[Federal Register: May 18, 2004 (Volume 69, Number 96)]
[Proposed Rules]
[Page 28195-28817]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr18my04-19]
[[Page 28195]]
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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 403, et al.
Medicare Program; Proposed Changes to the Hospital Inpatient
Prospective Payment Systems and Fiscal Year 2005 Rates; Proposed Rule
[[Page 28196]]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Parts 403, 412, 413, 418, 460, 480, 482, 483, 485, and 489
[CMS-1428-P]
RIN 0938-AM80
Medicare Program; Proposed Changes to the Hospital Inpatient
Prospective Payment Systems and Fiscal Year 2005 Rates
AGENCY: Centers for Medicare and Medicaid Services (CMS), HHS.
ACTION: Proposed rule.
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SUMMARY: We are proposing to revise the Medicare hospital inpatient
prospective payment systems (IPPS) for operating and capital-related
costs to implement changes arising from our continuing experience with
these systems; and to implement a number of changes made by the
Medicare Prescription Drug, Improvement, and Modernization Act of 2003
(Pub. L. 108-173), enacted on December 8, 2003. In addition, in the
Addendum to this proposed rule, we describe the proposed changes to the
amounts and factors used to determine the rates for Medicare hospital
inpatient services for operating costs and capital-related costs. These
proposed changes would be applicable to discharges occurring on or
after October 1, 2004. We also are setting forth proposed rate-of-
increase limits as well as proposed policy changes for hospitals and
hospital units excluded from the IPPS that are paid on a reasonable
cost basis subject to these limits.
Among the policy changes that we are proposing to make are: Changes
to the classification of cases to the diagnosis-related groups (DRGs);
changes to the long-term care (LTC)-DRGs and relative weights; changes
in the wage data, labor-related share of the wage index, and the
geographic area designations used to compute the wage index; changes in
the qualifying threshold criteria for and the proposed approval of new
technologies and medical services for add-on payments; changes to the
policies governing postacute care transfers; changes to payments to
hospitals for the direct and indirect costs of graduate medical
education; changes to the payment adjustment for disproportionate share
rural hospitals; changes in requirements and payments to critical
access hospitals (CAHs); changes to the disclosure of information
requirements for Quality Improvement Organization (QIOs); and changes
in the hospital conditions of participation for discharge planning and
fire safety requirements for certain health care facilities.
DATES: Comments will be considered if received at the appropriate
address, as provided below, no later than 5 p.m. on July 12, 2004.
ADDRESSES:
Submitting Comments: We welcome comments from the public on all
issues set forth in this proposed rule to assist in fully considering
issues and developing policies. You can assist us by referencing the
file code CMS-1428-P and the specific ``issue identifier'' that
precedes the section on which you choose to comment.
Submit electronic comments to: http://www.accessdata.fda.gov/scripts/oc/dockets/commentdocket.cfm?AGENCY=CMS
or www.regulations.gov.
Mail written comments (an original and three copies) to the
following address only:
Centers for Medicare & Medicaid Services, Department of Health and
Human Services, Attention: CMS-1428-P, P.O. Box 8010, Baltimore, MD
21244-1850.
If you prefer, you may deliver, by hand or courier, your written
comments (an original and three copies) to one of the following
addresses:
Room 443-G, Hubert H. Humphrey Building, 200 Independence Avenue,
SW., Washington, DC 20201, or Room C5-14-03, Central Building, 7500
Security Boulevard, Baltimore, MD 21244-1850.
(Because access to the interior of the 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 commenters who wish to retain proof of filing by stamping
in and keeping an extra copy of the comments being filed.)
Comments mailed to those addresses specified as appropriate for
courier delivery may be delayed and could be considered late.
Because of staffing and resource limitations, we cannot accept
comments by facsimile (FAX) transmission.
Inspection of Public Comments: All comments received before the
close of the comment period will be 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 will post all electronic comments received before
the close of the period on its public Web sites. Written comments
received timely will be available for public inspection as they are
received, generally beginning approximately 4 weeks after publication
of a document, in room C5-12-08 of the Centers for Medicare & Medicaid
Services, 7500 Security Blvd., Baltimore, MD, on Monday through Friday
of each week from 8:30 a.m. to 5 p.m. Please call (410) 786-7197 to
schedule an appointment to view public comments.
For comments that relate to information collection requirements,
mail a copy of comments to the following addresses:
Centers for Medicare & Medicaid Services, Office of Strategic
Operations and Regulatory Affairs, Security and Standards Group, Office
of Regulations Development and Issuances, Room C4-24-02, 7500 Security
Boulevard, Baltimore, Maryland 21244-1850. Attn: Dawn Willinghan, CMS-
1428-P; and
Office of Information and Regulatory Affairs, Office of Management
and Budget, Room 3001, New Executive Office Building, Washington, DC
20503, Attn: Brenda Aguilar, CMS Desk Officer.
FOR FURTHER INFORMATION CONTACT: Jim Hart, (410) 786-9520, Operating
Prospective Payment, Diagnosis-Related Groups (DRGs), Wage Index, New
Medical Services and Technology, Standardized Amounts, Hospital
Geographic Reclassifications, Postacute Care Transfers, and
Disproportionate Share Hospital Issues.
Tzvi Hefter, (410) 786-4487, Capital Prospective Payment, Excluded
Hospitals, Graduate Medical Education, Critical Access Hospitals, and
Long-Term Care (LTC)--DRGs Issues.
Mary Collins, (410) 786-3189, CAH Bed Limits and Distinct Part Unit
Issues.
John Eppinger, (410) 786-4518, CAH Periodic Interim Payment Issues.
Maria Hammel, (410) 786-1775, Quality Improvement Organization
Issues.
Siddhartha Mazumdar, (410) 786-6673, Rural Community Hospital
Demonstration Project Issues.
Jeannie Miller, (410) 786-3164, Bloodborne Pathogens Standards,
Hospital Conditions of Participation for Discharge Planning, and Fire
Safety Requirements Issues.
Dr. Mark Krushat, (410) 786-6809, and Dr. Anita Bhatia, (410) 786-
7236 Quality Data for Annual Payment Update Issues.
SUPPLEMENTARY INFORMATION:
[[Page 28197]]
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Acronyms
ACGME--Accreditation Council on Graduate Medical Education
AHIMA--American Health Information Management Association
AHA--American Hospital Association
AOA--American Osteopathic Association
ASC--Ambulatory Surgical Center
BBA--Balanced Budget Act of 1997, Public Law 105-33
BIPA--Medicare, Medicaid, and SCHIP [State Children's Health
Insurance Program] Benefits Improvement and Protection Act of 2000,
Public Law 106-554
BLS--Bureau of Labor Statistics
CAH--Critical access hospital
CART--CMS Abstraction & Reporting Tool
CBSAs--Core-Based Statistical Areas
CC--Complication or comorbidity
CMS--Centers for Medicare & Medicaid Services
CMSA--Consolidated Metropolitan Statistical Area
COBRA--Consolidated Omnibus Reconciliation Act of 1985, Public Law
99-272
CoP--Condition of Participation
CPI--Consumer Price Index
CRNA--Certified registered nurse anesthetist
DRG--Diagnosis-related group
DSH--Disproportionate share hospital
ESRD--End-stage renal disease
FDA--Food and Drug Administration
FQHC--Federally qualified health center
FSES--Fire Safety Evaluation System
FTE--Full-time equivalent
FY--Federal fiscal year
GME--Graduate medical education
HCRIS--Hospital Cost Report Information System
HIPC--Health Information Policy Council
HIPAA--Health Insurance Portability and Accountability Act of 1996,
Public Law 104-191
HHA--Home health agency
HPSA--Health Professions Shortage Area
ICD-9-CM--International Classification of Diseases, Ninth Revision,
Clinical Modification
ICD-10-PCS--International Classification of Diseases, Tenth Edition,
Procedure Coding System
ICF/MRs--Intermediate care facilities for the mentally retarded
IME--Indirect medical education
IPPS--Acute care hospital inpatient prospective payment system
IPF--Inpatient psychiatric facility
IRF--Inpatient rehabilitation facility
JCAHO--Joint Commission on the Accreditation of Healthcare
Organizations
LAMA--Left Against Medical Advice
LTC-DRG--Long-term care diagnosis-related group
LTCH--Long-term care hospital
LSC--Life Safety Code
MCE--Medicare Code Editor
MCO--Managed care organization
MDC--Major diagnostic category
MDH--Medicare-dependent small rural hospital
MedPAC--Medicare Payment Advisory Commission
MedPAR--Medicare Provider Analysis and Review File
MEI--Medicare Economic Index
MGCRB--Medicare Geographic Classification Review Board
MMA--Medicare Prescription Drug, Improvement, and Modernization Act
of 2003, Public Law 108-173
MPFS--Medicare Physician Fee Schedule
MSA--Metropolitan Statistical Area
NECMA--New England County Metropolitan Areas
NCHS--National Center for Health Statistics
NCVHS--National Committee on Vital and Health Statistics
NFPA--National Fire Protection Association
NPR--Notice of Program Reimbursement
NQF--National Quality Forum
NVHRI--National Voluntary Hospital Reporting Initiative
OES--Occupational Employment Statistics
OIG--Office of the Inspector General
OMB--Executive Office of Management and Budget
O.R.--Operating room
OSCAR--Online Survey Certification and Reporting (System)
OSHA--Occupational Safety and Health Act
PACE--Programs of All-Inclusive Care for the Elderly
PIP--Periodic interim payment
PMS--Performance Measurement System
PMSAs--Primary Metropolitan Statistical Areas
PPS--Prospective payment system
PRA--Per resident amount
ProPAC--Prospective Payment Assessment Commission
PRRB--Provider Reimbursement Review Board
PS&R--Provider Statistical and Reimbursement System
QIO--Utilization and Quality Control Quality Improvement
Organization
RHC--Rural health clinic
RHQDAPU--Reporting Hospital Quality Data for Annual Payment Update
RRC--Rural referral center
SCH--Sole community hospital
SNF--Skilled nursing facility
SOCs--Standard occupational classifications
SOM--State Operations Manual
SSA--Social Security Administration
SSI--Supplemental Security Income
TEFRA--Tax Equity and Fiscal Responsibility Act of 1982, Public Law
97-248
UHDDS--Uniform Hospital Discharge Data Set
Table of Contents
I. Background
A. Summary
1. Acute Care Hospital Inpatient Prospective Payment System
(IPPS)
2. Hospitals and Hospital Units Excluded from the IPPS
a. IRFs
b. LTCH
c. IPFs
3. Critical Access Hospitals (CAHs)
4. Payments for Graduate Medical Education (GME)
B. Provisions of the Medicare Prescription Drug, Improvement,
and Modernization Act of 2003
C. Major Contents of this Proposed Rule
1. Proposed Changes to the DRG Reclassifications and
Recalibrations of Relative Weights
2. Proposed Changes to the Hospital Wage Index
3. Other Decisions and Proposed Changes to the PPS for Inpatient
Operating and GME Costs
4. Proposed Changes to the PPS for Capital-Related Costs
5. Proposed Changes for Hospitals and Hospital Units Excluded
from the IPPS
6. Proposed Changes to QIO Disclosure of Information
Requirements
7. Proposed Changes Relating to Medicare Provider Agreements:
Bloodborne Pathogens Standards, Hospital Conditions of Participation
for Discharge Planning, and Fire Safety Requirements for Certain
Health Care Facilities
8. Determining Prospective Payment Operating and Capital Rates
and Rate-of-Increase Limits
9. Impact Analysis
10. Recommendation of Update Factor for Hospital Inpatient
Operating Costs
11. Discussion of Medicare Payment Advisory Commission
Recommendations
II. Proposed Changes to DRG Classifications and Relative Weights
[[Page 28198]]
A. Background
B. DRG Reclassification
1. General
2. MDC 1 (Diseases and Disorders of the Nervous System):
Intracranial Hemorrhage and Stroke with Infarction
3. MDC 5 (Diseases and Disorders of the Circulatory System)
a. Heart Assist System Transplant
b. Cardiac Resynchronization Therapy and Heart Failure
c. Combination Cardiac Pacemaker Devices and Lead Codes
4. MDC 6 (Diseases and Disorders of the Digestive System):
Artificial Anal Sphincter
5. MDC 8 (Diseases and Disorders of the Musculoskeletal System
and Connective Tissue)
a. 360 Spinal Fusion
b. Multiple Level Spinal Fusion
6. MDC 15 (Newborns and Other Neonates with Conditions
Originating in the Perinatal Period)
7. MDC 20 (Alcohol/Drug Use and Alcohol/Drug Induced Organic
Mental Disorders): Drug-Induced Dementia
8. MDC 22 (Burns): Burn Patients on Mechanical Ventilation
9. Pre-MDC: Tracheostomy
10. Medicare Code Editor (MCE) Changes
11. Surgical Hierarchies
12. Refinement of Complications and Comorbidities (CC) List
13. Review of Procedure Codes in DRGs 468, 476, and 477
a. Moving Procedure Codes from DRG 468 or DRG 477 to MDCs
b. Reassignment of Procedures among DRGs 468, 476, and 477
c. Adding Diagnosis or Procedure Codes to MDCs
14. Pancreatic Islet Cell Transplantation in Clinical Trials
15. Changes to the ICD-9-CM Coding System
16. Other Issues
a. Craniotomy Procedures
(1) Unruptured Cerebral Aneurysms
(2) GLIADEL[reg] Chemotherapy Wafers
(3) DRG 3 (Craniotomy Age 0-17)
b. Coronary Stent Procedures
c. Severe Sepsis
d. Implantable Cardiac Defibrillators
C. Recalibration of DRG Weights
D. Proposed LTC-DRG Reclassifications and Relative Weights for
LTCHs for FY 2005
1. Background
2. Proposed Changes in the LTC-DRG Classifications
a. Background
b. Patient Classifications into DRGs
3. Development of the Proposed FY 2005 LTC-DRG Relative Weights
a. General Overview of Development of the LTC-DRG Relative
