
arcs custom collimated pencil-beams with treatment setup and
verification images, complete course of therapy requiring more than one
session, per session.
G0178 Intensity modulated radiation therapy (IMRT) plan,
including dose volume histograms for target and critical structure
partial tolerances, inverse plan optimization performed for highly
conformal distributions, plan positional accuracy and dose
verification, per course of treatment.
We also proposed that HCPCS codes GXXX1, G0174, and G0178 have
status indicators of S, while GXXX2 has a status indicator of T. We
believe these are the correct status indicators because G0178 has a

"per session" designation, while GXXX2 has a "per lesion"
designation. This was based on our understanding that GXXX1 would not
be billed on a "per lesion" basis as the planning process would take
into account all lesions being treated and it would be extremely
difficult to determine resource utilization for planning on a "per
lesion" basis. Because the costs of performing GXXX1 will vary based
on the number of lesions treated, payment would reflect a weighted
average.
We based our proposal on our understanding that single-source
photon stereotactic radiosurgery (or linear accelerator) planning and
delivery are similar to IMRT planning and delivery in terms of clinical
use and resource requirements. Therefore, we proposed to require coding
for single-source photon stereotactic radiosurgery under HCPCS codes
G0174 and G0178.
We also noted that the AMA is establishing codes for IMRT planning
and treatment delivery for 2002 and we proposed to retire G0174 and
G0178 (with the usual 90-day phase out) and recognize the applicable
CPT codes when they are established in January 2002.
Because all activities required to perform stereotactic
radiosurgery and IMRT were to be included in the codes described above,
we proposed to discontinue the use of any other radiation therapy codes
for activities involved with planning and delivery of stereotactic
radiosurgery and IMRT for purposes of hospital billing in OPPS.
Therefore, we also proposed continuing to not recognize CPT code 61793
for hospital billing purposes.
We believed that our proposal would not only simplify the reporting
process for hospitals, but also appropriately recognize the clinical
practice and resource requirements for stereotactic radiosurgery and
IMRT.
We sought comments on our proposal, including the code titles,
descriptors, and coding requirements discussed above. We also requested
information regarding appropriate APC assignment and payment rates to
inform our decision-making. We specifically asked for information
regarding the costs of treatment delivery including any differences
between the cost of a complete treatment in single versus multiple
sessions.
Finally, we noted that several commenters had requested placement
of the stereotactic delivery codes in surgical APCs, therefore, we
requested clarification and support for these comments within the
context of our coding proposal. Specifically, we were concerned that
appropriate payment be made for GXXX2, which has a "per lesion"
descriptor.
We received numerous comments on our proposal. These comments
concerned our proposed coding scheme

[[Page 59867]]

and payment amounts as well as the need for separate codes recognizing
linear accelerator-based radiosurgery. Many of the comments were part
of a write-in campaign asking us to categorize radiosurgery as a
surgical procedure and not a radiologic procedure. These letters also
asserted that our payment amount for stereotactic radiosurgery should
be $15,000. Below, we address each major issue raised by the
commenters.
Comment: We received several comments regarding our coding
proposal. The commenters indicated the following:
Our proposed codes are duplicative of currently existing
codes.
We should recognize CPT code 61793 in the APC system.
Our proposed codes would not allow billing for single
session and fractionated linear accelerator-based radiosurgery.
We incorrectly believe that multisession radiosurgery is
similar in resource use to IMRT.
We should delete our proposed codes for stereotactic
radiosurgery planning and recognize CPT code 77295 for this purpose.
CMS should clarify the other codes that would be billable
with our proposed codes.
Conflicting comments on whether the proposed code for
stereotactic radiosurgery delivery should be "per lesion" or "per
session" or "per course of treatment."

