[Federal Register: August 9, 2002 (Volume 67, Number 154)]
[Proposed Rules]
[Page 52091-52140]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr09au02-36]
To assist readers in referencing sections contained in this
document, we are providing the following table of contents.
Table of Contents
Comparison of Proposed 2003 Payment Rates to 2002 Payment Rates
Summary
Outline of Contents
Alphabetical List of Acronyms Appearing in the Proposed Rule
I. Background
II. Proposed Changes to the Ambulatory Payment Classification (APC)
Groups and Relative Weights
III. Transitional Pass-Through and Related Payment Issues
IV. Wage Index Changes for Calendar Year 2003
V. Copayment for Calendar Year 2003
VI. Conversion Factor Update for Calendar Year 2003
VII. Outlier Policy for Calendar Year 2003
VIII.Other Policy Decisions and Proposed Changes
IX. Summary of and Responses to MedPAC Recommendations
X. Summary of Proposed Changes for 2003
XI. Summary of Proposed Payment Suspension Provisions
XII. Collection of Information Requirements
XIII.Response to Public Comments
XIV. Regulatory Impact Analysis
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 CMS Website Only
Addendum D--Payment Status Indicators for the Hospital Outpatient
Prospective Payment System
Addendum E--CPT Codes That Would Be Paid Only As Inpatient
Procedures
Addendum H--Wage Index for Urban Areas
Addendum I--Wage Index for Rural Areas
Addendum J--Wage Index for Hospitals That Are Reclassified
[[Page 52091]]
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Part VII
Department of Health and Human Services
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Centers for Medicare & Medicaid Services
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42 CFR Part 405 et al.
Medicare Program; Changes to the Hospital Outpatient Prospective
Payment System and Calendar Year 2003 Payment Rates; and Changes to
Payment Suspension for Unfiled Cost Reports; Proposed Rule
[[Page 52092]]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Parts 405, 410 and 419
[CMS-1206-P]
RIN 0938-AL19
Medicare Program; Changes to the Hospital Outpatient Prospective
Payment System and Calendar Year 2003 Payment Rates; and Changes to
Payment Suspension for Unfiled Cost Reports
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Proposed rule.
SUMMARY: This proposed rule would revise the Medicare hospital
outpatient prospective payment system to implement applicable statutory
requirements and changes arising from our continuing experience with
this system. In addition, it would describe proposed changes to the
amounts and factors used to determine the payment rates for Medicare
hospital outpatient services paid under the prospective payment system.
These changes would be applicable to services furnished on or after
January 1, 2003. In addition, this rule proposes to allow the Secretary
to suspend Medicare payments ``in whole or in part'' if a provider
fails to file a timely and acceptable cost report.
DATES: We will consider comments if we receive them at the appropriate
address, as provided below, no later than 5 p.m. on October 8, 2002.
ADDRESSES: In commenting, please refer to file code CMS-1206-P. Because
of staff and resource limitations, we cannot accept comments by
facsimile (FAX) transmission. Mail written comments (one original and
two copies) to the following address ONLY: Centers for Medicare &
Medicaid Services, Department of Health and Human Services, Attention:
CMS-1206-P, P.O. Box 8018, Baltimore, MD 21244-8018.
Please allow sufficient time for mailed comments to be timely
received in the event of delivery delays.
If you prefer, you may deliver (by hand or courier) your written
comments (one original and two copies) to one of the following
addresses:
Room 445-G, Hubert H. Humphrey Building, 200 Independence Avenue, SW.,
Washington, DC 20201, or
Room C5-14-03, 7500 Security Boulevard, Baltimore, MD 21244-1850.
(Because access to the interior of the HHH Building is not readily
available to persons without Federal Government identification,
commenters are encouraged to leave their comments in the CMS drop slots
located in the main lobby of the building. A stamp-in clock is
available for persons wishing to retain a proof of filing by stamping
in and retaining an extra copy of the comments being filed.)
Comments mailed to the addresses indicated as appropriate for hand
or courier delivery may be delayed and could be considered late.
For information on viewing public comments, see the beginning of
the SUPPLEMENTARY INFORMATION section.
FOR FURTHER INFORMATION CONTACT: Anita Heygster, (410) 786-0378--
outpatient prospective payment issues; Lana Price, (410) 786-4533--
partial hospitalization and ESRD; Gerald Walters, (410) 786-2070--
payment suspension issues.
SUPPLEMENTARY INFORMATION:
Inspection of Public Comments: Comments received timely will be
available for public inspection as they are received, generally
beginning approximately 3 weeks after publication of a document, at the
headquarters of the Centers for Medicare & Medicaid Services, 7500
Security Boulevard, Baltimore, Maryland 21244, Monday through Friday of
each week from 8:30 a.m. to 4 p.m. To schedule an appointment to view
public comments, call (410) 786-7197.
Availability of Copies and Electronic Access
Copies: To order copies of the Federal Register containing this
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an alternative, you can view and photocopy the Federal Register
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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.
To assist readers in referencing sections contained in this
document, we are providing the following table of contents.
Outline of Contents
Comparison of Proposed 2003 Payment Rates to 2002 Payment Rates
I. Background
A. Authority for the Outpatient Prospective Payment System
B. Summary of Rulemaking for the Outpatient Prospective Payment
System
C. Authority for Payment Suspension for Unfiled Cost Reports
D. Summary of Payment Suspension for Unfiled Cost Reports
II. Proposed 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. General Issues Considered by the Advisory Panel
3. Recommendations of the Advisory Panel and Our Responses
B. Other Changes Affecting the APCs
1. Limit on Variation of Costs of Services Classified Within a
Group
2. Procedures Moved from New Technology APCs to Clinically
Appropriate APCs
3. APC Assignment for New Codes Created During 2002
4. Recalibration of Weights for 2003
a. Data Issues
(1) Treatment of ``Multiple Procedure'' Claims
(2) Calendar Year 2002 Charge Data for Pass-Through Device
Categories
b. Description of How Weights Were Calculated for 2003
5. Procedures That Will Be Paid Only As Inpatient Procedures
C. Partial Hospitalization
III. Transitional Pass-Through and Related Payment Issues
A. Background
B. Discussion of Pro Rata Reduction
C. Expiration of Transitional Pass-Through Payments in Calendar Year
2003
1. Devices
2. Drugs and Biologicals (Including Radiopharmaceuticals, Blood,
and Blood Products)
3. Brachytherapy
D. Criteria for New Device Categories
E. Payment for Transitional Pass-Through Drugs and Biologicals for
Calendar Year 2003
IV. Wage Index Changes for Calendar Year 2003
V. Copayment for Calendar Year 2003
VI. Conversion Factor Update for Calendar Year 2003
VII. Outlier Policy for Calendar Year 2003
VIII. Other Policy Decisions and Proposed Changes
A. Hospital Coding for Evaluation and Management (E/M) Services
B. Observation Services
[[Page 52093]]
C. Payment Policy When A Surgical Procedure on the Inpatient List Is
Performed on an Emergency Basis
1. Current Policy
2. Hospital Concerns
3. Clarification of Payment Policy
4. Orders to Admit
D. Status Indicators
E. Other Policy Issues Relating to Pass-Through Device Categories
1. Reducing Transitional Pass-Through Payments To Offset Costs
Packaged Into APC Groups
2. Devices Paid With Multiple Procedures
F. Outpatient Billing for Dialysis
IX. Summary of and Responses to MedPAC Recommendations
X. Summary of Proposed Changes for 2003
A. Changes Required by Statute
B. Additional Changes to OPPS and Payment Suspension Provisons
C. Changes to the Regulations Text
XI. Summary of Proposed Payment Suspension Provisions
XII. Collection of Information Requirements
XIII. Response to Public Comments
XIV. Regulatory Impact Analysis
A. OPPS
1. General
2. Changes in this Proposed Rule
3. Limitations of Our Analysis
4. Estimated Impacts of this Proposed Rule
5. Projected Distribution of Outlier Payments
B. Payment Suspension for Unfiled Cost Reports 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 That Would Be Paid Only As Inpatient
Procedures
Addendum H--Wage Index for Urban Areas
Addendum I--Wage Index for Rural Areas
Addendum J--Wage Index for Hospitals That Are Reclassified
Alphabetical List of Acronyms Appearing in the Proposed Rule
ACEP American College of Emergency Physicians
AMA American Medical Association
APC Ambulatory payment classification
AWP Average wholesale price
BBA Balanced Budget Act of 1997
BIPA Medicare, Medicaid, and SCHIP Benefits Improvement and
Protection Act of 2000
BBRA Balanced Budget Refinement Act of 1999
CCR Cost center specific cost-to-charge ratio
CMHC Community mental health center
CMS Centers for Medicare & Medicaid Services (Formerly known as the
Health Care Financing Administration)
CPT (Physician's) Current Procedural Terminology, Fourth Edition,
2002, copyrighted by the American Medical Association
CSW Clinical social worker
CY Calendar year
DRG Diagnosis-related group
DSH Disproportionate Share Hospital
EACH Essential Access Community Hospital
E/M Evaluation and management
ERCP Endoscopic retrograde cholangiopancreatography
ESRD End-stage renal disease
FACA Federal Advisory Committee Act
FY Federal fiscal year
HCPCS Healthcare Common Procedure Coding System
HIPAA Health Insurance Portability and Accountability Act of 1996
ICU Intensive care unit
ICD-9-CM International Classification of Diseases, Ninth Edition,
Clinical Modification
IME Indirect Medical Education
IPPS (Hospital) inpatient prospective payment system
LTC Long Term Care
MedPAC Medicare Payment Advisory Commission
MDH Medicare Dependent Hospital
MSA Metropolitan statistical area
NECMA New England County Metropolitan Area
OCE Outpatient code editor
OMB Office of Management and Budget
OPD (Hospital) outpatient department
OPPS (Hospital) outpatient prospective payment system
OT Occupational therapist
PHP Partial hospitalization program
PPS Prospective payment system
PPV Pneumococcal pneumonia (virus)
PRA Paperwork Reduction Act
RFA Regulatory Flexibility Act
RRC Rural Referral Center
RVUs Relative value units
SCH Sole Community Hospital
TEFRA Tax Equity and Fiscal Responsibility Act
USPDI United States Pharmacopoeia Drug Information
Comparison of Proposed 2003 Payment Rates to 2002 Payment Rates
The outpatient pass-through provisions of the BBRA and BIPA have
been exceptionally difficult to implement, arguably the most complex
and difficult in the history of the Medicare program. In CY 2002, the
pass-through payments, and the APC rates were calculated on the best
information available. This was often manufacturer list prices, which
may not reflect not actual prices paid by hospitals. For CY 2003, far
more data is available on the actual charges for hospital OPDs, and
these are reflected in the rates in this proposed rule. In many cases
these new rates are significantly different from CY 2003 rates, but
they are based on actual hospital charges, and on far more complete
data than were the CY 2002 rates. Nevertheless, CMS is actively seeking
comment on all aspects of these rates, given the significant changes in
the proposed rule, and the agency is open to making changes, perhaps
significant, in the final rule based on comments.
