[Federal Register: May 4, 2005 (Volume 70, Number 85)]
[Proposed Rules]
[Page 23305-23673]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr04my05-18]
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Part II
Department of Health and Human Services
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Centers for Medicare & Medicaid Services
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42 CFR Parts 405, 412, et al.
Medicare Program; Proposed Changes to the Hospital Inpatient
Prospective Payment Systems and Fiscal Year 2006 Rates; Proposed Rule
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Parts 405, 412, 413, 415, 419, 422, and 485
[CMS-1500-P]
RIN 0938-AN57
Medicare Program; Proposed Changes to the Hospital Inpatient
Prospective Payment Systems and Fiscal Year 2006 Rates
AGENCY: Centers for Medicare and Medicaid Services (CMS), HHS.
ACTION: Proposed rule.
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SUMMARY: We are proposing to revise the Medicare hospital inpatient
prospective payment systems (IPPS) for operating and capital-related
costs to implement changes arising from our continuing experience with
these systems. In addition, in the Addendum to this proposed rule, we
describe the proposed changes to the amounts and factors used to
determine the rates for Medicare hospital inpatient services for
operating costs and capital-related costs. We also are setting forth
proposed rate-of-increase limits as well as proposed policy changes for
hospitals and hospital units excluded from the IPPS that are paid in
full or in part on a reasonable cost basis subject to these limits.
These proposed changes would be applicable to discharges occurring on
or after October 1, 2005, with one exception: The proposed changes
relating to submittal of hospital wage data by a campus or campuses of
a multicampus hospital system (that is, the proposed changes to Sec.
412.230(d)(2) of the regulations) would be effective upon publication
of the final rule.
Among the policy changes that we are proposing to make are changes
relating to: the classification of cases to the diagnosis-related
groups (DRGs); the long-term care (LTC)-DRGs and relative weights; the
wage data, including the occupational mix data, used to compute the
wage index; rebasing and revision of the hospital market basket;
applications for new technologies and medical services add-on payments;
policies governing postacute care transfers, payments to hospitals for
the direct and indirect costs of graduate medical education, submission
of hospital quality data, payment adjustment for low-volume hospitals,
changes in the requirements for provider-based facilities; and changes
in the requirements for critical access hospitals (CAHs).
DATES: Comments will be considered if received at the appropriate
address, as provided in the ADDRESSES section, no later than 5 p.m. on
June 24, 2005.
ADDRESSES: In commenting, please refer to file code CMS-1500-P. Because
of staff and resource limitations, we cannot accept comments by
facsimile (FAX) transmission.
You may submit comments in one of three ways (no duplicates,
please):
1. Electronically
You may submit electronic comments to http://www.cms.hhs.gov/regulations/ecomments
(attachments should be in Microsoft Word,
WordPerfect, or Excel; however, we prefer Microsoft Word).
2. By Mail
You may 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-1500-P, P.O.
Box 8011, Baltimore, MD 21244-1850.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By Hand or Courier
If you prefer, you may deliver (by hand or courier) your written
comments (one original and two copies) before the close of the comment
period to one of the following addresses. If you intend to deliver your
comments to the Baltimore address, please call telephone number (410)
786-7195 in advance to schedule your arrival with one of our staff
members.
Room 445-G, Hubert H. Humphrey Building, 200 Independence Avenue,
SW., Washington, DC 20201, or 7500 Security Boulevard, Baltimore, MD
21244-1850.
(Because access to the interior of the Hubert H. Humphrey 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 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 received after the comment
period.
Inspection of Public Comments: All comments received before the
close of the comment period are available for viewing by the public,
including any personally identifiable or confidential business
information that is included in a comment. After the close of the
comment period, CMS posts all electronic comments received before the
close of the comment period on its public Web site. Written comments
received timely will be available for public inspection as they are
received, generally beginning approximately 4 weeks after publication
of a document, at the headquarters of the Centers for Medicare &
Medicaid Services, 7500 Security Boulevard, Baltimore, MD 21244, Monday
through Friday of each week from 8:30 a.m. to 4 p.m. To schedule an
appointment to view public comments, phone 1-800-743-3951.
For comments that relate to information collection requirements,
mail a copy of comments to the following addresses:
Centers for Medicare & Medicaid Services, Office of Strategic
Operations and Regulatory Affairs, Security and Standards Group, Office
of Regulations Development and Issuances, Room C4-24-02 7500 Security
Boulevard, Baltimore, Maryland 21244-1850, Attn: James Wickliffe, CMS-
1500-P; and
Office of Information and Regulatory Affairs, Office of Management and
Budget, Room 3001, New Executive Office Building, Washington, DC 20503,
Attn: Christopher Martin, CMS Desk Officer, CMS-1500-P,
Christopher_Martin@omb.eop.gov. Fax (202) 395-6974.
FOR FURTHER INFORMATION CONTACT:
Marc Harstein, (410) 786-4539, Operating Prospective Payment,
Diagnosis-Related Groups (DRGs), Wage Index, New Medical Services and
Technology Add-On Payments, Hospital Geographic Reclassifications,
Postacute Care Transfers, and Disproportionate Share Hospital Issues.
Tzvi Hefter, (410) 786-4487, Capital Prospective Payment, Excluded
Hospitals, Graduate Medical Education, Critical Access Hospitals, and
Long-Term Care (LTC)-DRGs, and Provider-Based Facilities Issues.
Steve Heffler, (410) 786-1211, Hospital Market Basket Revision and
Rebasing.
Siddhartha Mazumdar, (410) 786-6673, Rural Hospital Community
Demonstration Project Issues.
Mary Collins, (410) 786-3189, Critical Access Hospitals (CAHs) Issues.
Dr. Mark Krushat, (410) 786-6809, Quality Data for Annual Payment
Update Issues.
Martha Kuespert, (410) 786-4605 Specialty Hospitals Definition Issues.
SUPPLEMENTARY INFORMATION:
Electronic Access
This Federal Register document is also available from the Federal
Register
[[Page 23307]]
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Acronyms
AAOS American Association of Orthopedic Surgeons
ACGME Accreditation Council on Graduate Medical Education
AHIMA American Health Information Management Association
AHA American Hospital Association
AICD Automatic cardioverter defibrillator
AMI Acute myocardial infarction
AOA American Osteopathic Association
ASC Ambulatory Surgical Center
ASP Average sales price
AWP Average wholesale price
BBA Balanced Budget Act of 1997, Pub. L. 105-33
BES Business Expenses Survey
BIPA Medicare, Medicaid, and SCHIP [State Children's Health
Insurance Program] Benefits Improvement and Protection Act of 2000,
Pub. L. 106-554
BLS Bureau of Labor Statistics
CAH Critical access hospital
CBSAs Core-Based Statistical Areas
CC Complication or comorbidity
CIPI Capital Input Price Index
CMS Centers for Medicare & Medicaid Services
CMSA Consolidated Metropolitan Statistical Area
COBRA Consolidated Omnibus Reconciliation Act of 1985, Pub. L. 99-
272
CoP Condition of Participation
CPI Consumer Price Index
CRNA Certified registered nurse anesthetist
CRT Cardiac Resynchronization Therapy
DRG Diagnosis-related group
DSH Disproportionate share hospital
ECI Employment Cost Index
FDA Food and Drug Administration
FIPS Federal Information Processing Standards
FQHC Federally qualified health center
FTE Full-time equivalent
FY Federal fiscal year
GAAP Generally accepted accounting principles
GAF Geographic adjustment factor
HIC Health Insurance Card
HIS Health Information System
GME Graduate medical education
HCRIS Hospital Cost Report Information System
HIPC Health Information Policy Council
HIPAA Health Insurance Portability and Accountability Act of 1996,
Pub. L. 104-191
HHA Home health agency
HHS Department of Health and Human Services
HPSA Health Professions Shortage Area
HQA Hospital Quality Alliance
ICD-9-CM International Classification of Diseases, Ninth Revision,
Clinical Modification
ICD-10-PCS International Classification of Diseases, Tenth Edition,
Procedure Coding System
ICF/MRs Intermediate care facilities for the mentally retarded
ICU Intensive Care Unit
IHS Indian Health Service
IME Indirect medical education
IPPS Acute care hospital inpatient prospective payment system
IPF Inpatient psychiatric facility
IRF Inpatient rehabilitation facility
IRP Initial residency period
JCAHO Joint Commission on Accreditation of Healthcare Organizations
LAMCs Large area metropolitan counties
LTC-DRG Long-term care diagnosis-related group
LTCH Long-term care hospital
MCE Medicare Code Editor
MCO Managed care organization
MDC Major diagnostic category
MDH Medicare-dependent small rural hospital
MedPAC Medicare Payment Advisory Commission
MedPAR Medicare Provider Analysis and Review File
MEI Medicare Economic Index
MGCRB Medicare Geographic Classification Review Board
MMA Medicare Prescription Drug, Improvement, and Modernization Act
of 2003, Pub. L. 108-173
MRHFP Medicare Rural Hospital Flexibility Program
MSA Metropolitan Statistical Area
NAICS North American Industrial Classification System
NCD National coverage determination
NCHS National Center for Health Statistics
NCVHS National Committee on Vital and Health Statistics
NECMA New England County Metropolitan Areas
NICU Neonatal intensive care unit
NQF National Quality Forum
NTIS National Technical Information Service
NVHRI National Voluntary Hospital Reporting Initiative
OES Occupational Employment Statistics
OIG Office of the Inspector General
OMB Executive Office of Management and Budget
O.R. Operating room
OSCAR Online Survey Certification and Reporting (System)
OSHA Occupational Safety and Health Act
PRM Provider Reimbursement Manual
PPI Producer Price Index
PMS Performance Measurement System
PMSAs Primary Metropolitan Statistical Areas
PPS Prospective payment system
PRA Per resident amount
ProPAC Prospective Payment Assessment Commission
PRRB Provider Reimbursement Review Board
PS&R Provider Statistical and Reimbursement System
QIA Quality Improvement Organizations
RHC Rural health clinic
RHQDAPU Reporting Hospital Quality Data for Annual Payment Update
RNHCI Religious nonmedical health care institution
RRC Rural referral center
RUCAs Rural-Urban Commuting Area Codes
SCH Sole community hospital
SDP Single Drug Pricer
SIC Standard Industrial Codes
SNF Skilled nursing facility
SOCs Standard occupational classifications
SOM State Operations Manual
SSA Social Security Administration
SSI Supplemental Security Income
TEFRA Tax Equity and Fiscal Responsibility Act of 1982, Pub. L. 97-
248
UHDDS Uniform Hospital Discharge Data Set
Table of Contents
I. Background
A. Summary
1. Acute Care Hospital Inpatient Prospective Payment System
(IPPS)
2. Hospitals and Hospital Units Excluded from the IPPS
a. IRFs
b. LTCH
c. IPFs
3. Critical Access Hospitals (CAHs)
4. Payments for Graduate Medical Education (GME)
B. Major Contents of this Proposed Rule
1. Proposed Changes to the DRG Reclassifications and
Recalibrations of Relative Weights
2. Proposed Changes to the Hospital Wage Index
3. Proposed Revision and Rebasing of the Hospital Market Basket
4. Other Decisions and Proposed Changes to the PPS for Inpatient
Operating and GME Costs
5. PPS for Capital-Related Costs
6. Proposed Changes for Hospitals and Hospital Units Excluded
from the IPPS
7. Proposed Payment for Blood Clotting Factors for Inpatients
with Hemophilia
8. Determining Proposed Prospective Payment Operating and
Capital Rates and Rate-of-Increase Limits
9. Impact Analysis
10. Recommendation of Update Factor for Hospital Inpatient
Operating Costs
11. Discussion of Medicare Payment Advisory Commission
Recommendations
II. Proposed Changes to DRG Classifications and Relative Weights
A. Background
B. DRG Reclassifications
1. General
2. Pre-MDC: Intestinal Transplantation
3. MDC 1 (Diseases and Disorders of the Nervous System)
a. Strokes
b. Unruptured Cerebral Aneurysms
4. MDC 5 (Diseases and Disorders of the Circulatory System)
a. Automatic Implantable Cardioverter/Defibrillator
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b. Coronary Artery Stents
c. Insertion of Left Atrial Appendage Device
d. External Heart Assist System Implant
e. Carotid Artery Stent
f. Extracorporeal Membrane Oxygenation (ECMO)
5. MDC 6 (Diseases and Disorders of the Digestive System):
Artificial Anal Sphincter
6. MDC 8 (Diseases and Disorders of the Musculoskeletal System
and Connective Tissue)
a. Hip and Knee Replacements
b. Kyphoplasty
c. Multiple Level Spinal Fusion
7. MDC 18 (Infectious and Parasitic Diseases (Systemic or
Unspecified Sites)): Severe Sepsis
8. MDC 20 (Alcohol/Drug Use and Alcohol/Drug Induced Organic
Mental Disorders): Drug-Induced Dementia
9. Medicare Code Editor (MCE) Changes
a. Newborn Age Edit
b. Newborn Diagnoses Edit
c. Diagnoses Allowed for ``Males Only'' Edit
d. Tobacco Use Disorder Edit
e. Noncovered Procedure Edit
