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Thursday,

August 2, 2007

Book 2 of 2 Books
Pages 42627–43130

Part III

Department of
Health and Human
Services
Centers for Medicare & Medicaid Services

42 CFR Parts 410, 411, 414 et al.


Medicare and Medicaid Programs: CY
2008 Proposed Changes; Proposed Rule
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42628 Federal Register / Vol. 72, No. 148 / Thursday, August 2, 2007 / Proposed Rules

DEPARTMENT OF HEALTH AND Further, we are proposing changes to please call telephone number (410) 786–
HUMAN SERVICES several of the current conditions of 9994 in advance to schedule your
participation that hospitals must meet to arrival with one of our staff members.
Centers for Medicare & Medicaid participate in the Medicare and (Because access to the interior of the
Services Medicaid programs to require the Hubert H. Humphrey Building is not
completion and documentation in the readily available to persons without
42 CFR Parts 410, 411, 414, 416, 419, medical record of medical histories and Federal Government identification,
482, and 485 physical examinations of patients commenters are encouraged to leave
conducted after admission and prior to their comments in the CMS drop slots
[CMS–1392–P]
surgery or a procedure requiring located in the main lobby of the
RIN 0938–AO71 anesthesia services and for building. A stamp-in clock is available
postanesthesia evaluations of patients for persons wishing to retain proof of
Medicare Program: Proposed Changes before discharge or transfer from the filing by stamping in and retaining an
to the Hospital Outpatient Prospective postanesthesia recovery area. extra copy of the comments being filed.)
Payment System and CY 2008 Payment DATES: To be assured consideration, Comments mailed to the addresses
Rates; Proposed Changes to the comments on all sections of the indicated as appropriate for hand or
Ambulatory Surgical Center Payment preamble of this proposed rule must be courier delivery may be delayed and
System and CY 2008 Payment Rates; received at one of the addresses received after the comment period.
Medicare and Medicaid Programs: provided in the ADDRESSES section no For information on viewing public
Proposed Changes to Hospital later than 5 p.m. on September 14, 2007. comments, see the beginning of the
Conditions of Participation; Proposed ADDRESSES: In commenting, please refer SUPPLEMENTARY INFORMATION section.
Changes Affecting Necessary Provider to file code CMS–1392–P. Because of FOR FURTHER INFORMATION CONTACT:
Designations of Critical Access staff and resource limitations, we cannot Alberta Dwivedi, (410) 786–0378,
Hospitals accept comments by facsimile (FAX) Hospital outpatient prospective
AGENCY: Centers for Medicare & transmission. payment issues.
Medicaid Services (CMS), HHS. You may submit comments in one of Dana Burley, (410) 786–0378,
four ways (no duplicates, please): Ambulatory surgical center issues.
ACTION: Proposed rule.
1. Electronically. You may submit Suzanne Asplen, (410) 786–4558, Partial
SUMMARY: This proposed rule would electronic comments on specific issues hospitalization and community
revise the Medicare hospital outpatient in this regulation to http:// mental health centers issues.
prospective payment system to www.cms.hhs.gov/eRulemaking. Click Sheila Blackstock, (410) 786–3502,
implement applicable statutory on the link ‘‘Submit electronic Reporting of quality data issues.
requirements and changes arising from comments on CMS regulations with an Mary Collins, (410) 786–3189, and
our continuing experience with this open comment period.’’ (Attachments Jeannie Miller, (410) 786–3164,
system. In this proposed rule, we should be in Microsoft Word, Necessary provider designations for
describe the proposed changes to the WordPerfect, or Excel; however, we CAHs Issues.
amounts and factors used to determine prefer Microsoft Word.) Scott Cooper, (410) 786–9465, and
2. By regular mail. You may mail Jeannie Miller, (410) 786–3164, Hospital
the payment rates for Medicare hospital
written comments (one original and two conditions of participation Issues.
outpatient services paid under the
copies) to the following address ONLY:
prospective payment system. These SUPPLEMENTARY INFORMATION:
Centers for Medicare & Medicaid
changes would be applicable to services Services, Department of Health and Submitting Comments: We welcome
furnished on or after January 1, 2008. Human Services, Attention: CMS– comments from the public on all issues
In addition, this proposed rule would 1392–P, P.O. Box 8011, Baltimore, MD set forth in this proposed rule to assist
update the revised Medicare ambulatory 21244–1850. us in fully considering issues and
surgical center (ASC) payment system to Please allow sufficient time for mailed developing policies. You can assist us
implement certain related provisions of comments to be received before the by referencing file code CMS–1392–P
the Medicare Prescription Drug, close of the comment period. and the specific ‘‘issue identifier’’ that
Improvement, and Modernization Act of 3. By express or overnight mail. You precedes the section on which you
2003 (MMA). In this proposed rule, we may send written comments (one choose to comment.
propose the applicable relative payment original and two copies) to the following Inspection of Public Comments: All
weights and amounts for services address ONLY: Centers for Medicare & comments received before the close of
furnished in ASCs, specific HCPCS Medicaid Services, Department of the comment period are available for
codes to which the final policies of the Health and Human Services, Attention: viewing by the public, including any
ASC payment system would apply, and CMS–1392–P, Mail Stop C4–26–05, personally identifiable or confidential
other pertinent ratesetting information 7500 Security Boulevard, Baltimore, MD business information that is included in
for the CY 2008 ASC payment system. 21244–1850. a comment. We post all comments
These changes would be applicable to 4. By hand or courier. If you prefer, received before the close of the
services furnished on or after January 1, you may deliver (by hand or courier) comment period on the following Web
2008. your written comments (one original site as soon as possible after they have
In this proposed rule, we also are and two copies) before the close of the been received: http://www.cms.hhs.gov/
proposing changes to the policies comment period to one of the following eRulemaking. Click on the link
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relating to the necessary provider addresses: Room 445–G, Hubert H. ‘‘Electronic Comments on CMS
designations of critical access hospitals Humphrey Building, 200 Independence Regulations’’ on that Web site to view
(CAHs) that are being recertified when Avenue, SW., Washington, DC 20201; or public comments.
a CAH enters into a new co-location 7500 Security Boulevard, Baltimore, MD Comments received timely will also
arrangement with another hospital or 21244–1850. be available for public inspection as
CAH or when the CAH creates or If you intend to deliver your they are received, generally beginning
acquires an off-campus location. comments to the Baltimore address, approximately 3 weeks after publication

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Federal Register / Vol. 72, No. 148 / Thursday, August 2, 2007 / Proposed Rules 42629

of a document, at the headquarters of CORF Comprehensive outpatient NCD National Coverage Determination
the Centers for Medicare & Medicaid rehabilitation facility NTIOL New technology intraocular
Services, 7500 Security Boulevard, CPT [Physicians’] Current Procedural lens
Baltimore, MD 21244, on Monday Terminology, Fourth Edition, 2007, OCE Outpatient Code Editor
through Friday of each week from 8:30 copyrighted by the American Medical OMB Office of Management and
a.m. to 4 p.m. To schedule an Association Budget
appointment to view public comments, CRNA Certified registered nurse OPD [Hospital] Outpatient department
phone 1–800–743–3951. anesthetist OPPS [Hospital] Outpatient
CY Calendar year prospective payment system
Electronic Access DMEPOS Durable medical equipment, PHP Partial hospitalization program
This Federal Register document is prosthetics, orthotics, and supplies PM Program memorandum
also available from the Federal Register DMERC Durable medical equipment PPI Producer Price Index
PPS Prospective payment system
online database through GPO Access, a regional carrier
PPV Pneumococcal pneumonia (virus)
service of the U.S. Government Printing DRA Deficit Reduction Act of 2005, PRA Paperwork Reduction Act
Office. Free public access is available on Pub. L. 109–171 QIO Quality Improvement
a Wide Area Information Server (WAIS) DSH Disproportionate share hospital Organization
through the Internet and via EACH Essential Access Community RFA Regulatory Flexibility Act
asynchronous dial-in. Internet users can Hospital RHQDAPU Reporting Hospital Quality
access the database by using the World E/M Evaluation and management Data for Annual Payment Update
Wide Web; the Superintendent of EPO Erythropoietin [Program]
Documents’ home page address is ESRD End-stage renal disease RHHI Regional home health
http://www.gpoaccess.gov/index.html, FACA Federal Advisory Committee intermediary
by using local WAIS client software, or Act, Pub. L. 92–463 SBA Small Business Administration
by telnet to swais.access.gpo.gov, then FAR Federal Acquisition Regulations SCH Sole community hospital
login as guest (no password required). FDA Food and Drug Administration SDP Single Drug Pricer
Dial-in users should use FFS Fee-for-service SI Status indicator
communications software and modem FSS Federal Supply Schedule TEFRA Tax Equity and Fiscal
to call (202) 512–1661; type swais, then FTE Full-time equivalent Responsibility Act of 1982, Pub. L.
login as guest (no password required). FY Federal fiscal year 97–248
GAO Government Accountability TOPS Transitional outpatient
Alphabetical List of Acronyms Office payments
Appearing in the Proposed Rule HCPCS Healthcare Common Procedure USPDI United States Pharmacopoeia
ACEP American College of Emergency Coding System Drug Information
Physicians HCRIS Hospital Cost Report WAC Wholesale acquisition cost
AHA American Hospital Association Information System In this document, we address two
AHIMA American Health Information HHA Home health agency payment systems under the Medicare
Management Association HIPAA Health Insurance Portability program: the hospital outpatient
AMA American Medical Association and Accountability Act of 1996, Pub. prospective payment system (OPPS) and
APC Ambulatory payment L. 104–191 the revised ambulatory surgical center
classification HOPD Hospital outpatient department (ASC) revised payment system. The
AMP Average manufacturer price HOP QDRP Hospital Outpatient provisions relating to the OPPS are
ASC Ambulatory Surgical Center Quality Data Reporting Program included in sections I. through XV.,
ASP Average sales price ICD–9–CM International Classification XVII., and XIX. through XXII. of this
AWP Average wholesale price of Diseases, Ninth Edition, Clinical proposed rule and in Addenda A, B, C
BBA Balanced Budget Act of 1997, Modification (Addendum C is available on the
Pub. L. 105–33 IDE Investigational device exemption Internet only; see section XIX. of this
BBRA Medicare, Medicaid, and SCHIP IOL Intraocular lens proposed rule), D1, D2, E, L, and M to
[State Children’s Health Insurance IPPS [Hospital] Inpatient prospective this proposed rule. The provisions
Program] Balanced Budget payment system related to the revised ASC payment
Refinement Act of 1999, Pub. L. 106– IVIG Intravenous immune globulin system are included in sections XVI.,
113 MAC Medicare Administrative XVII., and XIX. through XXII. of this
BCA Blue Cross Association Contractors proposed rule and in Addenda AA, BB,
BCBSA Blue Cross and Blue Shield MedPAC Medicare Payment Advisory DD1, and DD2 to this proposed rule.
Association Commission
BIPA Medicare, Medicaid, and SCHIP MDH Medicare-dependent, small rural Table of Contents
Benefits Improvement and Protection hospital I. Background for the OPPS
Act of 2000, Pub. L. 106–554 MIEA–TRHCA Medicare A. Legislative and Regulatory Authority for
CAH Critical access hospital Improvements and Extension Act the Hospital Outpatient Prospective
CAP Competitive Acquisition Program under Division B, Title I of the Tax Payment System
CBSA Core-Based Statistical Area Relief Health Care Act of 2006, Pub. B. Excluded OPPS Services and Hospitals
CCR Cost-to-charge ratio L. 109–432 C. Prior Rulemaking
CERT Comprehensive Error Rate MMA Medicare Prescription Drug, D. APC Advisory Panel
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Testing Improvement, and Modernization Act 1. Authority of the APC Panel