The 2003 payment rates proposed in this proposed rule are, for many
items and services, significantly higher or lower than the payment
rates for the same items and services for 2002, particularly for APCs
which use medical devices, and for APCs for drugs that will no longer
be eligible for pass-through status in 2003 and paid under separate
APCs. Some proposed payments for 2003 are far lower than the 2002
payment amounts (and some are higher).
For example, as can be seen in Addenda A, the proposed rate for APC
0108 (Insertion/Replacement/Repair of Cardioverter-Defibrilator Leads)
shows a dramatic decrease in payment compared to the 2002 rate. This
reduction for a number of APCs is of concern to us because of the
potential impact on access to care. We invite public comment and
suggestions on how to address the potential for adverse impact of these
proposed changes.
The proposed 2003 payment rates reflect the use of updated data, as
required by the statute, in calculating payment rates in accordance
with the methodologies set forth in the statute and regulations. The
proposed payment rates reflect mathematical calculations based on the
latest available program data.
Our goal in this proposed rule is to explain the methodology and to
solicit comments on our rate-setting methods and the effect on
beneficiary access, provider participation and the fiscal integrity of
the Medicare Trust Fund.
Devices
We believe that there are several factors that may explain the
differences between the proposed payment amounts for 2003 and the
payment amounts for 2002 (some, but not all of which, are significant).
First, we believe that the payment rates for the device related
procedures for 2002 may in some cases have been higher than they would
have been had actual hospital acquisition cost data been available for
us to use. Specifically, because we lacked hospitals' cost data for
devices, we used the best data available to us at the time which was
manufacturer data regarding the hospitals' acquisition costs in
providing the devices. We assumed that a device would be provided with
a related procedure and packaged 75 percent of these manufacturer
estimated
[[Page 52094]]
costs for the devices into the APCs for the procedures.
The costs that we packaged in for some devices may have been higher
than actual hospital acquisition costs. The differences between the
2002 payment rate and the lower 2003 proposed payments are based on our
data sources. While the 2003 rates are based on 2001 hospital claims
and the latest available cost report data, the 2002 rates are based on
manufacturer data for devices. We use charges on the hospital claims
data to estimate hospital costs. We apply hospital-specific,
department-specific cost-to-charge ratios (CCRs) from each provider's
most recently submitted cost report to the charges to develop the
estimate of costs. In most cases, the provider's most recently
submitted cost report is from fiscal year 1999. An adjustment factor is
applied in developing CCRs for cost reports that have not yet been
settled, so that the CCRs will more closely reflect CCRs from a settled
cost report.
Second, there may be problems in the data, particularly for coding
of devices in 2001. As discussed later in this preamble, devices were
to be coded using device specific C codes from the start of the OPPS on
August 1, 2000 until the law changes required that we establish
category codes by April 1, 2001. We then granted a grace period until
July 1, 2001, during which we accepted both device specific codes and
category codes. During a Town Hall meeting with the public on April 5,
2001, and in other contacts with hospitals (such as the open forum
calls and visits to hospitals) we have been told that hospitals had
difficulty in submitting proper HCPCS coding for services and for
devices once OPPS began and that, in many cases, they did not bill for
devices for which they should have claimed payment.
In some cases, hospitals were confused by the change from device
specific codes to category codes; in other cases, the use of HCPCS
codes was new and they had a long learning curve to learn how to use
HCPCS codes. Our initial data analysis suggested that hospitals may not
have billed for the devices using the device or category codes in all
cases. If the charges were not on the claim, they would not have been
picked up for calculation of the median cost for the service and the
associated device, possibly resulting in a proposed payment rate for
the APC that is inappropriately low and other rates that are
inappropriately too high. However, based on our analysis which is
described later, we believe that hospitals often showed the charges for
the devices in the applicable revenue centers (such as, supplies) and
that the charges for the devices often were on the claim, even if the
HCPCS code was not.
We welcome public comments regarding these issues for these payment
changes and proposals regarding how problems with claims data could be
rectified for development of the final rule.
Drugs
As discussed later in this preamble, we propose to package the
costs for lower cost drugs into the payment for the APC in which they
are used and to pay specialty drugs and high cost drugs under separate
APCs. Some of the APCs for separately paid drugs also show significant
reductions in payments compared to the pass-through payments made in
2002. Several factors may help place these decreases in perspective.
These changes result largely because the payment method for items
in transitional pass-through payment status differs significantly from
other services paid under the OPPS, and as items lose transitional
pass-through payment status they are subject to a different payment
method. In particular, a drug in transitional pass-through payment
status is paid based on 95 percent of the average wholesale price for
the drug, possibly subject to a uniform reduction.\1\
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\1\ In 2002, we apply a uniform reduction to the transitional
pass-through portion of payments for drugs with transitional pass-
through status. As a result, the OPPS now pays hospitals about 72
percent of AWP for drugs in this status. The uniform reduction, as
discussed in the March 1, 2002 final rule, is to comply with section
1833(t)(6)(E) of the Act, which limits the total projected amount of
transitional pass-through payments for 2002 to 2.5 percent of
projected total payments under the OPPS in 2002.
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In contrast, a drug not in transitional pass-through status is paid
as are other services under the OPPS. The statute provides that
services (other than transitional pass-through items) be paid on the
basis of a service-specific relative weight multiplied by a conversion
factor. The relative weight is determined based on the median hospital
cost, where the cost on each claim is derived by multiplying the
submitting hospital's charge by a cost-to-charge ratio (determined from
the hospital's latest submitted cost report, usually from fiscal year
1999). We anticipate that a hospital's charges on particular services
reflect, at least in relative terms, the hospital's resource use in
providing that service.
Per the statute, the conversion factor was set at the initiation of
the system to achieve budget neutrality relative to the prior system;
it is updated each year by the rate of increase in the hospital market
basket. This mechanism does reflect changes in input costs from the
initial base, but the system is not rebased to reflect the absolute
level of such costs.
This payment method was not intended to assure that hospitals, even
on average, are reimbursed costs of particular services. In fact,
because the conversion factor was calibrated to reflect prior
reductions in hospital operating and capital costs that were built into
the baseline for overall program expenditures, the OPPS is not set to
pay full costs to hospitals.\2\
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\2\ In fact, because of the effect of prior statutory reductions
in payments, the OPPS system was calibrated at its initiation to pay
only about 82 percent of hospital costs in the aggregate.
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Further, nothing in the payment method prescribed by the statute
requires or anticipates that hospitals would be reimbursed full costs
of purchased inputs such as drugs, just as it does not anticipate that
hospitals would be reimbursed for the full cost of any other services
they deliver.
The payment methods are set out in section 1833(t) of the Act. This
section does not permit continuation of a pass-through payment (at 95
percent of AWP or some other level) for drugs losing their transitional
pass-through status. This section permits the Secretary to specify APC
groupings, and we are proposing in 2003 to continue to pay separately
for certain drugs that had transitional pass-through status in 2002 and
that are no longer eligible for pass-through status in 2003. These
drugs would be in separate APCs, rather than being packaged into other,
procedure-related APCs; the payment method would be the same relative-
weight payment method used for other APCs.
The resulting payment rates incorporate the best evidence we have
regarding what hospitals charged in 2001. They may diverge, however,
from payment rates based on the AWP, including those in use for 2002.
As is discussed above, movement from pass-through payment rates to
relative-weight based payment rates would be expected to lead to
decreases in payments, even if AWP represented a reliable measure of
hospital acquisition costs (As discussed above, we use hospital charges
and hospital-specific, department-specific cost-to-charge ratios to
estimate hospital costs. In most cases, cost-to-charge ratios are
derived from 1999 cost reports).
However, we believe this outcome is also be due to deficiencies in
AWP as a measure of hospital acquisition costs. AWP is not an accurate
estimate of what
[[Page 52095]]
providers actually pay for drugs. Studies undertaken over the past
decade by the Office of the Inspector General, the Department of
Justice, and the General Accounting Office that compare AWP with actual
drug acquisition costs have consistently shown that published AWPs
considerably exceed these costs (See ``MEDICARE Payments for Covered
Outpatient Drugs Exceed Providers' Costs'', GAO-01-1118). Therefore, it
is to be expected that the proposed 2003 APC payment rates based on
median hospital costs for these drugs will be lower than the 2002
payment rates for the same drugs that are based on AWP. The
Administration has repeatedly stated its view that AWP inaccurately
represents actual market pricing. The pass-through system pays based on
AWP, creating further incentives for artificially high AWP listings. We
believe the steep reductions in some drug prices reflect these
incentives, and that the new rates more accurately reflect the actual
acquisition costs for hospitals pay. Still, we are interested in
soliciting comments on these costs, and the mechanisms to identify
them.
I. Background
A. Authority for the Outpatient Prospective Payment System
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
OPPS was first implemented for services furnished on or after August 1,
2000.
B. Summary of Rulemaking for the Outpatient Prospective System
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 18434) 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, 2000 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 and amended by the BBRA. Medicare
regulations governing the hospital OPPS are set forth at 42 CFR part
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. We implemented the OPPS on 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 implemented the 2001
OPPS on 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 November 2, 2001, we published a final rule (66 FR
55857) that announced the Medicare OPPS conversion factor for calendar
year 2002. In addition, it described the Secretary's estimate of the
total amount of the transitional pass-through payments for CY 2002 and
the implementation of a uniform reduction in each of the pass-through
payments for that year.
On November 2, 2001, we also published an interim final
rule with comment period (66 FR 55850) that set forth the criteria the
Secretary will use to establish new categories of medical devices
eligible for transitional pass-through payments under Medicare's OPPS.
On November 30, 2001, we published a final rule (66 FR
59856) that revised the Medicare OPPS to implement applicable statutory
requirements, including relevant provisions of BIPA, and changes
resulting from continuing experience with this system. It addition, it
described the CY 2002 payment rates for Medicare hospital outpatient
services paid under the PPS. This final rule also announced a uniform
reduction of 68.9 percent to be applied to each of the transitional
pass-through payments for certain categories of medical devices and
drugs and biologicals.
On December 31, 2001, we published a final rule (66 FR
67494) that delayed, until no later than April 1, 2002, the effective
date of CY 2002 payment rates and the uniform reduction of transitional
pass-through payments that were announced in the November 30, 2001
final rule. In addition, this final rule indefinitely delayed certain
related regulatory provisions.
On March 1, 2002, we published a final rule (67 FR 9556)
that corrected technical errors that affected the amounts and factors
used to determine the payment rates for services paid under the
Medicare OPPS and corrected the uniform reduction to be applied to
transitional pass-through payments for CY 2002 as published in the
November 30, 2001 final rule. These corrections and the regulatory
provisions that had been delayed became effective on April 1, 2002.