Commenters were also concerned about our ability to establish APC
weights using claims that contained two significant procedures (e.g.,
stereotactic radiosurgery planning and stereotactic radiosurgery
delivery).
Response: We reviewed all these comments very carefully. After
completing our review, we have decided to make the following
modifications to our proposed coding scheme:
IMRT--We are not making any changes to our proposal for
IMRT coding. We will delete the applicable G codes (G0174 and G0178)
and recognize the new CPT codes for IMRT planning (code 77301) and IMRT
delivery (code 77418) as established by the AMA.
GXXX1--Under our proposal, GXXX1 (now G0242) would have
been used only for Cobalt-based radiosurgery. After review of the
comments, we believe that the planning for Cobalt-based and linear
accelerator-based radiosurgery is similar both clinically and in terms
of resource consumption. Therefore, at the next coding update, we will
change the descriptor for this code to include linear accelerator-based
radiosurgery planning. We do not know whether radiosurgery planning is
similar clinically and in terms of resource consumption to CPT code
77295 (therapeutic radiology simulation-added field setting; three-
dimensional). Use of G0242 will allow us to collect claims data and
cost information that will aid us in determining whether G0242 is
similar in resource use to 77295. However, we believe that tracking the
utilization of G0242 as well as the codes with which it is submitted is
very important for future APC reclassification and recalibration
purposes, therefore, at this time, we do not intend to discontinue use
of this code.
GXXX2--Most of the comments concerned whether this code
(now G0243) should be "per lesion." After extensive review of the
comments, we have determined that it is more appropriate for this code
to be used "per session" or "per course of treatment." We have
concluded that the resource consumption for stereotactic treatment
delivery varies significantly depending on the size, shape, and depth
of the lesion(s) being treated. It is quite possible for the treatment
of two superficial, spherical lesions to be less resource intensive
than the treatment of a single, large, irregular lesion deep within the
brain. Furthermore, the method of treatment and the manner in which the
resources are used make a "per lesion" description inappropriate. For
example, in Cobalt-based treatment, patients are administered "spheres
of dose" and moved in and out of the machine after each "sphere of
dose." The number of "spheres of dose" per lesion varies widely so
therefore "per sphere of dose" might be an alternative description
for this service. However, we have concluded that any descriptor other
than "per session" or "per course of treatment" will result in, or
create the incentive to bill for, inappropriate payments for this
service. Furthermore, it is our understanding that hospitals usually
have a single charge for this service and that charge is based on the
average resource use for all patients undergoing the procedure whether
those patients have one, two, or more lesions treated. Because of the
variability of treatment delivery per lesion, hospitals would be
overpaid for multi-lesion patients if their charge is based on the
average resource use over all patients. Finally, a "per session"

description is more consistent with a prospective payment system.
Because a "per session" payment reflects an average that includes all
patients, unless a hospital specializes in treatment of multi-lesion
patients, the OPPS payment is likely to be appropriate across all
patient types. That is, the payment will be slightly higher than costs
for single lesion treatments, and slightly lower than costs for
multiple lesion treatments, averaging out over all patients.
Linear accelerator-based radiosurgery--This treatment
poses an especially difficult problem because linear accelerator-based
radiosurgery can be delivered in a single dose like Cobalt-based
treatment, or it can be delivered in fractions, with a maximum of five
fractions. We do not have any cost information concerning the resource
use of linear accelerator-based treatment delivery, but we do
understand that there are two types of linear accelerator-based
delivery of radiosurgery: "gantry-based" and "image-directed." We
do not know if the resource use of these two subtypes of linear
accelerator based-radiosurgery is similar. Furthermore, we do not know
whether the total resource consumption of fractionated radiosurgery
delivered from a linear accelerator is different from the resource
consumption of single dose radiosurgery delivered by a linear
accelerator.
Therefore, in order to collect data on this procedure, we will
designate current code G0173 for reporting single session radiosurgery
delivered by a linear accelerator, either gantry-based or image-
directed. At the next coding update, we will revise the descriptor for
G0173 to reflect this change. Additionally, at the next coding update,
we will create a new G code for use by facilities for fractionated
radiosurgery delivered by a linear accelerator (either gantry-based or
image-directed). The number of fractions will be limited to no more
than five. Both G0173 and the new code for fractionated linear
accelerator-based radiosurgery will be temporary while we collect cost
and utilization data for these services. Once we have collected these
data, we will determine whether permanent codes are needed.
In general, we have tried to strike a balance between recognizing
clinically dissimilar treatments with individual codes and avoiding the
creation of equipment-specific codes for purposes of the OPPS. We
believe that the codes established in this final rule reflect this
balance.
For multiple procedure claims, we do not believe there is a problem
recognizing claims with more than one significant procedure to assist
us in determining appropriate APC weights. We have analyzed all the
claims in the 1999-2000 data base for CPT code 61793 to determine the
codes with which it was billed and in what

[[Page 59868]]

frequencies. We have developed coding edits based on this claims
analysis and, as discussed below, the payments for stereotactic
radiosurgery reflect the median costs for all services that will be
included in the payment for stereotactic radiosurgery planning and
delivery. We have discussed these coding edits in great detail with the
American Society for Therapeutic Radiology and Oncology (ASTRO) and
they concur with the edits.
Comment: Many commenters asked us to place stereotactic
radiosurgery in a "surgical" APC.
Response: We do not understand these comments. We realize that a
neurosurgeon is present during stereotactic radiosurgery but, unlike
the hospital inpatient PPS, we have no APC designation of "surgical."