10. Surgical Hierarchies
11. Refinement of Complications and Comorbidities (CC) List
a. Background
b. Comprehensive Review of the CC List
c. CC Exclusion List for FY 2006
12. Review of Procedure Codes in DRGs 468, 476, and 477
a. Moving Procedure Codes from DRG 468 or DRG 477 to MDCs
b. Reassignment of Procedures among DRGs 468, 476, and 477
c. Adding Diagnosis or Procedure Codes to MDCs
13. Changes to the ICD-9-CM Coding System
14. Other Issues: Acute Intermittent Porphyria
C. Proposed Recalibration of DRG Weights
D. Proposed LTC-DRG Reclassifications and Relative Weights for
LTCHs for FY 2006
1. Background
2. Proposed Changes in the LTC-DRG Classifications
a. Background
b. Patient Classifications into DRGs
3. Development of the Proposed FY 2006 LTC-DRG Relative Weights
a. General Overview of Development of the LTC-DRG Relative
Weights
b. Data
c. Hospital-Specific Relative Value Methodology
d. Proposed Low-Volume LTC-DRGs
4. Steps for Determining the Proposed FY 2006 LTC-DRG Relative
Weights
E. Proposed Add-On Payments for New Services and Technologies
1. Background
2. FY 2006 Status of Technology Approved for FY 2005 Add-On
Payments
3. Reevaluation of FY 2005 Applications That Were Not Approved
4. FY 2006 Applicants for New Technology Add-On Payments
III. Proposed Changes to the Hospital Wage Index
A. Background
B. Core-Based Statistical Areas for the Proposed Hospital Wage
Index
C. Proposed Occupational Mix Adjustment to FY 2006 Index
1. Development of Data for the Proposed Occupational Mix
Adjustment
2. Calculation of the Proposed Occupational Mix Adjustment
Factor and the Proposed Occupational Mix Adjusted Wage Index
D. Worksheet S-3 Wage Data for the Proposed FY 2006 Wage Index
Update
E. Verification of Worksheet S-3 Wage Data
F. Computation of the Proposed FY 2006 Unadjusted Wage Index
G. Computation of the Proposed FY 2006 Blended Wage Index
H. Proposed Revisions to the Wage Index Based on Hospital
Redesignation
1. General
2. Effects of Reclassification
3. Proposed Application of Hold Harmless Protection for Certain
Urban Hospitals Redesignated as Rural
4. FY 2006 MGCRB Reclassifications
5. Proposed FY 2006 Redesignations under Section 1886(d)(8)(B)
of the Act
6. Reclassifications under Section 508 of Pub. L. 108-173
I. Proposed FY 2006 Wage Index Adjustment Based on Commuting
Patterns of Hospital Employees
J. Process for Requests for Wage Index Data Corrections
IV. Proposed Rebasing and Revision of the Hospital Market Baskets
A. Background
B. Rebasing and Revising the Hospital Market Basket
1. Development of Cost Categories and Weights
2. PPS--Selection of Price Proxies
3. Labor-Related Share
C. Separate Market Basket for Hospitals and Hospital Units
Excluded from the IPPS
1. Hospitals Paid Based on Their Reasonable Costs
2. Excluded Hospitals Paid Under Blend Methodology
3. Development of Cost Categories and Weights for the Proposed
2002-Based Excluded Hospital Market Basket
D. Frequency of Updates of Weights in IPPS Hospital Market
Basket
E. Capital Input Price Index Section
V. Other Decisions and Proposed Changes to the IPPS for Operating
Costs and GME Costs
A. Postacute Care Transfer Payment Policy
1. Background
2. Changes to DRGs Subject to the Postacute Care Transfer Policy
B. Reporting of Hospital Quality Data for Annual Hospital
Payment Update
1. Background
2. Requirements for Hospital Reporting of Quality Data
C. Sole Community Hospitals and Medicare Dependent Hospitals
1. Background
2. Budget Neutrality Adjustment to Hospital Payments Based on
Hospital-Specific Rate
3. Technical Change
D. Rural Referral Centers
1. Case-Mix Index
2. Discharges
3. Technical Change
E. Payment Adjustment for Low-Volume Hospitals
F. Indirect Medical Education (IME) Adjustment
1. Background
2. IME Adjustment for TEFRA Hospitals Converting to IPPS
Hospitals
3. Section 1886(d)(3)(E) Teaching Hospitals That Withdraw Rural
Reclassification
G. Payment to Disproportionate Share Hospitals (DSHs)
1. Background
2. Implementation of Section 951 of Pub. L. 108-173
H. Geographic Reclassifications
1. Background
2. Multicampus Hospitals
3. Urban Group Hospital Reclassifications
4. Clarification of Goldsmith Modification Criterion for Urban
Hospitals Seeking Reclassification as Rural
I. Payment for Direct Graduate Medical Education
1. Background
2. Direct GME Initial Residency Period
a. Background
b. Direct GME Initial Residency Period Limitation: Simultaneous
Match
3. New Teaching Hospitals' Participation in Medicare GME
Affiliated Groups
4. GME FTE Cap Adjustments for Rural Hospitals
5. Technical Changes: Cross-References
J. Provider-Based Status of Facilities under Medicare
1. Background
2. Limits on Scope of Provider-Based Regulations--Facilities for
Which Provider-Based Determinations Will Not Be Made
3. Location Requirement for Off-Campus Facilities: Application
to Certain Neonatal Intensive Care Units
4. Technical and Clarifying Changes
K. Rural Community Hospital Demonstration Program
L. Definition of a Hospital in Connection with Specialty
Hospitals
VI. PPS for Capital-Related Costs
VII. Proposed Changes for Hospitals and Hospital Units Excluded from
the IPPS
A. Payments to Excluded Hospitals and Hospital Units
1. Payments to Existing Excluded Hospitals and Hospital Units
2. Updated Caps for New Excluded Hospitals and Units
3. Implementation of a PPS for IRFs
4. Implementation of a PPS for LTCHs
5. Implementation of a PPS for IPFs
B. Critical Access Hospitals (CAHs)
1. Background
2. Proposed Policy Change Relating to Continued Participation by
CAHs in Lugar Counties
3. Proposed Policy Change Relating to Designation of CAHs as
Necessary Providers
a. Determination of the Relocation Status of a CAH
b. Relocation of a CAH Using a Waiver to Meet the CoP for
Distance
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VIII. Payment for Blood Clotting Factor Administered to Hemophilia
Inpatients
IX. MedPAC Recommendations
A. Medicare Payment Policy
B. Physician-Owned Specialty Hospitals
C. Other MedPAC Recommendations
X. Other Required Information
A. Requests for Data from the Public
B. Collection of Information Requirements
C. Public Comments
Regulation Text
Addendum--Proposed Schedule of Standardized Amounts Effective with
Discharges Occurring On or After October 1, 2004 and Update Factors
and Rate-of-Increase Percentages Effective With Cost Reporting
Periods Beginning On or After October 1, 2004
I. Summary and Background
II. Proposed Changes to Prospective Payment Rates for Hospital
Inpatient Operating Costs for FY 2006
A. Calculation of the Adjusted Standardized Amount
1. Standardization of Base-Year Costs or Target Amounts
2. Computing the Average Standardized Amount
3. Updating the Average Standardized Amount
4. Other Adjustments to the Average Standardized Amount
a. Recalibration of DRG Weights and Updated Wage Index--Budget
Neutrality Adjustment
b. Reclassified Hospitals--Budget Neutrality Adjustment
c. Outliers
d. Rural Community Hospital Demonstration Program Adjustment
(Section 410A of Pub. L. 108-173)
5. Proposed FY 2006 Standardized Amount
B. Adjustments for Area Wage Levels and Cost-of-Living
1. Adjustment for Area Wage Levels
2. Adjustment for Cost-of-Living in Alaska and Hawaii
C. DRG Relative Weights
D. Calculation of Proposed Prospective Payment Rates for FY 2006
1. Federal Rate
2. Hospital-Specific Rate (Applicable Only to SCHs and MDHs)
a. Calculation of Hospital-Specific Rate
b. Updating the FY 1982, FY 1987, and FY 1996 Hospital-Specific
Rates for FY 2006
3. General Formula for Calculation of Proposed Prospective
Payment Rates for Hospitals Located in Puerto Rico Beginning On or
After October 1, 2005 and Before October 1, 2006
a. Puerto Rico Rate
b. National Rate
III. Proposed Changes to Payment Rates for Acute Care Hospital
Inpatient Capital-Related Costs for FY 2006
A. Determination of Proposed Federal Hospital Inpatient Capital-
Related Prospective Payment Rate Update
1. Proposed Capital Standard Federal Rate Update
a. Description of the Update Framework
b. Comparison of CMS and MedPAC Update Recommendation
2. Proposed Outlier Payment Adjustment Factor
3. Proposed Budget Neutrality Adjustment Factor for Changes in
DRG Classifications and Weights and the Geographic Adjustment Factor
4. Proposed Exceptions Payment Adjustment Factor
5. Proposed Capital Standard Federal Rate for FY 2006
6. Proposed Special Capital Rate for Puerto Rico Hospitals
B. Calculation of Proposed Inpatient Capital-Related Prospective
Payments for FY 2006
C. Capital Input Price Index
1. Background
2. Forecast of the CIPI for FY 2006
IV. Proposed Changes to Payment Rates for Excluded Hospitals and
Hospital Units: Rate-of-Increase Percentages
A. Payments to Existing Excluded Hospitals and Units
B. Updated Caps for New Excluded Hospitals and Units
V. Payment for Blood Clotting Factor Administered to Hemophilia
Inpatients
Tables
Table 1A--National Adjusted Operating Standardized Amounts, Labor/
Nonlabor (69.7 Percent Labor Share/30.3 Percent Nonlabor Share If
Wage Index Is Greater Than 1)
Table 1B--National Adjusted Operating Standardized Amounts, Labor/
Nonlabor (62 Percent Labor Share/38 Percent Nonlabor Share If Wage
Index Is Less Than or Equal to 1)
Table 1C--Adjusted Operating Standardized Amounts for Puerto Rico,
Labor/Nonlabor
Table 1D--Capital Standard Federal Payment Rate
Table 2--Hospital Case-Mix Indexes for Discharges Occurring in
Federal Fiscal Year 2004; Hospital Average Hourly Wage for Federal
Fiscal Years 2004 (2000 Wage Data), 2005 (2001 Wage Data), and 2006
(2002 Wage Data) Wage Indexes and 3-Year Average of Hospital Average
Hourly Wages
Table 3A--FY 2006 and 3-Year Average Hourly Wage for Urban Areas
Table 3B--FY 2006 and 3-Year Average Hourly Wage for Rural Areas
Table 4A--Wage Index and Capital Geographic Adjustment Factor (GAF)
for Urban Areas
Table 4B--Wage Index and Capital Geographic Adjustment Factor (GAF)
for Rural Areas
Table 4C--Wage Index and Capital Geographic Adjustment Factor (GAF)
for Hospitals That Are Reclassified
Table 4F--Puerto Rico Wage Index and Capital Geographic Adjustment
Factor (GAF)
Table 4J--Out-Migration Adjustment--FY 2006
Table 5--List of Diagnosis-Related Groups (DRGs), Relative Weighting
Factors, and Geometric and Arithmetic Mean Length of Stay (LOS)
Table 6A--New Diagnosis Codes
Table 6B--New Procedure Codes
Table 6C--Invalid Diagnosis Codes
Table 6D--Invalid Procedure Codes
Table 6E--Revised Diagnosis Code Titles
Table 6F--Revised Procedure Code Titles
Table 6G--Additions to the CC Exclusions List
Table 6H--Deletions from the CC Exclusions List
Table 7A--Medicare Prospective Payment System Selected Percentile
Lengths of Stay: FY 2004 MedPAR Update December 2004 GROUPER V22.0
Table 7B--Medicare Prospective Payment System Selected Percentile
Lengths of Stay: FY 2004 MedPAR Update December 2004 GROUPER V23.0
Table 8A--Statewide Average Operating Cost-to-Charge Ratios--March
2005
Table 8B--Statewide Average Capital Cost-to-Charge Ratios--March
2005
Table 9A--Hospital Reclassifications and Redesignations by
Individual Hospital--FY 2006
Table 9B--Hospital Reclassifications and Redesignation by Individual
Hospital Under Section 508 of Pub. L. 108-173--FY 2005
Table 9C--Hospitals Redesignated as Rural under Section
1886(d)(8)(E) of the Act--FY 2006
Table 10--Geometric Mean Plus the Lesser of .75 of the National
Adjusted Operating Standardized Payment Amount (Increased to Reflect
the Difference Between Costs and Charges) or .75 of One Standard
Deviation of Mean Charges by Diagnosis-Related Groups (DRGs)--March
2005
Table 11--Proposed FY 2006 LTC-DRGs, Relative Weights, Geometric
Average Length of Stay, and 5/6ths of the Geometric Average Length
of Stay
Appendix A--Regulatory Impact Analysis
Appendix B--Recommendation of Update Factors for Operating Cost
Rates of Payment for Inpatient Hospital Services
I. Background
A. Summary
1. Acute Care Hospital Inpatient Prospective Payment System (IPPS)
Section 1886(d) of the Social Security Act (the Act) sets forth a
system of payment for the operating costs of acute care hospital
inpatient stays under Medicare Part A (Hospital Insurance) based on
prospectively set rates. Section 1886(g) of the Act requires the
Secretary to pay for the capital-related costs of hospital inpatient
stays under a prospective payment system (PPS). Under these PPSs,
Medicare payment for hospital inpatient operating and capital-related
costs is made at predetermined, specific rates for each hospital
discharge. Discharges are classified according to a list of diagnosis-
related groups (DRGs).
The base payment rate is comprised of a standardized amount that is
divided into a labor-related share and a nonlabor-related share. The
labor-related share is adjusted by the wage index applicable to the
area where the
[[Page 23310]]
hospital is located; and if the hospital is located in Alaska or
Hawaii, the nonlabor-related share is adjusted by a cost-of-living
adjustment factor. This base payment rate is multiplied by the DRG
relative weight.
If the hospital treats a high percentage of low-income patients, it
receives a percentage add-on payment applied to the DRG-adjusted base
payment rate. This add-on payment, known as the disproportionate share
hospital (DSH) adjustment, provides for a percentage increase in
Medicare payments to hospitals that qualify under either of two
statutory formulas designed to identify hospitals that serve a
disproportionate share of low-income patients. For qualifying
hospitals, the amount of this adjustment may vary based on the outcome
of the statutory calculations.