C. Authority for Payment Suspensions for Unfiled Cost Reports
Authority for the provision regarding payment suspensions for
unfiled cost reports is contained within the authority for subpart C of
42 CFR Part 405, that is, sections 1102, 1815, 1833, 1842,
[[Page 52096]]
1866, 1870, 1871, 1879, and 1892 of the Social Security Act (42 U.S.C.
1302, 1395g, 13951, 1395u, 1395cc, 1395gg, 1395hh, 1395pp, and 1395ccc)
and 31 U.S.C. 3711.
D. Summary of Payment Suspensions for Unfiled Cost Reports
This provision is set forth in our existing regulations at 42 CFR
405.371 as follows:
Section 405.371 (a) provides that Medicare payments may be
suspended, in whole or in part, following overpayments determined by
the Medicare contractor when overpayment exists or when the payments to
be made may not be correct.
Section 405.371(b) provides, in relevant part, that a payment
suspension may proceed only after certain procedural requirements
contained at Sec. 405.372 are met.
Existing Sec. 405.371(c) provides for suspension of payment if a
provider has failed to timely file an acceptable cost report. Payment
to the provider is immediately suspended until a cost report is filed
and determined by the intermediary to be acceptable.
With the increased transition to the prospective payment systems,
the cost report settlement process has become less determinative of an
institutional provider's Medicare reimbursement. For instance, in the
case of an inpatient acute care hospital, the base DRG payment (as
opposed to any teaching or disproportionate share payments, or pass-
through payments) is determined when a claim is initially adjudicated,
and does not generally change at the time of cost report settlement.
Similarly, the APC payment for an outpatient service is also based on
the claim adjudication. For home health agencies, minimal changes to
payment are made at the time of cost report settlement, and for skilled
nursing facilities, the main cost report issues revolve around bad debt
determinations. In all of these cases, a significant proportion of the
institution's payments are determined based on the adjudication of
claims, and do not change at the point of settling the cost report.
However, the filing of cost reports remains important for settling some
payments, such as medical education payments, even for providers that
are fully transitioned to prospective payment systems. Also, cost
reports for PPS providers are used for determining prospective payment
rates for future years. For these reasons, tailored payment suspensions
can still be an effective measure for ensuring that providers comply
with their obligation to file timely and acceptable cost reports.
II. Proposed Changes to the Ambulatory Payment Classification (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 601, Mid-Level Clinic
Visits. The APC weights are scaled to APC 601 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
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 payment 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 unusual cases, such as low volume items and
services.''
The APC groups that we are proposing in this rule as the basis for
payment in 2003 under the OPPS have been analyzed 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, requires that we consult with an
outside panel of experts when annually reviewing and updating the APC
groups and the relative weights. The Act 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 (Pub. L. 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, we chose 15
highly qualified individuals to serve on the Panel. The first APC Panel
meeting was held on February 27, February 28, and March 1, 2001 to
discuss the 2001 APCs in anticipation of the 2002 OPPS.
We published a notice in the Federal Register on December 14, 2001
to announce the location and time of the second 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 on our
website. We convened the second meeting of the Panel on January 22
through January 24, 2002.
2. General Issues Considered by the Advisory Panel
In this section, we summarize the Panel's discussion of a
recommendation by the Panel's Research Subcommittee concerning the
format of written submissions and oral presentations to the Panel and
of several general OPPS payment issues.
Content for Future Presentations to the Panel
During the 2001 meeting, the Panel heard many different types of
oral presentations. The Panel members felt that requiring consistency
for all presentations with regard to format, data submission, and
general information would assist them in analyzing the submissions and
presentations and making recommendations. Therefore, during the 2001
meeting, the Panel recommended the creation of a Research Subcommittee.
The Research Subcommittee was established during the 2001 meeting and
had regular conference calls to discuss the development and
implementation of standards for written submissions and oral
presentations to the Panel during its meetings. The Research
Subcommittee also analyzed complex issues (such as the use of multiple
procedure claims
[[Page 52097]]
data to set APC relative weights) that could not be addressed in the
time allotted for the annual meeting.
The Panel began its 2002 meeting by considering the Research
Subcommittee's recommendation to the Panel on requirements for written
submissions and oral presentations. The Research Subcommittee
recommended that all future oral presentations and written submissions
contain the following:
Name, address, and telephone number of the proposed
presenter.
Financial relationship(s), if any, with any company whose
products, services, or procedures are under consideration.
CPT codes involved.
APC(s) affected.
Description of the issue.
Clinical description of the service under discussion, with
comparison to other services within the APC.
Description of the resource inputs associated with the
service under discussion, with a comparison to resource inputs for
other services within the APC.
Recommendations and rationale for change.
Expected outcome of change and potential consequences of
no change.
The Panel adopted the Subcommittee s recommendation. Presentations
for the 2003 meeting must contain, at a minimum, this information.
Inpatient Only List
At its February 2001 meeting, the Panel discussed the existence of
the inpatient list. The Panel favored its elimination. At the January
2002 meeting, Panel members noted that hospitals receive no payment for
a service performed in an outpatient department that appears on the
inpatient list, even though the physician performing that service will
receive payment for his or her services. The Panel believes the
physician should determine what procedure to perform and that both the
hospital and the physician should receive payment for the procedure. We
continue to disagree with the position taken by the Panel regarding the
inpatient list for reasons that we discuss in detail in the April 7,
2000 final rule (65 FR 18456).
Prior to the 2002 Panel meeting, we received requests from hospital
and surgical associations and societies to remove certain procedures
from the inpatient list. We reviewed those requests and presented to
the Panel the requests for which we were unable to make a determination
based on the information submitted with the request.
The Panel considered removing the following procedures from the
inpatient list:
------------------------------------------------------------------------
CPT Description
------------------------------------------------------------------------
21390 Treat eye socket fracture.
27216 Treat pelvic ring fracture.
27235 Treat thigh fracture.
32201 Drain, percut, lung lesion.
33967 Insert ia percut device.
47490 Incision of gallbladder.
62351 Implant spinal canal cath.
64820 Remove sympathetic nerves.
92986 Revision of aortic valve.
92987 Revision of mitral valve.
92990 Revision of pulmonary valve.
92997 Pul art balloon repr, precut.
92998 Pul art balloon repr, precut.
------------------------------------------------------------------------
The Panel recommended that we solicit comments and additional
information from hospitals and medical specialty societies that have an
interest in these procedures. The Panel also recommended that we
present to them at their 2003 meeting any such comments that we receive
to assist in their evaluation of whether to recommend removing the
codes from the inpatient list.
The Panel did recommend that we remove from the inpatient list CPT
code 47001, Biopsy of liver, needle; when done for indicated purpose at
time of other major procedure. Panel members stated that this add-on
code is being billed with surgical procedures that are payable under
the OPPS. The Panel noted that coding edits prevent payment for the
other payable OPPS services if CPT code 47001 is on the claim. We agree
with the Panel's recommendation and we propose to remove 47001 from the
inpatient list. We further propose to assign it status indicator ``N''
so that costs associated with CPT code 47001 would be packaged into the
APC payment for the primary procedure performed during the same
operative session.
One presenter at the Panel meeting suggested removing CPT codes
53448, 54411, and 54417 from the inpatient list because he believed
they were being performed in the outpatient setting. After discussing
this suggestion, the Panel recommended that these codes remain on the
inpatient list because they involve removing a prosthesis through an
infected operative field and cannot be safely and effectively performed
in the outpatient setting. We agree with the Panel's recommendation,
and we are not proposing to remove these codes from the inpatient list.
In section II.B.5 of this preamble, below, we discuss additional
procedures, which were not considered by the Panel, that we propose to
remove from the inpatient list. We discuss in detail our reasons for
proposing these additional changes, and we propose two new criteria
that we would adopt in the future when evaluating whether to make a
procedure on the inpatient list payable under the OPPS. Table 6 in
section II.B.5 lists all the procedures we propose to remove from the
inpatient list, including those discussed by the Panel. We are
considering the removal of CPT code 33967, Insertion of intra-aortic
balloon assist device, percutaneous from the inpatient list, but did
not include it in Table 6. The Panel considered this code for removal
from the inpatient list and had concerns about whether performing this
procedure in an outpatient setting is appropriate. Further, we have not
been able to confirm that this procedure is being performed on Medicare
beneficiaries in an outpatient setting. We solicit comments, including
clinical data and specific case reports, that would support payment for
CPT 33967 under the OPPS.
Multiple Bills
During its February 2001 meeting, the Panel received oral testimony
identifying CMS exclusive use of single procedure claims to set
relative weights for APCs as a potential problem in setting appropriate
payment rates for APCs. Therefore, the panel asked its Research
Subcommittee to work with CMS staff, using the Endoscopic Retrograde
Cholangiopancreatography (ERCP) code family as a case study, to explore
the use of multiple procedure claims data for setting relative weights.
This code family was selected because presenters had suggested that
when procedures in this family are performed, it is typical to perform
more than one procedure during a session.
The Subcommittee reviewed pre-OPPS claims data for these codes,
paying particular attention to common code combinations and costs per
procedure and per code combination. After lengthy review, the Panel
concluded that (1) it could not determine whether findings based on
review of pre-OPPS data could be extrapolated to post-OPPS claims data;
(2) the variability in allocation of costs across ERCP line items and
the existence of claims where the same ERCP code was billed more than
once indicate that problems exist with the accuracy of facility coding
for these procedures; and (3) analysis of multiple claims data for ERCP
may not be applicable to other sets of services.
The Subcommittee made the following recommendations to the Panel,
which the Panel approved:
[[Page 52098]]
We should continue to explore the use of multiple
procedure claims data for setting payment rates but should continue to
use only single procedure claims data to determine relative payment
weights for CY 2003.
We should work with the APC Panel to explore the use of
multiple claims data drawn from OPPS claims for services such as
radiation oncology in time for the next APC Panel meeting.
We should educate hospitals on appropriate coding and
billing practices to ensure that claims with multiple procedures are
properly coded and that costs are properly allocated to each procedure.
One presenter to the panel suggested a method to increase the
number of claims that could be considered as single claims. Currently,
we consider any claim submitted with two or more primary codes (that
is, a code assigned to an APC for separate payment) to be a multiple
procedure claim. When these claims contain line items for revenue
centers without an accompanying Healthcare Common Procedure Coding
System (HCPCS) code there is no way to determine the appropriate
primary code with which to package the revenue center. The presenter
suggested that we consider all claims where every line contains a
separately payable HCPCS code as a single procedure claim, reasoning
that on such claims we do not have to determine how and where to
``package'' line items not identified by a separately payable HCPCS
code. Where every line item contains a separately payable HCPCS code,
every cost can easily be allocated to a separately payable HCPCS code
on the line item and all costs for each HCPCS code can then be
accurately and completely determined.
We agree. We describe in section II.B.4 how we determined the
number of single claims used to set the APC relative weights proposed
for 2003 using this methodology. We ask for comments on our
methodology.