We have interpreted this comment to mean that commenters do not want
stereotactic radiosurgery to be in the same APC as IMRT or fractionated
stereotactic radiosurgery. As discussed below, our new assignments of
the codes to APCs will effectively create this change.
Comment: We received numerous comments concerning the status
indicators we had proposed for the various radiosurgery procedures.
Response: In view of the change in the descriptor for G0243, we
will be changing the status indicator for G0243 to "S." This is
because there will not be multiple units of this service billed and the
costs for providing single dose stereotactic radiosurgery is relatively
fixed and it would be inappropriate to give this procedure, as
finalized, a "T" designation (that is, the multiple procedure
reduction is not applicable).
Comment: Many comments addressed the payment rate for stereotactic
radiosurgery and IMRT. Suggested amounts for payment of IMRT treatment
planning and delivery varied from less than $300 to over $2,000 and
suggested amounts for radiosurgery planning and treatment ranged from
less than $1,000 to $15,000.
Response: We have no cost data specifically associated with IMRT
upon which to base payment for IMRT. Therefore, we used information
that provided the basis for IMRT payment under the physician fee
schedule and we have established APC assignments that result in payment
rates for IMRT planning and treatment delivery similar to payment under
the physician fee schedule. We believe this is appropriate because the
resource use for these procedures is similar in freestanding facilities
and in hospitals. Because we have no claims data on the costs of IMRT,
these procedures will be assigned to new technology APCs. As cost data
are incorporated in the OPPS claims data base, they will be used to
recalibrate the payment for these services and determine their future
APC assignment. We would note that payment for IMRT planning includes
payment for the following CPT codes: 77300, 77280-77295, 77305-77321.
The only CPT codes that may be billed in addition to G0242 (IMRT
planning) are the CPT codes 72332-72334 for treatment devices. We plan
to incorporate the costs of those codes into IMRT planning when we have
collected the cost data. The APC assignment for G0242 is APC 0714, New
Technology--IX ($1250-$1500).
In order to determine appropriate payment amounts for both planning
and treatment of stereotactic radiosurgery, we did an extensive
analysis of our claims data base for code 61793 because that was the
code used for stereotactic radiosurgery during 1999-2000. We collected
all claims for 61793 and determined which CPT codes were billed with
61793 and the frequency with which each of those codes was billed with
61793. Within the subset of claims including CPT code 61793, we
determined the median costs for 61793 and for each CPT code billed with
61793. In analyzing these claims, it was clear that 61793 was generally
used to bill for treatment delivery and other codes were used, in
combination, to bill for treatment planning. For example, 61793 was
billed with 77300 on 57 percent of the claims, with either 77295 or
77290 on 62 percent of the claims, with either 77370 or 77336 on 77
percent of the claims (occasionally both of these codes were on the
same claim), and with either 77305, 77315, or 77321 on 59 percent of
the claims.
Based on these data, we have determined the total cost for
stereotactic radiosurgery as follows: For stereotactic radiosurgery
planning, we added the median costs (when billed with 61793) of 77295
(the most typical simulation code billed with 61793), 77300, 77370 (the
most common physics consult billed with 61793), and 77315 (the most
common dose plan billed with 61793) and will use the sum of these
medians as the basis for our APC assignment for 2002. The medians of
these codes are: $134.06 for 77300; $146.97 for 77370; $955.88 for
77295; and $206.56 for 77315. The total median cost for these codes is
$1,443.47. Effective for services furnished on or after January 1,
2002, we will no longer allow these codes to be billed with
stereotactic radiosurgery. No other codes were billed frequently enough
with 61793 to justify including their costs in our stereotactic
radiosurgery planning code. However, treatment device codes (77332-
77334) were billed with 61793 on 42 percent of the claims, so we will
allow one of those codes to be billed with each claim for stereotactic
radiosurgery. We will consider incorporating their costs into the
payment for stereotactic radiosurgery in the future. We note that the
median cost of 77334 (the most common treatment device code billed with
61793) was $174.27 when it was billed with 61793.
CPT Code 20660, application of cranial tongs, caliper, or
stereotactic frame, including removal (separate procedure), was billed
with 61793 on only 23 percent of the claims. Because 20660 is required
in order to perform stereotactic radiosurgery treatment, we will
package the costs associated with 20660 into G0243, the radiosurgery
treatment delivery code. We also note that 61793 was billed with an MRI
of the brain on 71 percent of the claims. We will allow CTs and MRIs to
be billed in addition to stereotactic radiosurgery planning.
For stereotactic radiosurgery delivery, we determined that the
median cost of 61793 (using all claims) was $5,734.22 and will use that
amount as the basis for our APC assignment for stereotactic
radiosurgery for 2002. No other radiotherapy treatment code was billed
frequently enough with 61793 to justify incorporation of its cost into
our payment (that is, the treatment code most commonly billed with
61793 was 77470 (33 percent of the claims) and the next most common was
77412 (6 percent of the claims)). We will not allow billing of any
other radiation treatment delivery codes with stereotactic radiosurgery
treatment.
Therefore, we are assigning G0243 to APC 0721, New Technology--XVI
($5,000 to $6,000).
We will pay the same amount for linear accelerator-based
stereotactic radiosurgery as for multiple source-based radiosurgery.
For fractionated linear accelerator-based radiosurgery, we will divide
the payment for single session radiosurgery by five and allow up to
five payments. This will make total payment for fractionated linear
accelerator based radiosurgery similar to linear accelerator-based
single dose radiosurgery while allowing us to collect cost and
utilization data for setting payments in 2003. Note that because
application of a stereotactic frame is not required for linear
accelerator-based radiosurgery, we will not be packaging the costs of
code 20660 into the costs for linear accelerator-based radiosurgery.
Linear accelerator-based radiosurgery planning will be coded with
the same