If the hospital is an approved teaching hospital, it receives a
percentage add-on payment for each case paid under the IPPS (known as
the indirect medical education (IME) adjustment). This percentage
varies, depending on the ratio of residents to beds.
Additional payments may be made for cases that involve new
technologies or medical services that have been approved for special
add-on payments. To qualify, a new technology or medical service must
demonstrate that it is a substantial clinical improvement over
technologies or services otherwise available, and that, absent an add-
on payment, it would be inadequately paid under the regular DRG
payment.
The costs incurred by the hospital for a case are evaluated to
determine whether the hospital is eligible for an additional payment as
an outlier case. This additional payment is designed to protect the
hospital from large financial losses due to unusually expensive cases.
Any outlier payment due is added to the DRG-adjusted base payment rate,
plus any DSH, IME, and new technology or medical service add-on
adjustments.
Although payments to most hospitals under the IPPS are made on the
basis of the standardized amounts, some categories of hospitals are
paid the higher of a hospital-specific rate based on their costs in a
base year (the higher of FY 1982, FY 1987, or FY 1996) or the IPPS rate
based on the standardized amount. For example, sole community hospitals
(SCHs) are the sole source of care in their areas, and Medicare-
dependent, small rural hospitals (MDHs) are a major source of care for
Medicare beneficiaries in their areas. Both of these categories of
hospitals are afforded this special payment protection in order to
maintain access to services for beneficiaries. (An MDH receives only 50
percent of the difference between the IPPS rate and its hospital-
specific rates if the hospital-specific rate is higher than the IPPS
rate. In addition, an MDH does not have the option of using FY 1996 as
the base year for its hospital-specific rate.)
Section 1886(g) of the Act requires the Secretary to pay for the
capital-related costs of inpatient hospital services ``in accordance
with a prospective payment system established by the Secretary.'' The
basic methodology for determining capital prospective payments is set
forth in our regulations at 42 CFR 412.308 and 412.312. Under the
capital PPS, payments are adjusted by the same DRG for the case as they
are under the operating IPPS. Similar adjustments are also made for IME
and DSH as under the operating IPPS. In addition, hospitals may receive
an outlier payment for those cases that have unusually high costs.
The existing regulations governing payments to hospitals under the
IPPS are located in 42 CFR part 412, Subparts A through M.
2. Hospitals and Hospital Units Excluded From the IPPS
Under section 1886(d)(1)(B) of the Act, as amended, certain
specialty hospitals and hospital units are excluded from the IPPS.
These hospitals and units are: Psychiatric hospitals and units;
rehabilitation hospitals and units; long-term care hospitals (LTCHs);
children's hospitals; and cancer hospitals. Various sections of the
Balanced Budget Act of 1997 (Pub. L. 105-33), the Medicare, Medicaid
and SCHIP [State Children's Health Insurance Program] Balanced Budget
Refinement Act of 1999 (Pub. L. 106-113), and the Medicare, Medicaid,
and SCHIP Benefits Improvement and Protection Act of 2000 (Pub. L. 106-
554) provide for the implementation of PPSs for rehabilitation
hospitals and units (referred to as inpatient rehabilitation facilities
(IRFs)), psychiatric hospitals and units (referred to as inpatient
psychiatric facilities (IPFs)), and LTCHs, as discussed below.
Children's hospitals and cancer hospitals continue to be paid under
reasonable cost-based reimbursement.
The existing regulations governing payments to excluded hospitals
and hospital units are located in 42 CFR Parts 412 and 413.
a. IRFs
Under section 1886(j) of the Act, as amended, rehabilitation
hospitals and units (IRFs) have been transitioned from payment based on
a blend of reasonable cost reimbursement subject to a hospital-specific
annual limit under section 1886(b) of the Act and the adjusted facility
Federal prospective payment rate for cost reporting periods beginning
January 1, 2002 through September 30, 2002, to payment at 100 percent
of the Federal rate effective for cost reporting periods beginning on
or after October 1, 2002 (66 FR 41316, August 7, 2001; 67 FR 49982,
August 1, 2002; and 68 FR 45674, August 1, 2003). The existing
regulations governing payments under the IRF PPS are located in 42 CFR
Part 412, Subpart P.
b. LTCHs
Under the authority of sections 123(a) and (c) of Pub. L. 106-113
and section 307(b)(1) of Pub. L. 106-554, LTCHs are being transitioned
from being paid for inpatient hospital services based on a blend of
reasonable cost-based reimbursement under section 1886(b) of the Act to
100 percent of the Federal rate during a 5-year period, beginning with
cost reporting periods that start on or after October 1, 2002. For cost
reporting periods beginning on or after October 1, 2006, LTCHs will be
paid 100 percent of the Federal rate (May 7, 2004 LTCH PPS final rule
(69 FR 25674)). LTCHs may elect to be paid based on 100 percent of the
Federal rate instead of a blended payment in any year during the 5-year
transition period. The existing regulations governing payment under the
LTCH PPS are located in 42 CFR Part 412, Subpart O.
c. IPFs
Under the authority of sections 124(a) and (c) of Pub. L. 106-113,
inpatient psychiatric facilities (IPFs) (formerly psychiatric hospitals
and psychiatric units of acute care hospitals) are paid under the new
IPF PPS. Under the IPF PPS, some IPFs are transitioning from being paid
for inpatient hospital services based on a blend of reasonable cost-
based payment and a Federal per diem payment rate, effective for cost
reporting periods beginning on or after January 1, 2005 (November 15,
2004 IPF PPS final rule (69 FR 66921)). For cost reporting periods
beginning on or after July 1, 2008, IPFs will be paid 100 percent of
the Federal per diem payment amount. The existing regulations governing
payment under the IPF PPS are located in 42 CFR part 412, subpart N.
3. Critical Access Hospitals (CAHs)
Under sections 1814, 1820, and 1834(g) of the Act, payments are
made to critical access hospitals (CAHs) (that is, rural hospitals or
facilities that meet certain statutory requirements) for inpatient and
outpatient services based
[[Page 23311]]
on 101 percent of reasonable cost. Reasonable cost is determined under
the provisions of section 1861(v)(1)(A) of the Act and existing
regulations under 42 CFR Parts 413 and 415.
4. Payments for Graduate Medical Education (GME)
Under section 1886(a)(4) of the Act, costs of approved educational
activities are excluded from the operating costs of inpatient hospital
services. Hospitals with approved graduate medical education (GME)
programs are paid for the direct costs of GME in accordance with
section 1886(h) of the Act; the amount of payment for direct GME costs
for a cost reporting period is based on the hospital's number of
residents in that period and the hospital's costs per resident in a
base year. The existing regulations governing payments to the various
types of hospitals are located in 42 CFR Part 413.
On August 11, 2004, we published a final rule in the Federal
Register (69 FR 48916) that implemented changes to the Medicare
hospital inpatient prospective payment systems for both operating cost
and capital-related costs, as well as changes addressing payments for
excluded hospitals and payments for GME costs. Generally these changes
were effective for discharges occurring on or after October 1, 2004. On
October 7, 2004, we published a document in the Federal Register (69 FR
60242) that corrected technical errors made in the August 11, 2004
final rule. On December 30, 2004, we published another document in the
Federal Register (69 FR 78525) that further corrected the August 11,
2004 final rule and the October 7, 2004 correction to that rule,
effective January 1, 2005.
B. Major Contents of This Proposed Rule
In this proposed rule, we are setting forth proposed changes to the
Medicare IPPS for operating costs and for capital-related costs in FY
2006. We also are setting forth proposed changes relating to payments
for GME costs, payments to certain hospitals and units that continue to
be excluded from the IPPS and paid on a reasonable cost basis, payments
for DSHs, and requirements and payments for CAHs. The changes being
proposed would be effective for discharges occurring on or after
October 1, 2005, unless otherwise noted.
The following is a summary of the major changes that we are
proposing to make:
1. Proposed Changes to the DRG Reclassifications and Recalibrations of
Relative Weights
As required by section 1886(d)(4)(C) of the Act, in section II. of
this proposed rule, we are proposing annual adjustments to the DRG
classifications and relative weights. Based on analyses of Medicare
claims data, we are proposing to establish a number of new DRGs and
make changes to the designation of diagnosis and procedure codes under
other existing DRGs.
The major DRG classification changes we are proposing include:
Reassigning procedure code 35.52 (Repair of atrial septal
defect with prosthesis, closed technique) from DRG 108 to DRG 518
(Percutaneous Cardiovascular Procedure Without Coronary Artery Stent or
AMI);
Reassigning procedure code 37.26 (Cardiac
electrophysiologic stimulation and recording studies) from DRGs 535 and
536 to DRGs 515 (Cardiac Defibrillator Implant Without Cardiac
Catheterization);
Splitting DRG 209 into two new DRGs based on the presence
or absence of the procedure codes for major joint replacement or
reattachment of lower extremity and revision of hip or knee
replacement, DRG 545 (Revision of Hip or Knee Replacement) and DRG 544
(Major Joint Replacement or Reattachment of Lower Extremity);
Reassigning procedure code 26.12 (Open biopsy of salivary
gland or duct) from DRG 468 to DRG 477 (Nonextensive O.R. Procedure
Unrelated To Principal Diagnosis);
Reassigning the principal diagnosis codes for curvature of
the spine or malignancy from DRGs 497 and 498 to proposed new DRG 546
(Spinal Fusion Except Cervical with PDX of Curvature of the Spine or
Malignancy);
Splitting DRGs 516 and 526 into four new DRGs based on the
presence or absence of a CC;
Reassigning procedure code 39.65 (Extracorporeal membrane
oxygenation [ECMO]) from DRGs 104 and 105 to DRG 541 (ECMO or
Tracheostomy with Mechanical Ventilation 96+ Hours or Principal
Diagnosis Except Face, Mouth and Neck Diagnoses With Major Operating
Room Procedure).
We also are presenting our reevaluation of certain FY 2005
applicants for add-on payments for high-cost new medical services and
technologies, and our analysis of FY 2006 applicants (including public
input, as directed by Pub. L. 108-173, obtained in a town hall
meeting).
We are proposing the annual update of the long-term care diagnosis-
related group (LTC-DRG) classifications and relative weights for use
under the LTCH PPS for FY 2006.
2. Proposed Changes to the Hospital Wage Index
In section III. of this preamble, we are proposing revisions to the
wage index and the annual update of the wage data. Specific issues
addressed include the following:
The FY 2006 wage index update, using wage data from cost
reporting periods that began during FY 2002.
The proposed occupational mix adjustment to the wage index
that we began to apply effective October 1, 2004.
The proposed revisions to the wage index based on hospital
redesignations and reclassifications.
The proposed adjustment to the wage index for FY 2006
based on commuting patterns of hospital employees who reside in a
county and work in a different area with a higher wage index.
The timetable for reviewing and verifying the wage data
that will be in effect for the proposed FY 2006 wage index.
3. Proposed Revision and Rebasing of the Hospital Market Baskets
In section IV. of this proposed rule, we are proposing rebasing and
revising the hospital operating and capital market baskets to be used
in developing the FY 2006 update factor for the operating prospective
payment rates and the excluded hospital market basket to be used in
developing the FY 2006 update factor for the excluded hospital rate-of-
increase limits. We are also setting forth the data sources used to
determine the revised market basket relative weights and choice of
price proxies.
4. Other Decisions and Proposed Changes to the PPS for Inpatient
Operating and GME Costs
In section V. of this proposed rule, we discuss a number of
provisions of the regulations in 42 CFR Parts 412 and 413 and set forth
proposed changes concerning the following:
Solicitation of public comments on two options for
possible expansion of the current postacute care transfer policy.
The reporting of hospital quality data as a condition for
receiving the full annual payment update increase.
Proposed changes in the payment adjustment for low-volume
hospitals.
Proposed IME adjustment for TEFRA hospitals that are
converting to IPPS hospitals, and IME FTE resident caps for urban
hospitals that are granted
[[Page 23312]]
rural reclassification and then withdraw that rural classification.
Proposed changes to implement section 951 of Pub. L. 108-
173 relating to the provision of patient stay/SSI days data maintained
by CMS to hospitals for the purpose of determining their DSH
percentage.
Proposed changes relating to hospitals' geographic
classifications, including multicampus hospitals and urban group
hospital reclassifications.
Proposed changes and clarifications relating to GME,
including GME initial residency period limitation, new teaching
hospitals' participation in Medicare GME affiliated groups, and the GME
FTE cap adjustment for rural hospitals;
Solicitation of public comments on possible changes in
requirements for provider-based entities relating to entities the
location requirements for certain neonatal intensive care units as off-
campus facilities;
Discussion of the second year of implementation of the
Rural Community Hospital Demonstration Program; and
Clarification of the definition of a hospital as it
relates to ``specialty hospitals'' participating in the Medicare
program.
5. PPS for Capital-Related Costs
In section VI. of this proposed rule, we are not proposing any
policy changes to the capital-related prospective payment system. For
the readers' benefit, we discuss the payment policy requirements for
capital-related costs and capital payments to hospitals.
6. Proposed Changes for Hospitals and Hospital Units Excluded From the
IPPS
In section VII. of this proposed rule, we discuss the proposed
revisions and clarifications concerning excluded hospitals and hospital
units, proposed policy changes relating to continued participation by
CAHs located in counties redesignated under section 1886(d)(8)(B) of
the Act (Lugar counties), and proposed policy changes relating to
designation of CAHs as necessary providers.