Weights
b. Data
c. Hospital-Specific Relative Value Methodology
d. Low-Volume LTC-DRGs
4. Steps for Determining the Proposed FY 2005 LTC-DRG Relative
Weights
E. Proposed Add-On Payments for New Services and Technologies
1. Background
2. Other Provisions of Section 503 of Public Law 108-173
3. FY 2005 Status of Technology Approved for FY 2004 Add-On
Payments
a. Drotrecogin Alfa (Activated)--Xigris[reg]
b. InFUSETM (Bone Morphogenetic Proteins (BMPs) for
Spinal Fusions)
4. Reevaluation of FY 2004 Applications That Were Not Approved
5. FY 2005 Applicants for New Technology Add-On Payments
a. InFUSETM Bone Graft (Bone Morphogenetic Proteins
(BMPs) for Tibia Fractures)
b. Norian Skeletal Repair System(SRS)[reg] Bone Void Filler
c. InSync[reg] Defibrillator System (Cardiac Resynchronization
Therapy with Defibrillation (CRT-D))
d. GliaSite[reg] Radiation Therapy System (RTS)
e. Natrecor[reg]--Human B-Type Natriuretic Peptide (hBNP)
f. Kinetra[reg] Implantable Neurostimulator for Deep Brain
Stimulation
g. Intramedullary Skeletal Kinetic Distractor (ISKD)
h. ActiconTM Neosphincter
i. TandemHeartTM Percutaneous Left Ventricular Assist
System
j. AquadexTM System 100 Fluid Removal System (System
100)
III. Proposed Changes to the Hospital Wage Index
A. Background
B. Revised OMB Definitions for Geographical Statistical Areas
1. Current Labor Market Areas Based on MSAs
2. Core-Based Statistical Areas
3. Revised Labor Market Areas
a. New England MSAs
b. Metropolitan Divisions
c. Micropolitan Areas
d. Transition Period
C. Proposed Occupational Mix Adjustment to Proposed FY 2005
Index
1. Development of Data for the Occupational Mix Adjustment
2. Proposed Calculation of the Occupational Mix Adjustment
Factor and the Proposed Occupational Mix Adjusted Wage Index
D. Worksheet S-3 Wage Data for the Proposed FY 2005 Wage Index
Update
E. Verification of Worksheet S-3 Wage Data
F. Computation of the Unadjusted Wage Index
G. Computation of the Proposed FY 2005 Blended Wage Index
H. Proposed Revisions to the Wage Index Based on Hospital
Redesignation
1. General
2. Effects of Reclassification
3. FY 2005 Issues
a. FY 2005 MGCRB Reclassifications
b. Implementation of New MSAs
c. Redesignations under Section 1886(d)(8)(B) of the Act
d. Reclassifications Under Section 508 of Public Law 108-173
e. Proposed Wage Index Adjustment Based on Commuting Patterns of
Hospital Employees
(1) Data
(2) Qualifying Counties
(3) The Adjustment
(4) Automatic Adjustments
4. Proposed FY 2005 Reclassifications
I. Process for Requests for Wage Index Data Corrections
1. Worksheet S-3 Wage Data
2. Occupational Mix Data
3. All FY 2005 Wage Index Data
J. Proposed Revision of the Labor-Related Share of the Wage
Index
IV. Other Decisions and Proposed Changes to the IPPS for Operating
Costs and GME Costs
A. Postacute Care Transfer Payment Policy
1. Background
2. Proposed Changes to DRGs Subject to the Postacute Care
Transfer Policy
B. Payments for Inpatient Care in Providers That Change
Classification Status During a Patient Stay
C. Geographic Reclassifications--Definitions of Urban and Rural
Areas
D. Equalization of Urban and Rural Standardized Amounts
E. Reporting of Hospital Quality Data for Annual Hospital
Payment Update
1. Background
2. Requirements for Hospital Reporting of Quality Data
3. Submission of Hospital Data for FYs 2006 and 2007
4. Proposed Regulation Change
F. Proposed Revision of the Labor-Related Share of the Hospital
Wage Index
G. Wage Index Adjustment for Commuting Patterns of Hospital
Employees
H. Additional Payments for New Medical Services and Technology:
Proposed Policy Changes
I. Rural Referral Centers
1. Case-Mix Index
2. Discharges
J. Additional Payments to Hospitals with High Percentage of End-
Stage Renal Disease (ESRD) Discharges
K. Indirect Medical Education (IME) Adjustment
1. IME Adjustment Factor Formula Multipliers
2. IME Adjustment Formula Multiplier for Redistributed FTE
Resident Slots
3. Technical Changes
L. Payment to Disproportionate Share Hospitals
1. Enhanced DSH Adjustment for Rural Hospitals and Urban
Hospitals with Fewer Than 100 Beds
2. Proposals Relating to Available Beds and Patient Days for the
DSH Adjustment
M. Payment Adjustments for Low-Volume Hospitals
N. Medicare Geographic Classification Review Board (MGCRB)
Reclassifications
1. Background
2. Standardized Amount Reclassification Provisions
3. Reclassification of Urban Rural Referral Centers
4. Special Circumstances of Sole Community Hospitals (SCHs) in
Low Population Density States
5. Possible Reclassifications for Dominant Hospitals and
Hospitals in Single-Hospital MSAs
6. Special Circumstances of Hospitals in All-Urban States
[[Page 28199]]
O. Payment for Direct Graduate Medical Education
1. Background
2. Reductions of and Increases in Hospitals' FTE Resident Caps
for GME Payment Purposes under Section 422 of Public Law 108-173
a. General Background on Methodology for Determining the FTE
Resident Count
b. Reduction of Hospitals' FTE Resident Caps under the
Provisions of Section 422 of Public Law 108-173
c. Hospitals Subject to the FTE Resident Cap Reduction
d. Exemption from FTE Resident Cap Reduction for Certain Rural
Hospitals
e. Determining the Estimated Number of FTE Resident Slots
Available for Redistribution
f. Determining the Possible Reduction to a Hospital's FTE
Resident Cap
(1) Reference Resident Level--General
(2) Expansion of an Existing Program
(3) Audits of the Reference Cost Reporting Periods
(4) Expansions Under Newly Approved Programs
(5) Affiliations
g. Criteria for Determining Hospitals That Will Receive
Increases in Their FTE Resident Caps
h. Application Process for the Increases in Hospitals' FTE
Resident Caps
i. CMS Evaluation of Applications for Increases in FTE Resident
Caps
j. Application of Locality-Adjusted National Average Per
Resident Amount (PRA)
k. Application of Section 422 to Hospitals That Participate in
Demonstration Projects or Voluntary Reduction Programs
l. Application of Section 422 to Hospitals That File Low
Utilization Medicare Cost Reports
m. Specific Solicitation for Public Comment on the Proposals
n. CMS Evaluation Form
o. CMS Central and CMS Regional Office Mailing Addresses for
Applications for Increases in FTE Resident Caps
3. Direct GME Initial Residency Period
a. Background
b. Direct GME Initial Residency Period Limitation: Simultaneous
Match Issue
c. Exception to Initial Residency Period for Geriatric Residency
or Fellowship Programs
4. Per Resident Amount: Extension of Update Limitation on High-
Cost Programs
5. Residents Training in Nonhospital Settings
a. Background
b. Moratorium on Disallowances of Allopathic or Osteopathic
Family Practice Residents Training Time in Nonhospital Settings
(1) Cost Reports That Are Settled Between January 1, 2004 and
December 31, 2004
(2) Family Practice Residents That Are Training in Nonhospital
Settings Between January 1, 2004 and December 31, 2004
c. Requirements for Written Agreements for Residency Training in
Nonhospital Settings
P. Rural Community Hospital Demonstration Program
Q. Special Circumstances of Hospitals Facing High Malpractice
Insurance Rate Increases
V. Proposed Changes to the PPS for Capital-Related Costs
A. Background
B. Payments to Hospitals Located in Puerto Rico
C. Exception Payment for Extraordinary Circumstances
A. Treatment of Hospitals Previously Reclassified for the
Operating PPS
E. Definition of Large Urban Area Standardized Amounts
VI. Proposed Changes for Hospitals and Hospital Units Excluded from
the IPPS
A. Payments to Excluded Hospitals and Hospital Units
1. Payments to Existing Excluded Hospitals and Hospital Units
2. Updated Caps for New Excluded Hospitals and Units
3. Implementation of a PPS for IRFs
4. Implementation of a PPS for LTCHs
5. Development of a PPS for IPFs
6. Technical Changes Related to Establishment of Payments for
Excluded Hospitals
B. Criteria for Classification of Hospitals-Within-Hospitals
C. Critical Access Hospitals (CAHs)
1. Background
2. Payment Amounts for Inpatient CAH Services
3. Condition for Application of Special Professional Service
Payment Adjustment
4. Coverage of Costs for Certain Emergency Room On-Call
Providers
5. Authorization of Periodic Interim Payments for CAHs
6. Revision of the Bed Limit for CAHs
7. Authority to Establish Psychiatric and Rehabilitation
Distinct Part Units of CAHs
8. Waiver Authority for Designation of a CAH as a Necessary
Provider
9. Payment for Clinical Diagnostic Laboratory Tests
10. Proposed Technical Changes in Part 489
VII. Proposed Changes to the Disclosure of Information Requirements
for Quality Improvement Organizations (QIOs)
A. Background
B. Provisions of the Proposed Regulations
C. Technical Changes
VIII. Proposed Policy Changes Relating to Medicare Provider
Agreements for Compliance with Bloodborne Pathogens Standards,
Hospital Conditions of Participation for Discharge Planning, and
Fire Safety Requirements for Certain Health Care Facilities
A. Conditions of Participation for Discharge Planning
1. Background
2. Implementation
B. Compliance with Bloodborne Pathogens Standards
C. Fire Safety Requirements for Certain Health Care Facilities
1. Background
2. Proposed Changes to the Regulations
IX. MedPAC Recommendations
X. Other Required Information
A. Requests for Data from the Public
1. CMS Wage Data
2. CMS Hospital Wage Indices (Formerly: Urban and Rural Wage
Index Values Only)
3. PPS SSA/FIPS MSA State and County Crosswalk
4. Reclassified Hospitals New Wage Index (Formerly: Reclassified
Hospitals by Provider Only)
5. PPS-IV to PPS-XII Minimum Data Set
6. PPS-IX to PPS-XII Capital Data Set
7. PPS-XIII to PPS-XIX Hospital Data Set
8. Provider-Specific File
9. CMS Medicare Case-Mix Index File
10. DRG Relative Weights (Formerly Table 5 DRG)
11. PPS Payment Impact File
12. AOR/BOR Tables
13. Prospective Payment System (PPS) Standardizing File
B. Collection of Information Requirements
C. Public Comments
Regulation Text
Addendum--Proposed Schedule of Standardized Amounts Effective with
Discharges Occurring On or After October 1, 2004 and Update Factors
and Rate-of-Increase Percentages Effective With Cost Reporting
Periods Beginning On or After October 1, 2004
Tables
Table 1A--National Adjusted Operating Standardized Amounts, Labor/
Nonlabor (71.1 Percent Labor Share/28.9 Percent Nonlabor Share If
Wage Index Is Greater Than 1)
Table 1B--National Adjusted Operating Standardized Amounts, Labor/
Nonlabor (62 Percent Labor Share/38 Percent Nonlabor Share If Wage
Index Is Less Than or Equal to 1)
Table 1C--Adjusted Operating Standardized Amounts for Puerto Rico,
Labor/Nonlabor
Table 1D--Capital Standard Federal Payment Rate
Table 2--Hospital Case-Mix Indexes for Discharges Occurring in
Federal Fiscal Year 2003; Hospital Average Hourly Wage for Federal
Fiscal Years 2003 (1999 Wage Data), 2004 (2000 Wage Data), and 2005
(2001 Wage Data) Wage Indexes and 3-Year Average of Hospital Average
Hourly Wages
Table 3A--3-Year Average Hourly Wage for Urban Areas
Table 3B--3-Year Average Hourly Wage for Rural Areas
Table 4A--Wage Index and Capital Geographic Adjustment Factor for
Urban Areas
Table 4B--Wage Index and Capital Geographic Adjustment Factor for
Rural Areas
Table 4C--Wage Index and Capital Geographic Adjustment Factor for
Hospitals That Are Reclassified
Table 4F--Puerto Rico Wage Index and Capital Geographic Adjustment
Factor
Table 4G--Pre-Reclassified Wage Index for Urban Areas
[[Page 28200]]
Table 4H--Pre-Reclassified Wage Index for Rural Areas
Table 4J--Wage Index Adjustment for Commuting Hospital Employees
(Out-Migration) In Qualifying Counties--FY 2005
Table 5--List of Diagnosis-Related Groups (DRGs), Relative Weighting
Factors, and Geometric and Arithmetic Mean Length of Stay (LOS)
Table 6A--New Diagnosis Codes
Table 6B--New Procedure Codes
Table 6C--Invalid Diagnosis Codes
Table 6D--Invalid Procedure Codes
Table 6E--Revised Diagnosis Code Titles
Table 6F--Revised Procedure Code Titles
Table 6G--Additions to the CC Exclusions List
Table 6H--Deletions from the CC Exclusions List
Table 7A--Medicare Prospective Payment System Selected Percentile
Lengths of Stay: FY 2003 MedPAR Update December 2003 GROUPER V21.0
Table 7B--Medicare Prospective Payment System Selected Percentile
Lengths of Stay: FY 2003 MedPAR Update December 2003 GROUPER V22.0
Table 8A--Statewide Average Operating Cost-to-Charge Ratios for
Urban and Rural Hospitals (Case-Weighted)
Table 8B--Statewide Average Capital Cost-to-Charge Ratios (Case-
Weighted)
Table 9A--Hospital Reclassifications and Redesignations by
Individual Hospital--FY 2004
Table 9B--Hospital Reclassifications and Redesignation by Individual
Hospital Under Section 508 of Public Law 108-173--FY 2004
Table 10--Geometric Mean Plus the Lesser of .75 of the National
Adjusted Operating Standardized Payment Amount (Increased to Reflect
the Difference Between Costs and Charges) or .75 of One Standard
Deviation of Mean Charges by Diagnosis-Related Groups (DRGs)--March
2004
Table 11--Proposed FY 2005 LTC-DRGs, Relative Weights, Geometric
Average Length of Stay, and 5/6ths of the Geometric Average Length
of Stay
Appendix A--Regulatory Impact Analysis
Appendix B--Recommendation of Update Factors for Operating Cost
Rates of Payment for Inpatient Hospital Services
I. Background
A. Summary
1. Acute Care Hospital Inpatient Prospective Payment System (IPPS)
Section 1886(d) of the Social Security Act (the Act) sets forth a
system of payment for the operating costs of acute care hospital
inpatient stays under Medicare Part A (Hospital Insurance) based on
prospectively set rates. Section 1886(g) of the Act requires the
Secretary to pay for the capital-related costs of hospital inpatient
stays under a prospective payment system (PPS). Under these PPSs,
Medicare payment for hospital inpatient operating and capital-related
costs is made at predetermined, specific rates for each hospital
discharge. Discharges are classified according to a list of diagnosis-
related groups (DRGs).