2. Establishment of the APC Panel
CMHC Community mental health of 2003, Pub. L. 108–173 3. APC Panel Meetings and Organizational
center MPFS Medicare Physician Fee Structure
CMS Centers for Medicare & Medicaid Schedule E. Provisions of the Medicare
Services MSA Metropolitan Statistical Area Improvements and Extension Act under
CoP [Hospital] Condition of NCCI National Correct Coding Division B of Title I of the Tax Relief and
participation Initiative Health Care Act of 2006

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42630 Federal Register / Vol. 72, No. 148 / Thursday, August 2, 2007 / Proposed Rules

F. Summary of the Major Contents of This (a) Background 8. Implantation of Spinal Neurostimulators
Proposed Rule (b) Proposed Payment for LDR Prostate (APC 0222)
1. Proposed Updates Affecting OPPS Brachytherapy 9. Stereotactic Radiosurgery (SRS)
Payments (3) Proposed Cardiac Electrophysiologic Treatment Delivery Services (APCs 0065,
2. Proposed OPPS Ambulatory Payment Evaluation and Ablation Composite APC 0066, and 0067)
Classification (APC) Group Policies (a) Background 10. Blood Transfusion (APC 0110)
3. Proposed OPPS Payment for Devices (b) Proposed Payment for Cardiac 11. Screening Colonscopies and Screening
4. Proposed OPPS Payment for Drugs, Electrophysiologic Evaluation and Flexible Sigmoidoscopies (APCs 0158
Biologicals, and Radiopharmaceuticals Ablation and 0159)
5. Proposed Estimate of OPPS Transitional e. Service-Specific Packaging Issues IV. Proposed OPPS Payment for Devices
Pass-Through Spending for Drugs, B. Proposed Payment for Partial A. Proposed Treatment of Device-
Biologicals, and Devices Hospitalization Dependent APCs
6. Proposed OPPS Payment for 1. Background 1. Background
Brachytherapy Sources 2. Proposed PHP APC Update 2. Proposed Payment
7. Proposed OPPS Coding and Payment for 3. Proposed Separate Threshold for Outlier 3. Proposed Payment When Devices Are
Drug Administration Services Payments to CMHCs Replaced With Partial Credit to the
8. Proposed OPPS Hospital Coding and C. Proposed Conversion Factor Update Hospital
Payment for Visits D. Proposed Wage Index Changes B. Pass-Through Payments for Devices
9. Proposed OPPS Payment for Blood and E. Proposed Statewide Average Default 1. Expiration of Transitional Pass-Through
Blood Products CCRs Payments for Certain Devices
10. Proposed OPPS Payment for F. Proposed OPPS Payments to Certain a. Background
Observation Services Rural Hospitals b. Proposed Policy
11. Proposed Procedures That Will Be Paid 1. Hold Harmless Transitional Payment 2. Proposed Provisions for Reducing
Only as Inpatient Services Changes Made by Pub. L. 109–171 (DRA) Transitional Pass-Through Payments to
12. Proposed Nonrecurring Technical and 2. Proposed Adjustment for Rural SCHs Offset Costs Packaged Into APC Groups
Policy Changes Implemented in CY 2006 Related to Pub. a. Background
13. Proposed OPPS Payment Status and L. 108–173 (MMA) b. Proposed Policy
Comment Indicators G. Proposed Hospital Outpatient Outlier V. Proposed OPPS Payment Changes for
14. OPPS Policy and Payment Payments Drugs, Biologicals, and
Recommendations H. Calculation of the Proposed National Radiopharmaceuticals
15. Proposed Update of the Revised ASC Unadjusted Medicare Payment A. Proposed Transitional Pass-Through
Payment for Additional Costs of Drugs
Payment System I. Proposed Beneficiary Copayments
and Biologicals
16. Proposed Quality Data for Annual 1. Background
1. Background
Payment Updates 2. Proposed Copayment
2. Drugs and Biologicals with Expiring
17. Proposed Changes Affecting Necessary 3. Calculation of a Proposed Adjusted
Pass-Through Status in CY 2007
Provider Critical Access Hospitals Copayment Amount for an APC Group
3. Drugs and Biologicals With Proposed
(CAHs) and Hospital Conditions of III. Proposed OPPS Ambulatory Payment Pass-Through Status in CY 2008
Participation (CoPs) Classification (APC) Group Policies B. Proposed Payment for Drugs,
18. Regulatory Impact Analysis A. Proposed Treatment of New HCPCS and Biologicals, and Radiopharmaceuticals
II. Proposed Updates Affecting OPPS CPT Codes Without Pass-Through Status
Payments 1. Proposed Treatment of New HCPCS 1. Background
A. Proposed Recalibration of APC Relative Codes Included in the April and July 2. Proposed Criteria for Packaging Payment
Weights Quarterly OPPS Updates for CY 2007 for Drugs and Biologicals
1. Database Construction 2. Proposed Treatment of New Category I 3. Proposed Payment for Drugs and
a. Database Source and Methodology and III CPT Codes and Level II HCPCS Biologicals Without Pass-Through Status
b. Proposed Use of Single and Multiple Codes That Are Not Packaged
Procedure Claims B. Proposed Changes—Variations Within a. Payment for Specified Covered
(1) Proposed Use of Date of Service APCs Outpatient Drugs
Stratification and a Bypass List To 1. Background (1) Background
Increase the Amount of Data Used To 2. Application of the 2 Times Rule (2) Proposed Payment Policy
Determine Medians 3. Proposed Exceptions to the 2 Times Rule (3) Proposed Payment for Blood Clotting
(2) Exploration of Allocation of Packaged C. New Technology APCs Factors
Costs to Separately Paid Procedure 1. Introduction (4) Proposed Payment for
Codes 2. Proposed Movement of Procedures From Radiopharmaceuticals
c. Proposed Calculation of CCRs New Technology APCs to Clinical APCs (a) Background
2. Proposed Calculation of Median Costs a. Positron Emission Tomography (PET)/ (b) Proposed Payment for Diagnostic
3. Proposed Calculation of OPPS Scaled Computed Tomography (CT) Scans (New Radiopharmaceuticals
Payment Weights Technology APC 1511) (c) Proposed Payment for Therapeutic
4. Proposed Changes to Packaged Services b. IVIG Preadministration-Related Services Radiopharmaceuticals
a. Background (New Technology APC 1502) b. Proposed Payment for Nonpass-Through
b. Addressing Growth in OPPS Volume c. Other Services in New Technology APCs Drugs, Biologicals, and
and Spending D. Proposed APC-Specific Policies Radiopharmaceuticals With HCPCS
c. Proposed Packaging Approach 1. Hyperbaric Oxygen Therapy (APC 0659) Codes, But Without OPPS Hospital
(1) Guidance Services 2. Skin Repair Procedures (APCs 0024, Claims Data
(2) Image Processing Services 0025, 0027, and 0686) VI. Proposed Estimate of OPPS Transitional
(3) Intraoperative Services 3. Cardiac Computed Tomography and Pass-Through Spending for Drugs,
(4) Imaging Supervision and Interpretation Computed Tomographic Angiography Biologicals, Radiopharmaceuticals, and
Services (APCs 0282, 0376, 0377, and 0398) Devices
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(5) Diagnostic Radiopharmaceuticals 4. Ultrasound Ablation of Uterine Fibroids A. Total Allowed Pass-Through Spending
(6) Contrast Agents With Magnetic Resonance Guidance B. Proposed Estimate of Pass-Through
(7) Observation Services (MRgFUS) (APCs 0195 and 0202) Spending
d. Proposed Development of Composite 5. Single Allergy Tests (APC 0381) VII. Proposed OPPS Payment for
APCs 6. Myocardial Positron Emission Brachytherapy Sources
(1) Background Tomography (PET) Scans (APC 0307) A. Background
(2) Proposed Low Dose Rate (LDR) Prostate 7. Implantation of Cardioverter- B. Proposed Payment for Brachytherapy
Brachytherapy Composite APC Defibrillators (APCs 0107 and 0108) Sources