7. Proposed Changes in Payment for Blood Clotting Factor
In section VIII of this proposed rule, we discuss the proposed
change in payment for blood clotting factor administered to inpatients
with hemophilia for FY 2006.
8. Determining Prospective Payment Operating and Capital Rates and
Rate-of-Increase Limits
In the Addendum to this proposed rule, we set forth proposed
changes to the amounts and factors for determining the FY 2006
prospective payment rates for operating costs and capital-related
costs. We also establish the proposed threshold amounts for outlier
cases. In addition, we address the proposed update factors for
determining the rate-of-increase limits for cost reporting periods
beginning in FY 2006 for hospitals and hospital units excluded from the
PPS.
9. Impact Analysis
In Appendix A of this proposed rule, we set forth an analysis of
the impact that the proposed changes would have on affected hospitals.
10. Recommendation of Update Factor for Hospital Inpatient Operating
Costs
In Appendix B of this proposed rule, as required by sections
1886(e)(4) and (e)(5) of the Act, we provided our recommendations of
the appropriate percentage changes for FY 2006 for the following:
A single average standardized amount for all areas for
hospital inpatient services paid under the IPPS for operating costs
(and hospital-specific rates applicable to SCHs and MDHs).
Target rate-of-increase limits to the allowable operating
costs of hospital inpatient services furnished by hospitals and
hospital units excluded from the IPPS.
11. Discussion of Medicare Payment Advisory Commission Recommendations
Under section 1805(b) of the Act, the Medicare Payment Advisory
Commission (MedPAC) is required to submit a report to Congress, no
later than March 1 of each year, in which MedPAC reviews and makes
recommendations on Medicare payment policies. MedPAC's March 2005
recommendation concerning hospital inpatient payment policies addressed
only the update factor for inpatient hospital operating costs and
capital-related costs under the IPPS and for hospitals and distinct
part hospital units excluded from the IPPS. This recommendation is
addressed in Appendix B of this proposed rule. MedPAC issued a second
Report to Congress: Physician-Owned Specialty Hospitals, March 2005,
which addressed other issues relating to Medicare payments to hospitals
for inpatient services. The recommendations on these issues from this
second report are addressed in section IX. of this preamble. For
further information relating specifically to the MedPAC March 2005
reports or to obtain a copy of the reports, contact MedPAC at (202)
220-3700 or visit MedPAC's Web site at: http://www.medpac.gov.
II. Proposed Changes to DRG Classifications and Relative Weights
A. Background
Section 1886(d) of the Act specifies that the Secretary shall
establish a classification system (referred to as DRGs) for inpatient
discharges and adjust payments under the IPPS based on appropriate
weighting factors assigned to each DRG. Therefore, under the IPPS, we
pay for inpatient hospital services on a rate per discharge basis that
varies according to the DRG to which a beneficiary's stay is assigned.
The formula used to calculate payment for a specific case multiplies an
individual hospital's payment rate per case by the weight of the DRG to
which the case is assigned. Each DRG weight represents the average
resources required to care for cases in that particular DRG, relative
to the average resources used to treat cases in all DRGs.
Congress recognized that it would be necessary to recalculate the
DRG relative weights periodically to account for changes in resource
consumption. Accordingly, section 1886(d)(4)(C) of the Act requires
that the Secretary adjust the DRG classifications and relative weights
at least annually. These adjustments are made to reflect changes in
treatment patterns, technology, and any other factors that may change
the relative use of hospital resources. The proposed changes to the DRG
classification system and the recalibration of the DRG weights for
discharges occurring on or after October 1, 2005, are discussed below.
B. DRG Reclassifications
(If you choose to comment on issues in this section, please include
the caption ``DRG Reclassifications'' at the beginning of your
comment.)
1. General
Cases are classified into DRGs for payment under the IPPS based on
the principal diagnosis, up to eight additional diagnoses, and up to
six procedures performed during the stay. In a small number of DRGs,
classification is also based on the age, sex, and discharge status of
the patient. The diagnosis and procedure information is reported by the
hospital using codes from the International
[[Page 23313]]
Classification of Diseases, Ninth Revision, Clinical Modification (ICD-
9-CM).
The process of forming the DRGs was begun by dividing all possible
principal diagnoses into mutually exclusive principal diagnosis areas
referred to as Major Diagnostic Categories (MDCs). The MDCs were formed
by physician panels as the first step toward ensuring that the DRGs
would be clinically coherent. The diagnoses in each MDC correspond to a
single organ system or etiology and, in general, are associated with a
particular medical specialty. Thus, in order to maintain the
requirement of clinical coherence, no final DRG could contain patients
in different MDCs. Most MDCs are based on a particular organ system of
the body. For example, MDC 6 is Diseases and Disorders of the Digestive
System. This approach is used because clinical care is generally
organized in accordance with the organ system affected. However, some
MDCs are not constructed on this basis because they involve multiple
organ systems (for example, MDC 22 (Burns)). For FY 2005, cases are
assigned to one of 519 DRGs in 25 MDCs. The table below lists the 25
MDCs.
[GRAPHIC] [TIFF OMITTED] TP04MY05.000
In general, cases are assigned to an MDC based on the patient's
principal diagnosis before assignment to a DRG. However, for FY 2005,
there are nine DRGs to which cases are directly assigned on the basis
of ICD-9-CM procedure codes. These DRGs are for heart transplant or
implant of heart assist systems, liver and/or intestinal transplants,
bone marrow, lung, simultaneous pancreas/kidney, and pancreas
transplants and for tracheostomies. Cases are assigned to these DRGs
before they are classified to an MDC. The table below lists the current
nine pre-MDCs.
[[Page 23314]]
[GRAPHIC] [TIFF OMITTED] TP04MY05.001
Once the MDCs were defined, each MDC was evaluated to identify
those additional patient characteristics that would have a consistent
effect on the consumption of hospital resources. Since the presence of
a surgical procedure that required the use of the operating room would
have a significant effect on the type of hospital resources used by a
patient, most MDCs were initially divided into surgical DRGs and
medical DRGs. Surgical DRGs are based on a hierarchy that orders
operating room (O.R.) procedures or groups of O.R. procedures by
resource intensity. Medical DRGs generally are differentiated on the
basis of diagnosis and age (less than or greater than 17 years of age).
Some surgical and medical DRGs are further differentiated based on the
presence or absence of a complication or a comorbidity (CC).
Generally, nonsurgical procedures and minor surgical procedures
that are not usually performed in an operating room are not treated as
O.R. procedures. However, there are a few non-O.R. procedures that do
affect DRG assignment for certain principal diagnoses, for example,
extracorporeal shock wave lithotripsy for patients with a principal
diagnosis of urinary stones.
Once the medical and surgical classes for an MDC were formed, each
class of patients was evaluated to determine if complications,
comorbidities, or the patient's age would consistently affect the
consumption of hospital resources. Physician panels classified each
diagnosis code based on whether the diagnosis, when present as a
secondary condition, would be considered a substantial complication or
comorbidity.
A substantial complication or comorbidity was defined as a
condition, which because of its presence with a specific principal
diagnosis, would cause an increase in the length of stay by at least
one day in at least 75 percent of the patients. Each medical and
surgical class within an MDC was tested to determine if the presence of
any substantial comorbidities or complications would consistently
affect the consumption of hospital resources.
The actual process of forming the DRGs was, and continues to be,
highly iterative, involving a combination of statistical results from
test data combined with clinical judgment. In deciding whether to
create a separate DRG, we consider whether the resource consumption and
clinical characteristics of the patients with a given set of conditions
are significantly different than the remaining patients in the DRG. We
evaluate patient care costs using average charges and length of stay as
proxies for costs and rely on the judgment of our medical officers to
decide whether patients are distinct or clinically similar to other
patients in the DRG. In evaluating resource costs, we consider both the
absolute and percentage differences in average charges between the
cases we are selecting for review and the remainder of cases in the
DRG. We also consider variation in charges within these groups; that
is, whether observed average differences are consistent across patients
or attributable to cases that are extreme in terms of charges or length
of stay, or both. Further, we also consider the number of patients who
will have a given set of characteristics and generally prefer not to
create a new DRG unless it will include a substantial number of cases.
As we explain in more detail in section IX. of this preamble, MedPAC
has made a number of recommendations regarding the DRG system. As part
of our review and analysis of MedPAC's recommendations, we will
consider whether to establish guidelines for making DRG
reclassification decisions.
A patient's diagnosis, procedure, discharge status, and demographic
information is fed into the Medicare claims processing systems and
subjected to a series of automated screens called the Medicare Code
Editor (MCE). The MCE screens are designed to identify cases that
require further review before classification into a DRG.
After patient information is screened through the MCE and any
further development of the claim is conducted, the cases are classified
into the appropriate DRG by the Medicare GROUPER software program. The
GROUPER program was developed as a means of classifying each case into
a DRG on the basis of the diagnosis and procedure codes and, for a
limited number of DRGs, demographic information (that is, sex, age, and
discharge status).
After cases are screened through the MCE and assigned to a DRG by
the GROUPER, the PRICER software calculates a base DRG payment. The
PRICER calculates the payments for each case covered by the IPPS based
on the DRG relative weight and additional factors associated with each
hospital, such as IME and DSH adjustments. These additional factors
increase the payment amount to hospitals above the base DRG payment.
The records for all Medicare hospital inpatient discharges are
maintained in the Medicare Provider Analysis and
[[Page 23315]]
Review (MedPAR) file. The data in this file are used to evaluate
possible DRG classification changes and to recalibrate the DRG weights.
However, in the July 30, 1999 IPPS final rule (64 FR 41500), we
discussed a process for considering non-MedPAR data in the
recalibration process. In order for us to consider using particular
non-MedPAR data, we must have sufficient time to evaluate and test the
data. The time necessary to do so depends upon the nature and quality
of the non-MedPAR data submitted. Generally, however, a significant
sample of the non-MedPAR data should be submitted by mid-October for
consideration in conjunction with the next year's proposed rule. This
allows us time to test the data and make a preliminary assessment as to
the feasibility of using the data. Subsequently, a complete database
should be submitted by early December for consideration in conjunction
with the next year's proposed rule.
Many of the changes to the DRG classifications are the result of
specific issues brought to our attention by interested parties. We
encourage individuals with concerns about DRG classifications to bring
those concerns to our attention in a timely manner so they can be
carefully considered for possible inclusion in the next proposed rule
and if included, may be subjected to public review and comment.
Therefore, similar to the timetable for interested parties to submit
non-MedPAR data for consideration in the DRG recalibration process,
concerns about DRG classification issues should be brought to our
attention no later than early December in order to be considered and
possibly included in the next annual proposed rule updating the IPPS.
The changes we are proposing to the DRG classification system for
FY 2006 for the FY 2006 GROUPER, version 23.0 and to the methodology
used to recalibrate the DRG weights are set forth below. Unless
otherwise noted in this proposed rule, our DRG analysis is based on
data from the December 2004 update of the FY 2004 MedPAR file, which
contains hospital bills received through December 31, 2004 for
discharges in FY 2004.
2. Pre-MDC: Intestinal Transplantation
In the FY 2005 IPPS final rule (69 FR 48976), we moved intestinal
transplantation cases that were assigned to ICD-9-CM procedure code
46.97 (Transplant of intestine) out of DRG 148 (Major Small and Large
Bowel Procedures with CC) and DRG 149 (Major Small and Large Bowel
Procedures Without CC) and into DRG 480 (Liver Transplant). We also
changed the title for DRG 480 to ``Liver Transplant and/or Intestinal
Transplant.'' We moved these cases out of DRGs 148 and 149 because our
analysis demonstrated that the average charges for intestinal
transplants are significantly higher than the average charges for other
cases in these DRGs. We stated at that time that we would continue to
monitor these cases.
Based on our review of the FY 2004 MedPAR data, we found 959 cases
assigned to DRG 480 with overall average charges of approximately
$165,622. There were only three cases involving an intestinal
transplant alone and one case in which both an intestinal transplant
and a liver transplant were performed. The average charges for the
intestinal transplant cases ($138,922) were comparable to the average
charges for the liver transplant cases ($165,314), while the remaining
combination of an intestinal transplant and a liver transplant case had
much higher charges ($539,841), and would be paid as an outlier case.
Therefore, we are not proposing any DRG modification for intestinal
transplantation cases at this time.
We note that an institution that performs intestinal
transplantation, in correspondence to us written following the
publication of the FY 2005 IPPS final rule, agreed with our decision to
move cases assigned to code 46.97 to DRG 480.
3. MDC 1 (Diseases and Disorders of the Nervous System)
a. Strokes
In 1996, the Food and Drug Administration (FDA) approved the use of
tissue plasminogen activator (tPA), one type of thrombolytic agent that
dissolves blood clots. In 1998, the ICD-9-CM Coordination and
Maintenance Committee created code 99.10 (Injection or infusion of
thrombolytic agent) in order to be able to uniquely identify the
administration of thrombolytic agents. Studies have shown that tPA can
be effective in reducing the amount of damage the brain sustains during
an ischemic stroke, which is caused by blood clots that block blood
flow to the brain. The use of tPA is approved for patients who have
blood clots in the brain, but not for patients who have a bleeding or
hemorrhagic stroke. Thrombolytic therapy has been shown to be most
effective when used within the first 3 hours after the onset of a
stroke, and it is contraindicated in hemorrhagic stroke. The presence
or absence of code 99.10 does not currently influence DRG assignment.
Since code 99.10 became effective, we have been monitoring the DRGs and
cases in which this code can be found, particularly with respect to
cardiac and stroke DRGs.
Last year, we met with representatives from several hospital stroke
centers who recommended modification of the existing stroke DRGs 14
(Intracranial Hemorrhage or Cerebral Infarction) and 15 (Nonspecific
CVA and Precerebral Occlusion Without Infarction) by using the
administration of tPA as a proxy to identify patients who have severe
strokes. The representatives stated that using tPA as a proxy for the
more severely ill stroke patient would recognize the higher charges
these cases generate because of their higher hospital resource
utilization.