The base payment rate is comprised of a standardized amount that is
divided into a labor-related share and a nonlabor-related share. The
labor-related share is adjusted by the wage index applicable to the
area where the hospital is located; and if the hospital is located in
Alaska or Hawaii, the nonlabor-related share is adjusted by a cost-of-
living adjustment factor. This base payment rate is multiplied by the
DRG relative weight.
If the hospital treats a high percentage of low-income patients, it
receives a percentage add-on payment applied to the DRG-adjusted base
payment rate. This add-on payment, known as the disproportionate share
hospital (DSH) adjustment, provides for a percentage increase in
Medicare payments to hospitals that qualify under either of two
statutory formulas designed to identify hospitals that serve a
disproportionate share of low-income patients. For qualifying
hospitals, the amount of this adjustment may vary based on the outcome
of the statutory calculations.
If the hospital is an approved teaching hospital, it receives a
percentage add-on payment for each case paid under the IPPS (known as
the indirect medical education (IME) adjustment). This percentage
varies, depending on the ratio of residents to beds.
Additional payments may be made for cases that involve new
technologies or medical services that have been approved for special
add-on payments. To qualify, a new technology or medical service must
demonstrate that it is a substantial clinical improvement over
technologies or services otherwise available, and that, absent an add-
on payment, it would be inadequately paid under the regular DRG
payment.
The costs incurred by the hospital for a case are evaluated to
determine whether the hospital is eligible for an additional payment as
an outlier case. This additional payment is designed to protect the
hospital from large financial losses due to unusually expensive cases.
Any outlier payment due is added to the DRG-adjusted base payment rate,
plus any DSH, IME, and new technology or medical service add-on
adjustments.
Although payments to most hospitals under the IPPS are made on the
basis of the standardized amounts, some categories of hospitals are
paid the higher of a hospital-specific rate based on their costs in a
base year (the higher of FY 1982, FY 1987, or FY 1996) or the IPPS rate
based on the standardized amount. For example, sole community hospitals
(SCHs) are the sole source of care in their areas, and Medicare-
dependent, small rural hospitals (MDHs) are a major source of care for
Medicare beneficiaries in their areas. Both of these categories of
hospitals are afforded this special payment protection in order to
maintain access to services for beneficiaries (although MDHs receive
only 50 percent of the difference between the IPPS rate and their
hospital-specific rates if the hospital-specific rate is higher than
the IPPS rate).
Section 1886(g) of the Act requires the Secretary to pay for the
capital-related costs of inpatient hospital services ``in accordance
with a prospective payment system established by the Secretary.'' The
basic methodology for determining capital prospective payments is set
forth in our regulations at 42 CFR 412.308 and 412.312. Under the
capital PPS, payments are adjusted by the same DRG for the case as they
are under the operating IPPS. Similar adjustments are also made for IME
and DSH as under the operating IPPS. In addition, hospitals may receive
an outlier payment for those cases that have unusually high costs.
The existing regulations governing payments to hospitals under the
IPPS are located in 42 CFR Part 412, Subparts A through M.
2. Hospitals and Hospital Units Excluded From the IPPS
Under section 1886(d)(1)(B) of the Act, as amended, certain
specialty hospitals and hospital units are excluded from the IPPS.
These hospitals and units are: psychiatric hospitals and units;
rehabilitation hospitals and units; long-term care hospitals (LTCHs);
children's hospitals; and cancer hospitals. Various sections of the
Balanced Budget Act of 1997 (Pub. L. 105-33), the Medicare, Medicaid
and SCHIP [State Children's Health Insurance Program] Balanced Budget
Refinement Act of 1999 (Pub. L. 106-113), and the Medicare, Medicaid,
and SCHIP Benefits Improvement and Protection Act of 2000 (Pub. L. 106-
554) provide for the implementation of PPSs for rehabilitation
hospitals and units (referred to as inpatient rehabilitation facilities
(IRFs)), psychiatric hospitals and units (referred to as inpatient
psychiatric facilities (IPFs)), and LTCHs, as discussed below.
Children's hospitals and cancer hospitals continue to be paid under
reasonable cost-based reimbursement.
The existing regulations governing payments to excluded hospitals
and
[[Page 28201]]
hospital units are located in 42 CFR Parts 412 and 413.
a. IRFs
Under section 1886(j) of the Act, as amended, rehabilitation
hospitals and units (IRFs) have been transitioned from payment based on
a blend of reasonable cost reimbursement subject to a hospital-specific
annual limit under section 1886(b) of the Act and prospective payments
for cost reporting periods beginning January 1, 2002 through September
30, 2002, to payment on a full prospective payment system basis
effective for cost reporting periods beginning on or after October 1,
2002 (66 FR 41316, August 7, 2001; 67 FR 49982, August 1, 2002; and 68
FR 45674, August 1, 2003). The existing regulations governing payments
under the IRF PPS are located in 42 CFR Part 412, Subpart P.
b. LTCHs
Under the authority of sections 123(a) and (c) of Public Law 106-
113 and section 307(b)(1) of Public Law 106-554, LTCHs are being
transitioned from being paid for inpatient hospital services based on a
blend of reasonable cost-based reimbursement under section 1886(b) of
the Act to fully Federal prospective rates during a 5-year period,
beginning with cost reporting periods that start on or after October 1,
2002. For cost reporting periods beginning on or after October 1, 2006,
LTCHs will be paid under the fully Federal prospective payment rate
(the June 6, 2003 LTCH PPS final rule (68 FR 34122)). LTCHs may elect
to be paid based on full PPS payments instead of a blended payment in
any year during the 5-year transition period. The existing regulations
governing payment under the LTCH PPS are located in 42 CFR part 412,
Subpart O.
c. IPFs
Sections 124(a) and (c) of Public Law 106-113 provide for the
development of a per diem PPS for payment for inpatient hospital
services furnished in IPFs under the Medicare program, effective for
cost reporting periods beginning on or after October 1, 2002. This
system must include an adequate patient classification system that
reflects the differences in patient resource use and costs among these
hospitals and maintains budget neutrality. We published a proposed rule
to implement the PPS for IPFs on November 28, 2003 (68 FR 66920). The
November 28, 2003 proposed rule proposed an April 1, 2004 effective
date for purposes of ratesetting and calculating impacts. However, the
proposed rule was unusually complex because it proposed a completely
new payment system for inpatient hospital services furnished by
psychiatric hospitals and units and the public requested additional
time to comment. As a result, we extended the comment period for the
proposed rule. Thus, we are still in the process of analyzing public
comments and developing a final rule for publication. Consequently, an
April 1, 2004 effective date for the IPF PPS is no longer possible.
3. Critical Access Hospitals (CAHs)
Under sections 1814, 1820, and 1834(g) of the Act, payments are
made to critical access hospitals (CAHs) (that is, rural hospitals or
facilities that meet certain statutory requirements) for inpatient and
outpatient services on a reasonable cost basis. Reasonable cost is
determined under the provisions of section 1861(v)(1)(A) of the Act and
existing regulations under 42 CFR Parts 413 and 415.
4. Payments for Graduate Medical Education (GME)
Under section 1886(a)(4) of the Act, costs of approved educational
activities are excluded from the operating costs of inpatient hospital
services. Hospitals with approved graduate medical education (GME)
programs are paid for the direct costs of GME in accordance with
section 1886(h) of the Act; the amount of payment for direct GME costs
for a cost reporting period is based on the hospital's number of
residents in that period and the hospital's costs per resident in a
base year. The existing regulations governing payments to the various
types of hospitals are located in 42 CFR part 413.
On August 1, 2003, we published a final rule in the Federal
Register (68 FR 45346) that implemented changes to the Medicare
hospital inpatient prospective payment systems for both operating cost
and capital-related costs, as well as changes addressing payments for
excluded hospitals and payments for GME costs. Generally these changes
were effective for discharges occurring on or after October 1, 2003. On
October 6, 2003, we published a document in the Federal Register (68 FR
57731) that corrected technical errors made in the August 1, 2003 final
rule.
B. 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 a number of changes to the Act relating to
prospective payments to hospitals for inpatient services, payments to
excluded hospitals and units, and payments to CAHs. This proposed rule
would implement amendments made by the following sections of Public Law
108-173:
Section 401, which provides that, for discharges occurring in a
fiscal year beginning with FY 2004 under the IPPS, Medicare will pay
hospitals in rural and small urban areas in the 50 States using the
standardized amount (computed for the previous fiscal year) that would
be used to pay hospitals in large urban areas (or beginning with FY
2005, for all hospitals in the previous fiscal year), increased by the
appropriate market basket percentage increase. One standardized amount
for hospitals in Puerto Rico would be established that would equal the
amount for hospitals in large urban areas in Puerto Rico.
Section 402, which provides that for discharges occurring on or
after April 1, 2004, the DSH payment adjustment for a hospital that is
not a large urban or large rural hospital will be calculated using the
current DSH adjustment formula for large urban hospitals, subject to a
limit of 12 percent for any of these hospitals that are not rural
referral centers. (There is no limit on the DSH payment percentage for
rural referral centers.)
Section 403, which provides that, for discharges occurring on or
after October 1, 2004, a hospital's labor-related share to which the
wage index is applied will be decreased to 62 percent of the
standardized amount when such a change will result in higher total
payments to the hospital. This provision also applies to the labor-
related share of the standardized amount for hospitals in Puerto Rico.
Section 405(a), which provides that inpatient, outpatient, and
covered SNF services provided by a CAH will be reimbursed at 101
percent of reasonable costs for services furnished to Medicare
beneficiaries. This provision is applicable to payments for services
furnished during cost reporting periods beginning on or after January
1, 2004.
Section 405(b), which expands coverage of the costs associated with
covered Medicare services furnished by on-call emergency room providers
in CAHs to include services furnished by physician assistants, nurse
practitioners, and clinical nurse specialists, effective for costs
incurred for services furnished on or after January 1, 2005.
Section 405(c), which provides that eligible CAHs may receive
payments for their inpatient services on a periodic interim payment
(PIP) basis, effective
[[Page 28202]]
with payments made on or after July 1, 2004.
Section 405(d), which allows CAHs to elect to receive payments
under the optional payment method (a payment encompassing both
inpatient CAH services and physician and practitioner services to
outpatients) even if some practitioners do not reassign to the CAH
their rights to bill for professional services to CAH outpatients. This
provision applies to cost reporting periods occurring on or after July
1, 2004, except that in the case of a CAH that made an election of the
optional payment method before November 1, 2003, the provision applies
to cost reporting periods beginning on or after July 1, 2001.
Section 405(e), which increases the limit on the number of beds
that a CAH may have for acute care from 15 to 25 beds. This provision
applies to CAH designations made before, on, or after January 1, 2004.
Any election made in accordance to the regulations promulgated to
implement this provision will only apply prospectively.