Packaging
We sought the Panel's guidance on whether we should package the
costs of HCPCS codes for radiologic guidance and radiologic supervision
and interpretation services whose descriptors require that they only be
performed in conjunction with a surgical procedure.
There are a number of reasons why we package the costs of certain
procedures. For example, ``add-on'' procedures and radiologic guidance
procedures should never be billed on a claim without the code for an
associated procedure. A facility should not submit a claim for
ultrasound guidance for a biopsy unless the claim also includes the
biopsy procedure, because the guidance is necessary only when a biopsy
is performed. A claim for a packaged guidance procedure (or a
supervision and interpretation procedure whose descriptor requires it
be performed in association with a surgical procedure) would be
returned to the provider for correction and resubmission.
Also, we use packaging because billing conventions allow hospitals
to report costs for certain services using only revenue center codes
(that is, hospitals are not required to specify HCPCS codes for certain
services). Packaging allows these costs to be captured in the data used
to calculate median costs for services with an APC.
Several presenters to the panel requested that we not package any
radiologic guidance or supervision and interpretation codes. They
believe that hospitals will not use codes for which they do not receive
a separate payment. If that were the case, it would be difficult to
track utilization for these procedures and make it difficult for
radiology departments to receive an appropriate payment for their
services. A few presenters also pointed out that various forms of
guidance with widely varying costs can be used for a single surgical
procedure. Therefore, we might unintentionally create an incentive for
inappropriate care by packaging several guidance procedures with
varying costs into a single surgical code. Additionally, a manufacturer
of ultrasound guidance equipment used for placement of radiation fields
commented that, because guidance is rarely used for this purpose, its
costs could not be adequately captured by packaging it into a common
procedure where the vast majority of claims did not use guidance.
The Panel concluded that, even though we could be setting relative
weights based on error claims, we should not package additional
radiologic guidance and supervision and interpretation procedures and
should continue to explore methodologies that would allow these
procedures to be recognized for separate payment. The Panel also
recommended that radiology guidance codes that were in APC 268 for CY
2001 but that were designated with status indicator ``N'' as packaged
services in 2002, be restored as separately payable services for CY
2003. The Panel requested that this topic be placed on the agenda for
the next Panel meeting.
Add-On Codes
We presented for the Panel's consideration several options for
payment of add-on codes, including assignment of status indicator ``N''
to package them into the payment for the base procedure. Add-on codes
described additional procedures performed by the same physician that
are associated with the primary procedure, and which cannot be billed
without the primary procedure. Such a methodology would create a
single, weight averaged payment for the parent procedure and the add-on
procedure while addressing the problem that any ``single'' claim for an
add-on procedure is, by definition, an error claim. After thorough
review, the Panel concluded that we should continue to pay for add-on
codes separately, setting relative weights with the use of single
procedure claims in spite of the fact that these were error claims. The
Panel asked us to continue exploring ways to most appropriately pay for
these services. They requested that this item also be placed on the
agenda for the next Panel meeting.
We propose to accept the recommendations of the APC Panel both for
packaging radiology guidance and supervision and interpretation codes
and for payment of add-on codes. We are proposing to pay separately in
2003 for radiology guidance codes that were paid in APC 268 in CY 2001
but that were packaged in 2002.
3. Recommendations of the Advisory Panel and Our Responses
In this section, we consider the Panel's recommendations affecting
specific APCs. The most recent data available for the Panel to review
in considering specific APC groupings were the 1999-2000 pre-OPPS
claims data that were the basis of the CY 2002 relative payment
weights. The APC titles are shown in this discussion of the APC Panel
recommendations as they existed when the APC Panel met in January 2002.
In a few cases the APC titles were changed for the proposed 2003 OPPS
and therefore some APCs do not have the same title in Addenda A as they
have in this section.
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.B.1 of this preamble, we discuss our proposals regarding the
2 times rule based on the CY 2001 data we are using to recalibrate the
2003 APC relative weights. Section II.B.1 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
[[Page 52099]]
exceptions we implemented in 2001 and 2002. We refer to the exceptions
as ``violations of the 2 times'' rule in the following discussion.
APC 215: Level I Nerve and Muscle Tests
APC 216: Level III Nerve and Muscle Tests
APC 218: Level II Nerve and Muscle Tests
We presented this agenda item because APC 215 appeared to violate
the 2 times rule. In order to remedy this violation, we asked the Panel
to consider the following changes:
Move CPT codes 95858, 95921, and 95922 from APC 215 to APC
218.
Move CPT code 95930 from APC 216 to APC 218.
Move CPT code 92275 from APC 216 to APC 231.
Move CPT code 95920 from APC 218 to APC 216.
A presenter to the Panel who represented a device manufacturer
noted that the resources used to provide 95921, Autonomic nerve
function test, are not similar to the resources required for performing
the procedures in APC 218, where we had suggested moving the device. He
requested that the code be reassigned to APC 216 where it resided in
calendar year 2000. Because there were very few claims for the code in
the 1999 and 2000 data, the Panel voiced concern about making the
change without sufficient data to support such a move.
The Panel recommended that the changes we asked them to consider be
made, that is, to move CPT codes 95921 and 95922 to APC 218. However,
if the calendar year 2001 data support a move of 95921 to APC 216, the
Panel recommended that we consider that move.
APC 600: Low Level Clinic Visits
APC 601: Mid Level Clinic Visits
APC 602: High Level Clinic Visits
APC 610: Low Level Emergency Visits
APC 611: Mid Level Emergency Visits
APC 612: High Level Emergency Visits
The Panel's recommendations related to facility coding for clinic
and emergency department visits are discussed below, in section VIII.A.
APC 296: Level I Therapeutic Radiologic Procedures
APC 297: Level II Therapeutic Radiologic Procedures
APC 263: Level I Miscellaneous Radiology Procedures
APC 264: Level II Miscellaneous Radiology Procedures
APCs 296, 263, and 264 appear to violate the 2 times rule. We asked
the Panel to consider three options for reconfiguring these APCs so
that they would conform with the 2 times rule.
Option 1: Create a new APC, Level III Therapeutic Radiology
Procedures, by moving CPT code 75984 from APC 296 and 74475 from APC
297. Also, move CPT codes 76101, 70390, and 71060 from APC 263 to APC
264 and move CPT code 75980 from APC 297 to APC 296.
Option 2: Move CPT codes 76101, 703690, and 71060 from APC 263 to
APC 264 and move CPT code 75984 from APC 296 to APC 264. Move CPT code
75980 from APC 297 to APC 296.
Option 3: Create a new APC, Level III Miscellaneous Radiology
Procedures, by moving CPT codes 76080, 7036736, 76101, 70390, 74190,
and 71060 from APC 263. Move CPT code 74327 from APC 296 to APC 263 and
move CPT code 75980 from APC 297 to APC 296. APC 264 remains unchanged.
One presenter to the panel objected to the use of miscellaneous
APCs in the OPPS. The presenter argued that we are charged with
creating clinically coherent APCs and that miscellaneous APCs
contradict the principle of clinical coherence. We noted that in spite
of considerable effort to do so, we have not been able to incorporate
the procedures assigned to miscellaneous APCs into other, more
clinically homogeneous APCs. We asked the presenter to propose a
configuration for consideration.
The Panel noted that none of the options that we presented resolve
all of the 2 times violations. However, the Panel agreed that Option 2
would create more clinically coherent APCs without creating a new APC
based on anticipated device costs that would be billed in 2002. In
addition, the Panel invited the American College of Radiology and other
interested parties to propose further changes for the Panel's
consideration next year.
We propose to accept the Panel's recommendations that option 2 be
implemented.
APC 230: Level I Eye Tests and Treatments
APC 231: Level III Eye Tests and Treatments
APC 232: Level I Anterior Segment Eye Procedures
APC 233: Level II Anterior Segment Eye Procedures
APC 234: Level III Anterior Segment Eye Procedures
APC 235: Level I Posterior Segment Eye Procedures
APC 236: Level II Posterior Segment Eye Procedures
APC 237: Level III Posterior Segment Eye Procedures
APC 238: Level I Repair and Plastic Eye Procedures
APC 239: Level II Repair and Plastic Eye Procedures
APC 240: Level III Repair and Plastic Eye Procedures
APC 241: Level IV Repair and Plastic Eye Procedures
APC 242: Level V Repair and Plastic Eye Procedures
APC 247: Laser Eye Procedures Except Retinal
APC 248: Laser Retinal Procedures
APC 698: Level II Eye Tests and Treatments
APC 699: Level IV Eye Tests and Treatments
We asked the Panel to review these APCs to address clinical
inconsistencies and violations of the 2 times rule. We suggested
creating a new level for posterior segment eye procedures and other
changes in order to make the groups more clinically coherent, as
follows:
Move CPT codes 65260 and 67218 from APC 237 to 236.
Create a new APC (Level IV Posterior Segment Eye
Procedures) by moving CPT codes 67107, 67112, 67040, and 67108 from APC
237.
Move CPT codes 67145, 67105, and 67210 from APC 247 to APC
248.
Move CPT code 66999 from APC 247 to APC 232.
Move CPT code 67299 from APC 248 to APC 235.
Move CPT codes 65855, 66761, and 66821 from APC 248 to APC
247.
Move CPT code 67820 from APC 698 to APC 230.
Move CPT code 67208 from APC 231 to APC 235.
Move CPT codes 92226, 92284, 65205, 92140 from APC 231 to
APC 698.
Move CPT code 92235 from APC 231 to APC 699.
Move CPT code 68100 from APC 233 to APC 232.
Move CPT code 65180 from APC 233 to APC 234.
Create a new APC (Level IV Anterior Segment Eye
Procedures) by moving CPT codes 66172, 66185, 66180, 66225 from APC
234.
Move CPT code 92275 from APC 216 to APC 231.
No presenters commented on these APCs, and, after brief discussion,
the Panel recommended concurrence with our suggested changes. We
propose to accept the Panel's recommendations. We note that when we
were able to use 2001 claims data to re-evaluate the changes
recommended by the Panel for these APCs, we found violations of the 2
times rule in the reconfigured APCs. Nonetheless, we propose to accept
the
[[Page 52100]]
Panel's recommendations because they result in more clinically coherent
APCs. We solicit comments on further changes that would address the
violations of the 2 times rule. We plan to place these APCs on the
panel's agenda for 2003.
APC 110: Transfusion
APC 111: Blood Product Exchange
APC 112: Apheresis, Photopheresis, and Plasmapheresis
We presented these APCs to the Panel in 2001 because of their low
payment rates and concern that our cost data was inaccurate. These APCs
were on the agenda this year in order to obtain further comment on our
cost data. We suggested no changes in the structure of these APCs.
Representatives of two associations made presentations regarding
these APCs. One recommended that all the plasma derivatives and
recombinant analogs that currently receive transitional pass-through
payments be assigned to permanent APCs in 2003, similar to the
designations of other blood products. The representative of the second
association supported this recommendation.
