[Federal Register: November 15, 2004 (Volume 69, Number 219)]
[Rules and Regulations]
[Page 65681-66233]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr15no04-17]
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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 Part 419
Medicare Program; Changes to the Hospital Outpatient Prospective
Payment System and Calendar Year 2005 Rates; Final Rule
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Part 419
[CMS-1427-FC]
RIN 0938-AM75
Medicare Program; Changes to the Hospital Outpatient Prospective
Payment System and Calendar Year 2005 Payment Rates
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Final rule with comment period.
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SUMMARY: This final rule with comment period revises the Medicare
hospital outpatient prospective payment system to implement applicable
statutory requirements and changes arising from our continuing
experience with this system and to implement certain related provisions
of the Medicare Prescription Drug, Improvement, and Modernization Act
(MMA) of 2003. In addition, the final rule with comment period
describes final changes to the amounts and factors used to determine
the payment rates for Medicare hospital outpatient services paid under
the prospective payment system. These changes are applicable to
services furnished on or after January 1, 2005.
In this final rule with comment period, we are responding to public
comments received on the January 6, 2004 interim final rule with
comment period relating to MMA provisions that were effective January
1, 2004, and finalizing those policies. Further, we are responding to
public comments received on the November 7, 2003 final rule with
comment period pertaining to the ambulatory payment classification
assignment of Healthcare Common Procedure Coding System (HCPCS) codes
identified in Addendum B of that rule with the new interim (NI) comment
indicators (formerly referred to as condition codes).
DATES: Effective Date: This final rule with comment period is effective
on January 1, 2005.
Comment Date: We will consider comments on the ambulatory payment
classification assignments of HCPCS codes identified in Addendum B with
new interim comment codes and other areas specified throughout this
preamble, if we receive them at the appropriate address, as provided
below no later than 5 p.m. on January 14, 2005.
ADDRESSES: In commenting, please refer to file code CMS-1427-FC.
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-1427-FC, P.O.
Box 8010, Baltimore, MD 21244-8018.
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 website. 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 (410) 786-7195.
FOR FURTHER INFORMATION CONTACT: Dana Burley, (410) 786-0378,
Outpatient prospective payment issues and Suzanne Asplen, (410) 786-
4558, Partial hospitalization and community mental health center
issues.
SUPPLEMENTARY INFORMATION:
Availability of Copies and Electronic Access
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Register online database through GPO Access, a service of the U.S.
Government Printing Office. The Web site address is: http://www.gpoaccess.gov/fr/index.html
.
Alphabetical List of Acronyms Appearing in the Final Rule With Comment
Period
ACEP--American College of Emergency Physicians
AHA--American Hospital Association
AHIMA--American Health Information Management Association
AMA--American Medical Association
APC--Ambulatory payment classification
AMP--Average manufacturer price
ASP--Average sales price
ASC--Ambulatory surgical center
AWP--Average wholesale price
BBA--Balanced Budget Act of 1997, Public Law 105-33
BIPA--Medicare, Medicaid, and SCHIP Benefits Improvement and
Protection Act of 2000, Public Law 106-554
BBRA--Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act
of 1999, Public Law 106-113
CAH--Critical access hospital
CCR--(Cost center specific) cost-to-charge ratio
CMHC--Community mental health center
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CMS--Centers for Medicare & Medicaid Services (formerly known as the
Health Care Financing Administration)
CORF--Comprehensive outpatient rehabilitation facility
CPT--[Physicians'] Current Procedural Terminology, Fourth Edition,
2004, copyrighted by the American Medical Association
CRNA--Certified registered nurse anesthetist
CY--Calendar year
DMEPOS--Durable medical equipment, prosthetics, orthotics, and
supplies
DMERC--Durable medical equipment regional carrier
DRG--Diagnosis-related group
DSH--Disproportionate share hospital
EACH--Essential Access Community Hospital
E/M--Evaluation and management
EPO--Erythropoietin
ESRD--End-stage renal disease
FACA--Federal Advisory Committee Act, Public Law 92-463
FDA--Food and Drug Administration
FI--Fiscal intermediary
FSS--Federal Supply Schedule
FY--Federal fiscal year
HCPCS--Healthcare Common Procedure Coding System
HCRIS--Hospital Cost Report Information System
HHA--Home health agency
HIPAA--Health Insurance Portability and Accountability Act of 1996,
Public Law 104-191
ICD-9-CM--International Classification of Diseases, Ninth Edition,
Clinical Modification
IME--Indirect medical education
IPPS--(Hospital) inpatient prospective payment system
IVIG--Intravenous immune globulin
LTC--Long-term care
MedPAC--Medicare Payment Advisory Commission
MDH--Medicare-dependent hospital
MMA--Medicare Prescription Drug, Improvement, and Modernization Act
of 2003, Public Law 108-173
MSA--Metropolitan Statistical Area
NCCI--National Correct Coding Initiative
NCD--National Coverage Determination
OCE--Outpatient code editor
OMB--Office of Management and Budget
OPD--(Hospital) outpatient department
OPPS--(Hospital) outpatient prospective payment system
PET--Positron Emission Tomography
PHP--Partial hospitalization program
PM--Program memorandum
PPI--Producer Price Index
PPS--Prospective payment system
PPV--Pneumococcal pneumonia (virus)
PRA--Paperwork Reduction Act
QIO--Quality Improvement Organization
RFA--Regulatory Flexibility Act
RRC--Rural referral center
SBA--Small Business Administration
SCH--Sole community hospital
SDP--Single drug pricer
SI--Status indicator
TEFRA--Tax Equity and Fiscal Responsibility Act of 1982, Public Law
97-248
TOPS--Transitional outpatient payments
USPDI--United States Pharmacopoeia Drug Information
To assist readers in referencing sections contained in this
document, we are providing the following outline of contents:
Outline of Contents
I. Background
A. Legislative and Regulatory Authority for the Outpatient
Prospective Payment System
B. Excluded OPPS Services and Hospitals
C. Prior Rulemaking
D. APC Advisory Panel
1. Authority for the APC Panel
2. Establishment of the APC Panel
3. APC Panel Meetings and Organizational Structure
E. Provisions of the Medicare Prescription Drug, Improvement,
and Modernization Act of 2003
F. Summary of the Provisions of the August 16, 2004 Proposed
Rule
G. Public Comments Received on the August 16, 2004 Proposed Rule
H. Public Comments Received on the January 6, 2004 Interim Final
Rule with Comment Period
I. Public Comments Received on the November 7, 2003 Final Rule
with Comment Period
II. Changes Related to Ambulatory Payment Classifications (APCs)
A. APC Changes: General
B. APC Panel Review and Recommendations
1. February 2004 Panel Meeting.
2. September 2004 Panel Meeting
3. Contents of This Section of the Preamble
4. APC 0018: Biopsy of Skin/Puncture of Lesion
5. Level I and II Arthroscopy
6. Angiography and Venography Except Extremity
a. February 2004 Panel Meeting
b. Public Comments Received
c. Final Policy for CY 2005
7. Packaged Codes in APCs
C. Limits on Variations Within APCs: Application of the 2 Times
Rule
1. Cardiac and Ambulatory Blood Pressure Monitoring
2. Electrocardiograms
3. Excision/Biopsy
4. Posterior Segment Eye Procedures
5. Laparoscopy
6. Anal/Rectal Procedures
7. Nerve Injections
8. Anterior Segment Eye Procedures
9. Pathology
10. Immunizations
11. Pulmonary Tests
12. Clinic Visits
13. Other APC Assignment Issues
a. Catheters for Brachytherapy Services
b. Peripherally Inserted Central Catheters (PICC)
c. External Fixation Devices
d. Apheresis
e. Imaging for Intravenous Cholangiogram (IVC) Filter Placement
and Breast Biopsy
f. Hysteroscopic Endometrial Ablation Procedures
g. Hysteroscopic Female Sterilization
h. Urinary Bladder Residual Study
i. Intracranial Studies, Electrodiagnostic Testing, Autonomic
Testing, and EEG
j. Therapeutic Radiation Treatment
k. Hyperthermia Procedures
l. Physician Blood Bank Services
m. Caloric Vestibular Test
n. APC 0365--Level II Audiometry
o. Noncoronary Intravascular Ultrasound (IVUS)
p. Electronic Analysis of Neurostimulator Pulse Generators
q. Endoscopic Ultrasound Services
r. External Counterpulsation
D. Exceptions to the 2 Times Rule
E. Coding for Stereostatic Radiosurgery Services
1. Background
2. Proposal for CY 2005
3. Public Comments Received and Departmental Responses
4. Final Policy for CY 2005
F. Movement of Procedures from New Technology APCs to Clinically
Appropriate APCs
1. Background
2. APC Panel Review and Recommendation
3. Proposed and Final Policy for CY 2005
a. Computerized Reconstruction CT of Aorta
b. Left Ventricular Pacing, Lead and Connector
c. Positron Emission Tomography (PET) Scans
d. Bard Endoscopic Suturing System
e. Stretta System
f. Gastrointestinal Tract Capsule Endoscopy
g. Proton Beam Therapy
4. Public Comments Received Relating to Other New Technology APC
Issues
a. Computerized Reconstruction CT of Aorta
b. Kyphoplasty
c. Laser Treatment of Benign Prostatic Hyperplasia (BPH)
d. Computerized Tomographic Angiography (CTA)
e. Acoustic Heart Sound Services
f. Laparoscopic Ablation Renal Mass
g. Intrabeam Intra-Operative Therapy
h. New Technology Process Issues
G. Changes to the Inpatient List
H. Assignment of ``Unlisted'' HCPCS Codes
1. Background
2. Proposed and Final Policies for CY 2005
I. Addition of New Procedure Codes
J. OPPS Changes Relating to Coverage of Initial Preventive
Physical Examinations and Mammography under Public Law 108-173
1. Payment for Initial Preventive Physical Examinations (Section
611 of Pub. L. 108-173)
a. Background
b. Amendments to Regulations
c. Assignment of New HCPCS Codes for Payment of Initial
Preventive Physical Examinations
d. APC Assignment of Initial Preventive Physical Examinations
2. Payment for Certain Mammography Services (Section 614 of Pub.
L. 108-173)
III. Recalibration of APC Relative Weights for CY 2005
A. Database Construction
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1. Treatment of Multiple Procedure Claims
2. Use of Single Procedure Claims
B. Calculation of Median Costs for CY 2005
C. Adjustment of Median Costs for CY 2005
1. Device-Dependent APCs
a. APC 0226: Implantation of Drug Infusion Reservoir
b. APC 0048: Arthroscopy with Prosthesis
c. APC 0385: Level I Prosthetic Urological Procedures
d. APC 0119: Implantation of Infusion Device and APC 0115:
Cannula/Access Device Procedures
2. Treatment of Specified APCs
a. APC 0315: Level II Implantation of Neurostimulator
b. APC 0651: Complex Interstitial Radiation Application
c. APC 0659: Hyperbaric Oxygen Therapy
3. Other APC Median Cost Issues
a. APC 0312 Radioelement Applications
b. Percutaneous Radiofrequency Ablation of Liver Tumors
c. Heparin Coated Stents
d. Aqueous Drainage Assist Device
4. Required Use of C-Codes for Devices
5. Submission of External Data
D. Calculation of Scaled OPPS Payment Weights
IV. Payment Changes For Devices
A. Pass-Through Payments For Devices
1. Expiration of Transitional Pass-Through Payments for Certain
Devices
2. Proposed and Final Policies for CY 2005
B. Provisions for Reducing Transitional Pass-Through Payments to
Offset Costs Packaged Into APC Groups
1. Background
2. Proposed and Final Policies for CY 2005
C. Criteria for Establishing New Pass-Through Device Categories
V. Payment Changes for Drugs, Biologicals, and Radiopharmaceutical
Agents, and Blood and Blood Products
A. Transitional Pass-Through Payment for Additional Costs of
Drugs and Biologicals
1. Background
2. Expiration in CY 2004 of Pass-Through Status for Drugs and
Biologicals
3. Drugs and Biologicals With Pass-Through Status in CY 2005
B. Drugs, Biologicals, and Radiopharmaceuticals Without Pass-
Through Status
1. Background
2. Criteria for Packaging Payment for Drugs, Biologicals, and
Radiopharmaceuticals
3. Payment for Drugs, Biologicals, and Radiopharmaceuticals
Without Pass-Through Status That Are Not Packaged
a. Payment for Specified Covered Outpatient Drugs
b. Treatment of Three Sunsetting Pass-Through Drugs as Specified
Covered Outpatient Drugs
c. CY 2005 Payment for Nonpass-Through Drugs, Biologicals, and
Radiopharmaceuticals with HCPCS Codes But Without OPPS Hospital
Claims Data
d. Payment for Separately Payable Nonpass-Through Drugs and
Biologicals
e. CY 2005 Change in Payment Status for HCPCS Code J7308
4. Public Comments Received on the January 6, 2004 Interim Final
rule With Comment Period and Departmental Responses
C. Coding and Billing for Specified Outpatient Drugs
D. Payment for New Drugs, Biologicals, and Radiopharmaceuticals
Before HCPCS Codes Are Assigned
1. Background
2. Provisions of Public Law 108-173
E. Payment for Vaccines
F. Changes in Payment for Single Indication Orphan Drugs
G. Changes in Payment Policy for Radiopharmaceuticals
H. Coding and Payment for Drug Administration
I. Payment for Blood and Blood Products
VI. Estimated Transitional Pass-Through Spending in CY 2005 for
Drugs, Biologicals, and Devices
A. Basis for Pro Rata Reduction
B. Estimate of Pass-Through Spending for CY 2005
VII. Other Policy Decisions and Policy Changes
A. Statewide Average Default Cost-to-Charge Ratios
B. Transitional Corridor Payments: Technical Change
C. Status Indicators and Comment Indicators Assigned in
Outpatient Code Editor (OCE)