[[Page 59869]]

code as multiple source-based radiosurgery; therefore, the APC
assignment will be the same as well. We note that all of these codes
associated with radiosurgery are assigned to new technology APCs as we
have no claim data on the procedures. Once we have collected data, the
procedures will be assigned to other APCs.
The final APC assignments are as follows:
77301 is assigned to APC 0712
77418 is assigned to APC 0710
G0173 is assigned to APC 0721
G0242 is assigned to APC 0714
G0243 is assigned to APC 0721.

APC 0311: Radiation Physics Services

APC 0312: Radio Element Application

APC 0313: Brachytherapy

We presented APC 0311 to the Panel because we believed our cost
data for CPT codes 77336, Continuing medical physics consultation,
including assessment of treatment parameters, quality assurance of dose
delivery, and review of patient treatment documentation in support of
the radiation oncologist, reported per week of therapy; 77370, Special
medical radiation physics consultation; and 77399, Unlisted procedure,
medical radiation physics, dosimetry, and treatment devices, and
special services, were inaccurate. We were concerned that these
procedures, particularly code 77370, were not being paid appropriately
in APC 0311.
Presenters pointed out that, as with all radiation oncology
services, the usual practice is to bill multiple CPT codes on the same
date of service. Therefore, single claims were likely to be inaccurate
bills and did not represent the true costs of the procedure. For this
reason, presenters believed that using single claims to set payment
rates for radiation oncology procedures was inappropriate and that we
needed to develop a methodology that allowed the use of multiple claims
data to set payment rates for these services.
For radiation physics consultation, presenters stated that the
staff costs associated with CPT code 77370 were significantly greater
than the costs of CPT codes 77336 and 77399. Therefore, they
recommended that CPT codes 77336 and 77399 be moved from APC 0311 to
APC 0304, Level I Therapeutic Radiation Treatment Preparation, and CPT
code 77370 be moved from APC 0311 to APC 0305, Level II Therapeutic
Radiation Treatment Preparation. The Panel agreed with this
recommendation and we proposed to accept the Panel's recommendation. We
also agreed that we should review the use of single claims to set
payment rates for radiation oncology services. We plan to present this
issue again at the 2002 Panel meeting.
We presented APCs 0312 and 0313 to the Panel because commenters
were concerned that the payment rates were too low for the procedures
assigned to the APCs and that there were insufficient data to set
payment rates for these APCs. The Panel agreed that the issue regarding
the use of single claim data affected the payment rates for these
services. However, there were insufficient data for the Panel to make
any recommendations regarding these APCs. The Panel did request to look
at the issue of radiation oncology at its 2002 meeting.
Therefore, we proposed to make no changes to APCs 0312 and 0313 but
will address radiation oncology issues at the Panel's 2002 meeting. We
note that our updated claims data show very few single claims for
procedures in these APCs. However, moving any of these procedures into
other radiation oncology APCs would lower their payment rates. We are
making no further changes to these APCs.