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VIII. Proposed OPPS Drug Administration b. Identification of Surgical Procedures 4. Classes of NTIOLS Approved for
Coding and Payment Eligible for Payment under the Revised Payment Adjustment
A. Background ASC Payment System 5. Payment Adjustment
B. Proposed Coding and Payment for Drug c. Payment for Covered Surgical 6. Proposed CY 2008 ASC Payment for
Administration Services Procedures under the Revised ASC Insertion of IOLs
IX. Proposed Hospital Coding and Payments Payment System J. Proposed ASC Payment and Comment
for Visits (1) General Policies Indicators
A. Background (2) Office-Based Procedures K. ASC Policy and Payment
B. Proposed Policies for Hospital (3) Device-Intensive Procedures Recommendations
Outpatient Visits (4) Multiple and Interrupted Procedure L. Proposed Calculation of the ASC
1. Clinic Visits: New and Established Discounting Conversion Factor and ASC Payment
Patient Visits and Consultations (5) Transition to Revised ASC Payment Rates
2. Emergency Department Visits Rates 1. Overview
C. Proposed Visit Reporting Guidelines 2. Covered Ancillary Services under the 2. Budget Neutrality Requirement
1. Background Revised ASC Payment System 3. Calculation of the ASC Payment Rates
2. CY 2007 Work on Visit Guidelines a. General Policies for CY 2008
3. Proposed Visit Guidelines b. Payment Policies for Specific Items and 4. Calculation of the ASC Payment Rates
X. Proposed OPPS Payment for Blood and Services for CY 2009 and FutureYears
Blood Products (1) Radiology Services XVII. Reporting Quality Data for Annual
A. Background (2) Brachytherapy Sources Payment Rate Updates
B. Proposed Payment for Blood and Blood (3) Drugs and Biologicals A. Background
Products (4) Implantable Devices with Pass-Through 1. Reporting Hospital Outpatient Quality
XI. Proposed OPPS Payment for Observation Status under the OPPS Data for Annual Payment Update
Services (5) Corneal Tissue Acquisition 2. Reporting ASC Quality Data for Annual
XII. Proposed Procedures That Will Be Paid 3. General Payment Policies Payment Increase
Only as Inpatient Procedures a. Geographic Adjustment B. Proposed Hospital Outpatient Measures
A. Background b. Beneficiary Coinsurance C. Other Proposed Hospital Outpatient
B. Proposed Changes to the Inpatient List D. Proposed Treatment of New HCPCS Measures
XIII. Proposed Nonrecurring Technical and Codes D. Proposed Implementation of the HOP
Policy Changes 1. Treatment of New CY 2008 Category I QDRP
A. Outpatient Hospital Services and and III CPT Codes and Level II HCPCS E. Proposed Requirements for HOP Quality
Supplies Incident to a Physician Service Codes Data Reporting for CY 2009 and
B. Interrupted Procedures 2. Proposed Treatment of New Mid-Year Subsequent Calendar Years
C. Transitional Adjustments Hold Category III CPT Codes 1. Administrative Requirements
Harmless Provisions 3. Proposed Treatment of Level II HCPCS 2. Data Collection and Submission
D. Reporting of Wound Care Services Codes Released on a Quarterly Basis Requirements
E. Reporting of Cardiac Rehabilitation E. Proposed Updates to Covered Surgical 3. HOP QDRP Validation Requirements
Services Procedures and Covered Ancillary F. Publication of HOP QDRP Data
F. Reporting of Bone Marrow and Stem Services Collected
Cell Processing Services 1. Identification of Covered Surgical G. Proposed Attestation Requirement for
XIV. Proposed OPPS Payment Status and Procedures Future Payment Years
Comment Indicators a. General Policies H. HOP QDRP Reconsiderations
A. Proposed Payment Status Indicator b. Proposed Changes in Designation of I. Reporting of ASC Quality Data
Definitions Covered Surgical Procedures as Office- XVIII. Proposed Changes Affecting Critical
1. Proposed Payment Status Indicators to Based Access Hospitals (CAHs) and Hospital
Designate Services That Are Paid under c. Proposed Changes in Designation of Conditions of Participation (CoPs)
the OPPS Covered Surgical Procedures as Device- A. Proposed Changes Affecting CAHs
2. Proposed Payment Status Indicators to Intensive 1. Background
Designate Services That Are Paid Under 2. Proposed Changes in Identification of 2. Co-Location of Necessary Provider CAHs
a Payment System Other Than the OPPS Covered Ancillary Services 3. Provider-Based Facilities of CAHs
3. Proposed Payment Status Indicators to F. Proposed Payment for Covered Surgical 4. Termination of Provider Agreement
Designate Services That Are Not Procedures and Covered Ancillary 5. Proposed Regulation Changes
Recognized under the OPPS But That Services B. Proposed Revisions to Hospital CoPs
May Be Recognized by Other 1. Proposed Payment for Covered Surgical 1. Background
Institutional Providers Procedures 2. Provisions of the Proposed Regulations
4. Proposed Payment Status Indicators to a. Proposed Update to Payment Rates a. Proposed Timeframes for Completion of
Designate Services That Are Not Payable b. Payment Policies When Devices Are the Medical History and Physical
by Medicare Replaced at No Cost or With Credit Examination
B. Proposed Comment Indicator (1) Policy When Devices Are Replaced at b. Proposed Requirements for
Definitions No Cost or With Full Credit Preanesthesia and Postanesthesia
XV. OPPS Policy and Payment (2) Proposed Policy When Implantable Evaluations
Recommendations Devices Are Replaced With Partial Credit c. Proposed Technical Amendment to
A. MedPAC Recommendations 2. Proposed Payment for Covered Ancillary Nursing Services CoP
B. APC Panel Recommendations Services XIX. Files Available to the Public Via the
XVI. Proposed Update of the Revised G. Physician Payment for Procedures and Internet
Ambulatory Surgical Center Payment Services Provided in ASC A. Information in Addenda Related to the
System H. Proposed Changes to Definitions of CY 2008 Hospital OPPS
A. Legislative and Regulatory Authority for ‘‘Radiology and Certain Other Imaging B. Information in Addenda Related to the
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the ASC Payment System Services’’ and ‘‘Outpatient Prescription CY 2008 ASC Payment System
B. Rulemaking for the Revised ASC Drugs’’ XX. Collection of Information Requirements
Payment System I. New Technology Intraocular Lenses XXI. Response to Comments
C. Revisions to the ASC Payment System 1. Background XXII. Regulatory Impact Analysis
Effective January 1, 2008 2. Changes to the NTIOL Determination A. Overall Impact
1. Covered Surgical Procedures under the Process Finalized for CY 2008 1. Executive Order 12866
Revised ASC Payment System 3. NTIOL Application Process for CY 2008 2. Regulatory Flexibility Act (RFA)
a. Definition of Surgical Procedure Payment Adjustment 3. Small Rural Hospitals

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4. Unfunded Mandates services and to encourage more efficient coinsurance, as an outpatient


5. Federalism delivery of care, the Congress mandated department service, payable under the
B. Effects of OPPS Changes in This replacement of the reasonable cost- OPPS.
Proposed Rule The OPPS rate is an unadjusted
based payment methodology with a
1. Alternatives Considered
prospective payment system (PPS). The national payment amount that includes
2. Limitation of Our Analysis
3. Estimated Impact of This Proposed Rule Balanced Budget Act (BBA) of 1997 the Medicare payment and the
on Hospitals and CMHCs (Pub. L. 105–33) added section 1833(t) beneficiary copayment. This rate is
4. Estimated Effect of This Proposed Rule to the Social Security Act (the Act) divided into a labor-related amount and
on Beneficiaries authorizing implementation of a PPS for a nonlabor-related amount. The labor-
5. Conclusion hospital outpatient services (OPPS). related amount is adjusted for area wage
6. Accounting Statement The Medicare, Medicaid, and SCHIP differences using the hospital inpatient
C. Effects of ASC Payment System Changes Balanced Budget Refinement Act wage index value for the locality in
in This Proposed Rule (BBRA) of 1999 (Pub. L. 106–113) made which the hospital or CMHC is located.
1. Alternatives Considered All services and items within an APC
major changes in the hospital OPPS.
2. Limitations on Our Analysis
3. Estimated Effects of This Proposed Rule The Medicare, Medicaid, and SCHIP group are comparable clinically and
on ASCs Benefits Improvement and Protection with respect to resource use (section
4. Estimated Effects of This Proposed Rule Act (BIPA) of 2000 (Pub. L. 106–554) 1833(t)(2)(B) of the Act). In accordance
on Beneficiaries made further changes in the OPPS. with section 1833(t)(2) of the Act,
5. Conclusion Section 1833(t) of the Act was also subject to certain exceptions, services
6. Accounting Statement amended by the Medicare Prescription and items within an APC group cannot
D. Effects of the Proposed Requirements for Drug, Improvement, and Modernization be considered comparable with respect
Reporting of Quality Data for Hospital Act (MMA) of 2003 (Pub. L. 108–173). to the use of resources if the highest
Outpatient Settings median (or mean cost, if elected by the
The Deficit Reduction Act (DRA) of
E. Effects of the Proposed Policy on CAH
2005 (Pub. L. 109–171), enacted on Secretary) for an item or service in the
Off-Campus and Co-Location
Requirements February 8, 2006, made additional APC group is more than 2 times greater
F. Effects of Proposed Policy Revisions to changes in the OPPS. In addition, the than the lowest median cost for an item
the Hospital CoPs Medicare Improvements and Extension or service within the same APC group
G. Executive Order 12866 Act under Division B of Title I of the (referred to as the ‘‘2 times rule’’). In
Tax Relief and Health Care Act (MIEA– implementing this provision, we use the
Regulation Text
TRHCA) of 2006 (Pub. L. 109–432), median cost of the item or service
Addenda enacted on December 20, 2006, made assigned to an APC group.
Addendum A—Proposed OPPS APCs for CY further changes in the OPPS. A Special payments under the OPPS
2008 discussion of these provisions is may be made for New Technology items
Addendum AA—Proposed ASC Covered included in sections I.E., VII., and XVII. and services in one of two ways. Section
Surgical Procedures for CY 2008 of this proposed rule. 1833(t)(6) of the Act provides for
(Including Surgical Procedures for The OPPS was first implemented for temporary additional payments, which
Which Payment is Packaged) services furnished on or after August 1, we refer to as ‘‘transitional pass-through
Addendum B—Proposed OPPS Payment By payments,’’ for at least 2 but not more
2000. Implementing regulations for the
HCPCS Code for CY 2008
OPPS are located at 42 CFR Part 419. than 3 years for certain drugs, biological
Addendum BB—Proposed ASC Covered
Ancillary Services Integral to Covered Under the OPPS, we pay for hospital agents, brachytherapy devices used for
Surgical Procedures for CY 2008 outpatient services on a rate-per-service the treatment of cancer, and categories
(Including Ancillary Services for Which basis that varies according to the of other medical devices. For New
Payment Is Packaged) ambulatory payment classification Technology services that are not eligible
Addendum D1—Proposed OPPS Payment (APC) group to which the service is for transitional pass-through payments,
Status Indicators assigned. We use the Healthcare and for which we lack sufficient data to
Addendum D2—Proposed OPPS Comment Common Procedure Coding System appropriately assign them to a clinical
Indicators (HCPCS) codes (which include certain APC group, we have established special
Addendum DD1—Proposed ASC Payment Current Procedural Terminology (CPT) APC groups based on costs, which we
Indicators
codes) and descriptors to identify and refer to as New Technology APCs. These
Addendum DD2—Proposed ASC Comment
Indicators group the services within each APC New Technology APCs are designated
Addendum E—Proposed HCPCS Codes That group. The OPPS includes payment for by cost bands which allow us to provide
Would Be Paid Only as Inpatient most hospital outpatient services, appropriate and consistent payment for
Procedures for CY 2008 except those identified in section I.B. of designated new procedures that are not
Addendum L—Proposed Out-Migration this proposed rule. Section yet reflected in our claims data. Similar
Adjustment 1833(t)(1)(B)(ii) of the Act provides for to pass-through payments, an
Addendum M—Proposed HCPCS Codes for Medicare payment under the OPPS for assignment to a New Technology APC is
Assignment to Composite APCs for CY hospital outpatient services designated temporary; that is, we retain a service
2008 by the Secretary (which includes partial within a New Technology APC until we
I. Background for the OPPS hospitalization services furnished by acquire sufficient data to assign it to a
community mental health centers clinically appropriate APC group.
A. Legislative and Regulatory Authority (CMHCs)) and hospital outpatient
for the Hospital Outpatient Prospective services that are furnished to inpatients B. Excluded OPPS Services and
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Payment System who have exhausted their Part A Hospitals