1. Payment Status Indicators
2. Comment Indicators
D. Observation Services
E. Procedures That Will be Paid Only as Inpatient Procedures
F. Hospital Coding for Evaluation and Management Services
1. Background
2. Proposal for Evaluation and Management Guidelines
G. Brachytherapy Payment Issues Related to Public Law 108-173
1. Payment for Brachytherapy Sources (Section 621(b) of Pub. L.
108-173)
2. HCPCS Codes and APC Assignments for Brachytherapy Sources
H. Payment for APC 0375, Ancillary Outpatient Services When
Patient Expires
VIII. Conversion Factor Update for CY 2005
IX. Wage Index Changes for CY 2005
X. Determination of Payment Rates and Outlier Payments for CY 2005
A. Calculation of the National Unadjusted Medicare Payment
B. Hospital Outpatient Outlier Payments
C. Payment for Partial Hospitalization
1. Background
2. PHP APC Update for CY 2005
3. Separate Threshold for Outlier Payments to CMHCs
D. General Public Comments
XI. Beneficiary Copayments for CY 2005
A. Background
B. Copayment for CY 2005
XII. Addendum Files Available to the Public Via Internet
XIII. Collection of Information Requirements
XIV. Regulatory Impact Analysis
A. OPPS: General
B. Impact of Changes in this Final Rule with Comment Period
C. Alternatives Considered
D. Limitations of Our Analysis
E. Estimated Impacts of this Final Rule with Comment Period on
Hospitals
F. Projected Distribution of Outlier Payment
G. Estimated Impacts of This Final Rule with Comment Period on
Beneficiaries
XV. Regulation Text
Addenda
Addendum A--List of Ambulatory Payment Classification (APCs) with
Status Indicators, Relative Weights, Payment Rates, and Copayment
Amounts for CY 2005
Addendum B--Payment Status by HCPCS Code and Related Information--CY
2005
Addendum C--Healthcare Common Procedure Coding System (HCPCS) Codes
by Ambulatory Payment Classification (APC) (Available only on CMS
Web site via Internet. See section XIII. of the preamble of this
final rule with comment period.)
Addendum D1--Payment Status Indicators for Hospital Outpatient
Prospective Payment System
Addendum D2--Comment Indicators
Addendum E--CPT Codes That Are Paid Only as Inpatient Procedures
I. Background
A. Legislative and Regulatory Authority for the Outpatient Prospective
Payment System
When the Medicare statute was originally enacted, Medicare payment
for hospital outpatient services was based on hospital-specific costs.
In an effort to ensure that Medicare and its beneficiaries pay
appropriately for services and to encourage more efficient delivery of
care, the Congress mandated replacement of the cost-based payment
methodology with a prospective payment system (PPS). The Balanced
Budget Act of 1997 (BBA) (Pub. L. 105-33), enacted on August 5, 1997,
added section 1833(t) to the Social Security Act (the Act) authorizing
implementation of a PPS for hospital outpatient services. The Medicare,
Medicaid, and SCHIP Balanced Budget Refinement Act of 1999 (BBRA) (Pub.
L. 106-113), enacted on November 29, 1999, made major changes that
affected the hospital outpatient PPS (OPPS). The Medicare, Medicaid,
and SCHIP Benefits Improvement and Protection Act of 2000 (BIPA) (Pub.
L. 106-554), enacted on December 21, 2000, made further changes in the
OPPS. Section 1833(t) of the Act was also recently amended by the
Medicare Prescription Drug, Improvement, and Modernization Act of 2003
(MMA), Public Law 108-173, enacted on December 8, 2003 (these
amendments are discussed later under section I.E. of this final rule
with comment period). The OPPS was first
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implemented for services furnished on or after August 1, 2000.
Implementing regulations for the OPPS are located at 42 CFR Part 419.
Under the OPPS, we pay for hospital outpatient services on a rate-
per-service basis that varies according to the ambulatory payment
classification (APC) group to which the service is assigned. We use
Healthcare Common Procedure Coding System (HCPCS) codes (which include
certain Current Procedural Terminology (CPT) codes) and descriptors to
identify and group the services within each APC group. The OPPS
includes payment for most hospital outpatient services, except those
identified in section I.B. of this final rule with comment period.
Section 1833(t)(1)(B)(ii) of the Act provides for Medicare payment
under the OPPS for certain services designated by the Secretary that
are furnished to inpatients who have exhausted their Part A benefits or
who are otherwise not in a covered Part A stay. In addition, the OPPS
includes payment for partial hospitalization services furnished by
community mental health centers (CMHCs).
The OPPS rate is an unadjusted national payment amount that
includes the Medicare payment and the beneficiary copayment. This rate
is divided into a labor-related amount and a nonlabor-related amount.
The labor-related amount is adjusted for area wage differences using
the inpatient hospital wage index value for the locality in which the
hospital or CMHC is located.
All services and items within an APC group are comparable
clinically and with respect to resource use (section 1833(t)(2)(B) of
the Act). In accordance with section 1833(t)(2) of the Act, subject to
certain exceptions, services and items within an APC group cannot be
considered comparable with respect to the use of resources if the
highest median (or mean cost, if elected by the Secretary) for an item
or service in the APC group is more than 2 times greater than the
lowest median cost for an item or service within the same APC group
(referred to as the ``2 times rule''). In implementing this provision,
we use the median cost of the item or service assigned to an APC group.
Special payments under the OPPS may be made for new technology
items and services in one of two ways. Section 1833(t)(6) of the Act
provides for temporary additional payments or ``transitional pass-
through payments'' for certain drugs, biological agents, brachytherapy
devices used for the treatment of cancer, and categories of medical
devices for at least 2 but not more than 3 years. For new technology
services that are not eligible for pass-through payments and for which
we lack sufficient data to appropriately assign them to a clinical APC
group, we have established special APC groups based on costs, which we
refer to as APC cost bands. These cost bands allow us to price these
new procedures more appropriately and consistently. Similar to pass-
through payments, these special payments for new technology services
are also temporary; that is, we retain a service within a new
technology APC group until we acquire adequate data to assign it to a
clinically appropriate APC group.
B. Excluded OPPS Services and Hospitals
Section 1833(t)(1)(B)(i) of the Act authorizes the Secretary to
designate the hospital outpatient services that are paid under the
OPPS. While most hospital outpatient services are payable under the
OPPS, section 1833(t)(1)(B)(iv) of the Act excluded payment for
ambulance, physical and occupational therapy, and speech-language
pathology services, for which payment is made under a fee schedule. The
Secretary exercised the broad authority granted under the statute to
exclude from the OPPS those services that are paid under fee schedules
or other payment systems. Such excluded services include, for example,
the professional services of physicians and nonphysician practitioners
paid under the Medicare Physician Fee Schedule; laboratory services
paid under the clinical diagnostic laboratory fee schedule; services
for beneficiaries with end-stage renal disease (ESRD) that are paid
under the ESRD composite rate; and services and procedures that require
an inpatient stay that are paid under the hospital inpatient
prospective payment system (IPPS). We set forth the services that are
excluded from payment under the OPPS in Sec. 419.22 of the
regulations.
Under Sec. 419.20 of the regulations, we specify the types of
hospitals and entities that are excluded from payment under the OPPS.
These excluded entities include Maryland hospitals, but only for
services that are paid under a cost containment waiver in accordance
with section 1814(b)(3) of the Act; critical access hospitals (CAHs);
hospitals located outside of the 50 States, the District of Columbia,
and Puerto Rico; and Indian Health Service hospitals.
C. Prior Rulemaking
On April 7, 2000, we published in the Federal Register a final rule
with comment period (65 FR 18434) to implement a prospective payment
system for hospital outpatient services. The hospital OPPS was first
implemented for services furnished on or after August 1, 2000. Section
1833(t)(9) of the Act requires the Secretary to review certain
components of the OPPS not less often than annually and to revise the
groups, relative payment weights, and other adjustments to take into
account changes in medical practice, changes in technology, and the
addition of new services, new cost data, and other relevant information
and factors. Since implementing the OPPS, we have published final rules
in the Federal Register annually to implement statutory requirements
and changes arising from our experience with this system. For a full
discussion of the changes to the OPPS, we refer readers to these
Federal Register final rules.\1\
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\1\ Interim final rule with comment period, August 3, 2000 (65
FR 47670); interim final rule with comment period, November 13, 2000
(65 FR 67798); final rule and interim final rule with comment
period, November 2, 2001 (66 FR 55850 and 55857); final rule,
November 30, 2001 (66 FR 59856); final rule, December 31, 2001 (66
FR 67494); final rule, March 1, 2002 (67 FR 9556); final rule,
November 1, 2002 (67 FR 66718); final rule with comment period,
November 7, 2003 (68 FR 63398); and interim final rule with comment
period, January 6, 2004 (69 FR 820).
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On November 7, 2003, we published a final rule with comment period
in the Federal Register (68 FR 63398) that revised the OPPS to update
the payment weights and conversion factor for services payable under
the calendar year (CY) 2004 OPPS on the basis of claims data from April
1, 2002 through December 31, 2002. In this final rule with comment
period, we are finalizing the APC assignments and addressing public
comments received pertaining to the new interim HCPCS codes listed in
Addendum B of the November 7, 2003 final rule with comment period
identified by new interim (NI) comment indicators (formerly referred to
as condition codes). Subsequent to publishing the November 7, 2003
final rule with comment period, we published a correction of the final
rule with comment period on December 31, 2003 (68 FR 75442). That
December 31, 2003 document corrected technical errors in the November
7, 2003 final rule with comment period and included responses to a
number of public comments that were inadvertently omitted from the
November 2003 final rule with comment period.
On January 6, 2004, we published in the Federal Register an interim
final rule with comment period (69 FR 820) that implemented provisions
of Public Law 108-173 that affected payments made under the OPPS,
effective January 1, 2004. We are finalizing this interim
[[Page 65686]]
final rule and addressing public comments associated with that rule in
this final rule with comment period.
D. APC Advisory Panel
1. Authority of the APC Panel
Section 1833(t)(9)(A) of the Act, as amended by section 201(h) of
the BBRA of 1999, requires that we consult with an outside panel of
experts to review the clinical integrity of the payment groups and
weights under the OPPS. The Advisory Panel on APC Groups (the APC
Panel), discussed under section I.D.2. of this preamble, fulfills this
requirement. The Act further specifies that the Panel will act in an
advisory capacity. This expert panel, which is to be composed of 15
representatives of providers subject to the OPPS (currently employed
full-time, not consultants, in their respective areas of expertise),
reviews and advises us about the clinical integrity of the APC groups
and their weights. The APC Panel is not restricted to using our data
and may use data collected or developed by organizations outside the
Department in conducting its review.
2. Establishment of the APC Panel
On November 21, 2000, the Secretary signed the charter establishing
the Advisory Panel on APC Groups. The APC Panel is technical in nature
and is governed by the provisions of the Federal Advisory Committee Act
(FACA), as amended (Public Law 92-463). On November 1, 2002, the
Secretary renewed the charter. The renewed charter indicates that the
APC Panel continues to be technical in nature, is governed by the
provisions of the FACA, may convene up to three meetings per year, and
is chaired by a Federal official.
Originally, in establishing the APC Panel, we solicited members in
a notice published in the Federal Register on December 5, 2000 (65 FR
75943). We received applications from more than 115 individuals who
nominated either colleagues or themselves. After carefully reviewing
the applications, we chose 15 highly qualified individuals to serve on
the APC Panel. Because of the loss of four APC Panel members due to the
expiration of terms of office on March 31, 2004, we published a Federal
Register notice on January 23, 2004 (69 FR 3370) that solicited
nominations for APC Panel membership. From the 24 nominations that we
received, we chose four new members. The entire APC Panel membership is
identified on the CMS Web site at http://www.cms.hhs.gov/faca/apc/apcmem.asp
.
3. APC Panel Meetings and Organizational Structure
The APC Panel first met on February 27, February 28, and March 1,
2001. Since that initial meeting, the APC Panel has held five
subsequent meetings, with the last meeting taking place on September 1,
2, and 3, 2004. Prior to each of these biennial meetings, we published
a notice in the Federal Register to announce each meeting and, when
necessary, to solicit nominations for APC Panel membership. For a more
detailed discussion about these announcements, refer to the following
Federal Register notices: December 5, 2000 (65 FR 75943), December 14,
2001 (66 FR 64838), December 27, 2002 (67 FR 79107), July 25, 2003 (68
FR 44089), and December 24, 2003 (68 FR 74621), and August 5, 2004 (69
FR 47446).