APC 0371: Allergy Injections

We presented this APC to the Panel because it violates the 2 times
rule. The median costs for CPT codes 95115, Professional services for
allergen immunotherapy not including provision of allergenic extracts;
single injection, and 95117, Professional services for allergen
immunotherapy not including provision of allergenic extracts; two or
more injections, were lower than the median costs for the other
services in this APC.
The Panel agreed that because codes 95115 and 95117 included
administration of an injection only, the resource utilization for these
services was lower than for the other services. The other services
involve preparation of antigen and require more staff time and hospital
resources to perform.
In order to create clinical and resource homogeneity, the Panel
recommended that we create a new APC for codes 95115 and 95117 and that
we leave the other services in APC 0371. We proposed to accept the
Panel recommendation and create a new APC 0353, Level II Allergy
Injections, and revise the title of APC 0371 to Level I Allergy
Injections. These proposed changes are incorporated as final in this
rule.

Observation Services

See the discussion on observation services in section II.C.4 of
this preamble for the Panel's recommendations and our proposal as well
as a discussion of the comments we received.

Inpatient Procedure List

See the discussion of the inpatient procedures list in section
II.C.5 of this preamble for the Panel's recommendations and our
proposal and a discussion of the comments we received on the list.
3. Other APC Issues

APC 0285: Positron Emission Tomography (PET)

Comment: Commenters expressed concern about the calculation of the
payment rate for APC 0285, Positron Emission Tomography (PET), which
includes PET for myocardial perfusion imaging. One specific concern is
that single service claims are used to calculate relative weights
although the applicable procedure codes for these studies are always
linked to another diagnostic study and, therefore, they should not
appear on single service claims. Second, the commenters are concerned
that it is not appropriate to place both single study and multiple
study PET procedures in the same APC.
Response: While the PET procedures are linked with a previous
diagnostic procedure, the latter need not have been performed on the
same day or in the same facility. Upon review of our claims data base,
we find that nearly 50 percent of all claims for PET myocardial
perfusion imaging studies are single service claims. We believe this to
be a sufficient frequency for setting payment rates consistent with the
overall methodology for setting rates in the OPPS. With regard to the
second concern, after further analysis of claims, we concluded that
there is not sufficient variation in the cost among the relevant codes,
whether single or multiple studies, to warrant a change in the APC
structure.

PET Scans Assigned to APC 0976: New Technology--Level VII ($750-
$1000)

In the April 7, 2000 final rule, we assigned PET scans that use 18-
flurodeoxyglucose (FDG) to APC 0980, New Technology--Level XII ($2000-
$2500) because there were no claims for these procedures in the 1996
data used to establish the APC relative weights for 2000. However,
based on the data from over 4,000 claims for services furnished between
July 1, 1999 through June 30, 2000, the data base that was used to set
the proposed APC weights, we found that the reported median costs for
these procedures was closer to $900. Therefore, in the proposed rule,
we

[[Page 59870]]

assigned the FDG PET scans to APC 0976, New Technology--Level VII
($750-$1000). We received a large number of comments on this proposed
change.
Comment: Commenters expressed concern that the proposed APC
assignment resulted in a much reduced payment rate for FDG PET scans.
Many of these commenters expressed particular concern that the proposed
rate of about $850 would not cover the cost of purchasing FDG in
addition to the direct and indirect costs of a PET scan. The commenters
requested that we review our data and the data they submitted and
assign these procedures to a higher level new technology APC.
Response: As we discussed in detail in the April 7, 2002 final rule
(65 FR 18476-78), the purpose of assigning a service to a new
technology APC is to pay for a new technology based on its expected
costs (as evidenced by data collected by us from various external
sources) while we collect claims data that would allow assignment of
the service to a clinically appropriate APC based on the actual
resource use of the service. Our current policy is that a service
remains in a new technology APC for 2 to 3 years while we collect the
necessary claims data. (See section VI.G of this preamble for a
discussion of changes we are making to this policy effective CY 2002.)
Because FDG PET scans were assigned to a new technology APC at the
implementation of the OPPS in August 2000, they will continue to be
assigned to a new technology APC through 2002. However, when we
reviewed the claims data in our 1999-2000 data base, there were about
5,000 single claims for these PET scans, with a median cost of about
$900. Therefore, we proposed to move these procedures from APC 0980 to
APC 0976.
As requested by the commenters and consistent with our policy on
pricing services for assignment to new technology APCs, we reviewed the
external data provided by the commenters as well as our claims data.
These data suggest that our claims cost data may not have accurately
captured the entire costs of the procedure, particularly the cost of
the FDG. Based on our analysis, we believe that the cost of an FDG PET
scan is between $1,200 and $1,800, with a midpoint of $1,500. According
to our methodology for pricing new technology services, these services
will be reassigned to APC 0978, New Technology--Level IX ($1250-$1500),
which results in a payment rate of $1,375.