When the Medicare statute was benefits, or who are otherwise not in a Section 1833(t)(1)(B)(i) of the Act
originally enacted, Medicare payment covered Part A stay. Section 611 of Pub. authorizes the Secretary to designate the
for hospital outpatient services was L. 108–173 added provisions for hospital outpatient services that are
based on hospital-specific costs. In an Medicare coverage of an initial paid under the OPPS. While most
effort to ensure that Medicare and its preventive physical examination, hospital outpatient services are payable
beneficiaries pay appropriately for subject to the applicable deductible and under the OPPS, section

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1833(t)(1)(B)(iv) of the Act excludes published in the Federal Register on other requirements, that the APC Panel
payment for ambulance, physical and November 24, 2006 the CY 2007 OPPS/ continue to be technical in nature; be
occupational therapy, and speech- ASC final rule with comment period (71 governed by the provisions of the
language pathology services, for which FR 67960). In that final rule with FACA; may convene up to three
payment is made under a fee schedule. comment period, we revised the OPPS meetings per year; has a Designated
Section 614 of Pub. L. 108–173 to update the payment weights and Federal Officer (DFO); and is chaired by
amended section 1833(t)(1)(B)(iv) of the conversion factor for services payable a Federal official designated by the
Act to exclude OPPS payment for under the CY 2007 OPPS on the basis Secretary.
screening and diagnostic mammography of claims data from January 1, 2005, The current APC Panel membership
services. The Secretary exercised the through December 31, 2005, and to and other information pertaining to the
authority granted under the statute to implement certain provisions of Pub. L. APC Panel, including its charter,
exclude from the OPPS those services 108–173 and Pub. L. 109–171. In Federal Register notices, meeting dates,
that are paid under fee schedules or addition, we responded to public agenda topics, and meeting reports can
other payment systems. Such excluded comments received on the provisions of be viewed on the CMS Web site at:
services include, for example, the the November 10, 2005 final rule with http://www.cms.hhs.gov/FACA/
professional services of physicians and comment period (70 FR 86516) 05_AdvisoryPanelonAmbulatory
nonphysician practitioners paid under pertaining to the APC assignment of PaymentClassificationGroups.asp#
the Medicare Physician Fee Schedule HCPCS codes identified in Addendum B TopOfPage.
(MPFS); laboratory services paid under of that rule with the new interim (NI) 3. APC Panel Meetings and
the clinical diagnostic laboratory fee comment indicator; and public Organizational Structure
schedule (CLFS); services for comments received on the August 23,
beneficiaries with end-stage renal The APC Panel first met on February
2006 OPPS/ASC proposed rule for CY
disease (ESRD) that are paid under the 27, February 28, and March 1, 2001.
2007 (71 FR 49506).
ESRD composite rate; and services and Since the initial meeting, the APC Panel
procedures that require an inpatient stay D. APC Advisory Panel has held 11 subsequent meetings, with
that are paid under the hospital the last meeting taking place on March
1. Authority of the APC Panel
inpatient prospective payment system 7 and 8, 2007. Prior to each meeting, we
(IPPS). We set forth the services that are Section 1833(t)(9)(A) of the Act, as publish a notice in the Federal Register
excluded from payment under the OPPS amended by section 201(h) of the BBRA, to announce the meeting, and when
in § 419.22 of the regulations. and redesignated by section 202(a)(2) of necessary to solicit and announce
Under § 419.20(b) of the regulations, the BBRA, requires that we consult with nominations for the APC Panel’s
we specify the types of hospitals and an outside panel of experts to review the membership.
entities that are excluded from payment clinical integrity of the payment groups The APC Panel has established an
under the OPPS. These excluded and their weights under the OPPS. The operational structure that, in part,
entities include Maryland hospitals, but Act further specifies that the panel will includes the use of three subcommittees
only for services that are paid under a act in an advisory capacity. The to facilitate its required APC review
cost containment waiver in accordance Advisory Panel on Ambulatory Payment process. The three current
with section 1814(b)(3) of the Act; Classification (APC) Groups (the APC subcommittees are the Data
critical access hospitals (CAHs); Panel), discussed under section I.D.2. of Subcommittee, the Observation and
hospitals located outside of the 50 this proposed rule, fulfills these Visit Subcommittee, and the Packaging
States, the District of Columbia, and requirements. The APC Panel is not Subcommittee. The Data Subcommittee
Puerto Rico; and Indian Health Service restricted to using data compiled by is responsible for studying the data
hospitals. CMS, and may use data collected or issues confronting the APC Panel, and
developed by organizations outside the for recommending options for resolving
C. Prior Rulemaking Department in conducting its review. them. The Observation and Visit
On April 7, 2000, we published in the Subcommittee reviews and makes
2. Establishment of the APC Panel recommendations to the APC Panel on
Federal Register a final rule with
comment period (65 FR 18434) to On November 21, 2000, the Secretary all technical issues pertaining to
implement a prospective payment signed the initial charter establishing observation services and hospital
system for hospital outpatient services. the APC Panel. This expert panel, which outpatient visits paid under the OPPS
The hospital OPPS was first may be composed of up to 15 (for example, APC configurations and
implemented for services furnished on representatives of providers subject to APC payment weights). The Packaging
or after August 1, 2000. Section the OPPS (currently employed full-time, Subcommittee studies and makes
1833(t)(9) of the Act requires the not as consultants, in their respective recommendations on issues pertaining
Secretary to review certain components areas of expertise), reviews clinical data to services that are not separately
of the OPPS, no less often than and advises CMS about the clinical payable under the OPPS, but whose
annually, and to revise the groups, integrity of the APC groups and their payments are bundled or packaged into
relative payment weights, and other weights. For purposes of this Panel, APC payments. Each of these
adjustments that take into account consultants or independent contractors subcommittees was established by a
changes in medical practices, changes in are not considered to be full-time majority vote from the full APC Panel
technologies, and the addition of new employees. The APC Panel is technical during a scheduled APC Panel meeting,
services, new cost data, and other in nature, and is governed by the and their continuation as
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relevant information and factors. provisions of the Federal Advisory subcommittees was approved at the
Since initially implementing the Committee Act (FACA). Since its initial March 2007 APC Panel meeting. All
OPPS, we have published final rules in chartering, the Secretary has renewed subcommittee recommendations are
the Federal Register annually to the APC Panel’s charter three times: on discussed and voted upon by the full
implement statutory requirements and November 1, 2002; on November 1, APC Panel.
changes arising from our continuing 2004; and effective November 21, 2006. Discussions of the recommendations
experience with this system. We The current charter specifies, among resulting from the APC Panel’s March

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42634 Federal Register / Vol. 72, No. 148 / Thursday, August 2, 2007 / Proposed Rules