During these meetings, the APC Panel established its operational
structure that, in part, includes the use of three subcommittees to
facilitate its required APC review process. Currently, the three
subcommittees are the Data Subcommittee, the Observation Subcommittee,
and the Packaging Subcommittee. The Data Subcommittee is responsible
for studying the data issues confronting the APC Panel and for
recommending viable options for resolving them. This subcommittee was
initially established on April 23, 2001, as the Research Subcommittee
and reestablished as the Data Subcommittee on April 13, 2004. The
Observation Subcommittee, which was established on June 24, 2003, and
reestablished with new members on March 8, 2004, reviews and makes
recommendations to the APC Panel on all issues pertaining to
observation services paid under the OPPS, such as coding and
operational issues. The Packaging Subcommittee, which was established
on March 8, 2004, studies and makes recommendations on issues
pertaining to services that are not separately payable under the OPPS
but are bundled or packaged APC payments. Each of these subcommittees
was established by a majority vote of the APC Panel during a scheduled
APC Panel meeting. All subcommittee recommendations are discussed and
voted upon by the full APC Panel.
For a detailed discussion of the APC Panel meetings, refer to the
hospital OPPS final rules cited in section I.C. of this preamble. Full
discussions of the APC Panel's February 2004 and September 2004
meetings and the resulting recommendations are included in sections
II., III., IV., V., and VI. of this preamble under the appropriate
subject headings.
E. Provisions of the Medicare Prescription Drug, Improvement, and
Modernization Act of 2003
On December 8, 2003, the Medicare Prescription Drug, Improvement,
and Modernization Act of 2003 (MMA), Public Law 108-173, was enacted.
Public Law 108-173 made changes to the Act relating to the Medicare
OPPS. In a January 6, 2004 interim final rule with comment period, we
implemented provisions of Public Law 108-173 relating to the OPPS that
were effective for CY 2004. In this final rule with comment period, we
are responding to public comments received on the January 6, 2004
interim final rule and finalizing that rule. In addition, in this final
rule with comment period, we are implementing the following sections of
Public Law 108-173 that are effective for CY 2005:
Section 611, which provides for Medicare coverage of an
initial preventive physical examination under Part B, subject to the
applicable deductible and coinsurance, as an outpatient department
(OPD) service payable under the OPPS. The provisions of section 611
apply to services furnished on or after January 1, 2005, but only for
individuals whose coverage period under Medicare Part B begins on or
after that date.
Section 614, which provides that screening mammography and
diagnostic mammography services are excluded from payment under the
OPPS. This amendment applies to screening mammography services
furnished on or after the date of enactment of Public Law 108-173 (that
is, December 8, 2003), and in the case of diagnostic mammography, to
services furnished on or after January 1, 2005.
Section 621(a)(1), which requires special classification
of certain separately paid radiopharmaceutical agents and drugs or
biologicals, and specifies the pass-through payment percentages,
effective for services furnished on or after January 1, 2005, for the
three categories of ``specified covered OPD drugs'' defined in the
statute: sole source drug; innovator multiple source drug; and
noninnovator multiple source drug. In addition, payment for these drugs
for CYs 2004 and 2005 does not have to be made in a budget neutral
manner.
Section 621(a)(2), which specifies the reduced threshold
for the establishment of separate APCs with respect to drugs or
biologicals from $150 to $50 per administration for drugs and
biologicals furnished in CYs 2005 and 2006.
[[Page 65687]]
Section 621(a)(3), which excludes separate drug APCs from
outlier payments. Specifically, no additional payment will be made in
the case of APC groups established separately for drugs and
biologicals.
Section 621(b), which requires that all devices of
brachytherapy consisting of a seed or seeds (or radioactive source)
furnished on or after January 1, 2004, and before January 1, 2007, be
paid based on the hospital's charges for each device, adjusted to cost.
This provision also requires that these brachytherapy services be
excluded from outlier payments.
F. Summary of the Provisions of the August 16, 2004 Proposed Rule
On August 16, 2004, we published a proposed rule in the Federal
Register (69 FR 50447) that set forth proposed changes to the Medicare
hospital OPPS and to implement provisions of Public Law 108-173
specified in section I.E. of this preamble that would be effective for
services furnished on or after January 1, 2005. The following is a
summary of the major changes that we proposed to make:
1. Changes to the APC Groups
As required by section 1833(t)(9)(A) of the Act, we proposed the
annual update of the APC groups and the relative payment weights. This
section also requires that we consult with an outside panel of experts,
the Advisory Panel on APC Groups, to review the clinical integrity of
the groups and weights under the OPPS. Based on analyses of Medicare
claims data and recommendations of the APC Panel, we proposed to
establish a number of new APCs and to make changes to the assignment of
HCPCS codes under a number of existing APCs.
We also discussed the application of the 2 times rule and proposed
exceptions to it; coding for stereotactic radiosurgery services; the
proposed movement of procedures from the new technology APCs; the
proposed changes to the list of procedures that will be paid as
inpatient services; and the proposed addition of new procedure codes to
the APCs.
2. Recalibrations of APC Relative Payment Weights
In the proposed rule, we discussed the methodology used to
recalibrate the proposed APC relative payment weights and set forth the
proposed recalibration of the relative weights for CY 2005.
3. Payment Changes for Devices
In the proposed rule, we discussed proposed changes to the pass-
through payment for devices and the methodology used to reduce, if
applicable, transitional pass-through payments to offset costs packaged
into APC groups.
4. Payment Changes for Drugs, Biologicals, Radiopharmaceutical Agents,
and Blood and Blood Products
In the proposed rule, we discussed our proposed payment changes for
drugs, biologicals, radiopharmaceutical agents, and blood and blood
products.
5. Estimated Transitional Pass-Through Spending in CY 2005 for Drugs,
Biologicals, and Devices
In the proposed rule, we discussed the proposed methodology for
measuring whether there should be an estimated pro rata reduction for
transitional pass-through drugs, biologicals, and devices for CY 2005.
6. Other Policy Decisions and Proposed Policy Changes
In the proposed rule, we presented our proposals for CY 2005
regarding the following:
Update of statewide default cost-to-charge ratios (CCRs).
A conforming change to the regulation relating to the use
of the first available cost reporting period ending after 1996 and
before 2001 for determining a provider's payment-to-cost ratio to
calculate transitional corridor payments for hospitals paid under the
OPPS that did not have a 1996 cost report.
Changes in the status indicators and comment indicators
assigned to APCs for CY 2005.
Elimination of the diagnostic tests criteria as a
requirement for hospitals to qualify for separate payment of
observation services under APC 0339 (Observation) and changes to the
guidelines to hospitals for counting patients' time spent in
observation care.
Payment under the OPPS for certain procedures currently
assigned to the inpatient list.
Strategy for giving the public notice of new
implementation guidelines for new evaluation and management codes.
Addition of three new HCPCS codes and descriptors for
brachytherapy sources that would be paid separately, pursuant to Public
Law 108-173.
Modification of the HCPCS code descriptors for
brachytherapy source descriptors for which units of payment are not
already delineated.
Payment for services furnished emergently to an outpatient
who dies before admission to a hospital as an inpatient.
7. Conversion Factor Update for CY 2005
As required by section 1833(5)(3)(C)(ii) of the Act, in the
proposed rule, we proposed to update the conversion factor used to
determine payment rates under the OPPS for CY 2005.
8. Wage Index Changes for CY 2005
In the proposed rule, we discussed the proposed retention of our
current policy to apply the IPPS wage indices to wage adjust the APC
median costs in determining the OPPS payment rate and the copayment
standardized amount. These indices reflect major changes for CY 2005
relating to hospital labor market areas as a result of OMB revised
definitions of geographical statistical areas; hospital
reclassifications and redesignations, including the one-time
reclassifications under section 508 of Public Law 108-173; and the wage
index adjustment based on commuting patterns of hospital employees
under section 505 of Public Law 108-173.
9. Determination of Payment Rates and Outlier Payments for CY 2005
In the proposed rule, we discussed how APC payment rates are
calculated and how the payment rates are adjusted to reflect geographic
differences in labor-related costs. We also discussed proposed changes
in the way we would calculate outlier payments for CY 2005.
10. Regulatory Impact Analysis
In the proposed rule, we set forth our analysis of the impact that
the proposed changes would have on affected hospitals and CMHCs.
G. Public Comments Received on the August 16, 2004 Proposed Rule
We received over 550 timely pieces of correspondence containing
multiple comments on the August 16, 2004 proposed rule. Summaries of
the public comments and our responses to those comments are set forth
in the various sections of this preamble under the appropriate heading.
We received a number of general public comments on our proposed
changes to the OPPS for CY 2005.
Comment: Some commenters were concerned about the extent to which
OPPS payment rates have fluctuated from year to year. Because Medicare
payment is a very significant portion of income for most hospitals,
they stated that the instability in the OPPS payment rates makes it
difficult for hospitals to plan and budget. They indicated that there
is a tremendous degree of variation across APCs in terms of payment to
cost ratios and that they
[[Page 65688]]
would expect that after three years of operating the OPPS, the payment
to cost ratios would be much more stable. One commenter offered to
share analysis of payment to cost ratios with CMS. Commenters stated
that such variation in payments compared to costs puts full-service
hospitals and their communities at risk because limited-service, or
``niche'' providers can easily identify and redirect patients with more
lucrative APCs to their facilities, leaving full-service hospitals with
a disproportionate share of patients who receive services that are
assigned to the underpaid APCs.
Response: We recognize hospitals' need for stability in payments
for hospital outpatient services. We would appreciate receiving studies
of the extent to which there is variation across APCS in terms of
payment to cost ratios across the multiple years of the OPPS to aid us
in assessing factors that might contribute to instability in the
payment rates.
Comment: One commenter indicated that the entire OPPS is
underfunded, as it pays only 87 cents of every dollar of hospital
outpatient care provided to Medicare beneficiaries. The commenter
stated that it will continue to work with Congress to address
inadequate payment rates and updates in order to ensure access to
hospital-based outpatient services for Medicare beneficiaries.
Response: Our early analyses indicated that the OPPS was, in its
inception, based on payment that was less than cost due to statutory
reductions in payment for hospital outpatient costs prior to the
enactment of the Balanced Budget Act of 1997, which authorized the
current OPPS. We agree that the commenter will need to work with
Congress to change certain fundamental features of the OPPS. For
example, the base amounts upon which the OPPS was established, the
rules concerning budget neutrality, and subsequent out-year adjustments
such as annual reductions in coinsurance and adjustments to outlier and
pass-through payment allocations are established in statute and, as
such, would require legislation to amend.
Comment: One commenter objected to the use of the display date to
start the 60-day comment period for the proposed rule. The commenter
stated that the display copy did not contain all of the information
included in the proposed rule, such as the comment due date, and did
not satisfy the statute's requirement that the notice of proposed
rulemaking be published in the Federal Register, with provision for a
60-day comment period. The commenter indicated that the use of the
display date to start the comment period gives reviewers too short a
period of time to comment properly and also, in this case, gives CMS an
inadequate period of time to review the comments and prepare the final
rule. The commenter urged CMS to publish a proposed rule no later than
late July to provide more time for CMS to consider public comments.
Response: While the law requires that we provide a 60-day public
comment period and that the notice of proposed rulemaking be published
in the Federal Register, it does not require that the date of Federal
Register publication be the first day of the comment period. The two
requirements are independent. We post the proposed rule on the CMS Web
site on the date of display of the proposed rule at the Federal
Register, thereby making the proposed rule far more easily available to
the public than was the case when the only public dissemination was
publication in the Federal Register, and satisfying the requirement for
a 60-day comment period. By making the proposed rule available on the
CMS Web site (as well as at the Federal Register), we provided the
public with access to not only the proposed rule but also to all of the
supporting files and documents cited in the proposed rule in a manner
that can be used for analysis. We note that the computer files posted
on the Web site can be manipulated for independent analysis. Therefore,
we believe that beginning the comment period for the proposed rule with
the display date at the Federal Register, and posting the proposed rule
and data files on the CMS Web site on the display date, fully complies
with the statute and provides a far better opportunity for the public
to have meaningful input than the past practice under which the comment
period began with the publication date in the Federal Register a week
or longer after the display date and no other data in any other form
was furnished.
With respect to the publication date of the proposed rule, we
publish the proposed rule as soon as it is practicable for us to do so.
Our process for development of the proposed rule begins with a winter
meeting of the APC Panel based on the earliest possible data analysis
for the forthcoming year. We then pull claims for the period ending
December of the data year and also pull cost report data for
development of CCRs to apply to the claims data. This step cannot be
started until approximately March 1 of the year and the development of
the proposed rule data takes considerable time as there are many
analyses to be performed and decisions to be made before each stage of
data development can be undertaken. We have to balance the need to
improve the process and to deal with each year's special issues with
the need to issue a proposed rule in sufficient time to permit the
public to comment and to permit us sufficient time to review the
comments and develop the final rule. Each year we review the timeline
and process to determine how we can best achieve that balance, while
ensuring that we issue the best possible proposed rule for public
comment.