The stroke representatives made two suggestions concerning DRGs 14
and 15. First, they proposed modifying DRG 14 by renaming it ``Ischemic
Stroke Treatment with a Reperfusion Agent,'' and including only those
cases containing code 99.10. The remainder of stroke cases where the
patient was not treated with a reperfusion agent would be included in
DRG 15, which would be renamed ``Hemorrhagic Stroke or Ischemic Stroke
without a Reperfusion Agent.'' Hemorrhagic stroke cases now found in
DRG 14 that are not treated with a reperfusion agent would migrate to
DRG 15.
The second suggestion was to leave DRGs 14 and 15 as they currently
exist, and create a new DRG, with a recommended title ``Ischemic Stroke
Treatment with a Reperfusion Agent.'' This suggested DRG would only
include strokes caused by clots, not by hemorrhages, and would include
the administration of tPA, identified by procedure code 99.10.
We have examined the MedPAR data for the cases in DRGs 14 and 15,
and have divided the cases based on the presence of a principal
diagnosis of hemorrhage or occlusive ischemia, and the presence of
procedure code 99.10. The following table displays the results:
[[Page 23316]]
[GRAPHIC] [TIFF OMITTED] TP04MY05.002
The above table shows that the average standardized charges for
cases treated with a reperfusion agent are more than $16,000 and
$10,000 higher than all other cases in DRGs 14 and 15, respectively.
While these data suggest that patients treated with a reperfusion agent
are more expensive than all other stroke patients, this conclusion is
based on a small number of cases. At this time, we are not proposing a
change to the stroke DRGs because of this concern. However, we believe
it is possible that more patients are being treated with a reperfusion
agent than indicated by our data because the presence of code 99.10
does not affect DRG assignment and may be underreported.
We invite public comment on the changes to DRGs 14 and 15 suggested
by the hospital representatives. In addition, we are interested in
public comment on the number of patients currently being treated with a
reperfusion agent as well as the potential costs of these patients
relative to others with strokes that are also included in DRGs 14 and
15.
b. Unruptured Cerebral Aneurysms
In the FY 2004 IPPS final rule (68 FR 45353), we created DRG 528
(Intracranial Vascular Procedures With a Principal Diagnosis of
Hemorrhage) in MDC 1. We received a comment at that time that suggested
we create another DRG for intracranial vascular procedures for
unruptured cerebral aneurysms. For the FY 2004 IPPS final rule (68 FR
45353) and the FY 2005 IPPS final rule (69 FR 48957), we evaluated the
data for cases in the MedPAR file involving unruptured cerebral
aneurysms assigned to DRG 1 (Craniotomy Age >17 With CC) and DRG 2
(Craniotomy Age >17 Without CC) and concluded that the average charges
were consistent with those for other cases found in DRGs 1 and 2.
Therefore, we did not propose a change to the DRG assignment for
unruptured cerebral aneurysms.
We have reviewed the latest data for unruptured cerebral aneurysms
cases. In our analysis of the FY 2004 MedPAR data, we found 1,136
unruptured cerebral aneurysm cases assigned to DRG 1 and 964 unruptured
cerebral aneurysm cases assigned to DRG 2. Although the average charges
for the unruptured cerebral aneurysm cases in DRG 1 ($53,455) and DRG 2
($34,028) were slightly higher than the average charges for all cases
in DRG 1 ($51,466) and DRG 2 ($30,346), we do not believe these
differences are significant enough to warrant a change in these two
DRGs at this time. Therefore, we are not proposing a change in the
structure of these DRGs relating to unruptured cerebral aneurysm cases
for FY 2006.
4. MDC 5 (Diseases and Disorders of the Circulatory System)
a. Automatic Implantable Cardioverter/Defibrillator
As part of our annual review of DRGs, for FY 2006, we performed a
review of cases in the FY 2004 MedPAR file involving the implantation
of a defibrillator in the following DRGs:
DRG 515 (Cardiac Defibrillator Implant Without Cardiac
Catheterization).
DRG 535 (Cardiac Defibrillator Implant With Cardiac Catheterization
With Acute Myocardial Infarction, Heart Failure, or Shock).
DRG 536 (Cardiac Defibrillator Implant With Cardiac Catheterization
Without Acute Myocardial Infarction, Heart Failure, or Shock).
While conducting our review, we noted that there had been
considerable comments from hospital coders on code 37.26 (Cardiac
electrophysiologic stimulation and recording studies (EPS)), which is
included in these DRGs. These comments from hospital coders were
directed at both CMS and the American Hospital Association. The
procedure codes for these three DRGs describe the procedures that are
considered to be a cardiac catheterization. Code 37.26 is classified as
a cardiac catheterization within these DRGs. Therefore, the submission
of code
[[Page 23317]]
37.26 affects the DRG assignment for defibrillator cases and leads to
the assignment of DRGs 535 or 536. When a cardiac catheterization is
performed, the case is assigned to DRGs 535 or 536, depending on
whether or not the patient also had an acute myocardial infarction,
heart failure, or shock. The following chart shows the number of cases
in each DRG, along with their average length of stay and average
charges, found in the data:
[GRAPHIC] [TIFF OMITTED] TP04MY05.003
We have received a number of questions from hospital coders
regarding the correct use of code 37.26. There is considerable
confusion about whether or not code 37.26 should be reported when the
procedure is performed as part of the defibrillator implantation.
Currently, the ICD-9-CM instructs the coder not to report code 37.26
when a defibrillator is inserted. There is an inclusion term under the
defibrillator code 37.94 (Implantation or replacement of automatic
cardioverter/defibrillator, total system [AICD]) which states that EPS
is included in code 37.94. We discussed modifying this instruction at
the October 7-8, 2004 meeting of the ICD-9-CM Coordination and
Maintenance Committee. We received a number of comments opposing a
modification to the use of code 37.26 to also allow it to be reported
with an AICD insertion. A report of this meeting can be found on the
Web site: http://www.cms.hhs.gov/paymentsystem/icd9.
We performed an analysis of cases within DRGs 535 and 536 with
cardiac catheterization and with and without code 37.26 and with code
37.26 only reported without cardiac catheterization and found the
following:
[GRAPHIC] [TIFF OMITTED] TP04MY05.004
The data show that when code 37.26 is the only procedure reported
from the list of cardiac catheterizations, the average charges and the
average length of stay are considerably lower. For example, the average
standardized charges for a defibrillator implant with only an EPS are
$85,390.88 in DRG 536, while the average standardized charges for DRG
536 with a cardiac catheterization, but not an EPS, are $110,493.86.
The average standardized charges for all cases in DRG 536 are
$94,453.62. The data show similar findings for DRG 535, with lower
lengths of stay and average charges when the only code reported from
the cardiac catheterization list is an EPS. When we also consider that
there may be some coding problems in the use of code 37.26, we believe
it is appropriate to propose a modification to these DRGs.
Data reflected in the chart above show that the average
standardized charges for DRG 515 were $83,659.76. These average charges
are closer to those in DRG 536 with code 37.26 and without any other
cardiac catheterization code reported. While the cases in DRG 535 with
code 37.26 and without a cardiac catheterization have higher average
charges than the average charges for cases in DRG 515, these cases have
much lower average charges than the average charges for overall cases
in DRG 535. For these reasons, we are proposing to remove code 37.26
from the list of cardiac catheterizations for DRGs 535 and 536. If a
defibrillator is implanted and an EPS is performed with no other type
of cardiac catheterization, the case would be assigned to DRG 515.
CMS issued a National Coverage Determination for implantable
cardioverter defibrillators, effective January 27, 2005, that expands
coverage and requires, in certain cases, that patient data be reported
when the defibrillator is implanted for the clinical indication of
primary prevention of sudden cardiac death. The submission of data on
patients receiving an implantable cardioverter defibrillator for
primary prevention to a data collection system is needed for the
determination that the implantable cardioverter
[[Page 23318]]
defibrillator is reasonable and necessary and for quality improvement.
These data will be made available in some form to providers and
practitioners to inform their decisions, monitor performance quality,
and benchmark and identify best practices. We made a temporary registry
available for use when the policy became effective and used the Quality
Net Exchange for data submission because Medicare-participating
hospitals already use the Exchange to report data.
We intend to transition from the temporary registry using the
Quality Net Exchange to a more sophisticated follow-on registry that
will have the ability to collect longitudinal data. Some providers have
suggested that CMS increase reimbursement for implantable cardioverter
defibrillators to compensate the provider for reporting data. ICD data
reporting includes elements of patient demographics, clinical
characteristics and indications, medications, provider information, and
complications. Since these data elements are commonly found in patient
medical records, it is CMS' expectation that these data are readily
available to the individuals abstracting and reporting data. Therefore,
we believe that increased reimbursement is not needed at this time.
b. Coronary Artery Stents
In the FY 2005 IPPS final rule (69 FR 48971 through 48974), we
addressed two comments from industry representatives about the DRG
assignments for coronary artery stents. These commenters had expressed
concern about whether the reimbursement for stents is adequate,
especially for insertion of multiple stents. They also expressed
concern about whether the current DRG structure represents the most
clinically coherent classification of stent cases.
The current DRG structure incorporates stent cases into the
following two pairs of DRGs, depending on whether bare metal or drug-
eluting stents are used and whether acute myocardial infarction (AMI)
is present:
DRG 516 (Percutaneous Cardiovascular Procedures with AMI).
DRG 517 (Percutaneous Cardiovascular Procedures with
Nondrug-Eluting Stent without AMI).
DRG 526 (Percutaneous Cardiovascular Procedures with Drug-
Eluting Stent with AMI).
DRG 527 (Percutaneous Cardiovascular Procedures with Drug-
Eluting Stent without AMI).
The commenters presented two recommendations for refinement and
restructuring of the current coronary stent DRGs. One of the
recommendations involved restructuring these DRGs to create two
additional stent DRGs that are closely patterned after the existing
pairs, and would reflect insertion of multiple stents with and without
AMI. The commenters recommended incorporating either stenting code
36.06 (Insertion of nondrug-eluting coronary artery stent(s)) or code
36.07 (Insertion of drug-eluting coronary artery stent(s)) when they
are reported along with code 36.05 (Multiple vessel percutaneous
transluminal coronary angioplasty [PTCA] or coronary atherectomy
performed during the same operation, with or without mention of
thrombolytic agent). The commenter's first concern was that hospitals
may be steering patients toward coronary artery bypass graft surgery in
place of stenting in order to avoid significant financial losses due to
what it considered the inadequate reimbursement for inserting multiple
stents.
In our response to comments in the FY 2005 IPPS final rule, we
indicated that it was premature to act on this recommendation because
the current coding structure for coronary artery stents cannot
distinguish cases in which multiple stents are inserted from those in
which only a single stent is inserted. Current codes are able to
identify performance of PTCA in more than one vessel by use of code
36.05. However, while this code indicates that PTCA was performed in
more than one vessel, its use does not reflect the exact number of
procedures performed or the exact number of vessels treated. Similarly,
when codes 36.06 and 36.07 are used, they document the insertion of at
least one stent. However, these stenting codes do not identify how many
stents were inserted in a procedure, nor distinguish insertion of a
single stent from insertion of multiple stents. Even the use of one of
the stenting codes in conjunction with multiple-PTCA code 36.05 does
not distinguish insertion of a single stent from multiple stents. The
use of code 36.05 in conjunction with code 36.06 or code 36.07
indicates only performance of PTCA in more than one vessel, along with
insertion of at least one stent. The precise numbers of PTCA-treated
vessels, the number of vessels into which stents were inserted, and the
total number of stents inserted in all treated vessels cannot be
determined. Therefore, the capabilities of the current coding structure
do not permit the distinction between single and multiple vessel
stenting that would be required under the recommended restructuring of
the coronary stent DRGs.
We agree that the DRG classification of cases involving coronary
stents must be clinically coherent and provide for adequate
reimbursement, including those cases requiring multiple stents. For
this reason, we created four new ICD-9-CM codes identifying multiple
stent insertion (codes 00.45, 00.46, 00.47, and 00.48) and four new
codes identifying multiple vessel treatment (codes 00.40, 00.41, 00.42,
and 00.43) at the October 7, 2004 ICD-9-CM Coordination and Maintenance
Committee Meeting. These eight new codes can be found in Table 6B of
this proposed rule. We have worked closely with the coronary stent
industry and the clinical community to identify the most logical code
structure to identify new codes for both multiple vessel and multiple
stent use. Effective October 1, 2005, code 36.05 will be deleted and
the eight new codes will be used in its place. Coders are encouraged to
use as many codes as necessary to describe each case, using one code to
describe the angioplasty or atherectomy, and one code each for the
number of vessels treated and the number of stents inserted. Coders are
encouraged to record codes accurately, as these data will potentially
be the basis for future DRG restructuring. While we agree that use of
multiple vessel and stent codes will provide useful information in the
future on hospital costs associated with percutaneous coronary
procedures, we believe it remains premature to proceed with a
restructuring of the current coronary stent DRGs on the basis of the
number of vessels treated or the number of stents inserted, or both, in
the absence of data reflecting use of this new coding structure.
The commenter's second recommendation was that we distinguish
``complex'' from ``noncomplex'' cases in the stent DRGs by expanding
the higher weighted DRGs (516 and 526) to include conditions other than
AMI. The commenter recommended recognizing certain comorbid and
complicating conditions, including hypertensive renal failure,
congestive heart failure, diabetes, arteriosclerotic cardiovascular
disease, cerebrovascular disease, and certain procedures such as
multiple vessel angioplasty or atherectomy (as evidenced by the
presence of procedure code 36.05), as indicators of complex cases for
this purpose. Specifically, the commenters recommended replacing the
current structure with the following four DRGs:
Recommended restructured DRG 516 (Complex percutaneous
[[Page 23319]]
cardiovascular procedures with non-drug-eluting stents).