2007 meeting are included in the Secretary to establish a process for procedures from New Technology APCs
sections of this proposed rule that are making the submitted data available for to clinical APCs.
specific to each recommendation. For public review.
3. Proposed OPPS Payment for Devices
discussions of earlier APC Panel
F. Summary of the Major Contents of In section IV. of this proposed rule,
meetings and recommendations, we
This Proposed Rule we discuss proposed payment for
reference previous hospital OPPS final
rules or the Web site mentioned earlier In this proposed rule, we are setting device-dependent APCs and the pass-
in this section. forth proposed changes to the Medicare through payment for specific categories
hospital OPPS for CY 2008. These of devices.
E. Provisions of the Medicare changes would be effective for services
Improvements and Extension Act Under 4. Proposed OPPS Payment for Drugs,
furnished on or after January 1, 2008. Biologicals, and Radiopharmaceuticals
Division B of Title I of the Tax Relief
We are also setting forth proposed
and Health Care Act of 2006 In section V. of this proposed rule, we
changes to the Medicare ASC payment
The Medicare Improvements and system for CY 2008. These changes discuss the proposed CY 2008 OPPS
Extension Act under Division B of Title would be effective for services furnished payment for drugs, biologicals, and
I of the Tax Relief and Health Care Act on or after January 1, 2008. The radiopharmaceuticals, including the
(MIEA–TRHCA) of 2006, Pub. L. 109– following is a summary of the major proposed payment for drugs,
432, enacted on December 20, 2006, changes that we are proposing to make: biologicals, and radiopharmaceuticals
included the following provisions with and without pass-through status.
affecting the OPPS: 1. Proposed Updates Affecting OPPS
Payments 5. Proposed Estimate of OPPS
1. Section 107(a) of the MIEA–TRHCA
Transitional Pass-Through Spending for
amended section 1833(t)(16)(C) of the In section II. of this proposed rule, we Drugs, Biologicals, and Devices
Act to extend the period for payment of set forth—
brachytherapy devices based on the • The methodology used to In section VI. of this proposed rule,
hospital’s charges adjusted to cost for 1 recalibrate the proposed APC relative we discuss the estimate of CY 2008
additional year, through December 31, payment weights. OPPS transitional pass-through
2007. • The proposed payment for partial spending for drugs, biologicals, and
2. Section 107(b)(1) of the MIEA– hospitalization services, including the devices.
TRHCA amended section 1833(t)(2)(H) proposed separate threshold for outlier 6. Proposed OPPS Payment for
of the Act by adding stranded and non- payments for CMHCs. Brachytherapy Sources
stranded devices furnished on or after • The proposed update to the
July 1, 2007, as additional conversion factor used to determine In section VII. of this proposed rule,
classifications of brachytherapy devices payment rates under the OPPS. we discuss our proposal concerning
for which separate payment groups • The proposed retention of our coding and payment for brachytherapy
must be established for payment under current policy to use the IPPS wage sources.
the OPPS. Section 107(b)(2) of the indices to adjust, for geographic wage 7. Proposed OPPS Coding and Payment
MIEA–TRCHA provides that the differences, the portion of the OPPS for Drug Administration Services
Secretary may implement the section payment rate and the copayment
107(b)(1) amendment to section In section VIII. of this proposed rule,
standardized amount attributable to we set forth our proposed policy
1833(t)(2)(H) of the Act ‘‘by program labor-related cost.
instruction or otherwise.’’ concerning coding and payment for
• The proposed update of statewide
3. Section 109(a) of the MIEA–TRHCA drug administration services.
average default CCRs.
added new paragraph (17) to section • The proposed application of hold 8. Proposed OPPS Hospital Coding and
1833(t) of the Act which authorizes the harmless transitional outpatient Payments for Visits
Secretary, beginning in 2009 and each payments (TOPs) for certain small rural
subsequent year, to reduce the OPPS In section IX. of this proposed rule,
hospitals. we set forth our proposed changes to
full annual update by 2.0 percentage • The proposed payment adjustment
points if a hospital paid under the OPPS policies for the coding and reporting of
for rural SCHs. clinic and emergency department visits
fails to submit data as required by the • The proposed calculation of the
Secretary in the form and manner and critical care services on claims paid
hospital outpatient outlier payment. under the OPPS.
specified on selected measures of • The calculation of the proposed
quality of care, including medication national unadjusted Medicare OPPS 9. Proposed OPPS Payment for Blood
errors. In accordance with this payment. and Blood Products
provision, the selected measures are • The proposed beneficiary In section X. of this proposed rule, we
those that are appropriate for the copayments for OPPS services. discuss our proposed payment for blood
measurement of quality of care and blood products.
furnished by hospitals in the outpatient 2. Proposed OPPS Ambulatory Payment
setting, that reflect consensus among Classification (APC) Group Policies 10. Proposed OPPS Payment for
affected parties and, to the extent In section III. of this proposed rule, Observation Services
feasible and practicable, that include we discuss the proposed additions of In section XI. of this proposed rule,
measures set forth by one or more of the new procedure codes to the APCs; our we discuss the proposed payment
national consensus entities, and that proposal to establish a number of new policies for observation services
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may be the same as those required for APCs; and our analyses of Medicare furnished to patients on an outpatient
reporting by hospitals paid under the claims data and certain basis.
IPPS. This provision specifies that a recommendations of the APC Panel. We
reduction for 1 year cannot be taken into also discuss the application of the 2 11. Proposed Procedures That Will Be
account when computing the OPPS times rule and proposed exceptions to Paid Only as Inpatient Services
update for a subsequent year. In it; proposed changes to specific APCs; In section XII. of this proposed rule,
addition, this provision requires the and the proposed movement of we discuss the procedures that we are

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proposing to remove from the inpatient to develop quality measures for payment weights for each APC based on
list and assign to APCs. reporting by ASCs. claims and cost report data for
outpatient services. We are proposing to
12. Proposed Nonrecurring Technical 17. Proposed Changes Affecting
use the most recent available data to
and Policy Changes Necessary Provider Critical Access
construct the database for calculating
Hospitals (CAHs) and Hospital
In section XIII. of this proposed rule, APC group weights. For the purpose of
Conditions of Participation (CoPs)
we set forth our proposals for recalibrating the proposed APC relative
nonrecurring technical and policy In section XVIII. of this proposed rule, payment weights for CY 2008, we used
changes and clarifications relating to we discuss our proposed changes approximately 131 million final action
outpatient hospital services and affecting necessary provider claims for hospital OPD services
supplies incident to a physician service; designations for CAHs that are being furnished on or after January 1, 2006,
payment for interrupted procedures recertified when the CAH enters into a and before January 1, 2007. (For exact
prior to and after the administration of new co-location arrangement with counts of claims used, we refer readers
anesthesia; transitional adjustments to another hospital or CAH or when the to the claims accounting narrative under
payments for covered outpatient CAH creates or acquires an off-campus supporting documentation for this
services furnished by small rural location. We also discuss our proposed proposed rule on the CMS Web site at
hospitals and SCHs located in rural changes relating to several hospital CoPs http://www.cms.hhs.gov/
areas; and reporting requirements for to require the completion of physical HospitalOutpatientPPS/HORD/). Of the
wound care services, cardiac examinations and medical histories, and 131 million final action claims for
rehabilitation services, and bone documentation in the medical records, services provided in hospital outpatient
marrow and stem cell processing for patients after admission and prior to settings, approximately 101 million
services. surgery or a procedure requiring claims were of the type of bill
anesthesia services and for potentially appropriate for use in setting
13. Proposed OPPS Payment Status and postanesthesia evaluations of patients rates for OPPS services (but did not
Comment Indicators before discharge or transfer from the necessarily contain services payable
In section XIV. of this proposed rule, postanesthesia recovery area. under the OPPS). Of the 101 million
we discuss proposed changes to the 18. Regulatory Impact Analysis claims, approximately 46 million were
definitions of status indicators assigned not for services paid under the OPPS or
to APCs and present our proposed In section XXII. of this proposed rule, were excluded as not appropriate for
comment indicators for the OPPS/ASC we set forth an analysis of the impact use (for example, erroneous cost-to-
final rule with comment period. the proposed changes will have on charge ratios (CCRs) or no HCPCS codes
affected entities and beneficiaries. reported on the claim). We were able to
14. OPPS Policy and Payment use approximately 50 million whole
Recommendations II. Proposed Updates Affecting OPPS
Payments claims of the approximately 54 million
In section XV. of this proposed rule, claims that remained to set the OPPS
we address recommendations made by A. Proposed Recalibration of APC APC relative weights we are proposing
MedPAC and the APC Panel regarding Relative Weights for the CY 2008 OPPS. From the 50
the OPPS for CY 2008. (If you choose to comment on issues million whole claims, we created
in this section, please include the approximately 88 million single records,
15. Proposed Update of the Revised ASC caption ‘‘APC Relative Weights’’ at the of which approximately 58 million were
Payment System beginning of your comment.) ‘‘pseudo’’ single claims (created from
In section XVI. of this proposed rule, multiple procedure claims using the
1. Database Construction
we discuss the proposed update of the process we discuss in this section).
revised ASC payment system payment a. Database Source and Methodology Approximately 822,000 claims trimmed
rates for CY 2008. We also discuss our Section 1833(t)(9)(A) of the Act out on cost or units in excess of ±3
proposed changes to our regulations requires that the Secretary review and standard deviations from the geometric
§ 414.22 (b)(5)(i)(A) and (B) regarding revise the relative payment weights for mean, yielding approximately 87
physician payment for performing APCs at least annually. In the April 7, million single bills used for median
noncovered ASC surgical procedures in 2000 OPPS final rule with comment setting. Ultimately, we were able to use
ASCs. In addition, we are proposing to period (65 FR 18482), we explained in for proposed CY 2008 ratesetting some
revise the definitions of ‘‘radiology and detail how we calculated the relative portion of 92 percent of the CY 2006
certain other imaging services’’ and payment weights that were claims containing services payable
‘‘outpatient prescription drugs’’ when implemented on August 1, 2000, for under the OPPS.
provided integral to an ASC covered each APC group. Except for some The proposed APC relative weights
surgical procedure. reweighting due to a small number of and payments for CY 2008 in Addenda
APC changes, these relative payment A and B to this proposed rule were
16. Reporting Quality Data for Annual
weights continued to be in effect for CY calculated using claims from this period
Payment Rate Updates
2001. This policy is discussed in the that were processed before January 1,
In section XVII. of this proposed rule, November 13, 2000 interim final rule 2007, and continue to be based on the
we discuss the proposed quality (65 FR 67824 through 67827). median hospital costs for services in the
measures for reporting hospital We are proposing to use the same APC groups. We selected claims for
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outpatient quality data for CY 2009 and basic methodology that we described in services paid under the OPPS and
subsequent years and set forth the the April 7, 2000 OPPS final rule with matched these claims to the most recent
requirements for data collection and comment period to recalibrate the APC cost report filed by the individual
submission for the annual payment relative payment weights for services hospitals represented in our claims data.
update. We also briefly discuss the furnished on or after January 1, 2008, We continue to believe that it is
legislative provisions of the MIEA– and before January 1, 2009. That is, we appropriate to use the most current full
TRHCA that give the Secretary authority are proposing to recalibrate the relative calendar year claims data and the most