H. Public Comments Received on the January 6, 2004 Interim Final Rule
With Comment Period
We received approximately 40 timely pieces of correspondence
containing multiple comments on the MMA provisions relating to payment
for drugs and brachytherapy under the OPPS that were included in the
January 6, 2004 interim final rule with comment period. Summaries of
the public comments and our responses to those comments are set forth
in sections V. and VII.G. of this preamble under the appropriate
heading.
I. Public Comments Received on the November 7, 2003 Final Rule With
Comment Period
We received 25 timely pieces of correspondence on the November 7,
2003 final rule with comment period, some of which contained multiple
comments on the APC assignment of HCPCS codes identified with the new
interim condition indicators (now referred to as condition codes) in
Addendum B of that final rule with comment period. Summaries of the
public comments and our responses to those comments are set forth in
various sections of this preamble under the appropriate subject areas.
II. Changes Related to Ambulatory Payment Classifications (APCs)
Section 1833(t)(2)(A) of the Act requires the Secretary to develop
a classification system for covered hospital outpatient services.
Section 1833(t)(2)(B) provides that this classification system may be
composed of groups of services, so that services within each group are
comparable clinically and with respect to the use of resources. In
accordance with these provisions, we developed a grouping
classification system, referred to as the Ambulatory Payment
Classification Groups (or APCs), as set forth in Sec. 419.31 of the
regulations. We use Level I and Level II Healthcare Common Procedure
Coding System (HCPCS) codes and descriptors to identify and group the
services within each APC. The APCs are organized such that each
[[Page 65689]]
group is homogeneous both clinically and in terms of resource use.
(However, new technology APCs that are temporary groups for certain
approved services are structured based on cost rather than clinical
homogeneity.) Using this classification system, we have established
distinct groups of surgical, diagnostic, and partial hospitalization
services, and medical visits. Because of the transitional pass-through
provisions, we also have developed separate APC groups for certain
medical devices, drugs, biologicals, radiopharmaceuticals, and devices
of brachytherapy.
We have packaged into each procedure or service within an APC group
the cost associated with those items or services that are directly
related and integral to performing a procedure or furnishing a service.
Therefore, we would not make separate payment for packaged items or
services. For example, packaged items and services include: Use of an
operating, treatment, or procedure room; use of a recovery room; use of
an observation bed; anesthesia; medical/surgical supplies;
pharmaceuticals (other than those for which separate payment may be
allowed under the provisions discussed in section V. of this preamble);
and incidental services such as venipuncture. Our packaging methodology
is discussed in section IV.B.3. of this final rule with comment period.
A. APC Changes: General
Under the OPPS, we pay for hospital outpatient services on a rate-
per-service basis that varies according to the APC group to which the
service is assigned. Each APC weight represents the median hospital
cost of the services included in that APC relative to the median
hospital cost of the services included in APC 0601, Mid-Level Clinic
Visits. The APC weights are scaled to APC 0601 because a mid-level
clinic visit is one of the most frequently performed services in the
outpatient setting.
Section 1833(t)(9)(A) of the Act requires the Secretary to review
the components of the OPPS not less than annually and to revise the
groups and relative payment weights and make other adjustments to take
into account changes in medical practice, changes in technology, and
the addition of new services, new cost data, and other relevant
information and factors. Section 1833(t)(9)(A) of the Act, as amended
by section 201(h) of the BBRA of 1999, also requires the Secretary,
beginning in CY 2001, to consult with an outside panel of experts to
review the APC groups and the relative payment weights.
Finally, section 1833(t)(2) of the Act provides that, subject to
certain exceptions, the items and services within an APC group cannot
be considered comparable with respect to the use of resources if the
highest median (or mean cost, if elected by the Secretary) for an item
or service in the group is more than 2 times greater than the lowest
median cost for an item or service within the same group (referred to
as the ``2 times rule''). We use the median cost of the item or service
in implementing this provision. The statute authorizes the Secretary to
make exceptions to the 2 times rule in unusual cases, such as low
volume items and services.
Section 419.31 of the regulations sets forth the requirements for
the APC system and the determination of the payment weights. In this
section, we discuss the changes that we proposed to the APC groups; the
APC Panel's review and recommendations from the February 2004 meeting
and our proposals in response to those recommendations; the application
of the 2 times rule and proposed exceptions to it; coding for
stereotactic radiosurgery services; the proposed movement of procedures
from the new technology APCs; the proposed changes to the inpatient
list; and the proposed additions of new procedures codes to the APCs.
In addition, in this section under the appropriate subject heading, we
present the APC Panel's review and recommendations of items discussed
at the September 1, 2, and 3, 2004 meeting held after publication of
the proposed rule and our final decisions on these recommendations. We
then present our final policies that are effective for CY 2005.
B. APC Panel Review and Recommendations
1. February 2004 Panel Meeting
As stated above, the APC Panel held its first 2004 meeting on
February 18, 19, and 20, 2004, to discuss the revised APCs for the CY
2005 OPPS. In preparation for that meeting, we published a notice in
the Federal Register on December 24, 2003 (68 FR 74621), to announce
the location, date, and time of the meeting; the agenda items; and the
fact that the meeting was open to the public. In that notice, we
solicited public comment specifically on the items included on the
agenda for that meeting. We also provided information about the APC
Panel meeting on the CMS Web site: http://www.cms.hhs.gov/faca/apc/panel
.
Oral presentations and written comments submitted for the February
2004 APC Panel meeting met, at a minimum, the adopted guidelines for
presentations set forth in the Federal Register document (68 FR 74621).
In conducting its APC review, the APC Panel heard testimony and
received evidence in support of the testimonies from a number of
interested parties. For the February 2004 deliberations, the APC Panel
used hospital outpatient claims data for the period January 1, 2003,
through September 30, 2003, that provided, at a minimum, median costs
for the APC structure in place in CY 2004 and that was based on CCRs
used for setting the CY 2004 payment rates. The data set presented to
the APC Panel represented 9 months of the CY 2003 data that we proposed
to use to recalibrate the APC relative weights and to calculate the
proposed APC payment rates for CY 2005. In sections II.B.4. through 7.
and sections II.C. through I. of this preamble, we summarize the APC
issues discussed during the APC Panel's February 2004 meeting, the
Panel's recommendations, the proposals that we included in the August
16, 2004 proposed rule, our proposals with respect to those
recommendations, and the policies that we are finalizing for CY 2005 in
this final rule with comment period.
2. September 2004 Panel Meeting
As stated earlier, the APC Panel held its second 2004 meeting on
September 1-3, 2004. In preparation for that meeting, we published a
notice in the Federal Register on August 5, 2004 (69 FR 47446) to
announce the location, date, and time of the meeting, the agenda items,
and the fact that the meeting was open to the public. In that notice,
we solicited public comments specifically on the items included on the
agenda for that meeting. During the September 2004 APC Panel meeting,
the APC Panel heard testimony on a number of the proposed changes in
APCs included in the August 16, 2004 proposed rule. We are summarizing
the topics that were discussed at the September 2004 Panel meeting and
the APC Panel's recommendations on each topic in the chart below. We
have included references to the appropriate section of this preamble
for the more detailed discussion of each recommendation.
For the September 2004 deliberations, the APC Panel used the
hospital outpatient claims data that we used in developing the proposed
rule; that is, data for the period of January 1, 2003,
[[Page 65690]]
through December 31, 2003, including updated CCRs.
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3. Contents of This Section of the Preamble
The discussion in this section II.B. of this final rule with
comment period is limited to APC changes regarding APCs other than
those that violate the 2 times rule and those that represent drugs,
biologicals, and transitional pass-through devices, or those that are
new technology APCs. The specific APC Panel review and recommendations
applicable to those APCs are discussed in sections II.C., IV., III.,
and II.F., respectively, of the preamble to this final rule with
comment period.
4. APC 0018: Biopsy of Skin/Puncture of Lesion
During the February 2004 APC Panel meeting, one presenter
recommended moving CPT tracking codes 0046T (Catheter lavage, mammary
duct(s)) and 0047T (Each additional duct) from APC 0018 and placing
them in an APC that more accurately reflects each of the procedures.
The APC Panel recommended that we reassign CPT codes 0046T and 0047T to
APC 0021, Level III Excision/Biopsy.
In the August 16, 2004 proposed rule, we proposed to accept the APC
Panel's recommendation. We did not receive any public comments on our
proposal. Therefore, we are adopting as final, without modification,
our proposal to reassign CPT codes 0046T and 0047T to APC 0021.
5. Level I and II Arthroscopy
APC 0041: Level I Arthroscopy
APC 0042: Level II Arthroscopy
We testified before the APC Panel at its February 2004 meeting
regarding a comment that we received in 2003 requesting that we
reassign CPT code 29827 (Arthroscopy, shoulder with rotator cuff
repair) from APC 0041 to APC 0042, based on its similarity to CPT 29826
(Arthroscopy, shoulder decompression of subacromial space with partial
acromioplasty without coracoacromial release). Our clinical staff
considered the request and determined that APCs 0041 and 0042 should be
reconfigured to improve clinical homogeneity. An APC Panel presenter
provided evidence to support moving CPT code 29827 to an APC that would
more accurately recognize the complexity of that procedure. We
requested the APC Panel's recommendation regarding a total revision of
these two APCs.
The APC Panel recommended that we reevaluate the codes in APCs 0041
and 0042 and propose restructuring that would improve the clinical
homogeneity in the two APCs.
In the August 16, 2004 proposed rule, we proposed to accept the APC
Panel's recommendation and to revise APCs 0041 and 0042 as presented in
Tables 1 and 2 of that proposed rule. We received one public comment on
our proposed restructuring.
Comment: One commenter requested that we move code 0014T from APC
0041 to APC 0042. The commenter provided information in support of its
belief that the procedure more accurately matches the clinical work and
resource inputs of APC 0042 than of APC 0041.
Response: We agree with the commenter and are assigning the
procedure to APC 0042. The tracking code 0014T is being retired and the
successor code is CPT code 29868 (Arthroscopy, knee, surgical,
osteochondral autograft(s) meniscal transplantation (including
arthrotomy for meniscal insertion, medial or lateral). Placement of
this code in APC 0042 is subject to comment in response to this final
rule with comment period because the code is a new code for CY 2005.
Accordingly, restructured APCs 0041 and 0042 for CY 2005, as
modified based on the public comment received, are shown in Tables 1
and 2 below.
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6. Angiography and Venography Except Extremity
APC 0279: Level II Angiography and Venography Except Extremity
APC 0280: Level III Angiography and Venography Except Extremity
APC 0668: Level I Angiography and Venography Except Extremity
a. February 2004 Panel Meeting
As requested by the APC Panel, at the February 2004 Panel meeting,
we presented our proposal for reconfiguring APCs 0279, 0280, and 0668
that reflected changes based on prior input with outside clinical
experts. The APC Panel had previously reviewed these APCs during its
January 2003 meeting and had recommended that we not restructure these
three APCs until we received input from clinical experts in the field.
When we updated the APC groups in CY 2003, we accepted the APC Panel's
recommendation and made no changes to APCs 0279, 0280, and 0668.
A review of these APCs was prompted by a commenter who requested
that we move CPT code 75978 (Repair venous blockage) from APC 0668 to
APC 0280 and that we move CPT code 75774 (Artery x-ray, each vessel)
from APC 0668 to APC 0279. The commenter submitted evidence in support
of these requests and testified before the APC Panel regarding the
common use of CPT code 75978 for treating dialysis patients and the
often required multiple intraoperative attempts to succeed with this
procedure for such patients.
After receiving input from the clinical experts, we determined that
these three APCs should be revised to improve their clinical
homogeneity. At the February 2004 meeting, we presented our proposed
restructuring of APCs 0279, 0280, and 0668 to the APC Panel. The APC
Panel concurred with our proposal.
In addition, subsequent to the APC Panel meeting, we discovered
several procedures in these APCs that were more appropriately placed in
other APCs in order to remedy any 2 times rule violations. We included
those modifications in our proposed restructured APCs published in
Table 3 in the August 16, 2004 proposed rule.
b. Public Comments Received
Comment: Several commenters requested that CMS postpone or cancel
the proposed plans for moving angiography codes 75960 (Transcatheter
introduction of intravascular stent(s), (non-coronary vessel)
percutaneous and/or open, radiological supervision and interpretation,
each vessel), 75962 (Transluminal balloon angioplasty, peripheral
artery, radiological supervision and interpretation), 75964
(Transluminal balloon angioplasty, each additional peripheral artery,
radiological supervision and interpretation), 75966 (Transluminal
balloon angioplasty, renal or other visceral artery, radiological
supervision and interpretation), and 75968 (Transluminal balloon
angioplasty, each additional visceral artery, radiological supervision
and interpretation), which are integral to a number of angioplasty and
stent placement procedures, from APC 0280 to APC 0668. One commenter
indicated that the proposed decreases in payments for these services
that would result from their APC reassignment were inconsistent with
CMS' proposal to limit payment decreases for device-dependent APCs.
Another commenter was particularly concerned that code 75962, which is
used for angioplasty of arterial blockages, may have a wide range of
associated procedure costs. The commenters stated that aggregate
payment for all services billed for many high volume procedures such as
peripheral transluminal angioplasty and single stent placement will
decrease by 16 to 21 percent, in large part due to the reassignment of
codes 75960, 75962, 75964, 75966, and 75968 to the lower level APC 0668
in the angiography and venography except extremity series and
[[Page 65694]]
to their placement on the bypass list. Two commenters were concerned
that supervision and interpretation services as part of peripheral
atherectomy procedures were assigned to higher paying APC 0279,
potentially providing hospitals with an incentive to perform
atherectomy instead of angioplasty or stent procedures, or both.