Section 405(g), which provides that a CAH may establish psychiatric
and rehabilitation distinct part units and limits the number of beds in
each unit to no more than 10. Services in these distinct part units
will be paid under the reasonable cost-based methodology. This
provision applies to cost reporting periods beginning on or after
October 1, 2004.
Section 405(h), which terminates a State's authority to waive the
location requirement for a CAH by designating the CAH as the necessary
provider, effective January 1, 2006. A grandfathering provision is
included for CAHs that are certified as necessary providers prior to
January 1, 2006, which allows any CAH that is designated as a necessary
provider in its State's rural health plan prior to January 1, 2006, to
maintain its necessary provider designation.
Section 406, which provides for a graduated adjustment to the
inpatient prospective payment rates to account for the higher costs
associated with hospitals described under section 1886(d) of the Act
that are located more than 25 road miles from another subsection (d)
hospital and that have less than 800 discharges during a fiscal year,
effective for discharges occurring on or after October 1, 2004. The
increase in these payments may not be greater than 25 percent and the
determination of the percentage payment increase is not subject to
administrative or judicial review.
Section 410A, which authorizes the Secretary to establish a
demonstration program to test the feasibility and advisability of the
establishment of rural community hospitals to furnish covered inpatient
hospital services to Medicare beneficiaries. The Secretary must select
up to 15 rural community hospitals to participate in the demonstration.
The Secretary must implement the demonstration program not later than
January 1, 2005, but may not implement the program before October 1,
2004.
Section 422(a), which provides that a hospital's GME FTE resident
cap will be reduced, and the reduction will be redistributed among
other hospitals if the hospital's resident count is less than its
resident cap (rural hospitals with less than 250 acute care inpatient
beds will be exempt) in a particular reference period. This provision
is effective for cost reporting periods occurring on or after July 1,
2005.
Section 422(b), which specifies that the formula multiplier for the
IME adjustment is 0.66 for FTE residents attributable to redistributed
resident positions, effective for discharges occurring on or after July
1, 2005.
Section 501, which provides the update factor for payments for the
hospital inpatient operating costs for FY 2005 and subsequent fiscal
years is the market basket percentage increase. For FYs 2005 through
2007, the update factor will be the market basket percentage increase
minus 0.4 percentage points for any ``subsection (d) hospital'' that
does not submit hospital quality data on 10 measures as specified by
the Secretary.
Section 502, which modifies the IME formula multiplier to be used
in the calculation of the IME adjustment for midway through FY 2004 and
provides a new schedule of formula multipliers for FYs 2005 and
thereafter.
Section 503(a), which includes a requirement for updating the ICD-
9-CM diagnosis and procedure codes in April 1 of each year, in addition
to the current process of annual updates on October 1 of each year.
This change will not affect Medicare payments or DRG classifications
until the fiscal year that begins after that date.
Section 503(b), which provides for changes to the threshold amount
for determining eligibility of new technologies or medical services for
add-on payments; provides for public input on applications for new
technology or medical service add-on payments prior to the publication
of a proposed rule; provides for reconsideration of applications
received for FY 2004 that were denied; provides for preference in the
use of DRG adjustments; and provides that new technology or medical
service payments shall not be budget neutral. This provision is
effective for fiscal years beginning in FY 2005.
Section 504, which increases the national portion of the operating
PPS payment rate for hospitals in Puerto Rico from 50 percent of the
Federal rate to 75 percent of the Federal rate and decreases the Puerto
Rico portion of the operating PPS payment from 50 percent to 25
percent, effective for discharges occurring on or after October 1,
2004. For the period of April 1, 2004 through September 30, 2004,
payments for hospitals in Puerto Rico will be based on 62.5 percent
Federal rate and 37.5 percent of the Puerto Rico rate.
Section 505, which provides for an increase in a hospital's wage
index value to take into consideration a commuter wage adjustment for
hospital employees who reside in a county and work in a different area
with a higher wage index.
Section 508, which provides for the establishment of a one-time
process for a hospital to appeal its geographic classification for wage
index purposes. By law, any reclassification resulting from this one-
time appeal applies for a 3-year period to discharges occurring on or
after April 1, 2004.
Section 711, which freezes the annual CPI-U updates to hospital-
specific per resident amount (PRAs) for GME payments for those PRAs
that exceed the ceiling, effective for cost reporting periods beginning
FY 2004 through FY 2013.
Section 712, which provides for an exception to the initial
residency period for purposes of direct GME payments for geriatric
residency or fellowship programs that allows the 2 years spent in an
approved geriatric program to be counted as part of the resident's
initial training period, but not to count against any limitation on the
initial residency period. This provision is effective for cost
reporting periods beginning on or after October 1, 2003.
Section 713, which, during a 1-year moratorium period of January 1,
2004 through December 31, 2004, allows hospitals to count allopathic or
osteopathic family practice residents training in nonhospital settings
for IME and direct GME purposes, without regard to the financial
arrangement between the hospital and the teaching physician practicing
in the nonhospital setting to which the resident is assigned.
Section 733, which provides for the Medicare payment of routine
costs, as well as costs relating to the transplantation and appropriate
related items and services, for Medicare beneficiaries participating in
a clinical trial involving pancreatic islet cell
[[Page 28203]]
transplantation, beginning no earlier than October 1, 2004.
Section 926, which requires the Secretary to make information
publicly available that enables hospital discharge planners, Medicare
beneficiaries, and the public to identify skilled nursing facilities
(SNFs) that are participating in the Medicare program, and requires a
hospital, as part of its discharge planning, to evaluate a patient's
need for SNF care.
Section 947, which requires that, by July 1, 2004, hospitals not
otherwise subject to the Occupational Safety and Health Act (OSHA) (or
a State occupational safety and health plan that is approved under
section 18(b) of that Act) must comply with the OSHA bloodborne
pathogens (BBP) standard as part of their Medicare provider agreements.
C. Major Contents of This Proposed Rule
In this proposed rule, we are setting forth proposed changes to the
Medicare IPPS for operating costs and for capital-related costs under
the IPPS for FY 2005. We also are setting forth proposed changes
relating to payments for GME costs, payments to certain hospitals and
units that continue to be excluded from the IPPS and paid on a
reasonable cost basis, payments for DSH, requirements and payments for
CAHs, conditions of participation for hospitals relating to discharge
planning and fire safety requirements, requirements for Medicare
provider agreements relating to bloodborne pathogen standards, and QIO
disclosure of information requirements. The changes being proposed
would be effective for discharges occurring on or after October 1,
2004, unless otherwise noted.
The following is a summary of the major changes that we are
proposing to make:
1. Proposed Changes to the DRG Reclassifications and Recalibrations of
Relative Weights
As required by section 1886(d)(4)(C) of the Act, we are proposing
annual adjustments to the DRG classifications and relative weights.
Based on analyses of Medicare claims data, in section II. of this
preamble, we are proposing to establish a number of new DRGs and make
changes to the designation of diagnosis and procedure codes under other
existing DRGs. Our proposed changes for FY 2005 are set forth in
section II. of this preamble.
Among the proposed changes discussed are:
Restructuring and retitling of several DRGs to reflect
expanded coverage of heart assist systems such as ventricular assist
devices (VAD) or left ventricular assist devices (LVAD) as destination
(or permanent) therapy for end-stage heart failure patients who are not
candidates for heart transplantation: DRG 103 (Heart Transplant or
Implant of Heart Assist System) (proposed title change), DRG 104
(Cardiac Valve and Other Major Cardiothoracic Procedures with Cardiac
Catheterization) and DRG 105 (Cardiac Valve and Other Major
Cardiothoracic Procedures Without Cardiac Catheterization), and DRG 525
(Other Heart Assist System Implant) (proposed title change).
Addition of pacemaker device and lead procedure code
combinations that could lead to the assignment of DRG 115 (Permanent
Cardiac Pacemaker Implant with Acute Myocardial Infarction, Heart
Failure, or Shock or ACID Lead or Generator Procedures) and DRG 116
(Other Permanent Cardiac Pacemaker Implant).
Movement of the procedure code for 360 spinal fusion from
DRG 496 (Combined Anterior/Posterior Spinal Fusion) to DRG 497 (Spinal
Fusion Except Cervical With CC) and DRG 498 (Spinal Fusion Except
Cervical Without CC).
Addition of combination codes, which also include heart
failure, to the list of major problems under DRG 387 (Prematurity With
Major Problems) and DRG 389 (Full-Term Neonate With Major Problems).
Modification of DRGs 504 through 509 under MDC 22 (Burns)
to recognize the impact of long-term mechanical ventilation on burn
cases and renaming DRG 504 as proposed title ``Extensive Burns or Full
Thickness Burns With Mechanical Ventilation 96+ Hours With Skin Graft''
and DRG 505 as proposed title ``Extensive Burns or Full Thickness Burns
With Mechanical Ventilation 96+ Hours Without Skin Graft.''
Deletion of DRG 483 (Tracheostomy for Face, Mouth, and
Neck Diagnoses) and splitting the assignment of cases to two proposed
new DRGs on the basis of the performance of a major operating room
procedure: proposed new DRGs 541 and 542 (Tracheostomy With Mechanical
Ventilation 96+ Hours or Principal Diagnosis Except Face, Mouth, and
Neck Diagnosis With and Without Major Operating Room Procedure,
respectively).
We also are presenting our reevaluation of FY 2004 applicants for
add-on payments for high-cost new medical services and technologies,
and our analysis of FY 2005 applicants (including public input, as
directed by Public Law 108-173, obtained in a town meeting).
We are proposing the annual update of the long-term care diagnosis-
related group (LTC-DRG) classifications and relative weights for use
under the LTCH PPS for FY 2005.
2. Proposed Changes to the Hospital Wage Index
In section III. of this preamble, we are proposing revisions to the
wage index and the annual update of the wage data. Specific issues
addressed in this section included the following:
The proposed FY 2005 wage index update, using wage data
from cost reporting periods that began during FY 2001.
Proposed revised labor market areas as a result of OMB
revised definitions of geographical statistical areas.
A discussion of the collection of occupational mix data
and the proposed occupational mix adjustment to the wage index that we
are proposing to apply beginning October 1, 2004.
The proposed revisions to the wage index based on hospital
redesignations and reclassifications, including changes that reflect
the new OMB standards for assignment of hospitals to geographic areas.
The proposed adjustment to the wage index based on
commuting patterns of hospital employees who reside in a county and
work in a different area with a higher wage index, to implement section
505 of Public Law 108-173.
A discussion of eligible hospitals reclassified under the
one-time appeals process under section 508 of Public Law 108-173.
Proposed changes to the labor-related share to which the
wage index is applied in determining the PPS rate for hospitals located
in specific geographic areas, to implement section 403 of Public Law
108-173.
The revised timetable for reviewing and verifying the wage
data that is in effect for the proposed FY 2005 wage index.
3. Other Decisions and Proposed Changes to the PPS for Inpatient
Operating and GME Costs
In section IV. of this preamble, we discuss a number of provisions
of the regulations in 42 CFR Parts 412 and 413 and set forth proposed
changes concerning the following:
Proposed expansion of the current postacute care transfer
policy.
Payments for inpatient care in providers that change
classification status during a patient stay.
Proposed changes in the definitions of urban and rural
areas for geographic reclassifications purposes.
[[Page 28204]]
Equalization of the standardized amount for urban and
rural hospitals.
The reporting of hospital quality data as a condition for
receiving the full annual payment update increase.
Proposed revision of the regulations to reflect the
revision of the labor share of the wage index.
Proposed revision of the regulations to reflect the wage
index adjustment for commuting patterns of hospital employees who live
in one county and commute to work in other areas with higher level
wages.
Proposed changes in the threshold amount for eligibility
for new medical services and technology add-on payments.
Proposed revision to our policy on additional payments to
hospitals with high percentages of ESRD discharges.
Proposed changes to the IME adjustment formula
multipliers, and the formula multiplier applicable to redistribution of
unused numbers of FTE residents slots.
Proposed changes in DSH adjustment payments to rural and
small urban hospitals.
Proposed payment adjustments for low-volume hospitals.
Proposed changes in policy affecting hospitals that apply
as a group for reclassification and a discussion of possible
reclassifications for dominant hospitals and hospitals in single-
hospital MSAs.
Proposed changes in policies governing payments for direct
GME, including the redistribution of unused FTE resident slots; changes
in the GME initial residency period; extension of the update limitation
on hospital-specific per resident amounts; and changes in the policies
on residents training in nonhospital settings, including written
agreements for teaching physician compensation.
An announcement of the rural community hospital
demonstration to be established under section 410A of Public Law 108-
173 and the opportunity for eligible hospitals to apply for
participation in the demonstration program.
A solicitation of public comments on the effect of
increases in malpractice insurance premiums on hospitals participating
in the Medicare program and beneficiary access of services.
4. Proposed Changes to the PPS for Capital-Related Costs
In section V. of this preamble, we discuss the payment requirements
for capital-related costs and propose changes relating to capital
payments to hospitals located in Puerto Rico, changes in the policies
on exception payments for extraordinary circumstances, treatment of
hospitals previously reclassified for the operating standardized
amounts, and capital payment adjustments based on the proposed changes
in geographic classifications.
5. Proposed Changes for Hospitals and Hospital Units Excluded From the
IPPS
In section VI. of this preamble, we discuss the following proposed
revisions and clarifications concerning excluded hospitals and hospital
units and CAHs:
Proposed changes in the payment rate for new excluded
hospitals.