Recommended restructured DRG 517 (Noncomplex percutaneous
cardiovascular procedures with non-drug-eluting stents).
Recommended restructured DRG 526 (Complex percutaneous
cardiovascular procedures with drug-eluting stents).
Recommended restructured DRG 527 (Noncomplex percutaneous
cardiovascular procedures with drug-eluting stents).
The commenter argued that this structure would provide an
improvement in both clinical and resource coherence over the current
structure that classifies cases according to the type of stent inserted
and the presence or absence of AMI alone, without considering other
complicating conditions. The commenter also presented an analysis,
based on previous MedPAR data, that evaluated charges and lengths of
stay for cases with expected high resource use and reclassified cases
into its recommended new structure of paired ``complex'' and
``noncomplex'' DRGs. The commenter's analysis showed some evidence of
clinical and resource coherence in the recommended DRG structure.
However, we did not adopt the proposal in the FY 2005 IPPS final rule.
First, the data presented by the commenter still represented
preliminary experience under a relatively new DRG structure. Second,
the analysis did not reveal significant gains in resource coherence
compared to existing DRGs for stenting cases. Therefore, we were
reluctant to adopt this approach because of comments and concern about
whether the overall level of payment in the coronary stent DRGs was
adequate. However, we indicated that this issue deserved further study
and consideration, and that we would conduct an analysis of this
recommendation and other approaches to restructuring these DRGs with
updated data in the FY 2006 proposed rule.
This year, we have analyzed the MedPAR data to determine the impact
of certain secondary diagnoses or complicating conditions on the four
DRGs cited above. Specifically, we examined the data in DRGs 516, 517,
526, and 527, based on the presence of coronary stents (codes 36.06 and
36.07) and the following additional diagnoses:
Congestive heart failure (represented by codes 398.91
(Rheumatic heart failure (congestive)), 402.01 (Hypertensive heart
disease, malignant, with heart failure), 402.11, (Hypertensive heart
disease, benign, with heart failure), 402.91 (Hypertensive heart
disease, unspecified, with heart failure), 404.01 (Hypertensive heart
and renal disease, malignant, with heart failure), 404.03 (Hypertensive
heart and renal disease, malignant, with heart failure and renal
failure), 404.11 (Hypertensive heart and renal disease, benign, with
heart failure), 404.13 (Hypertensive heart and renal disease, benign,
with heart failure and renal failure), 404.91 (Hypertensive heart and
renal disease, unspecified, with heart failure), 404.93 (Hypertensive
heart and renal disease, unspecified, with heart failure and renal
failure), 428.0 (Congestive heart failure, unspecified), and 428.1
(Left heart failure)).
Arteriosclerotic cardiovascular disease (represented by
code 429.2 (Cardiovascular disease, unspecified)).
Cerebrovascular disease (represented by codes 430.0
(Subarachnoid hemorrhage), 431.0 (Intracerebral hemorrhage), 432.0
(Nontraumatic extradural hemorrhage), 432.1, Subdural hemorrhage,
432.9, (Unspecified intracranial hemorrhage), 433.01 (Occlusion and
stenosis of basilar artery, with cerebral infarction), 433.11
(Occlusion and stenosis of carotid artery, with cerebral infarction),
433.21 (Occlusion and stenosis of vertebral artery, with cerebral
infarction), 433.31 (Occlusion and stenosis of multiple and bilateral
precerebral arteries, with cerebral infarction), 433.81 (Occlusion and
stenosis of other specified precerebral artery, with cerebral
infarction), 434.01 (Cerebral thrombosis with cerebral infarction),
434.11 (Cerebral embolism with cerebral infarction), 434.91 (Cerebral
artery occlusion with cerebral infarction, unspecified), 436.0 (Acute,
but ill-defined, cerebrovascular disease)).
Secondary diagnosis of acute myocardial infarction
(represented by codes 410.01 (Acute myocardial infarction of
anterolateral wall, initial episode of care), 410.11 (Acute myocardial
infarction of other anterior wall, initial episode of care), 410.21
(Acute myocardial infarction of inferolateral wall, initial episode of
care), 410.31 (Acute myocardial infarction of inferoposterior wall,
initial episode of care), 410.41 (Acute myocardial infarction of other
inferior wall, initial episode of care), 410.51 (Acute myocardial
infarction of other lateral wall, initial episode of care), 410.61
(True posterior wall infarction, initial episode of care), 410.71
(Subendocardial infarction, initial episode of care), 410.81 (Acute
myocardial infarction of other specified sites, initial episode of
care), 410.91 (Acute myocardial infarction of unspecified site, initial
episode of care)).
Renal failure (represented by codes 403.01 (Hypertensive
renal disease, malignant, with renal failure), 403.11 (Hypertensive
renal disease, benign, with renal failure), 403.91 (Hypertensive renal
disease, unspecified, with renal failure), 585.0 (Chronic renal
failure), V42.0 (Organ or tissue replaced by transplant, kidney), V45.1
(Renal dialysis status), V56.0 (Extracorporeal dialysis), V56.1
(Fitting and adjustment of extracorporeal dialysis catheter), V56.2
(Fitting and adjustment of peritoneal dialysis catheter)). Any renal
failure with congestive heart failure will be captured in the 404.xx
codes listed above.
We reviewed the cases in the four coronary stent DRGs and found
that most of the additional or ``complicated'' cases did, in fact, have
higher average charges in most instances. However, these results could
potentially be duplicated for many DRGs, or sets of DRGs, within the
PPS structure. That is, cases with selected complicating factors will
tend to have higher average lengths of stay and average charges than
cases without those complicating factors. Since cases with the selected
complicating factors necessarily contain sicker patients, longer
lengths of stay and higher average charges are to be expected. For
example, cases in which patients with a cardiac condition also have
renal failure are quite likely to consume higher resources than
patients only with a cardiac condition. In addition, selectively
recognizing the recommended secondary diagnoses or complicating
conditions raises some issues related to the logic and structural
integrity of the DRG system. Generally, we have taken into account the
higher costs of cases with complications by maintaining a general list
of comorbidities and complications (the CC) list), and, where
appropriate, distinguishing pairs of DRGs by ``with and without CCs.''
(This system also specifies exclusions from each pair, to account for
cases where a condition on the CC list is an expected and normal
constituent of the diagnoses reflected in the paired DRGs.) In order to
maintain the basic DRG body-system structure, we have not employed
special lists of procedures and diagnoses from one MDC to make
determinations about the structure of DRGs in another MDC. The
recommended restructuring of the coronary stent DRGs is inconsistent
with this principle and may create a new precedent of selecting
specific comorbidities and complications to restructure DRGs. For
example, the
[[Page 23320]]
presence of code 403.11 (Hypertensive renal disease, malignant, with
renal failure) may distinguish cases with higher average charges, but
the same argument could be raised for many other procedures across
other MDCs.
Rather than establishing such a precedent, we are proposing to
restructure the coronary stent DRGs on the basis of the standard CC
list to differentiate cases that require greater resources. We believe
this list to be more inclusive of true comorbid or complicating
conditions than selection of specific secondary diagnosis codes.
Therefore, restructuring these DRGs on this basis would result in a
logical arrangement of cases with regard to both clinical coherence and
resource consumption. We have compared the existing CC list with the
list of the codes recommended by the commenter as secondary diagnoses.
All of the recommended codes already appear on the CC list except for
codes 429.2, 432.9, V56.1, and V56.2. Code 429.2 represents a very
vague diagnosis (arteriosclerotic cardiovascular disease (ASCVD)). Code
432.9 represents a nonspecific principal diagnosis that is rejected by
the MCE when reported as the principal diagnosis. Codes V56.1 and V56.2
describe conditions relating to dialysis for renal failure. Therefore,
we believe that our proposal to utilize the existing CC list would
encompass most of the cases on the recommended list, as well as other
cases with additional CCs requiring additional resources. We have
examined the MedPAR data for the cases in the coronary stent DRGs,
distinguishing cases that include CCs and those that do not. The
following table displays the results:
[GRAPHIC] [TIFF OMITTED] TP04MY05.005
The data show a clear differentiation in average charges between
the cases in DRG 516 and 526 ``with CC'' and those ``without CC.''
Therefore, the data suggest that a ``with and without CC'' split in DRG
516 and 526 is warranted. At the same time, the data do not show such a
clear differentiation, in either average charges or lengths of stay,
among the cases in DRGs 517 and 527.
Therefore, we are proposing to delete DRGs 516 and 526, and to
substitute four new DRGs in their place. These new DRGs would be
patterned after existing DRGs 516 and 526, except that they would be
split based on the presence or absence of a secondary diagnosis on the
existing CC list. Specifically, we are proposing to create DRG 547
(Percutaneous Cardiovascular Procedure with AMI with CC), DRG 548
(Percutaneous Cardiovascular Procedure with AMI without CC), DRG 549
(Percutaneous Cardiovascular Procedure with Drug-Eluting Stent with AMI
with CC), and DRG 550 (Percutaneous Cardiovascular Procedure with Drug-
Eluting Stent with AMI without CC). As we noted above, the MedPAR data
do not support restructuring DRGs 517 and 527 based on the presence or
absence of a CC. Therefore, we are proposing to retain these two DRGs
in their current forms. We believe this revised structure will result
in a more inclusive and comprehensive array of cases within MDC 5
without selectively recognizing certain secondary diagnoses as
``complex.''
While we are proposing some restructuring of the coronary stent
DRGs for FY 2006, it is important to note that we will continue to
monitor and analyze clinical and resource trends in this area. For
example, we have found indications in the current data that treatment
may be moving toward use of drug-eluting stents, and away from use of
bare metal stents. Specifically, cases in DRGs 516 and 517, which
utilize bare metal stents, comprise only 44.4 percent, or less than
half, of the cases in the four coronary stent DRGs in the MedPAR data
we analyzed. As use of drug-eluting stents becomes the standard of
treatment, we may consider over time whether to dispense with the
distinction between these stents and the older bare metal stent
technology in the structure of the coronary stent DRGs. In addition, we
will continue to consider whether the structure of these DRGs ought to
reflect differences in the number of vessels treated or the number of
stents inserted, or both. As we discussed above, a new coding structure
capable of identifying multiple vessel treatment and the insertion of
multiple stents will go into effect on October 1, 2005. It remains
premature to restructure the coronary stent DRGs on the basis of the
number of vessels treated or the number of stents inserted, or both,
until data reflecting the use of these new codes become available.
However, we will analyze those data when they become available in order
to determine whether a restructuring based on multiple vessel treatment
or insertion of multiple stents, or both, is warranted. Our proposal to
restructure two of the current coronary stent DRGs into paired ``with
and without CC'' DRGs for FY 2006 does not preclude proposals in
subsequent years to restructure the coronary stent DRGs in one or both
of these ways.
[[Page 23321]]
c. Insertion of Left Atrial Appendage Device
Atrial fibrillation is a common heart rhythm disorder that can lead
to a cardiovascular blood clot formation leading to increased risk of
stroke. According to product literature, nearly all strokes are from
embolic clots arising in the left atrial appendage of the heart: an
appendage for which there is no useful function. Standard therapy uses
anticoagulation drugs. However, these drugs may be contraindicated in
certain patients and may cause complications such as bleeding. The
underlying concept behind the left atrial appendage device is to block
off the left atrial appendage, so that the blood clots formed therein
cannot travel to other sites in the vascular system. The device is
implanted using a percutaneous catheter procedure under fluoroscopy
through the femoral vein. Implantation is performed in a hospital
catheterization laboratory using standard transseptal technique, with
the patient generally under local anesthesia. The procedure takes
approximately 1 hour, and most patients stay overnight in the hospital.
In the FY 2005 IPPS final rule (69 FR 48978, August 11, 2004), we
discussed the DRG assignment of new ICD-9-CM procedure code 37.90
(Insertion of left atrial appendage device) for clinical trials,
effective for discharges occurring on or after October 1, 2004, to DRG
518 (Percutaneous Cardiovascular Procedure without Coronary Artery
Stent or Acute Myocardial Infarction)). In that final rule, we
addressed the DRG assignment of procedure code 37.90 in response to a
comment from a manufacturer who suggested that placement of the code in
DRG 108 (Other Cardiothoracic Procedures) was more representative of
the complexity of the procedure than placement in DRG 518. The
manufacturer indicated that the suggested placement of procedure code
37.90 in DRG 108 was justified because another percutaneous procedure,
described by ICD-9-CM procedure code 35.52 (Repair of atrial septal
defect with prosthesis, closed technique), was assigned to DRG 108. As
we indicated in the FY 2005 final rule (69 FR 48978), this comment
prompted us to examine data in the FY 2003 MedPAR file for cases of
code 35.52 assigned to DRG 108 and DRG 518 in comparison to all cases
assigned to DRG 108. We found the following:
[GRAPHIC] [TIFF OMITTED] TP04MY05.006
Therefore, we concluded that procedure code 35.52 showed a decided
similarity to the cases found in DRG 518, not DRG 108. At that time, we
determined that we would analyze the cases for both clinical coherence
and charge data as part of the IPPS FY 2006 process of identifying the
most appropriate DRG assignment for procedure code 35.52.