Further, the commenters suggested that the lower payment for the
supervision and interpretation services moved to APC 0668 for CY 2005
provides an incentive for hospitals to treat patients on an inpatient
basis or may limit beneficiaries' access to the outpatient procedures.
One commenter indicated that the cost and complexity of performing
angiographic procedures for angioplasty are similar, if not more
complex, than those of performing angiographic procedures for
atheretomy.
The commenters did not understand why CMS reassigned the
supervision and interpretation codes from a Level III to a Level I APC
and believed that CMS did not take into account the higher level of
hospital resources and staffing required for certain therapeutic
radiology supervision and interpretation services. Further, they
questioned the assumptions CMS adopted in the creation of the bypass
list to develop ``pseudo''single claims. They suggested that there
might be significant differences between the multiple procedure claims
that CMS converts to ``pseudo'' single claims and those that CMS is
unable to use. Thus, the commenters questioned the reliability of the
claims data and encouraged CMS to use external data as the basis for
the decisionmaking. One commenter noted that, of a large number of
claims for APC 0668, 79 percent accounted for device costs and 81
percent accounted for room charges, but CMS' single claim methodology
had only 4 percent of claims accounting for device costs or room
charges.
Finally, one commenter, a group of providers, stated that they
expected substantial payment decreases to result from the proposed
restructuring of APCs 0279, 0280, and 0668. The commenter suggested
that CMS should establish a mechanism (such as dampening) to offset
large payment swings similar to those anticipated as a result of the
CMS proposal.
Response: Our analyses of claims data used for the CY 2004 OPPS and
several past comments led us to recognize the need to restructure APCs
0279, 0280, and 0668 for the CY 2005 OPPS. There were only two services
in APC 0668 for CY 2004, APC 0279 was excepted from the 2 times rule in
CY 2004, and the median costs for individual services in APCs 0668,
0279, and 0280 showed significant overlap. The APC Panel also
acknowledged the need to reconfigure these APCs. In our proposed rule,
we presented the restructured APCs in which the procedures within each
APC demonstrated both clinical and resource homogeneity, and our final
data confirmed the appropriate assignment of the services. For
instance, the peripheral atherectomy supervision and interpretation
codes (75992 through 75996) assigned to the Level II APC (0279)
consistently had higher median costs than the supervision and
interpretation codes for intravascular stent placement or peripheral or
visceral artery balloon angioplasty, which are assigned to the Level I
APC (0668). For CY 2005, the median costs for the supervision and
interpretation codes for stent placement and angioplasty were much
lower than the median cost of their prior APC 0280 ($1,181) and were
within the range of median costs ($239-$444) for other procedures
assigned to APC 0668. As APCs 0668, 0279, and 0280 are not device-
dependent APCs because we expect the devices to be reported with the
interventional procedures provided (that are in device-dependent APCs),
it would be inappropriate to apply the device-dependent APC policy to
APCs 0668, 0279, and 0280. In addition, there were no violations of the
2 times rule in the restructured APCs 0668, 0279, or 0280 based on full
year 2003 hospital claims data.
The supervision and interpretation codes 75960, 75962, 75964,
75966, and 75968, along with peripheral atherectomy supervision and
interpretation CPT codes, were proposed for the bypass list for CY
2005. As the commenters noted, we recognized that angiography and
venography services generally involve multiple procedure claims, and
less than 10 percent of bills for APCs 0668, 0279, and 0280 were
available for ratesetting for CY 2004. We proposed to place a number of
radiological supervision and interpretation codes on the bypass list
for CY 2005 because we believed that these codes should have little
packaging associated with them and we recognized that their addition to
the bypass list might enable us to use significantly more data from
multiple procedure claims for APCs 0668, 0279, 0280, and others. We did
not expect that devices and room charges would generally be packaged
with the supervision and interpretation services, but rather would be
packaged with the interventional procedures they accompanied. This
accounts for the low percentage of device and room costs on the single
bills in APC 0668 used for the median calculation. None of the
commenters provided any information about why it would be inappropriate
to include these codes on the bypass list, other than to point out the
decline in proposed payment rates for the services. If packaging
appropriately attributable to the supervision and interpretation
services through the bypass procedure had been assigned to the
interventional procedures that the supervision and interpretation
services accompanied (such as angioplasty or stent placement), there
should have been increases in the median costs for the interventional
procedures. We did not see any such significant increases, and believe
that our data do not indicate any specific packaging allocation
problems with respect to the supervision and interpretation services.
We have no evidence of underreporting of costs used to calculate the
median costs for APC 0668.
For CY 2005, we had a significantly greater number of single claims
available for use in median calculation for APCs 0668, 0279, and 0280.
For example, for CY 2005, the median costs for the two supervision and
interpretation codes with the highest volume that were of concern to
the commenters (codes 75960 and 75962) were based on 20 percent of
claims in contrast to only 1 percent used last year. While it is
possible, as suggested by the commenters, that there may be differences
between the packaging in multiple procedure claims that we were able to
convert to ``pseudo'' single claims and those that we were unable to
use, we have no reason to believe that these issues are unique to these
APCs or especially problematic for these supervision and interpretation
services. Our goal continues to be to use as much of our historical
hospital claims data to set payment rates as possible. As we have
consistently stated, we are pursuing strategies to improve our ability
to utilize multiple procedure claims for median calculation, including
discussions with the APC Panel Data Subcommittee.
With regard to the commenter's suggestion that we establish a
mechanism to offset payment changes from one year to the next, we
understand the commenter's desire for a stable system. However, while
we are not convinced that an overall dampening policy is required, we
continue to work toward improving the hospital claims data through
education, data management, and data analyses. We believe that we have
achieved significant improvements so far.
[[Page 65695]]
c. Final Policy for CY 2005
After consideration of the APC Panel's recommendations and the
public comments we received on the August 16, 2004 proposal, we are
finalizing our proposal for the restructuring of APCs 0668, 0279, and
0280.
Tables 3, 4, and 5 reflect the final restructuring of APCs 0668,
0279, and 0280.
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7. Packaged Codes in APCs
As a result of requests from the public, the Packaging Subcommittee
of the APC Panel was established to review all the CPT codes with a
status indicator of ``N.'' Status indicator ``N'' indicates that
payment for packaged codes is bundled into the payment that providers
receive for separately payable codes for items or services provided on
the same day. Providers have often suggested that many codes could be
billed alone, without any separately payable service on the claim, and
requested that these codes not be assigned status indicator ``N.'' The
Packaging Subcommittee identified areas for change of some packaged CPT
codes for items or services that could be provided as the sole service
on a given date. During the September 2004 meeting, the APC Panel
accepted the report of the Packaging Subcommittee and made the
following recommendations:
The Panel recommended that the Packaging Subcommittee
review packaged codes individually instead of making a global decision
for all packaged codes.
The Panel recommended that CMS assign a modifier to CPT
codes 36540 (Collect blood venous device), 36600 (Withdrawal of
arterial blood), 51701 (Insert bladder catheter), and 97602 (Wound[s]
care, non-selective) to be used when these codes are the only code on
that particular claim for the same date of service. The APC Panel
indicated that it would revise this subset of codes once data become
available.
The Panel recommended that CMS educate providers and
intermediaries on the correct billing procedures for the packaged CPT
codes 36540, 36600, 51701, and 97602.
The Panel recommended that CMS not change the status
indicator for CPT 76397 (Ultrasound guidance for vascular access). The
Panel indicated that it would review the data on this code as they
become available.
The Panel recommended that the Packaging Subcommittee
continue to meet throughout the year to discuss other problematic
packaged codes.
CMS is considering the recommendation that a modifier be used when
certain codes are the only codes on a particular claim for the same
date of service. We note that code 97602 is assigned a status indicator
of ``A'' in this final rule with comment period, and is no longer
payable under OPPS. Therefore, a modifier, if applicable, would not be
assigned for this code.
Comment: One commenter asked CMS to review all the packaged codes
to determine which codes should become separately payable. Several
commenters also requested that codes 36540 (Collect blood venous
device), 36600 (Withdrawal of arterial blood), and 97602 (Wound[s]
care, nonselective) become separately payable because they are often
the only procedure on a bill. In cases where there is no separately
payable code on a claim, providers do not receive payment for these
packaged services.
Response: We appreciate the commenters' suggestions. As stated
above, the APC Panel Packaging Subcommittee recently reviewed all the
packaged codes. We are currently
[[Page 65697]]
considering whether to create a modifier to be used for CPT codes
36540, 36600, and 51701 when these codes appear on a claim without any
separately payable code on the same date of service. As stated above,
code 97602 will not be payable under OPPS for CY 2005 and, therefore,
is excluded from this discussion. Additional detailed suggestions for
the Packaging Subcommittee should be submitted to APCPanel@cms.hhs.gov
with ``Packaging Subcommittee'' in the subject line.
Comment: Two commenters requested that code 76937 (Ultrasound
guidance for vascular access) be assigned to APC 0268 (Ultrasound
Guidance Procedures), with status indicator ``S'' instead of the
proposed status indicator ``N.''
Response: We are accepting the APC Panel's recommendations that
code 76937 remain packaged for CY 2005. We are concerned that there
will be unnecessary utilization of this procedure if it is separately
payable. In addition, because code 76937 only became effective on
January 1, 2004, there are currently no claims data for this code. When
we review the CY 2004 claims data for the CY 2006 payment rates, we
will reexamine the status of code 76937. We also note that the APC
Panel Packaging Subcommittee remains active, and additional issues and
new data concerning the packaging status of codes will be shared for
their consideration as information becomes available.
Comment: Several commenters requested that the following CPT codes
become unpackaged: 42550 (Injection for salivary x-ray) and other x-ray
injection codes; 75998 (Fluoroscopic guidance for central venous access
device placement); 74328 (Endoscopic catheterization of the biliary
ductal system, S&I); 74329 (Endoscopic catheterization of the
pancreatic ductal system, S&I); 74330 (Combined endoscopic
catheterization of the biliary and pancreatic ductal systems, S&I);
36500 (Insert of catheter, vein); 75893 (venous sampling by catheter);
75989 (abscess drainage under x-ray); 76001 (Fluoroscope exam); 76003
(Needle localization by x-ray); 76005 (Fluoroguide for spine inject);
90471 and 90472 (Immunization administration); 94760, 94761, and 94762
(Pulse oximetry); and G0269 (Occlusive device in vein art). The
commenters were concerned that the OPPS has denied hospitals
reimbursement for these services.
Response: Hospitals include charges for packaged services on their
claims, and the costs associated with these packaged services are then
bundled into the costs for separately payable procedures on the claims.
Hospitals may use CPT codes to report any packaged services that were
performed, consistent with CPT coding guidelines. Because these imaging
codes are packaged, their presence on a claim that includes a code for
another separately payable service does not necessarily result in the
claim being a multiprocedure claim. Payment for these imaging services
is packaged in this way into payment for the separately payable
services with which the imaging services are billed.
The Packaging Subcommittee reviewed every code that was packaged in
CY 2004. The Committee narrowed the list of packaged codes to a list of
potentially problematic codes and subsequently reviewed utilization and
median cost data for these codes. One of the main criteria evaluated by
the Packaging Subcommittee to determine whether a code should become
unpackaged was how likely it was for the code to be billed without any
other code for separately payable services on the claim. We encourage
submission of clinical scenarios involving currently packaged codes to
the Packaging Subcommittee for review at future meetings. Submissions
should be sent to the APCPanel@cms.hhs.gov with ``Packaging
Subcommittee'' in the subject line.
We will continue to package CPT codes 42550 and other x-ray
injection codes, 75998, 73428, 74329, 74330, 36500, 75893, 75989,
76001, 76003, 76005, 90471, 94472, 94760, 94761, 94762, and G0269 for
CY 2005 and will discuss these codes with the APC Panel Packaging
Subcommittee.
Comment: One commenter requested that the status indicator for code
G0102 (Prostate cancer screening; digital rectal examination) be
changed from packaged to separately payable. The commenter indicated
that the screening is administered as part of the initial preventive
physical examination. The commenter stated, ``The payment for G0102
will be zero because it is identified with status indicator `N' which
means it is packaged and not paid for separately.''
Response: Currently, under the OPPS, we do not make separate
payment for code G0102. Its costs are bundled into the costs of other
separately payable services furnished by the hospital on the same day.
For example, a digital rectal examination is usually furnished as part
of an evaluation and management service, so its payment would generally
be bundled into payment for the evaluation and management service when
a covered evaluation and management service is furnished on the same
day as the digital rectal examination. It is a relatively quick and
simple procedure. Likewise, when the examination is performed during
the same visit as the initial preventive examination, we would expect
that costs associated with the examination would be bundled into the
costs for the initial preventive examination. Accordingly, we are
continuing to package code G0102.
Comment: One commenter requested that we map code G0168 (Wound
closure by adhesive) to an APC instead of assigning status indicator
``N'' to the code. The commenter was concerned that access to wound
adhesives would be reduced if this code is not separately payable.