The second presenter also pointed out that, consistent with our
billing instructions, every claim that a hospital submits for a blood
transfusion should include codes for both the blood product and the
transfusion. Therefore, payment for blood and blood products is another
area affected by the use of single bills in setting payment weights.
The Panel agreed to look specifically at blood in its work on the
multiple claims issues.
The Panel recommended that plasma derivatives be placed in their
own APCs and classified in the same manner as whole blood products. In
addition, the Panel observed that hospitals incur additional costs with
each unit of blood product transfused and, therefore, recommended that
APC 110 be revised to allow for the costs of additional units of blood
product and clinical services.
In section III.C, we discuss our payment proposals for drugs and
biologicals for which pass-through payments are scheduled to expire in
2003. Those proposals would affect payment for blood and blood
products. We propose not to accept the Panel's recommendation to change
current OPPS payment policy for transfusions. The current payment
reflects weight averaging over the number of units transfused.
Therefore, unless a hospital specializes in transfusing multiple units
of blood, payments for this procedure should be, on average,
appropriate.
Panel Recommendations to Defer Changes Pending Availability of 2001
Claims Data
Regarding the remaining APC groups that are addressed below, the
Panel recommended that we make no changes until data from claims billed
in 2001 under the OPPS become available for analysis. The Panel further
requested that we place the APC groups in this section on the agenda
for consideration at its meeting in 2003. The changes that we propose
for the APCs in this section are based upon our review of the 2001
claims data, which did not become available until March 2002.
APC 203: Level V Nerve Injections
APC 204: Level VI Nerve Injections
APC 206: Level III Nerve Injections
APC 207: Level IV Nerve Injections
Several presenters to the Panel suggested changes in the
configuration of these APCs because of concerns that the current
classifications result in payment rates that are too low relative to
the resource costs associated with certain procedures in the APCs.
Several of these APCs include procedures associated with drugs or with
device categories for which pass-through payments are scheduled to
expire in 2003. The Panel recommended that we not change the structure
of these APCs at this time. Because the structure of these APCs was
substantially changed for 2002, and 2002 cost data was not yet
available, the Panel felt it would be appropriate to review 2002 cost
data prior to making further structural changes to these APCs. We
propose to accept the Panel's recommendation. We will place these APCs
on the Panel's agenda when 2002 cost data becomes available.
APC 43: Closed Treatment Fracture Finger/Toe/Trunk
APC 44: Closed Treatment Fracture/Dislocation, Except Finger/Toe/Trunk
On the basis of 1999-2000 claims data, these APCs violate the 2
times rule. The Panel reviewed these APCs and recommended no changes.
Our subsequent review of 2001 OPPS cost data shows continuing
violations of the 2 times rule and that costs within these APCs are
virtually identical. Therefore, we propose to combine APCs 43 and 44
into APC 43. The procedures in the consolidated APC are clinically
homogeneous.
APC 58: Level I Strapping and Cast Application
APC 59: Level II Strapping and Cast Application
The Panel reviewed these APCs and recommended that no changes be
made pending analysis of 2001 claims data. The panel did recommend that
billing instructions be developed on the appropriate use of the codes
in these APCs. We agree with the Panel's recommendation regarding the
need for billing instructions, and we expect to develop such
instructions for hospitals to use in 2003.
Our subsequent review of 2001 claims data reveals that, in some
cases, costs for short casts and splints are greater than costs for
long casts and splints. Moreover, the proposed payments for these two
APCs, based on 2001 OPPS data, would not differ significantly from each
other. Therefore, we propose to combine the codes in APC 58 and APC 59
into a single APC, APC 58. Combining these APCs does not compromise
clinical homogeneity. The relative weight of the proposed single APC is
virtually identical to the relative weight of each of the two current
APCs. We propose to continue to work with hospitals to develop
appropriate coding for these services and will review the appropriate
APC structure for these services next year.
APC 279: Level I Angiography and Venography Except Extremity
APC 280: Level II Angiography and Venography Except Extremity
Without the benefit of 2001 OPPS claims data, it was difficult for
the Panel to determine whether the apparent violation of the 2 times
rule in APCs 279 and 280 was attributable to underreporting of
procedures or inaccurate coding. Therefore, the Panel recommended no
changes pending the availability of the more recent claims data. After
subsequently reviewing the 2001 claims data, we propose to move CPT
codes 75978, Transluminal balloon angioplasty, venous, radiological
supervision and interpretation, and 75774, Angiography, selective, each
additional vessel studied after basic examination, radiological
supervision and interpretation, to new APC 0668. This would resolve
violations of the 2 times rule and result in clinically coherent APCs.
APC 115: Cannula/Access Device Procedures
We propose to move CPT code 36860, External Cannula Declotting;
without balloon catheter, to APC 103, Miscellaneous Vascular
Procedures. We believe this makes both APC 115 and APC 103 more
clinically homogeneous and it resolves a violation of the 2 times rule
in APC 115 that was caused by the presence of CPT code 36860.
APC 93: Vascular Repair/Fistula Construction
[[Page 52101]]
APC 140: Esophageal Dilation without Endoscopy
APC 141: Upper GI Procedures
APC 142: Small Intestine Endoscopy
APC 143: Lower GI Endoscopy
APC 144: Diagnostic Anoscopy
APC 145: Therapeutic Anoscopy
APC 146: Level I Sigmoidoscopy
APC 147: Level II Sigmoidoscopy
APC 148: Level I Anal/Rectal Procedure
APC 149: Level II Anal/Rectal Procedure
Our subsequent review of 2001 claims data suggests that the cost
data for APCs 144 and 145 are aberrant. The cost data for these APCs
yield relative weights and payments that are significantly higher than
the relative weights for APCs 146 and 147, which consist of similar
procedures performed through a sigmoidoscope rather than an anoscope.
As currently arranged, the APC configuration for these services could
provide a financial incentive for hospitals to perform unnecessary
anoscopic procedures, either alone or with a sigmoidoscopy. To rectify
this problem, we propose to move the procedures in APCs 144 and 145 to
APC 147 with the exception of CPT code 46600, Anoscopy; diagnostic,
which we propose to assign to APC 340, Minor Ancillary procedures. We
believe these changes would result in clinically coherent APCs with
appropriate relative weights and payment rates.
APC 363: Otorhinolaryngologic Function Tests
Based on 2001 claims data, we propose to move CPT codes 92543,
92588, 92520, 92546, 92516, 92548, and 92584 to new APC 0660 (Level III
Otorhinolaryngolgic Function Tests). This change would resolve a 2
times rule violation and create clinically coherent APCs.
APC 96: Non-Invasive Vascular Studies
APC 265: Level I Diagnostic Ultrasound Except Vascular
APC 266: Level II Diagnostic Ultrasound Except Vascular
APC 267: Vascular Ultrasound
APC 269: Level I Echocardiogram Except Transesophageal
APC 270: Transesophageal Echocardiogram
The APC Panel recommended making no changes in the configuration of
these APCs. Several groups made a joint proposal to reconfigure these
APCs arguing that their proposal resulted in more clinically coherent
APCs. However, several other presenters commented that the joint
proposal did not include several physician groups who commonly perform
these procedures.
Based on 2001 claims data, we propose to make several changes in
order to resolve 2 times rule violations and to make these APCs more
clinically coherent. Specifically, we propose to move CPT code 43499
from APC 0140 to APC 141; CPT code 93721 from APC 0096 to APC 368; CPT
code 93740 from APC 0096 to APC 367; CPT code 93888 from APC 0267 to
APC 266; and CPT code 93931 from APC 0267 to APC 266. We also propose
to move CPT codes 78627, 76825, and 93320 from APC 0269 to new APC 0671
to achieve more clinical coherence. We also propose to create new APC
0670 for intravascular ultrasound and intracardiac echocardiography
consisting of CPT codes 37250, 37251, 92978, 92979, and 93662.
APC 291: Level I Diagnostic Nuclear Medicine Excluding Myocardial Scans
APC 292: Level II Diagnostic Nuclear Medicine Excluding Myocardial
Scans
Subsequent to the APC Panel meeting, we received comments on these
APCs from the Nuclear Medicine Task Force. After a thorough review of
that proposal within the context of the 2001 claims data, we propose to
accept the recommendations of the Nuclear Medicine Task Force, which
would result in a complete reconfiguration of APCs 290, 291, and 292.
Although the reconfiguration would create violations of the 2 times
rule, we agree with the Task Force that the reconfigured APCs are more
clinically coherent. We note that APCs 290, 291, and 292 as currently
configured would also violate the 2 times rule. Therefore, we solicit
comments on the proposed reconfiguration of APCs 290, 291, and 292 and
on alternative groupings that would achieve clinical coherence without
violating the 2 times rule.
APC 274: Myleography
APC 179: Urinary Incontinence Procedures
APC 182: Insertion of Penile Prosthesis
APC 19: Level I Excision/Biopsy
APC 20: Level II Excision/Biopsy
APC 21: Level IV Excision/Biopsy
APC 22: Level V Excision/Biopsy
APC 694: Level III Excision/Biopsy
Based on 2001 claims data, we propose to move several codes from
APC 19 to APC 20 and several codes from ACP 20 to APC 21. Additionally,
we propose to move CPT codes 11770, 54105, and 60512 to APC 22. We also
propose to move CPT code 58999 to APC 191 and CPT code 37799 to APC 35.
These changes would result in clinically coherent APCs that do not
violate the 2 times rule.
APC 24: Level I Skin Repair
APC 25: Level II Skin Repair
APC 26: Level III Skin Repair
APC 27: Level IV Skin Repair
APC 686: Level V Skin Repair
Based on 2001 claims data, we propose to move CPT code 43870 from
APC 0025 to APC 141; and CPT codes with high costs from APC 26 to APC
27. We also propose to move the codes remaining in APC 26 to APC 25.
APC 26 would then be deleted. These changes would result in a more
compact APC structure without compromising the clinical homogeneity of
the reconfigured APCs and without violating the 2 times rule. See Table
1 for codes moving from APC 26 to APC 25 or APC 27.