We have now examined data from the FY 2004 MedPAR file and found
results for cases assigned to DRG 108 and DRG 518 that are similar to
last year's findings as indicated in the chart below:
[GRAPHIC] [TIFF OMITTED] TP04MY05.007
From this comparison, we found that when an atrial septal defect is
percutaneously repaired, and procedure code 35.52 is the only code
reported in DRG 108, there is a significant discrepancy in both the
average charges and the average length of stay between the cases with
procedure code 35.52 reported in DRG 108 and the total cases in DRG
108. The total cases in DRG 108 have average charges of $51,744 greater
than the 872 cases in DRG 108 reporting procedure code 35.52 as the
only procedure. The total cases in DRG 108 also have an average length
of stay of 7.39 days greater than the average length of stay for cases
in DRG 108 with procedure code 35.52 reported. In comparison, the total
cases in DRG 518 have average charges of only $1,988 lower than the
cases in DRG 108 with only procedure code 35.52 reported. In addition,
the length of stay in total cases in DRG 518 is more closely related to
cases in DRG 108 with only procedure code 35.52 reported.
Based on our analysis of these data, we are proposing to move
procedure code 35.52 out of DRG 108 and place it in DRG 518. We believe
that this proposal would result in a more coherent group of cases in
DRG 518 that reflect all percutaneous procedures.
d. External Heart Assist System Implant
In the August 1, 2002, final rule (67 FR 49989), we attempted to
clinically and financially align ventricular assist device (VAD)
procedures by creating DRG 525 (Heart Assist System Implant). We also
noted that cases in which a heart transplant also occurred during the
same hospitalization episode would continue to be assigned to DRG 103
(Heart Transplant).
After further data review during the next 2 years, we decided to
realign the
[[Page 23322]]
DRGs containing VAD codes for FY 2005. In the August 11, 2004 final
rule (69 FR 48927), we announced changes to DRG 103, DRG 104 (Cardiac
Valve and Other Major Cardiothoracic Procedure with Cardiac
Catheterization), DRG 105 (Cardiac Valve and Other Major Cardiothoracic
Procedures Without Cardiac Catheterization), and DRG 525.
In summary, these changes included--
Moving code 37.66 (Insertion of implantable heart assist
system) out of DRG 525 and into DRG 103.
Renaming DRG 525 as ``Other Heart Assist System Implant.''
Moving code 37.62 (Insertion of non-implantable heart
assist system) out of DRGs 104 and 105 and back into DRG 525.
DRG 525 currently consists of any principal diagnosis in MDC 5,
plus the following surgical procedure codes:
37.52, Implantation of total replacement heart system *.
37.53, Replacement or repair of thoracic unit of total
replacement heart system *.
37.54, Replacement or repair of other implantable
component of total replacement heart system *.
37.62, Insertion of non-implantable heart assist system.
37.63, Repair of heart assist system.
37.65, Implant of external heart assist system.
* These codes represent noncovered services for Medicare
beneficiaries. However, it is our longstanding practice to assign
every code in the ICD-9-CM classification to a DRG. Therefore, they
have been assigned to DRG 525.
Since that decision, we have been encouraged by a manufacturer to
reevaluate DRG 525 for FY 2006. The manufacturer requested that we
again review the data surrounding cases reporting code 37.65 and has
suggested moving these cases into DRG 103. The manufacturer pointed out
the following: Code 37.65 describes the implantation of an external
heart assist system and is currently approved by the FDA as a bridge-
to-recovery device. From the standpoint of clinical status, the
patients in DRG 103 and receiving an external heart assist system are
similar because their native hearts cannot support circulation, and
absent a heart transplant, a mechanical pump is needed for patient
survival. The surgical procedures for implantation of both an internal
VAD and an external VAD are very similar. However, the external heart
assist system (code 37.65) is a less expensive device than the
implantable heart assist system (code 37.66). The manufacturer
suggested that the payment differential between DRGs 103 and 525 is an
incentive to choose the higher paying device, and asserted that only a
subset of patients receiving an implantable heart assist system are
best served by this device. The manufacturer also suggested that the
initial use of the least expensive therapeutically appropriate device
yields both the best clinical outcomes and the lowest total system
costs.
We note that, under the DRG system, our intent is to create
payments that are reflective of the average resources required to treat
a particular case. Our goal is that physicians and hospitals should
make treatment decisions based on the clinical needs of the patient and
not financial incentives.
When we reviewed the FY 2004 MedPAR data, we were able to
demonstrate the following comparisons:
[GRAPHIC] [TIFF OMITTED] TP04MY05.008
The above table shows that the 37.8 percent of cases in DRG 525
that reported code 37.65 have average charges that are nearly $33,000
higher than the average charges for all cases in the DRG. However, the
average charges for the subset of cases with code 37.65 in DRG 525
($206,497) are more than $107,086 lower than the average charges for
all cases in DRG 103 ($313,583). Furthermore, the average length of
stay for the subset of patients in DRG 525 receiving an external heart
assist system was 9.26 days compared to 37.5 days for the 633 cases in
DRG 103.
We note that the analysis above presents the difference in average
charges, not costs. Because hospitals' charges are higher than costs,
the difference in hospital costs will be less than the figures shown
here. Moving cases containing code 37.65 from DRG 525 to DRG 103 would
have two consequences. The cases in DRG 103 reporting code 37.65 would
be appreciably overreimbursed, which would be inconsistent with our
goal of coherent reimbursement structure within the DRGs. In addition,
the relative weight of DRG 103 would decrease by moving the less
resource-intensive external heart procedures into the same DRG with the
more expensive heart transplant cases. The net effect would be an
underpayment for heart transplant cases. Alternatively, we also
reconsidered our position on moving the insertion of an implantable
heart assist system (code 37.66) back into
[[Page 23323]]
DRG 525. However, as shown in the FY 2005 IPPS final rule (69 FR
48929), the resource costs associated with caring for a patient
receiving an implantable heart assist system are far more similar to
those cases receiving a heart transplant in DRG 103 than they are to
cases in DRG 525. For these reasons, we are not proposing to make any
changes to the structure of either DRG 103 or DRG 525 in this proposed
rule.
e. Carotid Artery Stent
Stroke is the third leading cause of death in the United States and
the leading cause of serious, long-term disability. Approximately 70
percent of all strokes occur in people age 65 and older. The carotid
artery, located in the neck, is the principal artery supplying the head
and neck with blood. Accumulation of plaque in the carotid artery can
lead to stroke either by decreasing the blood flow to the brain or by
having plaque break free and lodge in the brain or in other arteries to
the head. The percutaneous transluminal angioplasty (PTA) procedure
involves inflating a balloon-like device in the narrowed section of the
carotid artery to reopen the vessel. A carotid stent is then deployed
in the artery to prevent the vessel from closing or restenosing. A
distal filter device (embolic protection device) may also be present,
which is intended to prevent pieces of plaque from entering the
bloodstream.
Effective July 1, 2001, Medicare covers PTA of the carotid artery
concurrent with carotid stent placement when furnished in accordance
with the FDA-approved protocols governing Category B Investigational
Device Exemption (IDE) clinical trials. PTA of the carotid artery, when
provided solely for the purpose of carotid artery dilation concurrent
with carotid stent placement, is considered to be a reasonable and
necessary service only when provided in the context of such clinical
trials and, therefore, is considered a covered service for the purposes
of these trials. Performance of PTA in the carotid artery when used to
treat obstructive lesions outside of approved protocols governing
Category B IDE clinical trials remains a noncovered service.
At the April 1, 2004 ICD-9-CM Coordination and Maintenance
Committee meeting, we discussed creation of a new code or codes to
identify carotid artery stenting, along with a concomitant percutaneous
angioplasty or atherectomy (PTA) code for delivery of the stent(s).
This subject was addressed in response to the need to identify carotid
artery stenting for use in clinical trials in the upcoming fiscal year.
Public comment confirmed the need for specific codes for this
procedure. We established codes for carotid artery stenting procedures
effective October 1, 2004, for patients who are enrolled in an FDA-
approved clinical trial and are using on-label FDA approved stents and
embolic protection devices.
New procedure codes 00.61 (Percutaneous angioplasty or atherectomy
of precerebral (extracranial vessel(s)) and 00.63 (Percutaneous
insertion of carotid artery stent(s)) were published in Table 6B, New
Procedure Codes in the FY 2005 IPPS final rule (69 FR 49624).
Procedure code 00.61 was assigned to four MDCs and seven DRGs. The
most likely scenario is that in which cases are assigned to MDC 1
(Diseases and Disorders of the Nervous System in DRGs 533 (Extracranial
Procedures with CC) and 534 (Extracranial Procedures without CC). Cases
may also be assigned to MDC 5 (Diseases and Disorders of the
Circulatory System), MDC 21 (Injuries, Poisoning, and Toxic Effects of
Drugs), and MDC 24 (Multiple Significant Trauma). Other less likely DRG
assignments can be found in Table 6B in the Addendum to the FY 2005
IPPS final rule (69 FR 49624).
In the FY 2005 final rule, we indicated that we would continue to
monitor DRGs 533 and 534 and procedure code 00.61 in combination with
procedure code 00.63 in upcoming annual DRG reviews. For this proposed
rule, we are using proxy codes to evaluate the costs and DRG
assignments for carotid artery stenting because codes 00.61 and 00.63
were only approved for use beginning October 1, 2004, and because
MedPAR data for this period are not yet available. We used procedure
code 39.50 (Angioplasty or atherectomy of other noncoronary vessel(s))
in combination with procedure code 39.90 (Insertion of nondrug-eluting
peripheral vessel stent(s)) in DRGs 533 and 534 as the proxy codes for
coronary artery stenting. For this evaluation, we used principal
diagnosis code 433.10 (Occlusion and stenosis of carotid artery,
without mention of cerebral infarction) because this diagnosis most
closely reflects the clinical trial criteria.
The following chart shows our findings:
[GRAPHIC] [TIFF OMITTED] TP04MY05.009
The patients receiving a carotid stent (codes 39.50 and 39.90)
represented 3.5 percent of all cases in DRG 534. On average, patients
receiving a carotid stent had slightly shorter average lengths of stay
than other patients in DRGs 533 and 534. While the average charges for
patients receiving a carotid artery stent were higher than for other
patients in DRG 534, in our view, the small number of cases and the
magnitude of the difference in average charges are not sufficient to
justify a change in the DRGs.
Because we have a paucity of data for the carotid stent device and
its insertion, and no data utilizing procedure codes 00.61 and 00.63 in
a clinical trial setting, we believe it is premature to revise the DRG
structure at this time. We expect to revisit this analysis once data
become available on the new codes for carotid artery stents.
[[Page 23324]]
f. Extracorporeal Membrane Oxygenation (ECMO)
Extracorporeal membrane oxygenation (ECMO) is a procedure to create
a closed chest, heart-lung bypass system by insertion of vascular
catheters. Patients receiving this procedure require mechanical
ventilation. ECMO is performed for a small number of severely ill
patients who are at high risk of dying without this procedure. Most
often it is done for neonates with persistent pulmonary hypertension
and respiratory failure for whom other treatments have failed, certain
severely ill neonates receiving major cardiac procedures or
diaphragmatic hernia repair, and certain older children and adults,
most of whom are receiving major cardiac procedures.
We received several letters from institutions that perform ECMO.
The commenters stated that, in the CMS GROUPER logic, this procedure
has little or no impact on the DRG assignment in the newborn,
pediatric, and adult population. According to these letters, patients
receiving ECMO are highly resource intensive and should have a unique
DRG that reflects the costs of these resources. The commenters
recommended the creation of a new DRG for ECMO with a DRG weight equal
to or greater than the DRG weight for tracheostomy.
ECMO is assigned to procedure code 39.65 (Extracorporeal membrane
oxygenation). This code is classified as an O.R. procedure and is
assigned to DRG 104 (Cardiac Valve and Other Major Cardiothoracic
Procedure With Cardiac Catheterization) and DRG 105 (Cardiac Valve and
Other Major Cardiothoracic Procedure Without Cardiac Catheterization).
When ECMO is performed with other O.R. procedures, the case is assigned
to the higher weighted DRG. For example, when ECMO and a tracheostomy
are performed during the same admission, the case would be assigned to
DRG 541 (Tracheostomy with Mechanical Ventilation 96+ Hours or
Principal Diagnosis Except Face, Mouth, and Neck Diagnoses With Major
O.R.).
We note that the primary focus of updates to the Medicare DRG
classification system is changes relating to the Medicare patient
population, not the pediatric patient population. Because ECMO is
primarily a pediatric procedure and rarely performed in an adult
population, we have few cases in our data to use to evaluate resource
costs. We are aware that other insurers sometimes use Medicare's rates
to make payments. We advise private insurers to make appropriate
modifications to our payment system when it is being used for children
or other patients who are not generally found in the Medicare
population.
To evaluate the appropriateness of payment under the current DRG
assignment, we have reviewed the FY 2004 MedPAR data and found 78 ECMO
cases in 13 DRGs. The following table illustrates the results of our
findings:
[GRAPHIC] [TIFF OMITTED] TP04MY05.010
The average charges for all ECMO cases were approximately $258,821,
and the average length of stay was approximately 20.7 days. The average
charges for the ECMO cases are closer to the average charges for DRG
541 ($273,656) than to the average charges of DRG 104 ($147,766) and
DRG 105 ($131,700). Of the 78 ECMO cases, 14 cases are already assigned
to DRG 541. We believe that the data indicate that DRG 541 would be a
more appropriate DRG assignment for cases where ECMO is performed. We
further note that under the All Payer DRG System used in New York
State, cases involving ECMO are assigned to the tracheostomy DRG. Thus,
the assignment of ECMO cases to the tracheostomy DRG for Medicare would
be similar to how these cases are grouped in another DRG system. For
these reasons, we are proposing to reassign ECMO cases reporting code
39.65 to DRG 541. We are also proposing to change the title of DRG 541
to: ``ECMO or Tracheostomy With Mechanical Ventilation 96+ Hours or
Principal Diagnosis Except Face, Mouth and Neck Diagnoses With Major
O.R.''