Proposed changes to the criteria for determining payments
to hospitals-within-hospitals.
Proposed changes to the policies governing payment to
CAHs, including a change in the payment percentage for services
furnished by CAHs; changes in the rules governing the election by a CAH
of the optional method of payment; expansion of the payment to
emergency room on-call providers to include physician assistants, nurse
practitioners, and clinical nurse specialists; authorization for the
making of periodic interim payments (PIPs) for CAHs for inpatient
services furnished; revision of the bed count limit for CAHs from 15 to
25 acute care beds; proposed requirements for establishing psychiatric
and rehabilitation distinct part units in CAHs; and termination of the
location requirement for a CAH by designating the CAH as a necessary
provider.
6. Proposed Changes to QIO Disclosure of Information Requirements
In section VII. of this preamble, we discuss our proposed
clarification of the requirements for disclosure by QIOs of information
on institutions and practitioners collected in the course of the QIO's
quality improvement activities.
7. Proposed Changes Relating to Medicare Provider Agreements, Hospital
Conditions of Participation, and Fire Safety Requirements for Certain
Health Care Facilities
In section VIII. of this preamble, we are proposing to--
Require hospitals, as part of the discharge planning
standard under the Medicare hospital conditions of participation, to
furnish a list of Medicare-participating home health agencies to
patients who receive home health services after discharge and to
provide information on Medicare-certified SNFs to patients who are
likely to need posthospital extended care services.
Require that Medicare provider agreements include
provisions that would ensure that all hospital employees who may come
into contact with human blood in the course of their duties are
provided proper protection from bloodborne pathogens.
Correct a technical error relating to the application of
the 2000 edition of the Life Safety Code as the fire safety
requirements for certain health care facilities; and clarify the
effective date for the prohibition on the use of roller latches in
these facilities.
8. Determining Prospective Payment Operating and Capital Rates and
Rate-of-Increase Limits
In the Addendum to this proposed rule, we set forth proposed
changes to the amounts and factors for determining the FY 2005
prospective payment rates for operating costs and capital-related
costs. We also establish the proposed threshold amounts for outlier
cases. In addition, we address proposed update factors for determining
the rate-of-increase limits for cost reporting periods beginning in FY
2005 for hospitals and hospital units excluded from the PPS.
9. Impact Analysis
In Appendix A of the proposed rule, we set forth an analysis of the
impact that the proposed changes would have on affected hospitals.
10. Recommendation of Update Factor for Hospital Inpatient Operating
Costs
In Appendix B of this proposed rule, as required by sections
1886(e)(4) and (e)(5) of the Act, we provide our recommendations of the
appropriate percentage changes for FY 2005 for the following:
A single average standardized amount for all areas for
hospital inpatient services paid under the IPPS for operating costs
(and hospital-specific rates applicable to SCHs and MDHs).
Target rate-of-increase limits to the allowable operating
costs of hospital inpatient services furnished by hospitals and
hospital units excluded from the IPPS.
11. Discussion of Medicare Payment Advisory Commission Recommendations
Under section 1805(b) of the Act, the Medicare Payment Advisory
Commission (MedPAC) is required to submit a report to Congress, no
later than March 1 of each year, that reviews and makes recommendations
on Medicare payment policies. MedPAC's March 2004 recommendation
[[Page 28205]]
concerning hospital inpatient payment policies addressed only the
update factor for inpatient hospital operating costs and capital-
related costs under the IPPS and for hospitals and distinct part
hospital units excluded from the IPPS. This recommendation is addressed
in Appendix B. For further information relating specifically to the
MedPAC March 1 report or to obtain a copy of the report, contact MedPAC
at (202) 220-3700 or visit MedPAC's Web site at: http://www.medpac.gov.
II. Proposed Changes to DRG Classifications and Relative Weights
A. Background
Section 1886(d) of the Act specifies that the Secretary shall
establish a classification system (referred to as DRGs) for inpatient
discharges and adjust payments under the IPPS based on appropriate
weighting factors assigned to each DRG. Therefore, under the IPPS, we
pay for inpatient hospital services on a rate per discharge basis that
varies according to the DRG to which a beneficiary's stay is assigned.
The formula used to calculate payment for a specific case multiplies an
individual hospital's payment rate per case by the weight of the DRG to
which the case is assigned. Each DRG weight represents the average
resources required to care for cases in that particular DRG, relative
to the average resources used to treat cases in all DRGS.
Congress recognized that it would be necessary to recalculate the
DRG relative weights periodically to account for changes in resource
consumption. Accordingly, section 1886(d)(4)(C) of the Act requires
that the Secretary adjust the DRG classifications and relative weights
at least annually. These adjustments are made to reflect changes in
treatment patterns, technology, and any other factors that may change
the relative use of hospital resources. The proposed changes to the DRG
classification system and the proposed recalibration of the DRG weights
for discharges occurring on or after October 1, 2004, are discussed
below.
B. DRG Reclassifications
[If you choose to comment on issues in this section, please include
the caption ``DRG Reclassifications'' at the beginning of your
comment.]
1. General
Cases are classified into DRGs for payment under the IPPS based on
the principal diagnosis, up to eight additional diagnoses, and up to
six procedures performed during the stay. In a small number of DRGs,
classification is also based on the age, sex, and discharge status of
the patient. The diagnosis and procedure information is reported by the
hospital using codes from the International Classification of Diseases,
Ninth Revision, Clinical Modification (ICD-9-CM).
For FY 2004, cases are assigned to one of 522 DRGs in 25 major
diagnostic categories (MDCs). Most MDCs are based on a particular organ
system of the body. For example, MDC 6 is Diseases and Disorders of the
Digestive System. This approach is used because clinical care is
generally organized in accordance with the organ system affected.
However, some MDCs are not constructed on this basis because they
involve multiple organ systems (for example, MDC 22 (Burns)). The table
below lists the 25 MDCs.
------------------------------------------------------------------------
Major diagnostic categories (MDCs).
-------------------------------------------------------------------------
1--Diseases and Disorders of the Nervous System.
2--Diseases and Disorders of the Eye.
3--Diseases and Disorders of the Ear, Nose, Mouth, and Throat.
4--Diseases and Disorders of the Respiratory System.
5--Diseases and Disorders of the Circulatory System.
6--Diseases and Disorders of the Digestive System.
7--Diseases and Disorders of the Hepatobiliary System and Pancreas.
8--Diseases and Disorders of the Musculoskeletal System and Connective
Tissue.
9--Diseases and Disorders of the Skin, Subcutaneous Tissue and Breast.
10--Endocrine, Nutritional and Metabolic Diseases and Disorders.
11--Diseases and Disorders of the Kidney and Urinary Tract.
12--Diseases and Disorders of the Male Reproductive System.
13--Diseases and Disorders of the Female Reproductive System.
14--Pregnancy, Childbirth, and the Puerperium.
15--Newborns and Other Neonates with Conditions Originating in the
Perinatal Period.
16--Diseases and Disorders of the Blood and Blood Forming Organs and
Immunological Disorders.
17--Myeloproliferative Diseases and Disorders and Poorly Differentiated
Neoplasms.
18--Infectious and Parasitic Diseases (Systemic or Unspecified Sites).
19--Mental Diseases and Disorders.
20--Alcohol/Drug Use and Alcohol/Drug Induced Organic Mental Disorders.
21--Injuries, Poisonings, and Toxic Effects of Drugs.
22--Burns.
23--Factors Influencing Health Status and Other Contacts with Health
Services.
24--Multiple Significant Trauma.
25--Human Immunodeficiency Virus Infections
------------------------------------------------------------------------
In general, cases are assigned to an MDC based on the patient's
principal diagnosis before assignment to a DRG. However, for FY 2004,
there are eight DRGs to which cases are directly assigned on the basis
of ICD-9-CM procedure codes. These DRGs are for heart, liver, bone
marrow, lung, simultaneous pancreas/kidney, and pancreas transplants
and for tracheostomies. Cases are assigned to these DRGs before they
are classified to an MDC. The table below lists the current eight pre-
MDCs.
------------------------------------------------------------------------
Pre-Major Diagnostic Categories (Pre-MDCs)
-------------------------------------------------------------------------
DRG 103--Heart Transplant.
DRG 480--Liver Transplant.
[[Page 28206]]
DRG 481--Bone Marrow Transplant.
DRG 482--Tracheostomy for Face, Mouth, and Neck Diagnoses.
DRG 483--Tracheostomy with Mechanical Ventiliation 96+ Hours or
Principal Diagnosis Except for Face, Mouth, and Neck Diagnoses.
DRG 495--Lung Transplant.
DRG 512--Simultaneous Pancreas/Kidney Transplant.
DRG 513--Pancreas Transplant
------------------------------------------------------------------------
Within most MDCs, cases are then divided into surgical DRGs and
medical DRGs. Surgical DRGs are based on a hierarchy that orders
operating room (O.R.) procedures or groups of O.R. procedures by
resource intensity. Medical DRGs generally are differentiated on the
basis of diagnosis and age (less than or greater than 17 years of age).
Some surgical and medical DRGs are further differentiated based on the
presence or absence of a complication or a comorbidity (CC).
Generally, nonsurgical procedures and minor surgical procedures
that are not usually performed in an operating room are not treated as
O.R. procedures. However, there are a few non-O.R. procedures that do
affect DRG assignment for certain principal diagnoses, for example,
extracorporeal shock wave lithotripsy for patients with a principal
diagnosis of urinary stones.
Patient's diagnosis, procedure, discharge status, and demographic
information is fed into the Medicare claims processing systems and
subjected to a series of automated screens called the Medicare Code
Editor (MCE). The MCE screens are designed to identify cases that
require further review before classification into a DRG.
After patient information is screened through the MCE and any
further development of the claim is conducted, the cases are classified
into the appropriate DRG by the Medicare GROUPER software program. The
GROUPER program was developed as a means of classifying each case into
a DRG on the basis of the diagnosis and procedure codes and, for a
limited number of DRGs, demographic information (that is, sex, age, and
discharge status).
After cases are screened through the MCE and assigned to a DRG by
the GROUPER, a base DRG payment is calculated by the PRICER software.
The PRICER calculates the payments for each case covered by the IPPS
based on the DRG relative weight and additional factors associated with
each hospital, such as IME and DSH adjustments. These additional
factors increase the payment amount to hospitals above the base DRG
payment.
The records for all Medicare hospital inpatient discharges are
maintained in the Medicare Provider Analysis and Review (MedPAR) file.
The data in this file are used to evaluate possible DRG classification
changes and to recalibrate the DRG weights. However, in the July 30,
1999 IPPS final rule (64 FR 41500), we discussed a process for
considering non-MedPAR data in the recalibration process. In order for
us to consider using particular non-MedPAR data, we must have
sufficient time to evaluate and test the data. The time necessary to do
so depends upon the nature and quality of the non-MedPAR data
submitted. Generally, however, a significant sample of the non-MedPAR
data should be submitted by mid-October for consideration in
conjunction with the next year's proposed rule. This allows us time to
test the data and make a preliminary assessment as to the feasibility
of using the data. Subsequently, a complete database should be
submitted by early December for consideration in conjunction with the
next year's proposed rule.
Many of the changes to the DRG classifications are the result of
specific issues brought to our attention by interested parties. We
encourage individuals with concerns about DRG classifications to bring
those concerns to our attention in a timely manner so they can be
carefully considered for possible inclusion in the next proposed rule
and so any proposed changes may be subjected to public review and
comment. Therefore, similar to the timetable for interested parties to
submit non-MedPAR data for consideration in the DRG recalibration
process, concerns about DRG classification issues should be brought to
our attention no later than early December in order to be considered
and possibly included in the next annual proposed rule updating the
IPPS.
The changes we are proposing to the DRG classification system for
the FY 2005 GROUPER version 22.0 and to the methodology used to
recalibrate the DRG weights are set forth below. Unless otherwise noted
in this proposed rule, our DRG analysis is based on data from the
December 2003 update of the FY 2003 MedPAR file, which contains
hospital bills received through December 31, 2003 for discharges in FY
2003.
2. MDC 1 (Diseases and Disorders of the Nervous System): Intracranial
Hemorrhage and Stroke With Infarction
It has come to our attention that the title of DRG 14 (Intracranial
Hemorrhage and Stroke With Infarction) may be misleading because it
implies that a combination of conditions exists when the DRG is
assigned. When we developed this title, we did not intend to imply that
a combination of conditions exists. Therefore, we are proposing to
change the title of DRG 14 to read ``Intracranial Hemorrhage or
Cerebral Infarction''.
3. MDC 5 (Diseases and Disorders of the Circulatory System)
a. Heart Assist System Implant
Circulatory support devices, also known as heart assist systems,
ventricular assist devices (VADs) or left ventricular assist devices
(LVADs), offer a surgical alternative for end-stage heart failure
patients. This type of device is often implanted near a patient's
native heart and assumes the pumping function of the weakened heart's
left ventricle. In many cases, heart transplantation would be the
treatment of choice for this type of patient. However, the low number
of donor hearts limits this treatment option.
We have reviewed the payment and DRG assignment for this type of
device many times in the past. The reader is referred to the August 1,
2002 IPPS final rule (67 FR 49989) for a complete listing of those
discussions.