Table 1.--HCPCS Codes Proposed To Be Moved From APC 26 into APC 25 or
APC 27
------------------------------------------------------------------------
2002 APC 26 2003 APC 25 2003 APC 27
------------------------------------------------------------------------
11960......................................... ........... 11960
11970......................................... ........... 11970
12037......................................... 12037
12047......................................... 12047
12057......................................... 12057
13150......................................... 13150
13160......................................... ........... 13160
14000......................................... ........... 14000
14001......................................... ........... 14001
14020......................................... ........... 14020
14021......................................... ........... 14021
14040......................................... ........... 14040
14041......................................... ........... 14041
14060......................................... ........... 14060
14061......................................... ........... 14061
14300......................................... ........... 14300
14350......................................... ........... 14350
15000......................................... 15000
15001......................................... 15001
15050......................................... 15050
15101......................................... ........... 15101
15120......................................... ........... 15120
15121......................................... ........... 15121
15200......................................... ........... 15200
15201......................................... 15201
15220......................................... ........... 15220
15221......................................... 15221
15240......................................... ........... 15240
15241......................................... 15241
15260......................................... ........... 15260
15261......................................... 15261
15351......................................... ........... 15351
15400......................................... 15400
15401......................................... 15401
15570......................................... ........... 15570
15572......................................... ........... 15572
15574......................................... ........... 15574
15576......................................... ........... 15576
15600......................................... ........... 15600
15610......................................... ........... 15610
15620......................................... ........... 15620
15630......................................... ........... 15630
15650......................................... ........... 15650
15775......................................... 15775
15776......................................... 15776
15819......................................... 15819
15820......................................... ........... 15820
15821......................................... ........... 15821
15822......................................... ........... 15822
15823......................................... ........... 15823
[[Page 52102]]
15825......................................... ........... 15825
15826......................................... ........... 15826
15829......................................... ........... 15829
15835......................................... 15835
20101......................................... ........... 20101
20102......................................... ........... 20102
20910......................................... ........... 20910
20912......................................... ........... 20912
20920......................................... ........... 20920
20922......................................... ........... 20922
20926......................................... ........... 20926
23921......................................... 23921
25929......................................... ........... 25929
33222......................................... ........... 33222
33223......................................... ........... 33223
44312......................................... ........... 44312
44340......................................... ........... 44340
15580--Code Deleted...........................
15625--Code Deleted...........................
------------------------------------------------------------------------
APC 77: Level I Pulmonary Treatment
APC 78: Level II Pulmonary Treatment
APC 251: Level I ENT Procedures
APC 252: Level II ENT Procedures
APC 253: Level III ENT Procedures
APC 254: Level IV ENT Procedures
APC 256: Level V ENT Procedures
Based on 2001 claims data, we propose to address violations of the
2 times rule by moving CPT codes 40812, 42330, and 21015 from APC 0252
to APC 253 and by moving CPT codes 41120 and 30520 to APC 254.
B. Other Changes Affecting the APCs
1. Limit on Variation of Costs of Services Classified Within a Group
Section 1833(t)(2) of the Act provides that the items and services
within an APC group cannot be considered comparable with respect to the
use of resources if the highest cost item or service within a group is
more than 2 times greater than the lowest cost item or service within
the same group. However, the statute authorizes the Secretary to make
exceptions to this limit on the variation of costs within each group in
unusual cases such as low volume items and services. No exception may
be made, however, in the case of a drug or biological that has been
designated as an orphan drug under section 526 of the Federal Food,
Drug, and Cosmetic Act.
Taking into account the proposed APC changes discussed in relation
to the APC panel recommendations in this section of this preamble and
the use of 2001 claims data to calculate the median cost of procedures
classified to APCs, we reviewed all the APCs to determine which of them
would not meet the 2 times limit. We use the following criteria when
deciding whether to make exceptions to the 2 times rule for affected
APCs:
Resource homogeneity.
Clinical homogeneity.
Hospital concentration.
Frequency of service (volume).
Opportunity for upcoding and code fragmentation.
For a detailed discussion of these criteria, refer to the April 7,
2000 final rule (65 FR 18457).
The following table contains APCs that we propose to exempt from
the 2 times rule based on the criteria cited above. In cases in which
compliance with the 2 times rule appeared to conflict with a
recommendation of the APC Advisory Panel, we generally accepted the
Panel recommendation. This was because Panel recommendations were based
on explicit consideration of resource use, clinical homogeneity,
hospital specialization, and the quality of the data used to determine
payment rates.
The median cost for hospital outpatient services for these and all
other APCs can be found at website: http://www.cms.hhs.gov.
Table 2.--Table of Exempted Codes
------------------------------------------------------------------------
NPRM APC Description
------------------------------------------------------------------------
0012.............................. Level I Debridement & Destruction
0019.............................. Level I Excision/ Biopsy
0020.............................. Level II Excision/ Biopsy
0025.............................. Level II Skin Repair
0032.............................. Insertion of Central Venous/Arterial
Catheter
0043.............................. Closed Treatment Fracture Finger/Toe/
Trunk
0046.............................. Open/Percutaneous Treatment Fracture
or Dislocation
0058.............................. Level I Strapping and Cast
Application
0074.............................. Level IV Endoscopy Upper Airway
0080.............................. Diagnostic Cardiac Catheterization
0081.............................. Non-Coronary Angioplasty or
Atherectomy
0093.............................. Vascular Repair/Fistula Construction
0097.............................. Cardiac and Ambulatory Blood
Pressure Monitoring
0099.............................. Electrocardiograms
0103.............................. Miscellaneous Vascular Procedures
0105.............................. Revision/Removal of Pacemakers,
AICD, or Vascular
0121.............................. Level I Tube changes and
Repositioning
0140.............................. Esophageal Dilation without
Endoscopy
0147.............................. Level II Sigmoidoscopy
0148.............................. Level I Anal/Rectal Procedure
0155.............................. Level II Anal/Rectal Procedure
0165.............................. Level III Urinary and Anal
Procedures
0170.............................. Dialysis
0179.............................. Urinary Incontinence Procedures
0191.............................. Level I Female Reproductive Proc
0192.............................. Level IV Female Reproductive Proc
0203.............................. Level VI Nerve Injections
0204.............................. Level I Nerve Injections
0207.............................. Level III Nerve Injection
0218.............................. Level II Nerve and Muscle Tests
0225.............................. Implantation of Neurostimulator
Electrodes
0230.............................. Level I Eye Tests & Treatments
0231.............................. Level III Eye Tests & Treatments
[[Page 52103]]
0233.............................. Level II Anterior Segment Eye
Procedures
0235.............................. Level I Posterior Segment Eye
Procedures
0238.............................. Level I Repair and Plastic Eye
Procedures
0239.............................. Level II Repair and Plastic Eye
Procedures
0252.............................. Level II ENT Procedures
0260.............................. Level I Plain Film Except Teeth
0274.............................. Myelography
0286.............................. Myocardial Scans
0290.............................. Level I Diagnostic Nuclear Medicine
Excluding Myocardial Scans
0291.............................. Level II Diagnostic Nuclear Medicine
Excluding Myocardial Scans
0294.............................. Level I Therapeutic Nuclear Medicine
0297.............................. Level II Therapeutic Radiologic
Procedures
0303.............................. Treatment Device Construction
0304.............................. Level I Therapeutic Radiation
Treatment Preparation
0330.............................. Dental Procedures
0345.............................. Level I Transfusion Laboratory
Procedures
0354.............................. Administration of Influenza/
Pneumonia Vaccine
0356.............................. Level II Immunizations
0367.............................. Level I Pulmonary Test
0368.............................. Level II Pulmonary Tests
0370.............................. Allergy Tests
0373.............................. Neuropsychological Testing
0600.............................. Low Level Clinic Visits
0602.............................. High Level Clinic Visits
0660.............................. Level III Otorhinolaryngologic
Function Tests
0692.............................. Electronic Analysis of
Neurostimulator Pulse Generators
0694.............................. Mohs Surgery
0698.............................. Level II Eye Tests & Treatments
------------------------------------------------------------------------
2. Procedures Moved From New Technology APCs to Clinically Appropriate
APCs
In the November 30, 2001 final rule, we made final our proposal to
change the period of time during which a service may be paid under a
new technology APC (66 FR 59903), initially established in the April 7,
2000 final rule. That is, beginning in 2002, we will retain a service
within a new technology APC group until we have acquired adequate data
that allow us to assign the service to a clinically appropriate APC.
This policy allows us to move a service from a new technology APC in
less than 2 years if sufficient data are available, and it also allows
us to retain a service in a new technology APC for more than 3 years if
sufficient data upon which to base a decision for reassignment have not
been collected.
Effective in 2003, we propose to move several procedures from new
technology APCs to clinical APCs. Those procedures and the clinical
APCs to which we propose to assign the procedures for payment in 2003
are identified in Table 3. Based upon our review of the 2001 OPPS
claims data, we believe we have sufficient information upon which to
base assignment of these procedures to clinical APCs. In making this
determination, we reviewed both single and multiple procedure claims.
We compared median cost data for the new technology procedures with
median cost data for procedures that are clinically similar and for
which we would expect costs to be similar. We also compared median cost
data for the new technology procedures with median cost data for
clinically related procedures, such as different methods of treating
prostatic hypertrophy, where expected median costs were lower or higher
than those of the new technology procedure. In some cases we propose
classification of a new technology procedure in an APC with procedures
that are similar both clinically and in terms of resource consumption.
In other cases, we propose to create a new APC for a new technology
procedure because we do not believe any of the existing APCs contain
procedures that are clinically similar and similar in terms of resource
consumption. We solicit comments on our proposed reassignment of the
new technology procedures listed in Table 3.
Table 3.--Proposed Changes in HCPCS Assignments From New Technology APCs to Procedure APCs for 2003
----------------------------------------------------------------------------------------------------------------
HCPCS Description 2002 SI 2003 SI 2002 APC 2003 APC
----------------------------------------------------------------------------------------------------------------
19103........... Bx breast percut w/ S T 0710 0658
device.
33282........... Implant pat-active ht S S 0710 0680
record.
36550........... Declot vascular device. T T 0972 0677
53850........... Prostatic microwave T T 0982 0675
thermotx.
53852........... Prostatic rf thermotx.. T T 0982 0675
55873........... Cryoablate prostate.... T T 0982 0674
76075........... Dual energy x-ray study S S 0707 0288
76076........... Dual energy x-ray study S S 0707 0665
77520........... Proton trmt, simple w/o S S 0710 0664
comp.
77522........... Proton trmt, simple w/ S S 0710 0664
comp.
77523........... Proton trmt, S S 0712 0664
intermediate.
[[Page 52104]]
77525........... Proton treatment, S S 0712 0664
complex.
92586........... Auditor evoke potent, S S 0707 0218
limit.
95965........... Meg, spontaneous....... T S 0972 0717
95966........... Meg, evoked, single.... T S 0972 0714
95967........... Meg, evoked, each addl. T S 0972 0712
C1300........... Hyperbaric oxygen...... S S 0707 0659
C9708........... Preview Tx Planning T T 0975 0973
Software.
G0125........... PET img WhBD sgl pulm T S 0976 0667
ring.
G0166........... Extrnl counterpulse, T T 0972 0678
per tx.
G0168........... Wound closure by T X 0970 0340
adhesive.
G0173........... Stereo radoisurgery, S S 0721 0663
complete.
G0204........... Diagnostic mammography S S 0707 0669
digital.
G0206........... Diagnostic mammography S S 0707 0669
digital.
G0210........... PET img whbd ring S S 0714 0667
dxlung ca.
G0211........... PET img whbd ring init S S 0714 0667
lung.
G0212........... PET img whbd ring S S 0714 0667
restag lun.
G0213........... PET img whbd ring dx S S 0714 0667
colorec.
G0214........... PET img whbd ring init S S 0714 0667
colre.
G0215........... PET img whbd restag col S S 0714 0667
G0216........... PET img whbd ring dx S S 0714 0667
melanom.