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42636 Federal Register / Vol. 72, No. 148 / Thursday, August 2, 2007 / Proposed Rules

recently submitted cost reports to toward the goal of using more multiple would otherwise have been considered
calculate the median costs which we are bill information by assessing the amount to be multiple procedure claims and,
proposing to convert to relative payment of packaging in the multiple bills and, absent the proposal for additional
weights for purposes of calculating the specifically, by exploring the amount of packaging, could have been used for
CY 2008 payment rates. packaging for drug administration ratesetting only if we had been able to
services in the single and multiple bill create ‘‘pseudo’’ single claims from
b. Proposed Use of Single and Multiple
claims. Moreover, in many cases, the them.
Procedure Claims For CY 2008, we are proposing to
proposed expansion of packaging also
For CY 2008, in general, we are enables the use of more claims data by bypass 425 HCPCS codes that are
proposing to continue to use single enabling us to treat claims with multiple identified in Table 1 of this proposed
procedure claims to set the medians on procedure codes as single claims. We rule. We are proposing to continue the
which the APC relative payment refer readers to section II.A.4. of this use of the codes on the CY 2007 OPPS
weights would be based, with some proposed rule for a full discussion of bypass list but to remove codes we are
exceptions as discussed below. We have this proposal for CY 2008. proposing to package for CY 2008. We
received many requests asking that we also are proposing to remove codes that
ensure that the data from claims that (1) Proposed Use of Date of Service were on the CY 2007 bypass list that
contain charges for multiple procedures Stratification and a Bypass List To ceased to meet the empirical criteria
are included in the data from which we Increase the Amount of Data Used To under the proposed packaging changes
calculate the relative payment weights. Determine Medians when clinical review confirmed that
Requesters believe that relying solely on By bypassing specified codes that we their removal would be appropriate in
single procedure claims to recalibrate believe do not have significant packaged the context of the full proposal for the
APC relative payment weights fails to costs, we are able to use more data from CY 2008 OPPS. Since the inception of
take into account data for many multiple procedure claims. In many the bypass list, we have calculated the
frequently performed procedures, cases, this enables us to create multiple percent of natural single bills that
particularly those commonly performed ‘‘pseudo’’ single claims from claims contained packaging for each code and
in combination with other procedures. that, as submitted, contained multiple the amount of packaging in each
They believe that if a service is separately paid procedures on the same ‘‘natural’’ single bill for each code. We
frequently performed in combination claim. We refer to these newly created retained the codes on the previous
with others, the individual services are single procedure claims as ‘‘pseudo’’ year’s bypass list and used the update
more complex and more resource- single claims because they were year’s data to determine whether it
intensive than if they were performed submitted by providers as multiple would be appropriate to add additional
alone. Stakeholders have suggested that procedure claims. The history of our use codes to the previous year’s bypass list.
including data from multiple procedure of a bypass list to generate ‘‘pseudo’’ The entire list (including the codes that
claims could increase the median cost single claims is well documented, most remained on the bypass list from prior
estimates for the individual services. recently in the CY 2007 OPPS/ASC final years) was open to public comment. For
They believe that depending upon rule with comment period (71 FR 67969 this CY 2008 proposed rule, we
single procedure claims alone results in through 67970). explicitly reviewed all ‘‘natural’’ single
basing relative payment weights on the The date of service stratification and bills against the empirical criteria for all
least costly services that are not bypass list process we used for the CY codes on the CY 2007 bypass list
representative of the typical services, 2007 OPPS (combined with the because of the proposal for greater
thereby introducing downward bias to packaging changes we are proposing in packaging discussed in section II.A.4. of
the medians on which the weights are section II.A.4. of this proposed rule) this proposed rule, as this effort
based. resulted in our being able to use some increased the packaging associated with
We generally use single procedure part of approximately 92 percent of the some codes. We removed 106 HCPCS
claims to set the median costs for APCs total claims that are eligible for use in codes from the CY 2007 bypass list for
because we believe that it is important the OPPS ratesetting and modeling for the CY 2008 proposal. We note also that
that the OPPS relative weights on which this proposed rule. This process enabled many of the codes we are proposing to
payment rates are based be appropriate us to create, for CY 2008 approximately newly package for CY 2008 were on the
when one and only one procedure is 58 million ‘‘pseudo’’ singles and bypass list used for setting the OPPS
furnished and because we are, so far, approximately 30 million ‘‘natural’’ payment rates for CY 2007 and are no
unable to ensure that packaged costs can single bills. For this proposed rule, longer proposed for bypass because we
be appropriately allocated across ‘‘pseudo’’ single procedure bills are proposing to package them, as
multiple procedures performed on the represented 66 percent of all single bills discussed in more detail below. We also
same date of service. We agree that, used to calculate median costs. This are proposing to add to the bypass list
optimally, it is desirable to use the data compares favorably to the CY 2007 HCPCS codes that, using the proposed
from as many claims as possible to OPPS final rule data in which ‘‘pseudo’’ rule data, meet the same previously
recalibrate the APC relative payment single bills represented 68 percent of all established empirical criteria for the
weights, including those claims for single bills used to calculate the median bypass list that are reviewed below or
multiple procedures. We engaged in costs on which the CY 2007 OPPS which our clinicians believe would
several efforts this year to improve our payment rates were based. We believe have little associated packaging if the
use of multiple procedure claims for that the reduction in the percent of services were correctly coded.
ratesetting. As we have for several years, ‘‘pseudo’’ single bills and the The CY 2008 packaging proposal
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we continue to use date of service corresponding increase in the minimally reduced the percentage of
stratification and a list of codes to be proportion of ‘‘natural’’ single bills total claims that we were able to use, in
bypassed to convert multiple procedure occurred largely because of our proposal whole or in part, from 93 percent for CY
claims to ‘‘pseudo’’ single procedure to increase packaging as discussed in 2007 to 92 percent for this proposed
claims. We also continued our internal section II.A.4. of this proposed rule. In rule. The proposed packaging approach
efforts to better understand the patterns many cases, the packaging proposal for increased the number of ‘‘natural’’
of services and costs from multiple bills CY 2008 enabled us to use claims that single bills, in spite of reducing the