Cryoablation of the Prostate

Comment: We received several comments concerning our proposal to
place CPT code 55873, cryosurgical ablation of the prostate, into APC
0163, Level IV Cystourethroscopy and other Genitourinary Procedures.
Commenters believe that we had insufficient cost data to justify moving
this code from its current assignment, APC 0980, New Technology--XI
($1750-$2000). They also believe that cryoablation of the prostate is
not clinically similar to other procedures in APC 0163. One commenter
requested moving code 55873 into either APC 0984, New Technology--XV
($3500-$5000) or 0132, Level III Laparoscopy.
Response: We have reviewed our 1999-2000 cost data for code 55873,
and have 4 claims that show a median cost of just over $4,000, which
includes the cost of the procedure as well as the associated devices.
The devices associated with this procedure are eligible for
transitional pass-through payments. After subtracting the estimated
cost of the pass-through devices, we believe that the approximate
expected cost of this procedure warrants its assignment to APC 0982 New
Technology--XIII ($2500-$3000), with a status indicator of "T." The
devices associated with this procedure remain eligible for transitional
pass-through payments in 2002 in addition to the APC payment amount.

Water-Induced Thermotherapy

Comment: We received a comment from the manufacturer of the
equipment used for water-induced thermotherapy (a treatment for benign
prostatic hyperplasia), CPT code 53853, that our proposal to assign
this procedure in new technology APC 0977, New Technology--VIII ($1000-
$1250) did not accurately reflect the costs and resources required to
furnish this procedure. The commenter believes that 53853 should be
placed in APC 0982, New Technology--XIII ($2500-$3000) with other
minimally invasive thermotherapy treatments for benign prostatic
hyperplasia.
Response: We disagree with the commenter and are finalizing our
proposal. Based on the information provided by the commenters and our
own clinical knowledge, we understand that the resources required to
deliver water-induced thermotherapy are less than the resources
required for the procedures assigned to APC 0982 (CPT codes 53850,
transurethral destruction of prostate tissue; by microwave
thermotherapy, and 53852, transurethral destruction of prostate tissue;
by radiofrequency thermotherapy). Less intraoperative staff time and
less equipment resources are required for 53853 than for the other
procedures. In addition, unlike codes 53850 and 53852, which require
sedation or regional anesthesia, code 53853 requires only local
anesthesia. Finally, recovery time is shorter (in part because of the
local anesthesia) and requires fewer facility resources. Therefore, we
believe code 53853 is appropriately assigned to APC 0977.

Ultrasound Radiologic Guidance Codes

Comment: Several commenters inquired about a change in the proposed
rule that resulted in the packaging of certain ultrasound and
radiologic guidance codes. The commenters urged us to publish the data
and rationale for these changes and recommended that the proposed
changes not be made final, pending further review and a fuller
discussion of the proposed changes. The commenters recommended separate
rather than packaged payment for the guidance codes.
Response: As we explain above in section II.A.2 of this preamble
under the discussion for APC 0151, we accepted the APC Panel's
recommendation to consider the use of multiple claims data to determine
payment rates for endoscopic retrograde cholangio-pancreatography
(ERCP). The payment rate that we proposed for ERCP was based on both
single claims for ERCP procedures and on claims that included both an
ERCP procedure and a radiologic supervision or guidance procedure. That
is, rather than making separate payment for the radiologic supervision
and guidance furnished in connection with ERCP, we packaged those costs
into the proposed rate for APC 0151.
Our experience using multiple procedure claims to price ERCP in
accordance with the Panel's recommendation led us to consider other
services that could be priced similarly. We believe that the following
procedures assigned to APC 0268, Guidance Under Ultrasound, would never
be performed alone, but would always be performed in connection with
and be considered integral to the performance of another procedure:
76930, 76932, 76934, 76938, 76941, 76942, 76945, 76946, 76948, 76950,
76960, 76965, G0161. Therefore, if a claim listed one of the procedures
in APC 0268 in addition to another procedure, we retained that claim in
the pool of single-procedure bills used to calculate median costs for
services within the various APCs. Costs