G0217........... PET img whbd ring init S S 0714 0667
melan.
G0218........... PET img whbd ring S S 0714 0667
restag mel.
G0220........... PET img whbd ring dx S S 0714 0667
lymphom.
G0221........... PET img whbd ring init S S 0714 0667
lymph.
G0222........... PET img whbd ring resta S S 0714 0667
lymp.
G0223........... PET img whbd reg ring S S 0714 0667
dx hea.
G0224........... PET img whbd reg ring S S 0714 0667
ini hea.
G0225........... PET img whbd ring S S 0714 0667
restag hea.
G0226........... PET img whbd dx esophag S S 0714 0667
G0227........... PET img whbd ring ini S S 0714 0667
esopha.
G0228........... PET img whbd ring restg S S 0714 0667
esop.
G0229........... PET img metabolic brain S S 0714 0667
ring.
G0230........... PET myocard viability S S 0714 0667
ring.
G0231........... PET WhBD colorec; gamma S S 0714 0667
cam.
G0232........... PET WhBD lymphoma; S S 0714 0667
gamma cam.
G0233........... PET WhBD melanoma; S S 0714 0667
gamma cam.
G0234........... PET WhBD pulm nod, S S 0714 0667
gamma cam.
----------------------------------------------------------------------------------------------------------------
3. APC Assignment for New Codes Created During 2002
During CY 2002 we created several HCPCS codes to describe services
newly covered by Medicare and payable under the hospital OPPS. While we
have assigned these services to APCs for CY 2002, the assignments are
open to public comment in this proposed rule. In this proposed rule, we
solicit comment on the APC assignment of these services. In addition,
in this proposed rule, we are proposing the creation of several new
HCPCS codes and APC assignments with an effective date of January 1,
2003. Table 4 below includes new procedural HCPCS codes either created
for implementation in July 2002, which we intend to implement in
October 2002, or which we propose to implement January 2003.
Table 4 does not include new codes for drugs and devices for which
we established or intend to establish pass-through payment eligibility
in July or October 2002. Furthermore, neither the new procedural HCPCS
nor the new pass-through codes intended as of this publication for
implementation beginning October 2002 or later are included in Addendum
B of this proposed rule.
Table 4.--New G Codes for 2002 and Proposed G Codes for 2003
----------------------------------------------------------------------------------------------------------------
Proposed effective
Code Long descriptor APC SI date
----------------------------------------------------------------------------------------------------------------
G0245............... Initial physician 0600................ V................... 7/01/02
evaluation of a
diabetic patient with
diabetic sensory
neuropathy resulting in
a loss of protective
sensation (LOPS) which
must include the
procedure used to
diagnose LOPS; a
patient history; and a
physician examination
that consists of at
least the following
elements--* * *.
G0246............... Follow-up physician 0600................ V................... 7/01/02
evaluation of a
diabetic patient with
diabetic sensory
neuropathy resulting in
a loss of protective
sensation (LOPS) which
must include the
procedure used to
diagnose LOPS; a
patient history; and a
physician examination
that includes--* * *.
G0247............... Routine foot care by a 0009................ T................... 7/01/02
physician of a diabetic
patient with diabetic
sensory neuropathy
resulting in a loss of
protective sensation
(LOPS) to include if
present at least the
following--* * *.
[[Page 52105]]
G0248............... Demonstration, at 0708................ S................... 7/01/02
initial use, of home
INR monitoring for a
patient with mechanical
heart valve(s) who
meets Medicare coverage
criteria, under the
direction of a
physician; includes:
demonstration use and
care of the INR
monitor, obtaining at
least one blood sample
provision of
instructions for
reporting home INR test
results and
documentation of a
patient's ability to
perform testing.
G0249............... Provision of test 0708................ S................... 7/01/02
material and equipment
for home INR monitoring
to patient wih
mechanical heart
valve(s) who meets
Medicare coverage
criteria. Includes
provision of materials
for use in the home and
reporting of test
results to physician;
per 4 tests.
G0250............... Physician review/ N/A................. E................... 7/01/02
interpretation and
patient management of
home INR test for
patient with mechanical
heart valve(s) who
meets other coverage
criteria; per 4 tests
(does not require face-
to-face service).
G0AAA............... PET imaging for initial N/A................. E................... 10/01/02
diagnosis of breast
cancer and/or surgical
planning for breast
cancer (for example,
initial staging of
axillary lymph nodes),
not covered by
Medicare..
G0BBB............... PET imaging for breast 0285................ S................... 10/01/02
cancer, full and
partial-ring PET
scanners only, staging/
restaging after or
prior to course of
treatment.
G0CCC............... PET imaging for breast 0285................ S................... 10/01/02
cancer, full and
partial-ring PET
scanners only,
evaluation of response
to treatment, performed
during course of
treatment.
G0DDD............... Current Perception N/A................. E................... 10/01/02
Threshold/Sensory Nerve
Conduction Test, (SNCT)
per limb, any nerve..
G0EEE............... Intravenous infusion(s) 0340................ X................... 10/01/02
during separately
payable observation
stay, Per observation
stay (must be reported
with G0244).
G0FFF............... Bone marrow aspiration 0003................ T................... 1/01/03
and biopsy performed
through a single
incision during a
single session.
G0GGG............... Unscheduled or emergency 0170................ S................... 1/01/03
treatment for dialysis
for ESRD patient in the
outpatient department
of a hospital that does
not have a certified
ESRD facility.
G0HHH............... Injection procedure for N/A................. N................... 1/01/03
sacroiliac joint;
arthrography.
G0JJJ............... Injection procedure for 0204................ T................... 1/01/03
sacroiliac joint;
provision of
anesthetic, steroid,
and/or other
therapeutic agent.
G0KKK............... Prostate brachytherapy, 0684................ T................... 1/01/03
including transperineal
placement of needles or
catheters into the
prostate, cystoscopy,
and interstitial
radiation source
application..
G0LLL............... Initial nursing N................... N................... 1/01/03
assessment of patient
directly admitted to
observation with
diagnosis of congestive
heart failure, chest
pain or asthma..
G0MMM............... Initial nursing 0706................ S................... 1/01/03
assessment of patient
directly admitted to
observation with
diagnosis other than
congestive heart
failure, chest pain or
asthma..
G0NNN............... Transcatheter placement 0656................ T................... 01/01/03
of a drug eluting
intracoronary stent(s),
percutaneous, with or
without other
therapeutic
intervention, any
method; single vessel..
G0OOO............... Transcatheter placement 0656................ T................... 01/01/03
of a drug eluting
intracoronary stent(s),
percutaneous, with or
without other
therapeutic
intervention, any
method; each additional
vessel..
----------------------------------------------------------------------------------------------------------------
HCPCS Codes Created During CY 2002
The G codes G0245 through G0250 were created to implement payment
for newly covered Medicare services due to national coverage
determinations. The G codes G0AAA-G0DDD will be established October 1,
2002 as a result of national coverage policies that will be effective
October 1, 2002. These codes were created to accurately describe the
services covered, to ensure they were reported correctly, to track
their utilization, and to establish payment. We solicit comments on the
APC assignment of these services. The codes describing evaluation and
management services were assigned to clinic visit APCs containing
similar services, and the codes describing procedural services were
assigned to new technology APCs or to APCs containing procedures
requiring similar resource consumption. Because G0250 is a professional
service furnished by a physician, it is not payable under OPPS.
We expect to implement HCPCS code G0EEE (Intravenous Infusion(s)
During Separately Payable Observation Stay) effective October 1, 2002
to describe infusion therapy given during a separately payable
observation stay. This code is discussed in detail in section VIII.B of
this proposed rule. We have assigned it to APC 0340. We believe APC
0340 appropriately accounts for the resources used for infusion during
observation. This is because we believe that Q0081, which represents
the same service as G0EEE, is typically billed with an APC that has a
higher relative weight, therefore making APC 0120 payable at 50 percent
of its payment rate.
HCPCS Codes Proposed in This Rule for January 1, 2003
We are proposing the creation of several new HCPCS codes for 2003
in order to address issues that have come to our attention, to describe
new technology procedures, to implement policy proposals discussed in
this rule, and to allow more appropriate reporting of procedures
currently described by CPT (HCPCS Level I) codes.
(1) G0FFF--Bone Marrow Aspiration and Biopsy Services--we are
proposing to create this code to describe bone marrow aspiration and
biopsy performed through the same incision. We propose to place this
code in APC 0003. This code also appears in the proposed rule for the
physician fee schedule, published in the June 28, 2002 issue of the
Federal Register (67
[[Page 52106]]
FR 43846). This code would facilitate proper reporting of this
procedure.
(2) G0GGG--Unscheduled and Emergency Treatment for ESRD Patients--
we are proposing this code in order to facilitate payment for dialysis
provided to ESRD patients in the outpatient department of a hospital
that does not have a certified ESRD facility. This code is described in
detail in section VIII.G of this proposed rule.
(3) G0HHH and G0JJJ--Sacroiliac Joint Injections--we are proposing
to create these two codes to replace CPT code 27096, Injection
procedure for sacroiliac joint, arthrography and/or anesthetic steroid.
CPT code 27096 describes two distinct procedures requiring different
resource consumption. Moreover, our policy of packaging injection
procedures required packaging of this procedure even when it was used
to report injection of a steroid or anesthetic. In these cases, it was
appropriately billed without another procedure and should have been
payable. Therefore, in order to facilitate appropriate reporting and
payment for the procedures described by CPT code 27096, we propose to
create G0HHH, Injection procedure for sacroiliac joint, arthrography,
and G0JJJ, Injection procedure for sacroiliac joint, provision of
anesthetic and/or steroid. G0HHH would be given status indicator N, and
G0JJJ would be assigned to APC 0204.
(4) G0KKK--Prostate Brachytherapy--we are proposing this code to
implement our policy decision discussed in section III.C.3 of this
proposed rule.
(5) G0LLL and G0MMM--Observation Care--we are proposing to create
these codes to describe observation care provided to a patient who is
directly admitted from a physician's office to a hospital for
observation care. These codes are discussed in detail in section VIII.B
of this rule.
(6) G0NNN, G0OOO; Drug Eluting Stents--
Drug-Eluting Stents
Drug-eluting coronary artery stents (referred to as ``drug-eluting
stents'' in the discussion that follows) have been developed to combat
the problem of restenosis of blood vessels previously treated for
stenosis. The drug is coated on a stent with a special polymer, and
after the stent is placed in the vessel, the drug is slowly released
into the vessel wall tissue over a period of 30 to 45 days. The drug
coating on the stent is intended to prevent the build-up of scar tissue
that can narrow the reopened artery. The FDA has not yet approved this
technology for general use. We understand the earliest date that a
decision from the FDA is anticipated is late 2002.