In the August 1, 2002 final rule (67 FR 49990), we attempted to
clinically and financially align VAD procedures by creating new DRG 525
(Heart Assist System Implant). We also noted that cases in which a
heart transplant also occurred during the same hospitalization episode
would continue to be assigned to DRG 103 (Heart Transplant). At that
time, we announced that DRG 525 would consist of any principal
diagnosis in MDC 5, plus one of the following surgical procedure codes:
37.62, Insertion of nonimplantable heart assist system
37.63, Repair of heart assist system
[[Page 28207]]
37.65, Implant of external heart assist system
37.66, Insertion of implantable heart assist system
(To avoid confusion, we note that the titles of codes 37.62, 37.63,
37.65, and 37.66 have been revised for FY 2005 through the ICD-9-CM
Coordination and Maintenance Committee process as reflected in Table
6F, Revised Procedure Code Titles in the Addendum to this proposed
rule.)
Commenters on the May 19, 2003 proposed rule that preceded the
August 1, 2003 IPPS (FY 2004) final rule notified us that procedure
code 37.66 was neither a clinical nor a financial match to the rest of
the procedure codes now assigned to DRG 525. We did not modify DRG 525
for FY 2004. We agreed that we would continue to evaluate whether to
make further changes to DRG 525. After publication of the August 1,
2003 final rule, we again reviewed the MedPAR data concerning DRG 525,
and came to the conclusion that procedure code 37.62 is different in
terms of clinical procedures and resource utilization from the other
procedure codes assigned to DRG 525. Therefore, in a correction to the
August 1, 2003 IPPS (FY 2004) final rule, published on October 6, 2003
(68 FR 57733), we revised the composition of DRG 525 by correcting the
assignment of procedures to DRG 525 in light of the lower charges
associated with procedure code 37.62. We moved code 37.62 into DRG 104
(Cardiac Valve and Other Major Cardiothoracic Procedures With Cardiac
Catheterization) and DRG 105 (Cardiac Valve and Other Major
Cardiothoracic Procedures Without Cardiac Catheterization), and left
procedure codes 37.63, 37.65, and 37.66 in DRG 525.
In addition, we have evaluated a request for expanded coverage for
VADs and LVADs as destination (or permanent) therapy for end-stage
heart failure patients who are not candidates for heart
transplantation. VADs and LVADs had been approved for support of blood
circulation post-cardiotomy (effective for services performed on or
after October 18, 1993) and as a bridge to heart transplant (effective
for services performed on or after January 22, 1996) to assist a
damaged or weakened heart in pumping blood. The criteria that must be
fulfilled in order for Medicare coverage to be provided for these
purposes have been previously discussed in the August 1, 2000 final
rule (65 FR 47058), and can also be accessed online at: http://www.cms.gov/manuals/pm_trans/r2ncd1.pdf
.
As a result of that review, effective for services performed on or
after October 1, 2003, VADs have been approved as destination therapy
for patients requiring permanent mechanical cardiac support. Briefly,
VADs used for destination therapy are covered only if they have
received approval from the FDA for that purpose, and the device is used
according to the FDA-approved labeling instructions. VADs are covered
for patients who have chronic end-stage heart failure (New York Heart
Association Class IV end-stage left ventricular failure for at least 90
days with a life expectancy of less than 2 years). Implanting
facilities as well as patients must also meet all of the additional
conditions that are listed in the national coverage determination for
artificial hearts and related devices, which is posted on the above CMS
Web site.
In light of the new indication of destination therapy, we again
reviewed the FY 2003 MedPAR data for all cases in which a VAD had been
implanted, using the criterion of any case containing a procedure code
of 37.66. We found a total of 65 cases in 3 DRGs: DRG 103 (Heart
Transplant); DRG 483 (Tracheostomy With Mechanical Ventilation 96+
Hours or Principal Diagnosis Except Face, Mouth, and Neck Diagnoses);
and DRG 525 (Heart Assist System Implant). The following table displays
our findings:
----------------------------------------------------------------------------------------------------------------
Average length Average
DRG with code 37.66 reported Count of stay charges
----------------------------------------------------------------------------------------------------------------
103............................................................. 14 77.36 $836,011
483............................................................. 6 100.50 1,400,706
525............................................................. 45 38.93 308,725
----------------------------------------------------------------------------------------------------------------
The remaining 354 cases in DRG 103 that did not report code 37.66
had average charges of $282,578. The remaining 171 cases in DRG 525
that did not contain code 37.66 had an average length of stay of 12.39
days and average charges of $168,388. The 45 cases in DRG 525 with code
37.66 accounted for 26 percent of the cases. However, the average
charges for these cases are approximately $140,340 higher than the
average charges for cases in DRG 525 that did not report code 37.66.
Commenters on the FY 2004 final rule suggested adding code 37.66 to
DRG 103. We were concerned with the timing of that comment, as it was
received after publication of the proposed rule. We noted that the
commenter's suggestions on the structure of the DRGs involved were
significant, and that change of that magnitude should be subject to
public review and comment. We also noted that we would evaluate the
suggestion further. (68 FR 45370) However, as one of the indications
for this device has become destination therapy, and as this new
indication is more clinically aligned with DRG 103, we are proposing to
remove procedure code 37.66 from DRG 525 and assign it to DRG 103. We
also are proposing to change the title of DRG 103 to ``Heart Transplant
or Implant of Heart Assist System''. The proposed restructured DRG 103
would include any principal diagnosis in MDC 5, plus one of the
following surgical procedure codes:
33.6, Combined heart-lung transplantation
37.51, Heart transplantation
37.66, Insertion of implantable heart assist system
In addition to the proposed changes to DRG 103, we are proposing to
change the title of DRG 525 to ``Other Heart Assist System Implant''.
In conjunction with the above data review, we also looked at DRGs
104 and 105.
DRGs 104 and 105 had been restructured in FY 2003 by assigning code
37.62 to them. (Note: The code title for 37.62 has been revised,
effective FY 2005, as reflected in Table 6F of the Addendum to this
proposed rule). We examined the MedPAR data and found that the average
charges were $113,667 and $82,899, respectively, for DRGs 104 and 105
for cases not reporting code 37.62, while cases containing code 37.62
had average charges of $124,559 and $166,129, respectively.
The removal of code 37.66 from DRG 525 would have the effect of
clinically realigning that DRG to be more coherent. As a result of the
proposal to remove code 37.66 from DRG 525 and assign it to DRG 103, we
also are proposing to remove code 37.62 from DRGs 104 and 105 and
assign it back into DRG 525. In addition, the average
[[Page 28208]]
charges for code 37.62 shown above in DRGs 104 and 105 ($124,559 and
$166,129) more closely match the average charges reported for the 171
cases in DRG 525, absent code 37.66 ($168,388).
The proposed restructured DRG 525 would include any principal
diagnosis in MDC 5, plus the following surgical procedure codes:
37.52, Implantation of total replacement heart system*
37.53, Replacement or repair of thoracic unit of total
replacement heart system*
37.54, Replacement or repair of other implantable component of
total replacement heart system*
37.62, Insertion of nonimplantable heart assist system
37.63, Repair of heart assist system
37.65, Implant of external heart assist system
*These codes represent noncovered services for Medicare beneficiaries.
However, it is our longstanding practice to assign every code in the
ICD-9-CM classification to a DRG. Therefore, they have been assigned to
DRG 525.
b. Cardiac Resychronization Therapy and Heart Failure
We received a request from a manufacturer of a Cardiac
Resynchronization Therapy Defibrillator (CRT-D) device for a
modification to DRG 535 (Cardiac Defibrillator Implant With Cardiac
Catheterization With Acute Myocardial Infarction/Heart Failure/Shock)
and DRG 536 (Cardiac Defibrillator Implant With Cardiac Catheterization
Without Acute Myocardial Infarction/Heart Failure/Shock). The commenter
pointed out that defibrillator device implantations, including the CRT-
D type of defibrillator, are assigned to DRG 535 when the patient also
has a cardiac catheterization and has either an acute myocardial
infarction, heart failure, or shock as a principal diagnosis. If the
patient receiving the defibrillator implant and cardiac catheterization
does not have a principal diagnosis of acute myocardial infarction,
heart failure, or shock, the cases are assigned to DRG 536.
The commenter requested that cases be assigned to DRG 535 when the
patient has heart failure as either a principal diagnosis or a
secondary diagnosis. The commenter stated that patients receive a CRT-D
(as opposed to other types of defibrillators) when they have both heart
failure and arrhythmia. The commenter was concerned that some coders
may sequence the heart failure as a secondary diagnosis, which would
result in the patient being assigned to DRG 536.
As stated earlier, DRGs 535 and 536 are split based on the
principal diagnosis of acute myocardial infarction, heart failure, or
shock. Cases are not assigned to DRG 535 when heart failure is a
secondary diagnosis.
The commenter described a scenario where a patient was admitted
with heart failure for an evaluation of the need for a CRT-D
implantation. The hospitalization studies indicated that the patient
had a ventricular tachycardia. The commenter indicated that coders
would be confused as to which code should be listed as the principal
diagnosis.
CMS' review of this scenario as described would be that the heart
failure led to the admission and would be the principal diagnosis. This
case would properly be assigned to DRG 535. Furthermore, when two
conditions are considered to be equally responsible for the admission,
either one of the two conditions may be selected as the principal
diagnosis.
The commenter also stated that its own study shows CRT-D patients
have significantly higher charges than do other patients in DRGs 535
and 536 who receive an implantable defibrillator. This was the case
whether heart failure was used as a principal or secondary diagnosis.
A cardiac catheterization is a diagnostic procedure generally
performed to establish the nature of the patient's cardiac problem and
determine if implantation of a cardiac defibrillator is appropriate.
Generally, the cardiac catheterization can be done on an outpatient
basis. Patients who are admitted with acute myocardial infarction,
heart failure, or shock and have a cardiac catheterization are
generally acute patients who require emergency implantation of the
defibrillator. Thus, there are very high costs associated with these
patients.
We examined the MedPAR file for all cases in DRGs 535 and 536 and
only cases in DRG 536 in which acute myocardial infarction or heart
failure was listed as a secondary diagnosis. The following chart
illustrates the results of our findings:
----------------------------------------------------------------------------------------------------------------
Average length of
DRGs Count stay Average charges
----------------------------------------------------------------------------------------------------------------
535.................................................... 6,801 9.50 $110,663.57
536--All cases......................................... 17,454 5.47 89,493.85
536--Cases With Secondary Diagnosis of Cardiac 8,562 6.5 94,832.14
Defibrillator Implant With Cardiac Catheterization
Without Acute Myocardial Infarction/Heart Failure/
Shock.................................................
----------------------------------------------------------------------------------------------------------------
The data show that cases with a secondary diagnosis of acute
myocardial infarction or heart failure have average charges
($94,832.14) closer to the overall average charges for DRG 536
($89,493.85) where they are currently assigned. Overall charges for DRG
535 were $110,663.57. We do not believe these data support modifying
DRG 535 and DRG 536 as requested. Many of the CRT-D patients who are
admitted for heart failure would be assigned into DRG 535. Furthermore,
modifying the DRG logic for one specific type of defibrillator (CRT-D)
is not consistent with our overall policy of grouping similar types of
patients together in the same DRG. In addition, to modify the DRG logic
for the small percentage of cases where there might be confusion
concerning the selection of the principal diagnosis does not seem
prudent. Therefore, we are not proposing a modification to DRG 535 or
536 for CRT-Ds.
c. Combination Cardiac Pacemaker Devices and Lead Codes
We received a comment that recommended that we include additional
combination procedure codes representing cardiac pacemaker device and
lead codes under DRG 115 (Permanent Cardiac Pacemaker Implant With
Acute Myocardial Infarction, Heart Failure, or Shock or ACID Lead or
Generator Procedures) and DRG 116 (Other Permanent Cardiac Pacemaker
Implant). DRGs 115 and 116 are assigned when a complete pacemaker unit
with leads is implanted. Combinations of pacemaker devices and lead
codes that would lead to the DRG assignment are listed under DRGs 115
and 116. The commenter recommended that the following pacemaker device
and lead procedure code combinations be added to these two DRGs:
00.53 & 37.70
[[Page 28209]]
00.53 & 37.71
00.53 & 37.72
00.53 & 37.73
00.53 & 37.74
00.53 & 37.76
These codes are defined as follows:
00.53, Implantation or replacement of cardiac
resynchronization pacemaker, pulse generator only [CRT-P]
37.70, Initial insertion of pacemaker lead [electrode], not
otherwise specified
37.71, Initial insertion of transvenous lead [electrode] into
ventricle
37.72, Initial insertion of transvenous lead [electrode] into
atrium and ventricle
37.73, Initial insertion of transvenous lead [electrode] into
atrium
37.74, Initial insertion or replacement of epicardial lead
[electrode] into epicadium
37.76, Replacement of transvenous atrial and/or ventricular
lead(s) [electrode]
We have consulted our medical advisors and they agree that these
recommended procedure code combinations also describe pacemaker device
and lead implantations and should be included under DRGs 115 and 116.
Therefore, we are proposing to add the recommended procedure code
combinations to the list of procedure code combinations under DRGs 115
and 116.