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universe of codes requiring single bills or less than $50. This limits the amount TABLE 1.—PROPOSED CY 2008 BY-
for ratesetting, but reduced the number of error in redistributed costs. PASS CODES FOR CREATING ‘‘PSEU-
of ‘‘pseudo’’ single bills. More ‘‘natural’’ • The code is not a code for an DO’’ SINGLE CLAIMS FOR CALCU-
single procedure bills can be created by unlisted service.
LATING MEDIAN COSTS—Continued
the packaging of codes that always In addition, we are proposing to add
appear with another procedure because to the bypass list codes that our HCPCS
these dependent services are supportive clinicians believe have minimal Short descriptor
code
of and ancillary to the primary associated packaging based on their
independent procedures for which clinical assessment of the full CY 2008 70328 ... X-ray exam of jaw joint.
payment is being made. A claim OPPS proposal. We note that this list 70330 ... X-ray exam of jaw joints.
containing two independent procedure contains bypass codes that are 70336 ... Magnetic image, jaw joint.
appropriate to claims for services in CY 70355 ... Panoramic x-ray of jaws.
codes on the same date of service and
70360 ... X-ray exam of neck.
not on the bypass list previously could 2006 and, therefore, includes codes that 70370 ... Throat x-ray & fluoroscopy.
not be used for ratesetting, but have been deleted for CY 2007. 70371 ... Speech evaluation, complex.
packaging the cost of one of the codes Moreover, there are codes on the bypass 70450 ... Ct head/brain w/o dye.
on the claim frees the claim to be used list that are new for CY 2007 and which 70480 ... Ct orbit/ear/fossa w/o dye.
to calculate the median cost of the are appropriate additions to the bypass 70486 ... Ct maxillofacial w/o dye.
procedure that is not packaged. On the list in preparation for use of the CY 70490 ... Ct soft tissue neck w/o dye.
other hand, our proposed packaging 2007 claims for creation of the CY 2009 70544 ... Mr angiography head w/o dye.
approach reduced the number of codes OPPS. 70551 ... Mri brain w/o dye.
eligible for the bypass list because of the In order to keep the established 71010 ... Chest x-ray.
empirical criteria for the bypass list 71015 ... Chest x-ray.
limitation on packaging set by our
71020 ... Chest x-ray.
previously established empirical constant, we are seeking public 71021 ... Chest x-ray.
criteria. A smaller bypass list and the comment on whether we should adjust 71022 ... Chest x-ray.
presence of greater packaging on claims the $50 packaging cost criterion for 71023 ... Chest x-ray and fluoroscopy.
reduced the final number of ‘‘pseudo’’ inflation each year and, if so, 71030 ... Chest x-ray.
single claims. In prior years, roughly 68 recommendations for the source of the 71034 ... Chest x-ray and fluoroscopy.
percent of single bills were ‘‘pseudo’’ adjustment. Adding an inflation 71035 ... Chest x-ray.
single bills, but based on the CY 2008 adjustment factor would ensure that the 71100 ... X-ray exam of ribs.
proposed rule data, 66 percent of single same amount of packaging associated 71101 ... X-ray exam of ribs/chest.
bills were ‘‘pseudo’’ singles. Moreover, with candidate codes for the bypass list 71110 ... X-ray exam of ribs.
71111 ... X-ray exam of ribs/chest.
the number of ‘‘natural’’ single bills and is reviewed each year relative to 71120 ... X-ray exam of breastbone.
‘‘pseudo’’ single bills are reduced by the nominal costs. 71130 ... X-ray exam of breastbone.
volume of services that we are 71250 ... Ct thorax w/o dye.
proposing to package. Hence, our CY TABLE 1.—PROPOSED CY 2008 BY- 72010 ... X-ray exam of spine.
2008 proposal to package payment for PASS CODES FOR CREATING ‘‘PSEU- 72020 ... X-ray exam of spine.
some HCPCS codes with relatively high DO’’ SINGLE CLAIMS FOR CALCU- 72040 ... X-ray exam of neck spine.
frequencies would eliminate for LATING MEDIAN COSTS
72050 ... X-ray exam of neck spine.
ratesetting the number of available 72052 ... X-ray exam of neck spine.
‘‘natural’’ and ‘‘pseudo’’ single bills 72069 ... X-ray exam of trunk spine.
HCPCS 72070 ... X-ray exam of thoracic spine.
attributable to the codes that we are Short descriptor
code
72072 ... X-ray exam of thoracic spine.
proposing to package.
72074 ... X-ray exam of thoracic spine.
As in prior years, we are proposing to 11056 ... Trim skin lesions, 2 to 4.
72080 ... X-ray exam of trunk spine.
use the following empirical criteria to 11057 ... Trim skin lesions, over 4.
11300 ... Shave skin lesion. 72090 ... X-ray exam of trunk spine.
determine the additional codes to add to 72100 ... X-ray exam of lower spine.
11301 ... Shave skin lesion.
the CY 2007 bypass list to create the CY 72110 ... X-ray exam of lower spine.
11719 ... Trim nail(s).
2008 bypass list. We assume that the 11720 ... Debride nail, 1–5. 72114 ... X-ray exam of lower spine.
representation of packaging on the 11721 ... Debride nail, 6 or more. 72120 ... X-ray exam of lower spine.
single claims for any given code is 11954 ... Therapy for contour defects. 72125 ... Ct neck spine w/o dye.
comparable to packaging for that code in 17003 ... Destruct premalg les, 2–14. 72128 ... Ct chest spine w/o dye.
the multiple claims: 31231 ... Nasal endoscopy, dx. 72131 ... Ct lumbar spine w/o dye.
• There are 100 or more single claims 31579 ... Diagnostic laryngoscopy. 72141 ... Mri neck spine w/o dye.
for the code. This number of single 51798 ... Us urine capacity measure. 72146 ... Mri chest spine w/o dye.
54240 ... Penis study. 72148 ... Mri lumbar spine w/o dye.
claims ensures that observed outcomes 72170 ... X-ray exam of pelvis.
56820 ... Exam of vulva w/scope.
are sufficiently representative of 72190 ... X-ray exam of pelvis.
67820 ... Revise eyelashes.
packaging that might occur in the 69210 ... Remove impacted ear wax. 72192 ... Ct pelvis w/o dye.
multiple claims. 69220 ... Clean out mastoid cavity. 72202 ... X-ray exam sacroiliac joints.
• Five percent or fewer of the single 70030 ... X-ray eye for foreign body. 72220 ... X-ray exam of tailbone.
claims for the code have packaged costs 70100 ... X-ray exam of jaw. 73000 ... X-ray exam of collar bone.
on that single claim for the code. This 70110 ... X-ray exam of jaw. 73010 ... X-ray exam of shoulder blade.
criterion results in limiting the amount 70120 ... X-ray exam of mastoids. 73020 ... X-ray exam of shoulder.
of packaging being redistributed to the 70130 ... X-ray exam of mastoids. 73030 ... X-ray exam of shoulder.
mstockstill on PROD1PC66 with PROPOSALS2

70140 ... X-ray exam of facial bones. 73050 ... X-ray exam of shoulders.
payable procedure remaining on the
70150 ... X-ray exam of facial bones. 73060 ... X-ray exam of humerus.
claim after the bypass code is removed 70160 ... X-ray exam of nasal bones. 73070 ... X-ray exam of elbow.
and ensures that the costs associated 70200 ... X-ray exam of eye sockets. 73080 ... X-ray exam of elbow.
with the bypass code represent the cost 70210 ... X-ray exam of sinuses. 73090 ... X-ray exam of forearm.
of the bypassed service. 70220 ... X-ray exam of sinuses. 73100 ... X-ray exam of wrist.
• The median cost of packaging 70250 ... X-ray exam of skull. 73110 ... X-ray exam of wrist.
observed in the single claims is equal to 70260 ... X-ray exam of skull. 73120 ... X-ray exam of hand.

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42638 Federal Register / Vol. 72, No. 148 / Thursday, August 2, 2007 / Proposed Rules

TABLE 1.—PROPOSED CY 2008 BY- TABLE 1.—PROPOSED CY 2008 BY- TABLE 1.—PROPOSED CY 2008 BY-
PASS CODES FOR CREATING ‘‘PSEU- PASS CODES FOR CREATING ‘‘PSEU- PASS CODES FOR CREATING ‘‘PSEU-
DO’’ SINGLE CLAIMS FOR CALCU- DO’’ SINGLE CLAIMS FOR CALCU- DO’’ SINGLE CLAIMS FOR CALCU-
LATING MEDIAN COSTS—Continued LATING MEDIAN COSTS—Continued LATING MEDIAN COSTS—Continued

HCPCS HCPCS HCPCS


Short descriptor Short descriptor Short descriptor
code code code

73130 ... X-ray exam of hand. 76830 ... Transvaginal us, non-ob. 88305 ... Tissue exam by pathologist.
73140 ... X-ray exam of finger(s). 76856 ... Us exam, pelvic, complete. 88307 ... Tissue exam by pathologist.
73200 ... Ct upper extremity w/o dye. 76857 ... Us exam, pelvic, limited. 88311 ... Decalcify tissue.
73218 ... Mri upper extremity w/o dye. 76870 ... Us exam, scrotum. 88312 ... Special stains.
73221 ... Mri joint upr extrem w/o dye. 76880 ... Us exam, extremity. 88313 ... Special stains.
73510 ... X-ray exam of hip. 76970 ... Ultrasound exam follow-up. 88321 ... Microslide consultation.
73520 ... X-ray exam of hips. 76977 ... Us bone density measure. 88323 ... Microslide consultation.
73540 ... X-ray exam of pelvis & hips. 76999 ... Echo examination procedure. 88325 ... Comprehensive review of data.
73550 ... X-ray exam of thigh. 77300 ... Radiation therapy dose plan. 88331 ... Path consult intraop, 1 bloc.
73560 ... X-ray exam of knee, 1 or 2. 77301 ... Radiotherapy dose plan, imrt. 88342 ... Immunohistochemistry.
73562 ... X-ray exam of knee, 3. 77315 ... Teletx isodose plan complex. 88346 ... Immunofluorescent study.
73564 ... X-ray exam, knee, 4 or more. 77326 ... Brachytx isodose calc simp. 88347 ... Immunofluorescent study.
73565 ... X-ray exam of knees. 77327 ... Brachytx isodose calc interm. 88348 ... Electron microscopy.
73590 ... X-ray exam of lower leg. 77328 ... Brachytx isodose plan compl. 88358 ... Analysis, tumor.
73600 ... X-ray exam of ankle. 77331 ... Special radiation dosimetry. 88360 ... Tumor immunohistochem/manual.
73610 ... X-ray exam of ankle. 77336 ... Radiation physics consult. 88365 ... Insitu hybridization (fish).
73620 ... X-ray exam of foot. 77370 ... Radiation physics consult. 88368 ... Insitu hybridization, manual.
73630 ... X-ray exam of foot. 77401 ... Radiation treatment delivery. 88399 ... Surgical pathology procedure.
73650 ... X-ray exam of heel. 77402 ... Radiation treatment delivery. 89049 ... Chct for mal hyperthermia.
73660 ... X-ray exam of toe(s). 77403 ... Radiation treatment delivery. 89230 ... Collect sweat for test.
73700 ... Ct lower extremity w/o dye. 77404 ... Radiation treatment delivery. 89240 ... Pathology lab procedure.
73718 ... Mri lower extremity w/o dye. 77407 ... Radiation treatment delivery. 90761 ... Hydrate iv infusion, add-on.
73721 ... Mri jnt of lwr extre w/o dye. 77408 ... Radiation treatment delivery. 90766 ... Ther/proph/dg iv inf, add-on.
74000 ... X-ray exam of abdomen. 77409 ... Radiation treatment delivery. 90801 ... Psy dx interview.
74010 ... X-ray exam of abdomen. 77411 ... Radiation treatment delivery. 90802 ... Intac psy dx interview.
74020 ... X-ray exam of abdomen. 77412 ... Radiation treatment delivery. 90804 ... Psytx, office, 20–30 min.
74022 ... X-ray exam series, abdomen. 77413 ... Radiation treatment delivery. 90805 ... Psytx, off, 20–30 min w/e&m.
74150 ... Ct abdomen w/o dye. 77414 ... Radiation treatment delivery. 90806 ... Psytx, off, 45–50 min.
74210 ... Contrst x-ray exam of throat. 77416 ... Radiation treatment delivery. 90807 ... Psytx, off, 45–50 min w/e&m.
74220 ... Contrast x-ray, esophagus. 77418 ... Radiation tx delivery, imrt. 90808 ... Psytx, office, 75–80 min.
74230 ... Cine/vid x-ray, throat/esoph. 77470 ... Special radiation treatment. 90809 ... Psytx, off, 75–80, w/e&m.
74246 ... Contrst x-ray uppr gi tract. 77520 ... Proton trmt, simple w/o comp. 90810 ... Intac psytx, off, 20–30 min.
74247 ... Contrst x-ray uppr gi tract. 77523 ... Proton trmt, intermediate. 90812 ... Intac psytx, off, 45–50 min.
74249 ... Contrst x-ray uppr gi tract. 80500 ... Lab pathology consultation. 90816 ... Psytx, hosp, 20–30 min.
76020 ... X-rays for bone age. 80502 ... Lab pathology consultation. 90818 ... Psytx, hosp, 45–50 min.
76040 ... X-rays, bone evaluation. 85097 ... Bone marrow interpretation. 90826 ... Intac psytx, hosp, 45–50 min.
76061 ... X-rays, bone survey. 86510 ... Histoplasmosis skin test. 90845 ... Psychoanalysis.
76062 ... X-rays, bone survey. 86850 ... RBC antibody screen. 90846 ... Family psytx w/o patient.
76065 ... X-rays, bone evaluation. 86870 ... RBC antibody identification. 90847 ... Family psytx w/patient.
76066 ... Joint survey, single view. 86880 ... Coombs test, direct. 90853 ... Group psychotherapy.
76070 ... Ct bone density, axial. 86885 ... Coombs test, indirect, qual. 90857 ... Intac group psytx.
76071 ... Ct bone density, peripheral. 86886 ... Coombs test, indirect, titer. 90862 ... Medication management.
76075 ... Dxa bone density, axial. 86890 ... Autologous blood process. 92002 ... Eye exam, new patient.
76076 ... Dxa bone density/peripheral 86900 ... Blood typing, ABO. 92004 ... Eye exam, new patient.
76077 ... Dxa bone density/v-fracture. 86901 ... Blood typing, Rh (D). 92012 ... Eye exam established pat.
76078 ... Radiographic absorptiometry. 86903 ... Blood typing, antigen screen. 92014 ... Eye exam & treatment.
76100 ... X-ray exam of body section. 86904 ... Blood typing, patient serum. 92020 ... Special eye evaluation.
76400 ... Magnetic image, bone marrow. 86905 ... Blood typing, RBC antigens. 92081 ... Visual field examination(s).
76510 ... Ophth us, b & quant a. 86906 ... Blood typing, Rh phenotype. 92082 ... Visual field examination(s).
76511 ... Ophth us, quant a only. 86930 ... Frozen blood prep. 92083 ... Visual field examination(s).
76512 ... Ophth us, b w/non-quant a. 86970 ... RBC pretreatment. 92135 ... Opthalmic dx imaging.
76513 ... Echo exam of eye, water bath. 88104 ... Cytopath fl nongyn, smears. 92136 ... Ophthalmic biometry.
76514 ... Echo exam of eye, thickness. 88106 ... Cytopath fl nongyn, filter. 92225 ... Special eye exam, initial.
76516 ... Echo exam of eye. 88107 ... Cytopath fl nongyn, sm/fltr. 92226 ... Special eye exam, subsequent.
76519 ... Echo exam of eye. 88108 ... Cytopath, concentrate tech. 92230 ... Eye exam with photos.
76536 ... Us exam of head and neck. 88112 ... Cytopath, cell enhance tech. 92240 ... Icg angiography.
76645 ... Us exam, breast(s). 88160 ... Cytopath smear, other source. 92250 ... Eye exam with photos.
76700 ... Us exam, abdom, complete. 88161 ... Cytopath smear, other source. 92275 ... Electroretinography.
76705 ... Echo exam of abdomen. 88162 ... Cytopath smear, other source. 92285 ... Eye photography.
mstockstill on PROD1PC66 with PROPOSALS2