[[Page 59871]]

associated with the codes in APC 0268 were therefore packaged into the
APCs of procedures with which they were billed between July 1, 1999
through June 30, 2000.
We continue to believe that the most appropriate way to pay for
ultrasound guidance is to package its costs as part of the cost of
performing the procedure for which the guidance is needed. Therefore,
in the proposed rule, we assigned status indicator "N" to still
active codes that had previously been in APC 0268. We applied the same
principle to several radiologic guidance codes (76393, 19290, 19291,
and 19295). We assigned status indicator "N" to these codes because
they represent services that are always furnished in connection with
another procedure. That is, they are integral to performing another
procedure and would never be performed alone, as a single service.
Therefore, costs associated with such radiologic guidance codes are
more appropriately packaged than paid for separately.
It is crucial that hospitals bill charges for codes with status
indicator "N" to ensure that costs for packaged services are
appropriately captured in the APCs with which they are associated. For
the 2003 OPPS update, we will consider proposing to package additional
guidance services with whichever procedures they are billed, including
the following:
76095, Stereotactic localization guidance for breast biopsy or
needle placement.
76355, Computerized tomography guidance for stereotactic
localization.
76360, Computerized tomography guidance for needle placement.
We will report to the Panel on our progress in treating bills with
certain packaged services as single procedure claims. We will also
include on the agenda of the next Panel meeting a follow-up discussion
to review the services that we have packaged thus far and to consider
other codes that would also be more appropriately paid as packaged
rather than separate services. To identify all the procedures with
which the ultrasound and radiologic guidance services are packaged
would require a review of the raw outpatient claims that make up the
1999-2000 data that we are using to recalibrate the 2002 APC weights
because we have previously packaged the guidance costs with whatever
procedure they are billed in preparing the claims data base used for
recalibration.

Breast Biopsy

Comment: A few commenters, including the manufacturer of a
minimally invasive breast biopsy system, expressed concern that the
higher APC relative weight for surgical breast biopsy procedures would
discourage Medicare beneficiary access to less invasive procedures. The
commenters were also concerned that the proposed payment for less
invasive breast biopsy procedures was inadequate.
Response: As we discuss below in section II.D. of this preamble,
the APC weights reflect hospital median costs (as determined from the
charges reflected on claims submitted by hospitals) for a given
procedure relative to the costs for other procedures. We expect that
the costs for an open surgical procedure will be higher than those for
less invasive procedures because open surgery is more resource
intensive, especially in terms of recovery time, anesthesia, and
nursing care. We do not agree that the higher relative weight for open
surgical biopsy will serve as an incentive to perform this procedure
rather than the less costly, less invasive options. The payment rate
for the less invasive options are based on the costs of those
procedures as reported by hospitals. We note that the payment rate for
the breast biopsy procedure assigned to APC 0974, New Technology--Level
V ($300-$500) (CPT code 19103, Percutaneous, automated vacuum assisted
or rotating biopsy device, using imaging guidance) is higher in this
final rule relative to the proposed rule (see the discussion in section
II.D. of this preamble, below).
Comment: Several commenters questioned why the proposed rule
indicated that CPT code 76095, Stereotactic localization guidance for
breast biopsy, would be moved from APC 0264, Level II Miscellaneous
Radiology Procedures, with a status indicator of "X" (ancillary
service) to APC 0187, Placement/Repositioning Miscellaneous Catheters,
with a status indicator of "T" (significant procedure, multiple
procedure reduction applies). The commenters were concerned that the

"T" status indicator would result in a lower payment for the
procedure when it is billed with other procedures.
Response: We agree with commenters that the title for APC 0187 in
the proposed rule is misleading given the procedures that are included
within the APC. Therefore, in the final rule, we are changing the name
of APC 0187 to "Miscellaneous Placement/Repositioning". We are also
changing the status indicator for APC 0187 from "T" to "X". We
created APC 0187 to pay more appropriately for certain guidance codes,
including code 76095.