4. MDC 6 (Diseases and Disorders of the Digestive System): Artificial
Anal Sphincter
In the FY 2003 IPPS final rule (67 FR 50242), we created two new
codes for procedures involving an artificial anal sphincter, effective
for discharges occurring on or after October 1, 2002: code 49.75
(Implantation or revision of artificial anal sphincter) that is used to
identify cases involving implantation or revision of an artificial anal
sphincter and code 49.76 (Removal of artificial anal sphincter) that is
used to identify cases involving the removal of the device. In Table 6B
of that final rule, we assigned both codes to one of four MDCs, based
on principal diagnosis, and one of six DRGs within those MDCs. In the
August 1, 2003 IPPS final rule (68 FR 45372), we discussed the
assignment of these codes in response to a request we had received to
consider reassignment of these two codes to different MDCs and DRGs.
The requester believed that the average charges ($44,000) for these
codes warranted reassignment. In the August 1, 2003 IPPS final rule, we
stated that we did not have sufficient MedPAR data available on the
reporting of codes 49.75 and 49.76 to make a determination on DRG
reassignment of these codes. We agreed that, if warranted, we would
give further consideration to the DRG assignments of these codes
because it is our customary practice to review DRG assignment(s) for
newly created codes to determine clinical coherence and similar
resource consumption after we have had the opportunity to collect
MedPAR data on utilization, average length of stay charges, and
distribution throughout the system.
Therefore, we reviewed the FY 2003 MedPAR data for the presence of
codes 49.75 and 49.76. We then arrayed the results by DRG, count,
average length of stay, charges, and the presence or absence of a
secondary diagnosis that could be classified as a CC. We found that
there were a total of 13 cases in 5 total DRGs with CCs, and 9 cases in
4 total DRGs without CCs, for a total of 22 cases that reported these
procedure codes. We had anticipated that the majority of cases would
have been found in DRGs 157 (Anal and Stomal Procedures With CC) and
158 (Anal and Stomal Procedures Without CC), but found only 2 cases
grouped to DRG 157 and 4 cases grouped to DRG 158. Our data showed
average charges of $22,374 for the cases with CC, and average charges
of $20,831 for the cases without CC. Average charges for DRG 157 were
$18,196, while average charges for DRG 158 were $9,348.
Our medical advisors also reviewed the contents of DRGs 157 and
158. The consensus was that codes 49.75 and 49.76 are not a clinical
match to the other procedure codes found in these two DRGs. The other
procedure codes in DRGs 157 and 158 are for simpler and less invasive
procedures. In some circumstances, these procedures could potentially
be performed in an outpatient setting or in a physician's office. Our
medical advisors determined that clinical coherence was not
demonstrated and recommended that we move these codes to DRGs 146
(Rectal Resection With CC) and 147 (Rectal Resection Without CC), as
these anal sphincter procedures more closely resemble the procedures in
these DRGs. In addition, the average charges for paired DRG 146
($33,853) and DRG 147 ($21,747) more closely resemble the actual
average charges found in the MedPAR data for these cases.
Even though there are few reports of codes 49.75 and 49.76 in the
MedPAR data and we do not anticipate a significant increase in
utilization of these procedures, we are proposing that these two codes
would only be removed from paired DRG 157 and 158 and reassigned to
paired DRG 146 and 147 under MDC 6 (Diseases and Disorders of the
Digestive System). All other MDC and DRG assignments for codes 49.75
and 49.76 would remain the same.
5. MDC 8 (Diseases and Disorders of the Musculoskeletal System and
Connective Tissue)
a. 360 Spinal Fusions
We received a comment that suggested procedure code 81.61 (360
Spinal fusion) should not be included in DRG 496 (Combined Anterior/
Posterior Spinal Fusion). The commenter stated that code 81.61 does not
represent the same types of cases as other codes included in DRG 496.
The commenter indicated that cases reported with code 81.61 involve
making only one incision, and then fusing both the anterior and
posterior portion of the spine. All other cases in DRG 496 involve two
separate surgical approaches used to reach the site of the spinal
fusion. For these other patients, an incision is made into the patient,
and a fusion is made in part of the spine. The patient is then turned
over and a separate incision is made so that a fusion can be made in
another part of the spine. The commenter added that these two separate
incisions and fusions are more time consuming than the single incision
used for code 81.61. The commenter also stated that patients receiving
the two surgical approaches have a longer recovery period and use more
hospital resources.
We examined data in the MedPAR file for cases assigned to DRG 496
and found the following:
----------------------------------------------------------------------------------------------------------------
Average length Average
DRG Count of stay charges
----------------------------------------------------------------------------------------------------------------
496--All Cases.................................................. 2,706 8.0 $74,967.33
496--Cases with code 81.61...................................... 829 4.7 50,659.69
496--Cases with code 81.61 with CC.............................. 451 5.4 55,639.50
496--Cases with code 81.61 without CC........................... 378 3.8 44,718.16
496--Cases without 81.61........................................ 1877 9.4 85,703.09
----------------------------------------------------------------------------------------------------------------
[[Page 28210]]
We also examined cases in related DRG 497 (Spinal Fusion Except
Cervical With CC) and DRG 498 (Spinal Fusion Except Cervical Without
CC) in which code 81.61 was not reported. The chart below reflects our
findings.
----------------------------------------------------------------------------------------------------------------
Average length Average
DRG Count of stay charges
----------------------------------------------------------------------------------------------------------------
497............................................................. 16,965 6.19 $49,315.27
498............................................................. 11,598 3.95 37,450.68
----------------------------------------------------------------------------------------------------------------
These data clearly show that cases with code 81.61 have
significantly less average charges than other cases in DRG 496 that
have two surgical approaches. Cases with code 81.61 are more closely
aligned with cases in DRG 497 and DRG 498. Furthermore, including code
81.61 will have the effect of lowering the relative weights for DRG 496
in future years. Therefore, we are proposing to remove code 81.61 from
DRG 496 and reassign it to DRGs 497 and 498.
b. Multiple Level Spinal Fusion
On October 1, 2003 (68 FR 45596), the following new ICD-9-CM
procedure codes were created to identify the number of levels of
vertebra fused during a spinal fusion procedure:
81.62, Fusion or refusion of 2-3 vertebrae
81.63, Fusion or refusion of 4-8 vertebrae
81.64, Fusion or refusion of 9 or more vertebrae
Prior to the creation of these new codes, we received a comment
recommending the establishment of new DRGs that would differentiate
between the number of levels of vertebrae involved in a spinal fusion
procedure. In the August 1, 2003 final rule, we discussed the creation
of these new codes and the lack of sufficient MedPAR data with the new
multiple level spinal fusion codes (68 FR 45369). The commenter had
conducted an analysis and submitted data to support redefining the
spinal fusion DRGs. The analysis found that increasing the levels fused
from 1 to 2 levels to 3 levels or more levels increased the mean
standardized charges by 38 percent for lumbar/thoracic fusions, and by
47 percent for cervical fusions.
The following current spinal fusion DRGs separate cases based on
whether or not a CC is present: DRG 497 (Spinal Fusion Except Cervical
With CC) and DRG 498 (Spinal Fusion Except Cervical Without CC); DRG
519 (Cervical Spinal Fusion With CC) and DRG 520 (Cervical Spinal
Fusion Without CC). However, the difference in charges associated with
the current CC split was only slightly greater than the difference
attributable to the number of levels fused as found by the commenter's
analysis. In addition, adopting the commenter's recommendation would
have necessitated adjusting the DRG relative weights using non-MedPAR
data because Medicare claims data with the new ICD-9-CM codes would not
have been available until the FY 2003 MedPAR file. Therefore, at that
time, we did not redefine the spinal fusion DRGs to differentiate on
the basis of the number of levels of vertebrae involved in a spinal
fusion procedure.
We did not yet have any reported cases utilizing the new multilevel
spinal fusion codes in our data. We stated that we would wait until
sufficient data with the new multilevel spinal fusion codes were
available before making a final determination on whether multilevel
spinal fusions should be incorporated into the spinal fusion DRG
structure. The codes went into effect on October 1, 2003 and we have
not received any data using these codes. Spinal surgery is an area of
rapid changes. In addition, we have created a series of new procedure
codes that describe a new type of spinal surgery, spinal disc
replacement. (See codes 84.60 through 84.69 in Table 6B in the Addendum
to this proposed rule that will go into effect on October 1, 2004.) Our
medical advisors describe this new surgical procedure as a more
conservative approach for back pain than the spinal fusion surgical
procedure. With only limited data concerning multiple level spinal
fusion and the rapid changes in spinal surgery, we believe it is more
prudent not to propose the establishment of new DRGs based on the
number of levels of vertebrae involved in a spinal fusion procedure at
this time.
In addition, no other surgical DRG is split based on the number of
procedures performed. For instance, the same DRG is assigned whether
one or more angioplasties are performed on a patient's arteries. The
insertion of multiple stents within an artery does not result in a
different DRG assignment. Similarly, the excision of neoplasms from
multiple sites does not lead to a different DRG assignment. To begin
splitting DRGs based on the number of procedures performed or devices
inserted could set a new and significant precedent for DRG policy.
Therefore, while we will continue to study this area, we are not
proposing to redefine the spinal fusion DRGs based on the number of
levels of vertebrae fused at this time.
6. MDC 15 (Newborns and Other Neonates With Conditions Originating in
the Perinatal Period)
We continue to receive comments that MDC 15 (Newborn and Other
Neonates With Conditions Originating in the Perinatal Period) does not
adequately capture care provided for newborns and neonates by
hospitals. The commenters point out that we have not updated the DRGs
within MDC 15 as we have for other parts of the DRG system.
Our primary focus of updates to the Medicare DRG classification
system is on changes relating to the Medicare patient population, not
the pediatric or neonatal patient populations. However, we acknowledge
the Medicare DRGs are sometimes used to classify other patient
populations. Over the years, we have received comments about aspects of
the Medicare newborn DRGs that appear problematic, and we have
responded to these on an individual basis. In the May 9, 2002 IPPS
proposed rule (67 FR 31413), we proposed extensive changes to multiple
DRGs within MDC 15. Because of our limited data and experience with
newborn cases under Medicare, we contacted the National Association of
Children's Hospitals and Related Institutions (NACHRI) to obtain
proposals for possible revisions of the DRG categories within MDC 15.
We received extensive comments opposing these revisions. Therefore, we
did not implement the proposals.
We advise those non-Medicare systems that need a more up-to-date
system to choose from other systems that are currently in use in this
country, or to develop their own modifications. As previously stated,
we do not have the data or the expertise to develop more extensive
newborn and pediatric DRGs. Our mission in maintaining the Medicare
DRGs is to serve the Medicare population. Therefore, we will make only
minor corrections of obvious errors to the DRGs within MDC 15. At this
time, we do not plan to conduct a more extensive analysis involving
major revisions to these DRGs.
In the IPPS final rule for FY 2004 (68 FR 45360), we added heart
failure
[[Page 28211]]
diagnosis codes 428.20 through 428.43 to the list of secondary
diagnosis of major problem under DRG 387 (Prematurity With Major
Problems) and DRG 389 (Full-Term Neonate With Major Problems). We
received a comment after the August 1, 2003 final rule stating that we
should add the following list of combination codes, which also include
heart failure, to the list of major problems under DRGs 387 and 389:
398.91, Rheumatic heart failure (congestive)
402.01, Malignant hypertensive heart disease, with heart
failure
402.11, Benign hypertensive heart disease, with heart failure
402.91, Unspecified hypertensive heart disease, with heart
failure
404.01, Malignant hypertensive heart and renal disease, with
heart failure
404.03, Malignant hypertensive heart and renal disease, with
heart failure and renal failure
404.11, Benign hypertensive heart and renal disease, with
heart failure
404.13, Benign hypertensive heart and renal disease, with
heart failure and renal failure
404.91, Unspecified hypertensive heart and renal disease, with
heart failure
404.93, Unspecified hypertensive heart and renal disease, with
heart failure and renal failure.
428.9, Heart failure, unspecified
We agree that the codes listed above also include heart failure and
should also be added to DRGs 387 and 389 as major problems. Therefore,
we are proposing to add the heart failure codes listed above to DRGs
387 and 389 as major problems.
7. MDC 20 (Alcohol/Drug Use and Alcohol/Drug Induced Organic Mental
Disorders): Drug-Induced Dementia
We received a request from a commenter that we remove the principal
diagnosis code 292.82 (Drug-induced dementia) from MDC 20 (Alcohol/Drug
Use and Alcohol/Drug Induced Organic Mental Disorders) and the
following DRGs under MDC 20:
DRG 521 (Alcohol/Drug Abuse or Dependence With CC)
DRG 522 (Alcohol/Drug Abuse or Dependence With Rehabilitation
Therapy Without CC)
DRG 523 (Alcohol/Drug Abuse or Dependence Without
Rehabilitation Therapy Without CC)
The commenter indicated that a patient who has a drug-induced
dementia should not be classified to an alcohol/drug DRG. However, the
commenter did not propose a new DRG assignment for code 292.82.
Our medical advisors have evaluated the request and determined that
the most appropriate DRG classification for a patient with drug-induced
dementia would be within MDC 20. The medical advisors indicated that
because this mental condition is drug induced, it is appropriately
classified to DRGs 521 through 523 in MDC 20. Therefore, we are not
proposing a new DRG classification for the principal diagnosis code
292.82.