Response: Wound adhesives are considered supplies used to repair
lacerations and surgical incisions. These products are used instead of
sutures to close wounds. We do not make separate payments for sutures
under the OPPS. Providers are paid when they use wound adhesives in the
same manner as they are paid for other ``packaged'' procedures. The
charges for code G0168 should be packaged into whichever procedure(s)
is billed on the same date of service. Payment to the provider reflects
the cost of performing the procedure and the related supplies.
C. Limits on Variations Within APCs: Application of the 2 Times Rule
Section 1833(t)(2) of the Act provides that the items and services
within an APC group cannot be considered comparable with respect to the
use of resources if the median (or mean) of the highest cost item or
service within an APC group is more than 2 times greater than the
median of the lowest cost item or service within that same group.
However, the statute authorizes the Secretary to make exceptions to
this limit on the variation of costs within each APC group in unusual
cases such as low volume items and services. No exception may be made
in the case of a drug or biological that has been designated as an
orphan drug under section 526 of the Federal Food, Drug, and Cosmetic
Act. We implemented this statutory provision in Sec. 419.31 of the
regulations. Under this regulation, we elected to use the highest
median cost and lowest median cost to determine comparability.
During the APC Panel's February 2004 meeting, we presented data and
information concerning a number of APCs that violate the 2 times rule
and asked the APC Panel for its recommendation. We discuss below the
APC Panel's recommendations specific to each of these APCs, our
proposals in
[[Page 65698]]
response to the APC Panel's recommendations that were discussed in the
August 2004 proposed rule, and our final policies.
1. Cardiac and Ambulatory Blood Pressure Monitoring
APC 0097: Cardiac and Ambulatory Blood Pressure Monitoring
We expressed concern to the APC Panel that APC 0097 appears to
violate the 2 times rule. We sought the APC Panel's recommendation on
revising the APC to address the violation. Based on clinical
homogeneity considerations, the APC Panel recommended that we not
restructure APC 0097 for CY 2005.
We proposed to accept the APC Panel's recommendation that we make
no changes to APC 0097 for CY 2005. We did not receive any public
comments on our proposal. Accordingly, in this final rule, we are not
making any changes to APC 0097 for CY 2005.
2. Electrocardiograms
APC 0099: Electrocardiograms
We expressed concern to the APC Panel at its February 2004 meeting
that APC 0099 appears to violate the 2 times rule. We asked the APC
Panel to recommend options for resolving this violation. Based on
clinical homogeneity considerations, the APC Panel recommended that we
not alter the structure of APC 0099 for CY 2005.
We proposed to accept the APC Panel's recommendation that we make
no changes to APC 0099 for CY 2005. We did not receive any public
comments on our proposal. Accordingly, in this final rule with comment
period, we are not making any changes to APC 0099 for CY 2005.
3. Excision/Biopsy
APC 0019: Level I Excision/Biopsy
APC 0020: Level II Excision/Biopsy
APC 0021: Level III Excision/Biopsy
We expressed concern to the APC Panel at its February 2004 meeting
that APC 0019 appears to violate the 2 times rule. We advised the APC
Panel that this violation was not evident in CY 2004 because the CY
2002 median cost data used in calculating the CY 2004 APC updates
supported moving CPT codes 11404 (Removal of skin lesion) and 11623
(Removal of skin lesion) from APC 0020 and APC 0021. However, based on
the CY 2003 data reviewed by the APC Panel, APC 0019 would violate the
2 times rule. Therefore, we asked the APC Panel to recommend an
approach to resolve the violation. We asked the APC Panel if we should
leave this APC as is; divide APC 0019 into two separate APCs; or move
some codes in APC 0019 to higher level excision/biopsy APCs. In making
its recommendation, the APC Panel noted that the 2 times violation in
APC 0019 was minor, and recommended that we not modify APC 0019.
We proposed to accept the APC Panel's recommendation to not make
any modifications to APC 0019 for CY 2005. We did not receive any
public comments on our proposal. Accordingly, in this final rule with
comment period, we are not making any changes to APC 0019 for CY 2005.
4. Posterior Segment Eye Procedures
APC 0235: Level I Posterior Segment Eye Procedures
We expressed concern to the APC Panel at its February 2004 meeting
that APC 0235 appears to violate the 2 times rule. At the August 2003
APC Panel meeting, the APC Panel recommended that we monitor the data
for APC 0235 for review at its February 2004 meeting. In order to
address the apparent violation, we asked the APC Panel to consider
moving a few CPT codes from APC 0235 into a higher level posterior
segment eye procedure APC. The APC Panel noted that the 2 times
violation in APC 0235 was minor, and recommended that we not change APC
0235.
We proposed to accept the APC Panel's recommendation that we make
no changes to the structure of APC 0235 for CY 2005. We receive one
public comment regarding this proposal.
Comment: One commenter urged CMS not to finalize the proposal to
keep the CY 2004 structure of APC 0235 for CY 2005. The commenter asked
CMS to consider moving codes 67220 (Treatment of choroids lesion),
67221 (Ocular photodynamic therapy), 67225 (Eye photodynamic therapy,
add-on), 67101 (Repair detached retina), and 67141 (Treatment of
retina) to a higher level Posterior Segment Eye Procedure APC.
Response: After further analysis, we continue to believe that the
resources and clinical characteristics of these codes are most
compatible and homogeneous with those services in Level I Posterior
Segment Eye Procedures, APC 0235. We plan to discuss the possible
restructuring of APCs 0235, 0236, and 0237 (Level I, Level II, and
Level III Posterior Segment Eye Procedures, respectively) at the next
APC Panel meeting. We invite comments on these APCs.
In this final rule with comment period, we are adopting as final
the proposal not to make any changes to APC 0235 for CY 2005.
5. Laparoscopy
APC 0130: Level I Laparoscopy
APC 0131: Level II Laparoscopy
We expressed concern to the APC Panel at its February 2004 meeting
that APC 0130 appears to violate the 2 times rule. We suggested moving
CPT code 44970 (Laparoscopy, appendectomy) from APC 0130 to APC 0131.
The APC Panel recommended that we make this change.
We proposed to accept the APC Panel's recommendation to move CPT
code 44970 from APC 0130 to APC 0131. We did not receive any public
comments on our proposal. Accordingly, in this final rule with comment
period, we are adopting as final without modification our proposal to
move CPT code 44970 from APC 0130 to APC 0131.
6. Anal/Rectal Procedures
APC 0148: Level I Anal/Rectal Procedure
APC 0155: Level II Anal/Rectal Procedure
APC 0149: Level III Anal/Rectal Procedure
APC 0150: Level IV Anal/Rectal Procedure
We expressed concern to the APC Panel at its February 2004 meeting
that APC 0148 appears to violate the 2 times rule. We suggested moving
CPT code 46020 (Placement of seton) from APC 0148 to a higher level
anal/rectal procedure APC. The APC Panel reviewed the four anal/rectal
APCs (APC 0148, 0149, 0150, and 0155) and recommended moving CPT codes
46020 and 46706 (Repair of anal fistula with glue) from APC 0148 to APC
0150. The APC Panel also recommended moving CPT codes 45005 (Drainage
of rectal abscess) and 45020 (Drainage of rectal abscess) from APC 0148
to APC 0155.
We proposed to accept the APC Panel's recommendations specific to
APC 0148. We received one favorable public comment on our proposal.
Accordingly, in this final rule with comment period, we are adopting as
final without modification our proposal and are moving CPT codes from
APC 0148 to APCs 0150 and 0155 as shown in the Table 6 below.
[[Page 65699]]
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7. Nerve Injections
APC 0204: Level I Nerve Injections
APC 0206: Level II Nerve Injections
APC 0207: Level III Nerve Injections
APC 0203: Level IV Nerve Injections
We expressed concern to the APC Panel that APC 0203 and APC 0207
appear to violate the 2 times rule. After careful consideration of new
data presented during the February 2004 meeting, the APC Panel
recommended moving CPTs 64420 (Nerve block injection, intercostal
nerve), 64630 (Injection treatment of nerve), 64640 (Injection
treatment of nerve), and 62280 (Treatment of a spinal cord lesion) from
APC 0207 to APC 0206. The APC Panel also recommended moving CPT code
62282 (Treatment of a spinal canal lesion) from APC 0207 to APC 0203.
After reviewing more recent, complete calendar year data that was
not available in February 2004, we proposed to accept only the APC
Panel's recommendation to move CPTs 64630 and 64640 from APC 0207 to
APC 0206 and to make some other changes that we believed were
appropriate to improve the nerve injection APCs' clinical and resource
homogeneity, as shown in Tables 7, 8, and 9 of the proposed rule.
We received two comments regarding our proposed reassignment of
four CPT codes from APC 0203 to APC 0207 to address an apparent
violation of the 2 times rule.
Comment: Commenters urged CMS not to finalize the proposed changes
to CPT codes 64620 (Injection treatment of nerve), 64680 (Injection
treatment of nerve), 62263 (Lysis epidural adhesions) and 62264
(Epidural lysis on single day), which we proposed to move from APC 0203
to APC 0207. The commenters stated that the proposed payment for these
services was well below the cost of the resources required to provide
the services at an acceptable standard of care. The commenters
requested that we not move these four codes from APC 0203.
Response: After further analysis, we agree with the commenters that
CPT codes 64620, 62263, and 62264 should remain in APC 0203 based on
clinical and resource homogeneity with the services in APC 0203.
Therefore, in this final rule with comment period, we are not moving
these three codes from APC 0203, as displayed in Table 9B below.
However, based on our final CY 2003 hospital data for CPT code
64680, utilizing over half of the several hundred total bills for this
service for calculation of median hospital costs, we continue to
believe that the resources and clinical characteristics of destruction
of the celiac plexus by neurolytic nerve agent are most compatible and
homogeneous with those services in Level III Nerve Injections, APC
0207. Therefore, in this final rule with comment period, we are
adopting as final the proposed movement of CPT code 64680 from APC 0203
to APC 0207, as displayed in Table 9B below.
Accordingly, all of the final APC reassignments of nerve injections
codes in this final rule with comment period are displayed below in
Tables 7, 8, 9A, and 9B.
[[Page 65700]]
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[[Page 65701]]
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8. Anterior Segment Eye Procedures
APC 0232: Level I Anterior Segment Eye Procedures
APC 0233: Level II Anterior Segment Eye Procedures
We expressed concern to the APC Panel at its February 2004 meeting
that APC 0233 appears to violate the 2 times rule. We suggested moving
CPT codes 65286 (Repair of eye wound), 66030 (Injection treatment of
eye), and 66625 (Removal of iris) from APC 0233 to APC 0232. The APC
Panel agreed and recommended that we move CPT codes 65286, 66030, and
66625 from APC 0233 to APC 0232.
We proposed to accept the APC Panel's recommendation and to
reassign these three codes. We received one public comment on our
proposal.
Comment: One commenter asserted that the costs for performing the
procedures under CPT codes 65286 and 66625 are similar to the costs for
performing procedures in APC 0233 and requested that these codes not be
moved to APC 0232.
Response: After further analysis, we continue to believe that the
resources and clinical characteristics of codes 62586 and 66625 are
most compatible and homogeneous with those services in Level I Anterior
Segment Eye Procedures, APC 0232.
Therefore, in this final rule with comment period, we are adopting
as final without modification our proposal and are moving CPT codes
65286, 66030, and 66625 from APC 0233 to APC 0232 as shown in the Table
10 below.
[GRAPHIC] [TIFF OMITTED] TR15NO04.008
[[Page 65702]]
9. Pathology
APC 0343: Level II Pathology
APC 0344: Level III Pathology
We expressed concern to the APC Panel at its February 2004 meeting
that APC 0343 appears to violate the 2 times rule. We suggested moving
CPT code 88346 (Immunoflourescent study) from APC 0343 to APC 0344. The
APC Panel concurred with our proposal.
We proposed to accept the APC Panel's recommendation and to move
CPT code 88346 from APC 0343 to APC 0344. We received one public
comment on our proposal.
Comment: One commenter requested that CMS split APC 0344 into two
APCs to create another level for the pathology procedures. The
commenter stated that creation of another level would lead to more
economically homogenous APCs to provide payment that more closely
covers the costs of the procedures. The commenter pointed out that APC
0344, as currently configured, violates the 2 times rule and
recommended that CMS split APC 0344 into two APCs and that CMS should
assign them to a newly created APC rather than finalize its proposal to
assign the new computer-assisted image analysis procedures to APC 0344.
Response: We believe that our proposed reassignment of CPT code
88346 from APC 0343 to 0344, as recommended by the APC Panel, will
improve the resource and clinical homogeneity of the APCs. We are
reluctant to make further reassignments without hospital cost data to
support changes. Several of the codes that the commenter is concerned
about, including APC codes 88360 (Morphometric analysis, tumor
immunohistochemistry, quantitative or semiquantitative, each antibody;
manual), 88368 (Morphometric analysis, in situ hybridization, each
probe; manual), and 88367 (Morphometric analysis, in situ
hybridization, each probe; using computer assisted technology) were new
in CY 2004 and CY 2005 and, as such, we do not have available claims
data for analysis.