We received an application to establish a new medical device
category eligible for transitional pass-through payment under the OPPS
for drug-eluting stents from a manufacturer of these stents. In the
application for the new device category, the manufacturer asserts that
drug-eluting stents meet the criteria for establishing a new device
category that were set forth in the November 2, 2001 Federal Register.
Specifically, the manufacturer believes a new device category is
appropriate because drug-eluting stents meet the cost significance
thresholds for a new device category, and they provide substantial
therapeutic benefit to Medicare beneficiaries compared to other
available therapies for coronary atherosclerosis.
Based on our review of the application as well as other information
pertaining to drug-eluting stents, we determined that drug-eluting
stents are described by an existing pass-through device category. As we
discuss in section III.D of this preamble, section
1833(t)(6)(B)(ii)(IV) of the Act requires that a new category must
include medical devices for which no existing category, or one
previously in effect, is appropriate. In the program memorandum that we
issued to our contractors on March 22, 2001 (Transmittal A-01-41) with
instructions for the implementation of category codes for use in making
transitional pass-through payments for devices, we established two
categories that describe and could be used to bill for drug-eluting
stents: HCPCS code C1874, Stent, coated/covered, with delivery system,
and HCPCS code C1875, Stent, coated/covered, without delivery system.
These two categories were based on devices that previously qualified
for transitional pass-through payment on an item-specific basis.
Although these two device categories are among those that will sunset
after December 31, 2002, as we discuss in section III.C of this
preamble, the fact that they exist precludes the establishment of a new
device category for drug-eluting stents.
Payment for drug-eluting stents is not allowed under the OPPS until
they receive FDA approval for general use. If the drug-eluting stents
are approved for general use by the FDA, payment would be packaged into
the APC payment for the procedures with which the stents are used. The
cost of drug-eluting stents would be incorporated within the APC
relative payment weights when we recalibrate the payment weights in CY
2005 using CY 2003 claims data.
In considering how we would pay for drug eluting stents under OPPS
we thought carefully about how the payment should relate to payment for
these stents under IPPS. Section 533 of BIPA added sections
1886(d)(5)(K) and (d)(5)(L) to the Act (as implemented by Sec. 42 CFR
412.87 and 412.88 ) to reduce the time needed under the hospital
inpatient PPS for the DRG system to recognize the higher costs of new
technologies that meet certain criteria. Drug-eluting stents did not
meet the inpatient PPS new technology cost threshold criterion in the
May 9, 2002 proposed rule to update the hospital inpatient PPS for FY
2003. Therefore, in that proposed rule, we listed a new ICD-9 procedure
code 36.07 (Insertion of drug-eluting coronary artery stent(s)) that
would be effective for use October 1, 2002. We also proposed to add
ICD-9 code 00.55 (Insertion of drug-eluting noncoronary artery stent)
(67 FR 31630). To be consistent with our prior practice of assigning
new technology to the same DRGs to which its predecessor technologies
were assigned, we proposed in the May 9 inpatient PPS proposed rule to
assign inpatient cases involving ICD-9 code 36.07 to DRG 517
(Percutaneous Cardiovascular Procedure with Coronary Artery Stent
without AMI).
However, comments to the May 9, 2002 proposed IPPS rule and our own
further consideration of this issue persuaded us that a different
approach was needed for the IPPS given the preliminary evidence that
drug-eluting stents could prove potentially to be transformational
technology in the treatment of coronary artery disease. While this
technology is not yet approved for general use by FDA, commenters to
the May 9 hospital inpatient PPS proposed rule reported that drug-
eluting stents have shown promise to significantly advance the
treatment of coronary artery disease, and they encouraged CMS to
consider the available data to determine the most appropriate DRG
payment. Commenters supported reassignment of the new procedure codes
for drug-eluting stent insertions to higher paying DRGs or, if
necessary, the modification of all affected DRGs, once verifiable data
on the costs associated with drug-eluting stents become available.
Many of the commenters who supported higher payment under the
inpatient PPS for this technology were clinical practitioners and
hospitals, who expressed great anticipation for the potential benefits
of this technology. In addition, commenters referred to the likelihood
that, once approved, patients would demand to have these new drug-
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eluting stents, putting tremendous financial strain on hospitals.
Commenters to the proposed rule for the inpatient PPS for FY 2003
also argued there should be long-term cost savings to the Medicare
program and the health system generally from this technology after
approval by the FDA. Specifically, if dramatically fewer patients
require restenting, savings will result from fewer repeat angioplasty
procedures. And, to the extent bypass surgeries are reduced, savings
would result from that outcome as well.
In responding to these commenters in the inpatient final rule
published in the Federal Register on August 1, 2002 (67 FR 50003), we
noted that, although the FDA has not yet approved this technology for
general use, public presentation of the results from recent clinical
trials have found virtually no in-stent restenosis in patients treated
with the drug-eluting stent. Therefore, we recognize the potentially
significant impact this technology may conceivably have on the
treatment of coronary artery blockages.
We are concerned that, if the FDA does approve this technology and
the predictions of its rapid, widespread use are accurate, significant
strain on hospital financial resources would result. In particular, we
are concerned that the higher costs of this technology would create
undue financial hardships for hospitals due to the high volume of stent
cases and the fact that a large proportion of these cases could involve
the new technology soon after FDA approval. Therefore, in the final
rule for the FY 2003 inpatient PPS, we implemented an unprecedented
approach in response to the unique circumstances surrounding the
potential breakthrough nature of this technology and we created two new
DRGs to reflect cases involving the insertion of a drug-eluting
coronary artery stent. We discuss in detail in the final inpatient PPS
rule our rationale for establishing these DRGs (67 FR 50003-50005).
Although the clinical trials for drug-eluting stents are being
conducted on hospital inpatients, our 2001 hospital outpatient claims
data included nearly 18,000 claims for procedures utilizing other types
of coronary stents in the hospital outpatient setting. Every indication
points to a steady increase in the future volume of coronary stent
procedures performed on an outpatient basis. The same concerns that we
express above about the impact of the advent of drug-eluting stents on
hospital resources apply to procedures performed in the outpatient
setting as well as the inpatient setting. We created these new DRGs for
drug-eluting stents to ensure and promote beneficiary access to the
best care possible by ensuring that our payment system keeps pace with
what we believe will be a growing volume of coronary stent procedures
if FDA approves drug-eluting coronary artery stents. We want to ensure
that the costs of drug-eluting stents will be recognized sufficiently
quickly to ensure beneficiary access in the outpatient setting over the
2 years that it will take for the costs of these devices to appear in
the Medicare data on which we will base Medicare payments for them.
Drug-eluting stents may have been commercially marketed for 2 years
by the time cost data for stent insertion procedures performed in CY
2003 are incorporated into the APC relative weights under the OPPS for
CY 2005. Therefore, as we have done under the inpatient PPS for FY 2003
under these exceptional circumstances, we propose to deviate from our
standard OPPS payment methodology to ensure consistent payment for
drug-eluting stents in both the inpatient and outpatient settings; to
ensure that hospital resources are not negatively affected by a sudden
surge in demand for this new technology if FDA approval is received;
and, to ensure that Medicare payment does not impede beneficiary access
to what appears to be a potentially landmark advance in the treatment
of coronary disease. Consistent with the special approach we
implemented in the inpatient PPS final rule, we propose to create two
new HCPCS codes and a new APC that may be used to pay for the insertion
of coronary artery drug-eluting stents under the OPPS, to be effective
if these stents receive FDA approval for general use. Of course, as
with other new procedures, FDA approval does not mean that Medicare
will always cover the approved item. Medicare coverage depends upon
whether an item or service is medically necessary to treat illness or
injury as determined by Medicare contractors based on the specifics of
individual cases.
The new HCPCS codes that we propose are as follows: G0NNN--
Transcatheter placement of a drug eluting intracoronary stent(s),
percutaneous, with or without other therapeutic intervention, any
method; single vessel G0OOO--Transcatheter placement of a drug eluting
intracoronary stent(s), percutaneous, with or without other therapeutic
intervention, any method; each additional vessel.
We propose to assign G0NNN and G0OOO to new APC 0656, Transcatheter
Placement of Drug-Eluting Coronary Stents, with a status indicator of
T.
To establish a payment amount for the proposed new APC, we propose
to apply the same assumptions that we used in establishing the weights
for DRG 526 (Percutaneous Cardiovascular Procedure with Drug-Eluting
Stent with AMI) and DRG 527 (Percutaneous Cardiovascular Procedure With
Drug-Eluting Stent Without AMI) as described in the final rule
implementing the FY 2003 inpatient PPS. That is, based on prices in
countries where drug-eluting stents are currently being used,
manufacturer information and information furnished in response to the
May 9, 2002 IPPS proposed rule, and the average price of currently
available stents, we assume a price differential of approximately
$1,200. Using an average of 1.5 stents per procedure, we propose to add
$1,200 to the median costs established for APC 0104 based on 2001
claims data. We would then calculate a relative payment weight and
payment rate for APC 0656 in accordance with the methodology that we
discuss in section II.B. of this preamble. By taking this approach, we
believe that payment for drug-eluting stents would be balanced between
the OPPS and the inpatient PPS, minimizing the incentive to use payment
as the basis for determining where to furnish this new technology.
We are taking the extraordinary temporary measure of establishing
this APC and pricing it as we propose only because we have been advised
by experts that these stents can be expected to revolutionize the
provision of coronary care and can be expected to supplant use of
existing stents. While the statute contemplates the difficulties of
setting OPPS payments for new devices by providing the transitional
pass-through mechanism, that mechanism does not work in this
circumstance since these devices fall into a previously existing device
category and do not meet the test for inclusion in new technology APCs.
However, the law permits us to take into account changes in technology
and the addition of new factors (See section 1833(t)(9)(A)) of the Act.
In this case, we think the impact of this new technology will be so
great compared to other new technologies that, to ensure beneficiary
access to state-of-the-art medical care, we believe that we need to
create new codes and a separate APC, paid based on the best information
currently available, to ensure adequate payment to providers and access
to care during the first 2 years of the device's existence. To
undertake this methodology in other cases, we would
[[Page 52108]]
have to be similarly convinced that the technology would not qualify
for pass-through payment nor new technology APC payment, that it will
revolutionize the provision of care and that it will replace an
existing technology. As indicated previously, this payment mechanism
would be a temporary one that would exist only until 2005, at which
point we would have sufficient data to determine how to pay for these
devices under the standard OPPS methodology for setting payment
amounts.
We propose to implement payment under APC 0656 effective April 1,
2003, consistent with the effective date for implementation of the
drug-eluting DRGs under the OPPS and contingent upon FDA approval by
that date. If the FDA grants approval prior to April 1, 2003, hospitals
would be paid for insertion of coronary artery drug-eluting stents
under APC 104.
We are proposing to establish the new HCPCS codes and APC group for
coronary artery drug-eluting stents to allow close tracking of the
utilization and costs associated with these services. Once we obtain
adequate cost data for coronary artery drug-eluting stents, we propose
to incorporate these data into the current CPT codes for coronary stent
placement. We invite comments on this p 