8. MDC 22 (Burns): Burn Patients on Mechanical Ventilation
We have received concerns raised by hospitals treating burn
patients that the current DRG payment for burn patients on mechanical
ventilation is not adequate. The DRG assignment for these cases depends
on whether the hospital performed the tracheostomy or the tracheostomy
was performed prior to transfer to the hospital. If the hospital does
not actually perform the tracheostomy, the case is assigned to one of
the burn DRGs in MDC 22 (Burns). If the hospital performs a
tracheostomy, the case is assigned to Pre-MDC DRG 482 (Tracheostomy for
Face, Mouth, and Neck Diagnoses) or DRG 483 (Tracheostomy With
Mechanical Ventilation 96+ Hours or Principal Diagnosis Except Face,
Mouth and Neck Diagnoses).
In the August 1, 2002 final rule, we modified DRGs 482 and 483 to
recognize code 96.72 (Continuous mechanical ventilation for 96+ hours)
for the first time in the DRG assignment (67 FR 49996). The
modification was partially in response to concerns that hospitals could
omit diagnosis codes indicating face, mouth, or neck diagnoses in order
to have cases assigned to DRG 483 rather than the much lower paying DRG
482 (the payment for DRG 483 is more than four times greater than the
DRG 482 payment weight). In addition, we noted that many patients
assigned to DRG 483 did not have code 96.72 recorded. We believed this
was due, in part, to the limited number of procedure codes (six) that
can be submitted on the current billing form and the fact that code
96.72 did not affect the DRG assignment prior to FY 2003. The
modification was the first attempt to refine DRGs 482 and 483 so that
patients who receive long-term mechanical ventilation for more than 96
hours are differentiated from those who receive mechanical ventilation
for less than 96 hours. The modification was intended to ensure that
patients who have a tracheostomy and continuous mechanical ventilation
greater than 96 hours (code 96.72) would be assigned to DRG 483. By
making the GROUPER recognize long-term mechanical ventilation and
assigning those patients to the higher weighted DRG 483, we encouraged
hospitals to be more aware of the importance of reporting code 96.72
and to increase reporting of code 96.72 when, in fact, patients had
been on the mechanical ventilator for greater than 96 hours. We stated
in the August 1, 2002 final rule that, once we received more accurate
data, we would give consideration to further modifying DRGs 482 and 483
based on the presence of code 96.72.
To assess the DRG payments for burn patients on mechanical
ventilation, we analyzed FY 2003 MedPAR data for burn cases in the
following DRGs to determine the frequency for which these burn cases
were treated with continuous mechanical ventilation for 96 or more
consecutive hours (code 96.72):
DRG 483 (Tracheostomy With Mechanical Ventilation 96+ Hours or
Principal Diagnosis Except Face, Mouth, and Neck Diagnoses)
DRG 504 (Extensive 3rd Degree Burns With Skin Graft)
DRG 505 (Extensive 3rd Degree Burns Without Skin Graft)
DRG 506 (Full Thickness Burn With Skin Graft or Inhalation
Injury With CC or Significant Trauma)
DRG 507 (Full Thickness Burn With Skin Graft or Inhalation
Injury Without CC or Significant Trauma)
DRG 508 (Full Thickness Burn Without Skin Graft or Inhalation
Injury With CC or Significant Trauma)
DRG 509 (Full Thickness Burn Without Skin Graft or Inhalation
Injury Without CC or Significant Trauma)
DRG 510 (Nonextensive Burns With CC or Significant Trauma)
DRG 511 (Nonextensive Burns Without CC or Significant Trauma)
The following chart summarizes those findings:
----------------------------------------------------------------------------------------------------------------
Average length Average
DRG Count of stay charges
----------------------------------------------------------------------------------------------------------------
483--All cases.................................................. 31,754 37.68 $210,631.94
483--Cases with code 96.72 reported............................. 19,669 36.54 195,171.66
[[Page 28212]]
483--Cases without code 96.72 reported.......................... 12,085 39.52 235,794.39
504--All cases.................................................. 98 30.54 191,645.49
504--Cases with code 97.62 reported............................. 19 25.79 264,095.16
504--Cases without code 96.72 reported.......................... 79 31.68 174,220.89
505--All cases.................................................. 119 2.96 18,619.78
505--Cases with code 96.72 reported............................. 20 7.70 42,613.00
505--Cases without code 96.72 reported.......................... 99 2.00 13,772.67
506--All cases.................................................. 754 16.15 61,370.63
506--Cases with code 96.72 reported............................. 54 20.13 138,272.46
506--Cases without code 96.72 reported.......................... 700 15.85 55,438.20
507--All cases.................................................. 236 8.78 25,891.89
507--Cases with code 96.72 reported............................. 1 38.00 137,132.00
507--Cases without code 96.72 reported.......................... 235 8.66 25,418.53
508--All cases.................................................. 448 7.02 18,332.46
508--Cases with code 96.72 reported............................. 5 10.40 83,171.80
508--Cases without code 96.72 reported.......................... 443 6.98 17,600.64
509--All cases.................................................. 117 4.32 8,994.71
509--Cases with code 96.72 reported............................. 0 0 0
509--Cases without code 96.72 reported.......................... 117 4.32 8,994.71
510--All cases.................................................. 1,209 6.90 18,457.21
510--Cases with code 96.72 reported............................. 21 20.52 93,925.62
510--Cases without code 96.72 reported.......................... 1,188 6.66 17,123.18
511--All cases.................................................. 413 4.18 10,046.89
511--Cases with code 96.72 reported............................. 0 0 0
511--Cases without code 96.72 reported.......................... 413 4.18 10,046.89
----------------------------------------------------------------------------------------------------------------
We found 120 cases that reported code 96.72 within the 3,394 burn
DRG cases (DRGs 504 through 511). Cases reporting code 96.72 have
significantly longer average lengths of stay and average charges. The
majority (54) of these cases that reported code 96.72 were in DRG 506.
The cases with code 96.72 reported had average charges approximately
1.5 times higher than other cases in DRG 506 without code 96.72.
We noted that there were 21 cases that reported code 96.72 within
DRG 510. Since the 21 patients were on continuous mechanical
ventilation for 96 consecutive hours or more, it seems surprising that
the principal diagnosis was listed as one of the nonextensive burn
codes included in DRG 510. A closer review of these cases shows some
questionable coding and reporting of information. It would appear that
hospitals did not always correctly select the principal diagnosis (the
reason after study that led to the hospital admission). For instance,
one admission was for a second-degree burn of the ear. This patient was
on a ventilator for over 96 hours. It would appear that the reason for
the admission was a diagnosis other than the burn of the ear. Other
cases where the patient received long-term mechanical ventilation
included those with a principal diagnosis of first degree burn of the
face, second degree burn of the nose, second degree burn of the lip,
and an unspecified burn of the foot. These four cases reported average
charges ranging from $48,551 to $186,824 and had lengths of stay
ranging from 8 to 36 days.
The impact of long-term mechanical ventilation is quite clear on
burn cases as was shown by the data above. Therefore, we are proposing
to modify the burn DRGs 504 through 509 under MDC 22 to recognize this
impact. We are proposing to modify DRG 504 and DRG 505 so that code
96.72 will be assigned to these DRGs when there is a principal
diagnosis of extensive third degree burns or full thickness burns
(those cases currently assigned to DRGs 504 through 509). In other
words, when cases currently in DRGs 506 through 509 also have code
96.72 reported, they would now be assigned to DRGs 504 or 505. We are
proposing to modify the titles of DRGs 504 and 505 to reflect the
proposed changes in reporting code 96.72 as follows:
Proposed DRG 504 (Extensive Burns or Full Thickness Burns With
Mechanical Ventilation 96+ Hours With Skin Graft)
Proposed DRG 505 (Extensive Burns or Full Thickness Burns With
Mechanical Ventilation 96+ Hours Without Skin Graft)
Cases currently assigned to DRGs 504 and 505 that do not entail 96+
hours of mechanical ventilation will continue to be assigned to DRGs
504 and 505 because they would have extensive burns, as required by the
DRG logic.
We are not proposing to include DRG 510 and DRG 511 within this
revised DRG logic. Cases currently assigned to DRG 510 or DRG 511 that
also report code 96.72 would not be reassigned to DRGs 504 and 505. We
recommend that hospitals examine cases that are assigned to DRG 510 or
DRG 511 and that have code 96.72 to determine if there are possible
coding problems or other issues. As stated earlier, in examining
reported cases within DRG 510, we noted several cases with code 96.72
that appear to have an incorrect principal diagnosis. It would appear
that the principal diagnosis may more appropriately be related to an
inhalation injury, if the injury was present at the time of admission.
We are specifically seeking comments on our proposal to move cases
reporting code 96.72 from DRGs 506 through 509 and assign them to DRGs
504 and 505. We also are seeking comments on our proposal not to
include DRGs 510 and 511 in this proposed revision.
9. Pre-MDC: Tracheostomy
In the August 1, 2002 IPPS final rule (67 FR 49996), for FY 2003,
we modified DRG 482 (Tracheostomy for Face, Mouth, and Neck Diagnoses)
and DRG 483 (Tracheostomy With Mechanical Ventilation 96+ Hours or
Principal Diagnosis Except Face, Mouth, and Neck Diagnoses) to
recognize procedure code 96.72 (Continuous mechanical ventilation 96+
hours) in the DRG 483 assignment. As discussed earlier, we were
concerned about an underreporting of code 96.72 and wanted to encourage
increased reporting of this code.
We examined cases in the MedPAR file in which code 96.72 was
reported
[[Page 28213]]
within DRGs 482 and 483. The following chart illustrates the average
charges and lengths of stays for cases within DRGs 482 and 483 with and
without code 96.72 reported:
----------------------------------------------------------------------------------------------------------------
Average length Average
DRG Count of stay charges
----------------------------------------------------------------------------------------------------------------
482--All cases.................................................. 3,557 11.77 $45,419.10
482--Cases with code 96.72...................................... 22 31.64 137,880.41
482--Cases without code 96.72................................... 3,535 11.64 44,843.67
483--All cases.................................................. 31,754 37.68 210,631.94
483--Cases with code 96.72...................................... 19,669 36.54 195,171.66
483--Cases without code 96.72................................... 12,085 39.52 235,794.39
----------------------------------------------------------------------------------------------------------------
Of the 3,557 cases reported in DRG 482, only 22 cases reported code
96.72. These 22 cases did not have a tracheostomy performed. All 22
cases reported code 30.4 (Laryngectomy), which also leads to an
assignment of DRG 482. It would appear that the long-term mechanical
ventilation was performed through an endotracheal tube instead of
through a tracheostomy. While the average charges for DRG 482 cases
with code 96.72 reported were significantly higher than the average
charges for other cases in the DRG, we do not believe that the very
limited number of cases (22) warrants proposing a DRG modification.
Therefore, we are not proposing any modification for DRG 482 at this
time. We will continue to monitor cases assigned to this DRG.
In DRG 483, 19,669 cases were reported with code 96.72. However,
the data were counter-intuitive. While one would expect to find higher
average charges for cases reported with code 96.72, the opposite is the
case. Cases in DRG 483 reported with code 96.72 had average charges
that were $40,623 lower than those not reported with code 96.72.
Clearly, the presence or absence of code 96.72 does not explain
differences in charges for patients within DRG 483.
As stated earlier, we are concerned that hospitals may not always
report code 96.72 because of space limitations. The electronic billing
system limits the number of procedure codes that can be reported to six
codes. We then looked at whether or not another major O.R. procedure is
performed in addition to a tracheostomy. The DRG 483 logic requires
that all patients assigned to DRG 483 have a tracheostomy. We examined
cases in DRG 483 in the MedPAR file and discovered that those patients
in DRG 483 who have a major procedure performed in addition to the
tracheostomy have higher charges. A major procedure is a procedure
whose code is included on the list that would be assigned to DRG 468
(Extensive O.R. Procedure Unrelated to Principal Diagnosis), except for
tracheostomy codes 31.21 and 31.29. Currently, this additional O.R.
procedure does not affect the DRG assignment for cases assigned to DRG
483. The following chart reflects our findings.
----------------------------------------------------------------------------------------------------------------
Average length Average
DRG Count of stay Charges
----------------------------------------------------------------------------------------------------------------
483--All Cases.................................................. 31,754 37.68 $210,631.94
483--Cases with major O.R. procedure............................ 15,664 42.70 255,914.00
483--Cases without major O.R. procedure......................... 12,867 32.7 168,890.20
----------------------------------------------------------------------------------------------------------------
We found that cases of patients assigned to DRG 483 who had a major
procedure (in addition to the required tracheostomy) had average
charges that were $87,023 higher than the average charges for cases
without a major O.R. procedure and an average length of stay of 5 days
more than those without a major O.R. procedure. We found that the
performance of an additional major O.R. procedure helps to identify the
more expensive patients within DRG 483.
Therefore, as a result of our findings, we are proposing to modify
DRG 483 by dividing these cases into two new DRGs depending on whether
or not there is a major O.R. procedure reported (in addition to the
tracheostomy). We are proposing to delete DRG 483 and create two new
DRGs as follows:
Proposed new DRG 541 (Tracheostomy With Mechanical Ventilation
96+ Hours or Principal Diagnosis Except Face, Mouth, and Neck Diagnoses
With Major O.R. Procedure)
Proposed new DRG 542 (Tracheostomy With Mechanical Ventilation
96+ Hours or Principal Diagnosis Except Face, Mouth and Neck Diagnoses
Without Major O.R. Procedure)
We are specifically seeking comments on our proposal to delete DRG
483 and replace it with two proposed new DRGs by splitting the
assignment of cases on the basis