Given the new codes mentioned by the commenter and the 2 times rule
violations in APC 0342 and 0344, we expect that we will want to solicit
the advice of the APC Panel regarding the configuration of all the
pathology APCs: 0342, 0343, 0344, and 0661, at their next meeting. We
will reexamine the APCs for future updates to the OPPS, but will not
make other changes to the APCs at this time.
In this final rule with comment period, we are adopting as final
without modification our proposal and are moving CPT code 88346 from
APC 0343 to APC 0344.
10. Immunizations
APC 0355: Level III Immunizations (for CY 2005: Level I Immunizations)
APC 0356: Level IV Immunizations (for CY 2005: Level II Immunizations)
We expressed concern to the APC Panel at its February meeting that
APCs 0355 and 0356 appear to violate the 2 times rule. In order to
eliminate this violation, we suggested moving CPT 90636 (Hepatitis A/
Hepatitis B vaccine, adult dose, intramuscular use) from APC 0355 to
APC 0356. We also suggested moving CPT codes 90375 (Rabies immune
globulin, intramuscular or subcutaneous), 90740 (Hepatitis B vaccine,
dialysis or immunosuppressed patient, intramuscular), 90723
(Diphtheria-pertussis-tetanus, Hepatitis B, Polio vaccine,
intramuscular), and 90693 (Typhoid vaccine, AKD, subcutaneous) from APC
0356 to APC 0355.
The APC Panel recommended moving CPT 90636 from APC 0355 to APC
0356 and CPT codes 90740, 90723, and 90693 from APC 0356 to APC 0355.
The APC Panel delayed making a recommendation on CPT 90375 and
requested that we collect additional cost data on this procedure for
discussion at the next scheduled APC Panel meeting.
In the August 16, 2004 proposed rule, we proposed to accept the APC
Panel's recommended changes to move CPT code 90740 from APC 0356 to
0355, and to move CPT code 90636 from 0355 to 0356. Based on our review
of more recent claims data than were available to the APC Panel, we
also determined that the medians for CPT codes 90693 and 90375 are
below the $50 drug packaging threshold. Therefore, we also proposed to
package both CPT codes 90693 and 90375 and to change the status
indicator for CPT code 90723 to ``E'' because it is not payable by
Medicare.
We received one public comment relating to CPT code 90740.
Comment: One commenter requested that CMS not reassign CPT code
90740 Recombivax 40mcg/mL (a brand name for Hepatitis B vaccine), from
APC 0356 (Level II Immunizations) to APC 0355 (Level I Immunizations),
as proposed. The commenter stated that the CMS median cost of $5.55 is
erroneous and that the lowest published price for Recombivax 40mcg/mL
in the Federal Supply Schedule is $79.33. Therefore, the commenter
believed that code 90740 does not violate the 2 times rule when
assigned to APC 0356.
Response: We are using the CY 2003 hospital claims as the basis for
payment and we believe we have adequate claims on which to base payment
for CPT code 90740 for CY 2005. We were able to use 99 percent of the
claims for CPT code 90740 for median calculation and believe that our
assignment of CPT code 90740 for CY 2005 is appropriate.
In this final rule with comment period, we are adopting as final
without modification our proposal and are moving CPT code 90740 from
APC 0356 to APC 0355 and CPT code 90636 from APC 0355 to APC 0356, as
shown in Table 11, and packaging both CPT codes 90693 and 90375.
[GRAPHIC] [TIFF OMITTED] TR15NO04.009
[[Page 65703]]
11. Pulmonary Tests
APC 0367: Level I Pulmonary Tests
APC 0368: Level II Pulmonary Tests
APC 0369: Level III Pulmonary Tests
We expressed concern to the APC Panel at its February 2004 meeting
that APC 0369 appears to violate the 2 times rule. We suggested moving
CPT code 94015 (Patient recorded spirometry) from APC 0369 to APC 0367.
The APC Panel concurred with our proposal.
In the August 16, 2004 proposed rule, we proposed to accept the APC
Panel's recommendation and to move CPT code 94015 from APC 0369 to APC
0367. In addition, during our analysis of more recent claims data
following the APC Panel meeting, we noted that APC 0367 violated the 2
times rule. Therefore, we proposed to reassign CPT codes 94375, 94750,
94450, 94014, 94690, and 93740 to APC 0368.
We did not receive any public comments on our proposal.
Accordingly, in this final rule with comment period, we are adopting as
final without modification our proposal and are moving CPT code 94015
from APC 0369 to APC 0367 and reassigning CPT codes 93740, 94014,
94375, 94450, 94690, and 94750 to APC 0368, as shown in Table 12A.
[GRAPHIC] [TIFF OMITTED] TR15NO04.010
12. Clinic Visits
APC 0600: Low Level Clinic Visits
We expressed concern to the APC Panel at its February 2004 meeting
that APC 0600 appears to violate the 2 times rule. We suggested moving
HCPS code G0264 (Assessment other than CHF, chest pain, asthma) to a
higher level clinic visit. The APC Panel recommended that we not make
any changes to APC 0600.
We proposed to accept this recommendation and not make any changes
to APC 0600 for CY 2005. We received one public comment on our proposal
from a provider group.
Comment: One comment recommended that CMS investigate further the
apparent two times violation in APC 0600. The commenter believed that,
although the APC Panel did not recommend reassignment of HCPCS code
G0264 (Initial nursing assessment of patient directly admitted to
observation with diagnosis other than CHF, chest pain or asthma or
patient directly admitted to observation with diagnosis of CHF, chest
pain or asthma when the observation stay does not qualify for G0244),
in order to remedy the apparent violation, CMS should make the
reassignment of G0264 to a much higher level clinic visit (APC 0602,
High Level Clinic Visit) due to the resources involved in directly
admitting a patient to observation. The commenter provided examples of
services that the commenter believed are part of the initial
observation nursing assessment provided by a hospital, including
patient registration, comprehensive nursing clinical admission
assessment, initiation of physician orders, coordination and scheduling
of ancillary services, administration of medications, and assessment of
discharge planning needs.
Response: We do not agree with the commenter's assertion that the
services coded using G0264 are necessarily more resource intensive than
a low-level clinic visit. The beneficiary whose observation stay would
be coded using G0264 presents to the hospital following a physician
visit. The beneficiary has already been assessed by the physician who,
as a result of the assessment, has decided that observation care is
warranted. We are concerned that hospitals may be attributing costs to
the initial nursing assessment that are more appropriately attributable
to observation services themselves, such as administration of
medications, scheduling of tests to be conducted during the period of
observation, and discharge planning. It is not apparent why the
services provided in the hospital associated with admission to
observation care (including some of those listed by the commenter)
should require the resources of a High Level Clinic Visit (APC 0602) as
the commenter suggested. Thus, we agree with the APC Panel's
recommendation to leave G0264 in APC 0600.
Accordingly, in this final rule with comment period, we are
adopting as final our proposal not to make any changes to APC 0600 for
CY 2005.
13. Other APC Assignment Issues
We received a number of comments about specific APC assignments and
payment amounts that were generated by our proposed rates or proposed
changes to HCPCS code APC assignments resulting from our revisions to
address violations of the 2 times rule. Those changes were not all
specifically discussed in the proposed rule, but were open to comment.
We respond to these comments in this section of the final rule.
a. Catheters for Brachytherapy Services
Comment: One commenter asked that CMS consider carefully in which
APCs to place new CPT codes 19296, 19297, and 19298 (for placement of
catheters into the breast for brachytherapy) because the services have,
heretofore, been coded under unlisted code 19499, which is assigned to
APC 0028 (Level I Breast Surgery) and with a proposed payment amount of
$1,081 for CY 2005. The commenter believed that this
[[Page 65704]]
proposed amount is too low to appropriately reflect the costs of these
services.
Response: We have assigned new CPT codes 19296 and 19298 in New
Technology APC 1524 (New Technology-Level XIV ($3,000-$3,500)) with a
payment amount of $3,250 and CPT code 19297 in APC 1523 (New
Technology-Level XXIII ($2,500-$3,000)) with a payment amount of $2,750
for CY 2005 OPPS. These are new codes and the APC assignments were not
included in the proposed rule. Therefore, the APC assignments are
subject to comment.
b. Peripherally Inserted Central Catheters (PICC)
We received one comment regarding our proposed APC reassignment of
CPT codes 36568 (Insertion of peripherally inserted central venous
catheter (PICC), without subcutaneous port or pump; under 5 years of
age) and 36569 (Insertion of peripherally inserted central venous
catheter (PICC), without subcutaneous port or pump; age 5 years or
older to APC 0187 (Miscellaneous placement/repositioning). We made the
proposal based on a recommendation by the APC Panel during its February
2004 meeting.
Comment: One commenter requested that we not reassign CPT codes
36568 and 36569 from APC 0032 to APC 0187 as proposed.
Response: We proposed to reassign the PICC lines to APC 0187 based
on our agreement with the APC Panel that there are significant
differences in the clinical complexity and resource use associated with
the procedures assigned to APC 0032 compared to PICC line insertion. We
will reevaluate the APC assignment of the PICC line insertion once we
have sufficient data to evaluate the assignment.
c. External Fixation Devices
Comment: One commenter indicated that APC 0046 (Open/Percutaneous
Treatment Fracture) contains violations of the two times rules and
should be broken into multiple APCs so that CPT codes 20690 (Apply bone
fixation device) and 20692 (Apply bone fixation device), which are for
application of external fixation devices, could be paid appropriate
amounts. Other commenters asked that CMS require that claims for these
codes must contain codes for the devices and asked that we revise the
definition of C1713 (Anchor/screw for opposing bone to bone or soft
tissue to bone (implantable)) to also apply to external fixation
devices and to remove the requirement that the device be implantable.
One commenter also asked that we instruct providers to bill code 20690
or 20692 when external fixation is provided with the reduction of a
fracture and asked that we create a new APC to contain CPT codes 20690
and 20692.
Response: CPT codes 20690 and 20692 are currently in APC 0050 and
no changes were proposed for 2005 OPPS. There are no 2 times violations
in the APC in which they are located and each of these codes represents
approximately one percent of the volume in the APC. Therefore we see no
reason to create a new APC for these codes. The CPT codes for treatment
of a fracture often include with or without fixation in the definition
of the code. Where fixation is included in the definition of the code,
it would be miscoding to also report 20690 or 20692; these codes should
be reported if, and only if, fixation is not included in the definition
of the CPT code for treatment of the fracture. Providers should review
the CPT instructions and look to the AMA's guidance on coding if they
have questions about when these codes should be reported.
d. Apheresis
Comment: Two commenters disagreed with our proposed reassignment of
CPT code 36515 (Apheresis, adsorp/reinfuse) to APC 0111 (Blood Product
Exchange) and recommended that the code be reassigned to APC 0112
(Apheresis, Photopheresis and Plasmapheresis). One of the commenters, a
medical specialty society, indicated that the procedure involves an
expensive disposable supply item that costs more than the proposed
payment rate for APC 0111. In addition, this commenter stated that the
proposed payment rate would be significantly less than the physician's
office payment, which the commenter concluded indicated that the charge
data used to establish the median cost of the procedure may be
incorrect.
Response: APC assignments are based on clinical homogeneity and
comparable resource utilization for all CPT and HCPCS codes within an
APC. After careful review, we disagree with the commenters that CPT
code 36515 should be reassigned to APC 0112. We believe that the
resources required for CPT code 36515 are more similar to the other CPT
codes in APC 0111. Thus, for CY 2005, we are adopting as final our
proposal to assign CPT code 36515 to APC 0111, effective January 1,
2005.
e. Imaging for Intravenous Cholangiogram (IVC) Filter Placement and
Breast Biopsy
Comment: One commenter requested that we move CPT code 75940
(Percutaneous placement of IVC filter, radiological supervision and
interpretation) from APC 0187 (Miscellaneous Placement/Repositioning)
to APC 0280 (Level III Angiography and Venography Except Extremity) and
CPT code 76095 (Stereotactic localization guidance for breast biopsy or
needle placement, each lesion, radiological supervision and
interpretation) from APC 0187 (Miscellaneous Placement/Repositioning)
to APC 0289 (Needle Localization for Breast Biopsy). The commenter
believed that imaging for IVC filter placement and breast biopsy are
entirely unrelated services to the central venous access surgical
procedures comprising the majority of the codes in APC 0187.