5. MDC 6 (Diseases and Disorders of the Digestive System): Artificial
Anal Sphincter
In the FY 2003 IPPS final rule (67 FR 50242), we created two new
codes for procedures involving an artificial anal sphincter, effective
for discharges occurring on or after October 1, 2002: code 49.75
(Implantation or revision of artificial anal sphincter) is used to
identify cases involving implantation or revision of an artificial anal
sphincter and code 49.76 (Removal of artificial anal sphincter) is used
to identify cases involving the removal of the device. In Table 6B of
that final rule, we assigned both codes to one of four MDCs, based on
principal diagnosis, and one of six DRGs within those MDCs: MDC 6
(Diseases and Disorders of the Digestive System), DRGs 157 and 158
(Anal and Stomal Procedures With and Without CC, respectively); MDC 9
(Diseases and Disorders of the Skin, Subcutaneous Tissue and Breast),
DRG 267 (Perianal and Pilonidal Procedures); MDC 21 (Injuries,
Poisonings, and Toxic Effects of Drugs), DRGs 442 and 443 (Other O.R.
Procedures for Injuries With and without CC, respectively); and MDC 24
(Multiple Significant Trauma), DRG 486 (Other O.R. Procedures for
Multiple Significant Trauma).
In the FY 2004 IPPS final rule (68 FR 45372), we discussed the
assignment of these codes in response to a request we had received to
consider reassignment of these two codes to different MDCs and DRGs.
The requester believed that the average charges ($44,000) for these
codes warranted reassignment. In the FY 2004 IPPS final rule, we stated
that we did not have sufficient MedPAR data available on the reporting
of codes 49.75 and 49.76 to make a determination on
[[Page 23325]]
DRG reassignment of these codes. We agreed that, if warranted, we would
give further consideration to the DRG assignments of these codes
because it is our customary practice to review DRG assignment(s) for
newly created codes to determine clinical coherence and similar
resource consumption after we have had the opportunity to collect
MedPAR data on utilization, average lengths of stay, average charges,
and distribution throughout the system. In the FY 2005 IPPS final rule,
we reviewed the FY 2003 MedPAR data for the presence of codes 49.75 and
49.76 and determined that these procedures were not a clinical match
with the other procedures in DRGs 157 and 158. Therefore, for FY 2005,
we moved procedure codes 49.75 and 49.76 out of DRGs 157 and 158 and
into DRGs 146 and 147 (Rectal Resection With and Without CC,
respectively). This change had the effect of doubling the payment for
the cases with procedure codes 49.75 and 49.76 assigned to DRGs 146 and
147 based on increases in the relative weights. One commenter had
suggested that we create a new DRG for ``Complex Anal/Rectal Procedure
with Implant.'' However, we noted that the DRG structure is a system of
averages and is based on groups of patients with similar
characteristics. At that time, we indicated that we would continue to
monitor procedure codes 49.75 and 49.76 and the DRGs to which they are
assigned.
For this FY 2006 proposed rule, we reviewed the FY 2004 MedPAR data
for the presence of codes 49.75 and 49.76. We found that these two
procedures are still of low incidence. Among the six possible DRG
assignments, we found a total of 18 cases reported with codes 49.75 and
49.76 for the implant, revision, or removal of the artificial anal
sphincter. We found 13 of these cases in DRGs 146 and 147 (compared to
12,558 total cases in these DRGs), and the remaining 5 cases in DRGs
442 and 443 (compared to 19,701 total cases in these DRGs).
We believe the number of cases with codes 49.75 and 49.76 in these
DRGs is too low to provide meaningful data of statistical significance.
Therefore, we are not proposing any further changes to the DRGs for
these procedures at this time. Neither are we proposing to change the
structure of DRGs 146 or 147 at this time.
6. MDC 8 (Diseases and Disorders of the Musculoskeletal System and
Connective Tissue)
a. Hip and Knee Replacements
Orthopedic surgeons representing the American Association of
Orthopaedic Surgeons (AAOS) requested that we subdivide DRG 209 (Major
Joint and Limb Reattachment Procedures of Lower Extremity) in MDC 8 by
creating a new DRG for revision of lower joint procedures. The AAOS
made a presentation at the October 7-8, 2004 meeting of the ICD-9-CM
Coordination and Maintenance Committee meeting. A summary report of
this meeting can be found at the CMS Web site: http://www.cms.hhs.gov/paymentsystems/icd9/.
We also received written comments on this
request.
The AAOS surgeons stated that cases involving patients who require
a revision of a prior replacement of a knee or hip require
significantly more resources than cases in which patients receive an
initial joint replacement. They pointed out that total joint
replacement is one of the most commonly performed and successful
operations in orthopedic surgery. The surgeons mentioned that, in 2002,
over 300,000 hip replacement and 350,000 knee replacement procedures
were performed in the United States. They also pointed out that these
procedures are a frequent reason for Medicare hospitalization. The
surgeons stated that total joint replacements have been shown to be
highly cost-effective procedures, resulting in dramatic improvements in
quality of life for patients suffering from disabling arthritic
conditions involving the hip or knee. In addition, they reported that
the medical literature indicates success rates of greater than 90
percent for implant survivorship, reduction in pain, and improvement in
function at a 10-year to 15-year followup. However, despite these
excellent results with primary total joint replacement, factors related
to implant longevity and evolving patient demographics have led to an
increase in the volume of revision total joint procedures performed in
the United States over the past decade.
Total hip replacement is an operation that is intended to reduce
pain and restore function in the hip joint by replacing the arthritic
hip joint with a prosthetic ball and socket joint. The prosthetic hip
joint consists of a metal alloy femoral component with a modular
femoral head made of either metal or ceramic (the ``ball'') that
articulates with a metal acetabular component with a modular liner made
of either metal, ceramic, or high-density polyethylene (the
``socket'').
The AAOS surgeons stated that in a normal knee, four ligaments help
hold the bones in place so that the joint works properly. When a knee
becomes arthritic, these ligaments can become scarred or damaged.
During knee replacement surgery, some of these ligaments, as well as
the joint surfaces, are substituted or replaced by the new artificial
prostheses. Two types of fixation are used to hold the prostheses in
place. Cemented designs use polymethyl methacrylate to hold the
prostheses in place. Cementless designs rely on bone growing into the
surface of the implant for fixation.
The surgeons stated that all hip and knee replacements have an
articular bearing surface that is subject to wear (the acetabular
bearing surface in the hip and the tibial bearing surface in the knee).
Traditionally, these bearing surfaces have been made of metal-on-metal
or metal-on-polyethylene, although newer materials (both metals and
ceramics) have been used more recently. Earlier hip and knee implant
designs had nonmodular bearing surfaces, but later designs included
modular articular bearing surfaces to reduce inventory and potentially
simplify revision surgery. Wear of the articular bearing surface occurs
over time and has been found to be related to many factors, including
the age and activity level of the patient. In some cases, wear of the
articular bearing surface can produce significant debris particles that
can cause peri-prosthetic bone resorption (also known and osteolysis)
and mechanical loosening of the prosthesis. Wear of the bearing surface
can also lead to instability or prosthetic dislocation, or both, and is
a common cause of revision hip or knee replacement surgery.
Depending on the cause of failure of the hip replacement, the type
of implants used in the previous surgery, the amount and quality of the
patient's remaining bone stock, and factors related to the patient's
overall health and anatomy, revision hip replacement surgery can be
relatively straightforward or extremely complex. Revision hip
replacement can involve replacing any part or all of the implant,
including the femoral or acetabular components, and the bearing surface
(the femoral head and acetabular liner), and may involve major
reconstruction of the bones and soft tissues around the hip. All of
these procedures differ significantly in their clinical indications,
outcomes, and resource intensity.
The AAOS surgeons provided the following summary of the types of
[[Page 23326]]
revision knee replacement procedures: Among revision knee replacement
procedures, patients who underwent complete revision of all components
had longer operative times, higher complication rates, longer lengths
of stay, and significantly higher resource utilization, according to
studies conducted by the AAOS. Revision of the isolated modular tibial
insert component was the next most resource-intensive procedure, and
primary total knee replacement was the least resource-intensive of all
the procedures studied.
Isolated Modular Tibial Insert Exchange. Isolated removal
and exchange of the modular tibial bearing surface involves replacing
the modular polyethylene bearing surface without removing the femoral,
tibial, or patellar components of the prosthetic joint. Common
indications for this procedure include wear of the polyethylene bearing
surface or instability (for example, looseness) of the prosthetic knee
joint. Patient recovery times are much shorter with this procedure than
with removal and exchange of either the tibial, femoral, or patellar
components.
Revision of the Tibial Component. Revision of the tibial
component involves removal and exchange of the entire tibial component,
including both the metal base plate and the modular polyethylene
bearing surface. Common indications for tibial component revision are
wear of the modular bearing surface, aseptic loosening (often
associated with osteolysis), or infection. Depending on the amount of
associated bone loss and the integrity of the ligaments around the
knee, tibial component revision may require the use of specialized
implants with stems that extend into the tibial canal and/or the use of
metal augments or bone graft to fill bony defects.
Revision of the Femoral Component. Revision of the femoral
component involves removal and exchange of the metal implant that
covers the end of the thigh-bone (the distal femur). Common indications
for femoral component revision are aseptic loosening with or without
associated osteolysis/bone loss, or infection. Similar to tibial
revision, femoral component revision that is associated with extensive
bone loss often involves the use of specialized implants with stems
that extend into the femoral canal and/or the use of metal augments or
bone graft to fill bony defects.
Revision of the Patellar Component. Complications related
to the patella-femoral joint are one of the most common indications for
revision knee replacement surgery. Early patellar implant designs had a
metal backing covered by high-density polyethylene; these implants were
associated with a high rate of failure due to fracture of the
relatively thin polyethylene bearing surface. Other common reasons for
isolated patellar component revision include poor tracking of the
patella in the femoral groove leading to wear and breakage of the
implant, fracture of the patella with or without loosening of the
patellar implant, rupture of the quadriceps or patellar tendon, and
infection.
Revision of All Components (Tibial, Femoral, and
Patellar). The most common type of revision knee replacement procedure
is a complete total knee revision. A complete revision of all implants
is more common in knee replacements than hip replacements because the
components of an artificial knee are not compatible across vendors or
types of prostheses. Therefore, even if only one of the implants is
loose or broken, a complete revision of all components is often
required in order to ensure that the implants are compatible. Complete
total knee revision often involves extensive surgical approaches,
including osteotomizing (for example, cutting) the tibia bone in order
to adequately expose the knee joint and gain access to the implants.
These procedures often involve extensive bone loss, requiring
reconstruction with specialized implants with long stems and metal
augments or bone graft to fill bony defects. Depending on the status of
the ligaments in the knee, complete total knee revision at times
requires implantation of a highly constrained or ``hinged'' knee
replacement in order to ensure stability of the knee joint.
Reimplantation from previous resection or cement spacer.
In cases of deep infection of a prosthetic knee, removal of the
implants with implantation of an antibiotic-impregnated cement spacer,
followed by 6 weeks of intravenous antibiotics is often required in
order to clear the infection. Revision knee replacement from an
antibiotic impregnated cement spacer often involves complex bony
reconstruction due to extensive bone loss that occurs as a result of
the infection and removal of the often well-fixed implants. As noted
above, the clinical outcomes following revision from a spacer are often
poor due to limited functional capacity while the spacer is in place,
prolonged periods of protected weight bearing (following reconstruction
of extensive bony defects), and the possibility of chronic infection.
The surgeons stated that the current ICD-9-CM codes did not
adequately capture the complex nature of revisions of hip and knee
replacements. Currently, code 81.53 (Revision of hip replacement)
captures all ``partial'' and ``total'' revision hip replacement
procedures. Code 81.55 (Revision of knee replacement) captures all
revision knee replacement procedures. These two codes currently capture
a wide variety of procedures that differ in their clinical indications,
resource intensity, and clinical outcomes.
An AAOS representative made a presentation at the October 7-8, 2004
ICD-9-CM Coordination and Maintenance Committee. Based on the comments
received at the October 7-8, 2004 meeting and subsequent written
comments, new ICD-9-CM procedure codes were developed to better capture
the variety of ways that revision of hip and knee replacements can be
performed: codes 00.70 through 00.73 and code 81.53 for revisions of
hip replacements and codes 00.80 through 00.84 and code 81.55 for
revisions of knee replacements. These new and revised procedure codes,
which will be effective on October 1, 2005, can be found in Table 6B
and Table 6F of this proposed rule. The commenters stated that claims
data using these new and specific codes should provide improved data on
these procedures for future DRG modifications.
However, the commenters requested that CMS consider DRG
modifications based on current data using the existing revision codes.
The commenters reported on a recently completed study comparing
detailed hospital resource utilization and clinical characteristics in
over 10,000 primary and revision hip and knee replacement procedures at
3 high volume institutions: The Massachusetts General Hospital, the
Mayo Clinic, and the University of California at San Francisco. The
purpose of this study was to evaluate differences in clinical outcomes
and resource utilization among patients who underwent different types
of primary and revision hip or knee replacement procedures. The study
found significant differences in operative time, complication rates,
hospital length of stay, discharge disposition, and resource
utilization among patients who underwent different types of revision
hip or knee replacement procedures.
Among revision hip replacement procedures, patients who underwent
both femoral and acetabular component revision had longer operative
times, higher complication rates, longer lengths of stay, significantly
higher resource utilization, and were more likely to be discharged to a
subacute care facility. Isolated femoral
[[Page 23327]]
component revision was the next most resource-intensive procedure,
followed by isolated acetabular revision. Primary hip replacement was
the least resource intensive of all the procedures studied. Similarly,
among revision knee replacement procedures, patients who underwent
complete revision of all components had