Status Indicators

Comment: A commenter asserted that some hospitals believe that
procedure codes designated with status indicators of "S," "T,"
"V," and "X" mean that the procedure must be performed in the
outpatient setting.
Response: This is not the case. These status indicators were
developed to assist us with our pricing policy in OPPS, not to dictate
where the procedures could be performed. Although a status indicator of

"C" means that the procedure will not be paid if performed in the
outpatient setting, the status indicators paid under the OPPS do not
dictate where that service or procedure is covered. We pay for any
covered service or procedure performed in the inpatient setting as an
inpatient service as long as the patient's condition merits admission
to the hospital as an inpatient.

B. Additional APC Changes Resulting from BIPA Provisions

1. Coverage of Glaucoma Screening
Section 102 of the BIPA amended section 1861(s)(2) of the Act to
provide payment for glaucoma screening for eligible Medicare
beneficiaries, specifically, those with diabetes mellitus or a family
history of glaucoma, and certain other individuals found to be at high
risk for glaucoma as specified by our rulemaking. The implementation of
this provision is discussed in detail in a separate final rule
concerning the revisions in the physician fee schedule payment policy
for CY 2002, published in the Federal Register on November 1, 2001 (66
FR 55272).
In order to implement section 102 of BIPA, we have established two
new HCPCS codes for glaucoma screening:
G0117--Glaucoma screening for high risk patients furnished
by an optometrist or ophthalmologist.
G0118--Glaucoma screening for high risk patients furnished
under the direct supervision of an optometrist or ophthalmologist.
We proposed to assign the glaucoma screening codes to APC 0230,
Level I Eye Tests. We further proposed to instruct our fiscal
intermediaries to make payment for glaucoma screening only if it is the
sole ophthalmologic service for which the hospital submits a bill for a
visit. That is, the services included in glaucoma screening (a dilated
eye examination with an intraocular pressure measurement and direct
opthalmoscopy or slit-lamp biomicroscopy) would generally be performed
during the delivery of another opthalmologic service that is furnished
on the same day. If the

[[Page 59872]]

beneficiary receives only a screening service, however, we would pay
for it under APC 0230.
2. APCs for Contrast Enhanced Diagnostic Procedures
Section 430 of the BIPA amended section 1833(t)(2) of the Act to
require the Secretary to create additional APC groups to classify
procedures that utilize contrast agents separately from those that do
not, effective for items and services furnished on or after July 1,
2001. On June 1, 2001, we issued a Program Memorandum, Transmittal A-
01-73, in which we made numerous coding and grouping changes to
implement this provision. (This transmittal can be found at
www.hcfa.gov/pubforms/transmit/AO173.pdf) We removed the radiological
procedures whose descriptors included either "without contrast
material" or "without contrast material followed by contrast
material" from APC groups 0282, Level I, Computerized Axial
Tomography; APC 0283, Level II, Computerized Axial Tomography; and APC
0284, Magnetic Resonance Imaging. As a result, APCs 0283 and 0284 now
include only imaging procedures that are performed with contrast
materials. Additionally, reconfigured APC 0282 no longer includes
radiological procedures that use contrast agents.
Effective for items or services furnished on or after July 1, 2001,
we created six new APC groups for the procedures removed from APCs
0282, 0283, and 0284, as shown below. (Effective October 1, 2001, we
eliminated APC 0338. Refer to Transmittal A-01-73 for a detailed
description of this change.) For services furnished on or after July 1,
2001 and before January 1, 2002, the payment rates for the new imaging
APCs are the same as those associated with the APCs from which the
procedures were moved. For the proposed rule, we calculated separate
weights for the new APCs based on the data available at the time for
recalibration. In this final rule, we are establishing separate weights
for the new APCs based on the final data used to recalibrate the
weights for 2002.

Table 1.--APC Groups Reconfigured To Separate Imaging Procedures That Use Contrast Material From Procedures That
Do Not Use Contrast Material
----------------------------------------------------------------------------------------------------------------
APC SI APC title
----------------------------------------------------------------------------------------------------------------
0282............................. S Miscellaneous Computerized Axial Tomography.
0283............................. S Computerized Axial Tomography with Contrast.
0284............................. S Magnetic Resonance Imaging and Angiography with
Contrast.
0332............................. S Computerized Axial Tomography w/o Contrast.
0333............................. S CT Angio and Computerized Axial Tomography w/o
Contrast followed by with Contrast.
0335....................