Response: We understand the commenter's concern regarding the
clinical inconsistency between the services described by CPT codes
75940 and 76095, which are assigned to APC 0187, and the central venous
access (CVA) procedures that are also assigned to APC 0187. However, we
disagree with the commenter's recommendation that CPT codes 75940 and
76095 be reassigned. First, if we were to accept the commenter's
recommendation to reassign CPT code 75940 to APC 0280 and CPT code
76095 to APC 0289, the resource homogeneity of those two APCs would be
compromised, and we would be significantly overpaying CPT code 75940
and underpaying CPT code 76095 based on the median costs of those two
codes relative to the median costs of the procedures currently assigned
to APCs 0280 and 0289, respectively. Further, we lack data for a number
of the CVA codes in APC 0187 because they are new codes that were
established in CY 2004. We believe that these new CVA codes are
clinically similar to the codes that comprise APC 0187, and we estimate
that they are also similar in terms of resource costs, which is why we
assigned them to APC 0187. Once we have accumulated data for these new
codes, we will review the configuration of APC 0187, and make whatever
changes are appropriate in future updates. Therefore, we are
maintaining CPT codes 75940 and 76095 in APC 0187 for CY 2005.
f. Hysteroscopic Endometrial Ablation Procedures
Comment: Some commenters opposed the APC Panel recommendation that
both CPT codes 0009T (Endometrial cryoablation) and 58563
(Hysteroscopic endometrial ablation) be assigned to APC 0387 (Level II
Hysteroscopy) in CY 2005. The commenters were concerned that adding
endometrial cryoablation
[[Page 65705]]
(CPT 0009T) to APC 0387 would seriously weaken the clinical homogeneity
of APC 0387 because CPT 0009T (Endometrial ablation with ultrasonic
guidance) does not use hysteroscopy, and it requires an ultrasound
machine and a separate capital unit, or compressor console, to provide
cryotherapeutic energy. Instead, the commenters urged CMS not to keep
CPT code 58563 in APC 0387, but rather, to assign it to APC 0202, in
addition to assigning code 0009T to APC 0202, as we had proposed. One
commenter argued that the clinical homogeneity of APC 0202 would be
enhanced by grouping the two endometrial ablation procedures that use
visualization to monitor and confirm the destruction of the endometrium
in the same APC. Moreover, moving both CPT codes 58563 and 0009T to APC
0202 would highlight APC 0202's clinical homogeneity as a more device-
intensive family of new technology procedures while better organizing
APC 0387 as the group of non-device hysteroscopic procedures involving
surgical removal or resection of intrauterine tissue for reasons other
than abnormal uterine bleeding (AUB). The same commenter also believed
that assigning both codes to APC 0202 would negate any inappropriate
incentives to use either treatment because of payment. Other commenters
asked that CMS create a new APC for endometrial cryoablation and place
that APC on the device-dependent list as it did for cryoablation of the
prostate because they have found that the device is 70 percent of the
total cost of endometrial cryoablation. The commenters asked that the
new APC be paid at least $3,448 to appropriately reflect the hospital's
cost of the service.
Response: After careful consideration of the comments, we have
decided to make final for CY 2005 our proposal to retain hysteroscopic
endometrial ablation (CPT code 58563) in APC 0387. In addition, we are
making final for CY 2005 our proposal to assign endometrial
cryoablation with ultrasonic guidance to APC 0202. (We note that CPT
code 0009T for endometrial cryoablation with ultrasonic guidance is
replaced by new CPT code 58356 for CY 2005.). We believe that the need
for a hysteroscope to perform hysteroscopic endometrial ablation makes
it similar to the other services in APC 0387. On the other hand,
Endometrial cryoablation uses a device but not a hysteroscope and,
therefore, is more clinically compatible with APC 0202, which contains
other resource intensive gynecologic services that also use a device
but not a hysteroscope. Moreover, APC 0202 is a device-dependent APC
and, therefore, a more appropriate placement for a procedure that uses
a device.
g. Hysteroscopic Female Sterilization
Comment: One commenter indicated that the AMA intended create a new
CPT level III tracking code for hysteroscopic female sterilization for
CY 2005 and urged CMS to assign it to APC 0202. The commenter indicated
that this new service places implants through a hysteroscope to occlude
the fallopian tubes and that, therefore, it should be assigned to APC
0202, which would provide appropriate payment for this new service for
which the implants cost $1,000 to $1,500.
Response: This service is represented by new CPT code 58565
(Hysteroscopic fallopian tube cannulation and micro insert placement),
which was created after the issuance of the proposed rule. We are
placing this new code to APC 0202 for CY 2005 for the OPPS. The
placements of new codes in APCs, such as this code, are subject to
comment during the comment period of this final rule with comment
period.
h. Urinary Bladder Residual Study
Comment: One commenter asked us to keep CPT code 78730 (Urinary
bladder residual study) in APC 0404 (Renal and Genitourinary Studies
Level I) instead of moving it to APC 0340 (Minor Ancillary Procedures).
The commenter noted that this code is being misused to report other
than urinary bladder residual imaging.
Response: CPT code 78730 was created and originally valued for the
Medicare Physician Fee Schedule as a procedure that required the
services of a nuclear medicine technician. Subsequently, the use of the
code has changed so that it is now used primarily by urologists. We do
not believe that urologists perform services requiring nuclear medicine
technicians and so, as the commenter pointed out, it appears that the
code may now be utilized for coding a service that is different from
that for which it was created.
However, we are not reassigning the code at this time, as requested
by the commenter, pending further review. To that end, we would
appreciate submission of resource data from other physician specialties
that use CPT code 78730 for us to review in the context of our hospital
data so that we can examine this issue further.
i. Intracranial Studies, Electrodiagnostic Testing, Autonomic Testing,
and EEG
We received one comment relating to the APC assignments for several
electrodiagnostic testing, autonomic testing, and EEG codes.
Comment: One commenter requested that CPT code 93888 (Intracranial
study) be moved from APC 0266 (Level II Diagnostic Ultrasound Except
Vascular) and assigned to APC 0267 (Level III Diagnostic Ultrasound
Except Vascular) as it was in CY 2002; that CPT codes 95870 (Muscle
test, nonparaspinal), 95900 (Motor nerve conduction test), and 95904
(Sensory NCV) be assigned to APC 0218 (Level II Nerve Muscle Tests);
that CPT codes 95921, 95922, and 95923 (Autonomic nerve function tests)
be assigned to APC 216 (Level III Nerve and Muscle Tests); and that CPT
codes 95953 and 95956 (EEG monitoring) be assigned to APC 209 (Extended
EEG Studies and Sleep Studies, Level II).
Response: Based on our final CY 2003 hospital data for CPT codes
93888, 95870, 95900, 95904, 95921, and 95922, we continue to believe
that the resources and clinical characteristics of those codes are most
compatible with other services in the APCs to which they are assigned.
We made no proposal to change any of those APC assignments. Therefore,
in this final rule with comment period, we are finalizing our continued
placement of CPT code 93888 in APC 0266; CPT codes 95870, 95900, and
95904 in APC 0215; and CPT codes 95921 and 95922 in APC 0218. We are
moving CPT code 95923 from APC 0215 to APC 0218 because the resources
for this code are most compatible and homogenous with those services in
Level II Nerve and Muscle Tests.
Based on our further review of CPT codes 95953 and 95956, we are
moving these two CPT codes, as well as code 95950, to APC 0209
(Extended EEG Studies and Sleep Studies, Level II). Based on our review
of clinical and resource use characteristics of these CPT codes, we
discovered that 95953, 95956 and 95950 all are more homogenous with
procedures assigned to APC 0209 than in their current APCs. Although we
did not propose to make these reassignments in the proposed rule, based
in part on the comment received and our further review, we are making
these reassignments in this final rule with comment period in the
interest of clinical and resource use homogeneity.
Accordingly, we are reassigning the CPT codes relating to
intracranial studies, electrodiagnostics testing, autonomic testing,
and EEG to APCs, as displayed below in Table 12B.
[[Page 65706]]
[GRAPHIC] [TIFF OMITTED] TR15NO04.011
j. Therapeutic Radiation Treatment
Comment: Some commenters objected to the proposed movement of CPT
code 77370 (Radiation physics consult) from APC 0305 (Level II
Therapeutic Radiation Treatment Preparation) to APC 0304 (Level I
Therapeutic Radiation Treatment Preparation), with a proposed reduction
in the payment rate by 51 percent from the CY 2004 payment rate of
$200.60. The commenters indicated that the current CY 2004 payment rate
is already inadequate. The commenters expressed concern that the
proposed payment of $98.27 would not compensate for the costs incurred
to deliver this service and urged that CPT code 77370 remain in APC
0305.
Response: The median of $134.22 for CPT code 77370 was based on 95
percent of the total CY 2003 claims (33,070 single procedure claims out
of 34,792 total claims). Based on these claims data, we believe that
the movement of CPT code 77370 from APC 0305 (with a proposed median of
$229.92) to APC 0304 (with a proposed median of $99.92) is appropriate.
Therefore, we are finalizing our movement of CPT code 77370 from APC
0305 to APC 0304 for CY 2005.
k. Hyperthermia Procedures
Comment: One commenter expressed concern about the 9-percent
decrease in the proposed payment rate for hyperthermia procedures (CPT
codes 77600 through 77605) assigned to APC 0314 (Hyperthermic
Therapies). The commenter asserted that the hospital charges do not
reflect the tremendous capital costs associated with hyperthermia
procedures. The commenter suspected that the questionably high
utilization for these procedures may be a result of miscoding. The
commenter requested that CMS consider the hyperthermia practice expense
data submitted through the Practice Expense Advisory Council (PEAC) and
Medicare Physician Fee Schedule (MPFS) processes. The commenter urged
CMS to maintain the CY 2004 payment rates for hyperthermia through CY
2005 to allow additional time for the commenter to educate providers on
the proper coding and cost reporting for hyperthermia.
Response: We believe the data do not support the commenter's
concern that a high utilization for these codes is indicative of
miscoding, as we do not consider 552 total claims to reflect a high
utilization that gives rise to question. The payment rate for APC 0314
for CY 2005 noted in the proposed rule was set using 86 percent of the
total claims (that is, 452 single procedure claims out of 522 total
claims), which we consider to be sufficiently robust for ratesetting
purposes. Therefore, we will not consider practice expense data
submitted through the PEAC or MPFS processes.
l. Physician Blood Bank Services
Comment: One commenter asked that CMS place CPT codes 86077, 86078
and 86079 (Physician blood bank services) into an APC and make payment
for them under the OPPS. The commenter indicated that the current
assignment of status indicator ``A'' is assigned to HCPCS codes that
are paid under another fee schedule but that these services are not
paid under any other fee schedule or payment system and, therefore, the
hospital is not being paid for these services. The commenter noted that
the services had status indicator ``X'' for minor services and had APC
assignments in the CY 2003 OPPS.
Response: We agree and have assigned these CPT codes to APC 343
with status indicator ``X.'' These services consist mainly of physician
professional services, which are paid through the Medicare Physician
Fee Schedule, but we expect there may also be some hospital resources
utilized. We have given these codes a condition code of ``NI'' (new
interim) in this interim final rule with comment because they were not
paid under the OPPS in CY 2004 and because we were not able to use the
data for these codes in the calculation of the median cost for APC 343.
m. Caloric Vestibular Test
Comment: One commenter requested an explanation for the proposed
movement of CPT code 92543 (Caloric vestibular test) from APC 0363
(Level I Otorhinolaryngologic Function Tests) to APC 0660 (Level 2
Otohinplaryngologic Function Tests), and CPT codes 92553 (Audiometry,
air and bone) and 92575 (Sensorineural acuity test) from APC 0365
(Level II Audiometry) to APC 0364 ((Level I Audiometry).
Response: We regularly review CPT codes to ensure that they are in
appropriate clinical APCs, based on resource use and clinical
homogeneity. Upon review, we have found that code 92543 fits more
appropriately in a higher-paying APC in the same family of
otorhinolaryngologic function test APCs, while codes 92553 and 92575
fit in a lower-paying APC in the same family of audiometry APCs.
n. APC 0365--Level II Audiometry
Comment: One commenter stated that the services in APC 0365 (Level
II Audiometry) are not clinically homogeneous and also violate the 2
times rule, sometimes by a spread of 300 percent. The commenter asked
that CMS split the APC into two APCs: one containing CPT codes 92604,
92602, 92603, 92601 and 92561 and a second new APC containing CPT codes
92577, 92579, 92582, 92557.
Response: We agree that revision of this APC would result in
improved clinical homogeneity and better grouping of services with
similar resources. Therefore, we are establishing a new APC 0366 (Level
III Audiometry), and are placing in the new APC those
[[Page 65707]]
services that are specific to aural rehabilitation after cochlear
implantation: CPT codes 92601, 92602, 92603, and 92604.
o. Noncoronary Intravascular Ultrasound (IVUS)
Comment: One commenter requested that CMS keep CPT code 37250
(Intravascular ultrasound (non-coronary vessel) during diagnostic
evaluation and/or therapeutic intervention; initial vessel) in APC 0670
(Level II Intravascular and Intracardiac Ultrasound and Flow Reserve)
and to use only those claims that capture intravascular ultrasound
(IVUS) device-related costs to calculate the median cost for this
procedure.
Response: We assigned CPT 37250 to APC 0416 (Level I Intravascular
and Intracardiac Ultrasound and Flow Reserve) in the proposed rule. We
created two levels for IVUS by creating APC 0416 in order to recognize
both the clinical and resource use differences between the coronary and
noncoronary vessel procedures, as well as the initial vessel and each
additional vessel procedures. Prior to creation of APC 0416, all IVUS
procedures, coronary and noncoronary, as well as initial vessel and
each additional vessel, were assigned to APC 0670. Based on analysis of
our CY 2003 hospital claims data, we concluded that the services in APC
0670 had widely varying median costs, with lower median costs for both
the each additional vessel (noncoronary and coronary) and initial
noncoronary vessel services in APC 0670, as compared with the initial
coronary vessel IVUS. W