76770 ... Us exam abdo back wall, comp. 88172 ... Cytopathology eval of fna. 92286 ... Internal eye photography.
76775 ... Us exam abdo back wall, lim. 88173 ... Cytopath eval, fna, report. 92520 ... Laryngeal function studies.
76778 ... Us exam kidney transplant. 88182 ... Cell marker study. 92541 ... Spontaneous nystagmus test.
76801 ... Ob us < 14 wks, single fetus. 88184 ... Flowcytometry/tc, 1 marker. 92546 ... Sinusoidal rotational test.
76805 ... Ob us >/= 14 wks, sngl fetus. 88185 ... Flowcytometry/tc, add-on. 92548 ... Posturography.
76811 ... Ob us, detailed, sngl fetus. 88300 ... Surgical path, gross. 92552 ... Pure tone audiometry, air.
76816 ... Ob us, follow-up, per fetus. 88302 ... Tissue exam by pathologist. 92553 ... Audiometry, air & bone.
76817 ... Transvaginal us, obstetric. 88304 ... Tissue exam by pathologist. 92555 ... Speech threshold audiometry.

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Federal Register / Vol. 72, No. 148 / Thursday, August 2, 2007 / Proposed Rules 42639

TABLE 1.—PROPOSED CY 2008 BY- TABLE 1.—PROPOSED CY 2008 BY- contributions of packaged costs
PASS CODES FOR CREATING ‘‘PSEU- PASS CODES FOR CREATING ‘‘PSEU- (including packaged revenue code
DO’’ SINGLE CLAIMS FOR CALCU- DO’’ SINGLE CLAIMS FOR CALCU- charges and charges for packaged
LATING MEDIAN COSTS—Continued LATING MEDIAN COSTS—Continued
HCPCS codes) to the median cost of
each drug administration service. (We
HCPCS HCPCS refer readers to Recommendation #28 in
Short descriptor Short descriptor the August 23–24, 2006 meeting
code code
recommendation summary on the CMS
92556 ... Speech audiometry, complete. 95900 ... Motor nerve conduction test. Web site at: http://www.cms.hhs.gov/
92557 ... Comprehensive hearing test. 95921 ... Autonomic nerv function test. FACA/05_AdvisoryPanelonAmbulatory
92567 ... Tympanometry. 95925 ... Somatosensory testing. PaymentClassificationGroups.asp#
92582 ... Conditioning play audiometry. 95930 ... Visual evoked potential test.
TopOfPage.) In our continued effort to
92585 ... Auditor evoke potent, compre. 95950 ... Ambulatory eeg monitoring.
92603 ... Cochlear implt f/up exam 7 >. 95953 ... EEG monitoring/computer. better understand the multiple claims in
92604 ... Reprogram cochlear implt 7 >. 95970 ... Analyze neurostim, no prog. order to extract single bill information
92626 ... Eval aud rehab status. 95972 ... Analyze neurostim, complex. from them, we examined the extent to
93005 ... Electrocardiogram, tracing. 95974 ... Cranial neurostim, complex. which the packaging in multiple
93225 ... ECG monitor/record, 24 hrs. 95978 ... Analyze neurostim brain/1h. procedure claims differs from the
93226 ... ECG monitor/report, 24 hrs. 96000 ... Motion analysis, video/3d. packaging in the single procedure
93231 ... Ecg monitor/record, 24 hrs. 96101 ... Psycho testing by psych/phys. claims on which we base the median
93232 ... ECG monitor/report, 24 hrs. 96111 ... Developmental test, extend. costs both in general and more
93236 ... ECG monitor/report, 24 hrs. 96116 ... Neurobehavioral status exam.
specifically for drug administration
93270 ... ECG recording. 96118 ... Neuropsych tst by psych/phys.
96119 ... Neuropsych testing by tec. services. We performed this analysis
93271 ... Ecg/monitoring and analysis.
93278 ... ECG/signal-averaged. 96150 ... Assess hlth/behave, init. using the claims data on which we
93727 ... Analyze ilr system. 96151 ... Assess hlth/behave, subseq. based the CY 2007 OPPS/ASC final rule
93731 ... Analyze pacemaker system. 96152 ... Intervene hlth/behave, indiv. with comment period. We examined the
93732 ... Analyze pacemaker system. 96153 ... Intervene hlth/behave, group. amount of packaging in multiple
93733 ... Telephone analy, pacemaker. 96415 ... Chemo, iv infusion, addl hr. procedure versus single procedure
93734 ... Analyze pacemaker system. 96423 ... Chemo ia infuse each addl hr. claims in general and in claims for drug
93735 ... Analyze pacemaker system. 96900 ... Ultraviolet light therapy. administration services in particular.
93736 ... Telephonic analy, pacemaker. 96910 ... Photochemotherapy with UV-B.
We conducted this analysis without
93741 ... Analyze ht pace device sngl. 96912 ... Photochemotherapy with UV-A.
96913 ... Photochemotherapy, UV-A or B. taking into account the proposed
93742 ... Analyze ht pace device sngl.
96920 ... Laser tx, skin < 250 sq cm. packaging approach presented in this
93743 ... Analyze ht pace device dual.
93744 ... Analyze ht pace device dual. 98925 ... Osteopathic manipulation. proposed rule. However, we do not
93786 ... Ambulatory BP recording. 98926 ... Osteopathic manipulation. expect the services newly proposed for
93788 ... Ambulatory BP analysis. 98927 ... Osteopathic manipulation. packaged payment to commonly appear
93797 ... Cardiac rehab. 98940 ... Chiropractic manipulation. with a drug administration service.
93798 ... Cardiac rehab/monitor. 98941 ... Chiropractic manipulation. Therefore, we believe that the analysis
93875 ... Extracranial study. 98942 ... Chiropractic manipulation. conducted on the CY 2007 final rule
93880 ... Extracranial study. 99204 ... Office/outpatient visit, new. with comment period data is sufficient
93882 ... Extracranial study. 99212 ... Office/outpatient visit, est.
to inform our development of this
93886 ... Intracranial study. 99213 ... Office/outpatient visit, est.
99214 ... Office/outpatient visit, est. proposed rule.
93888 ... Intracranial study. In general, we do not believe that the
93922 ... Extremity study. 99241 ... Office consultation.
99242 ... Office consultation. proportionate amount of packaged costs
93923 ... Extremity study.
93924 ... Extremity study. 99243 ... Office consultation. in the multiple bills relative to the
93925 ... Lower extremity study. 99244 ... Office consultation. number of primary services is greater
93926 ... Lower extremity study. 99245 ... Office consultation. than that in the single bills. The costs
93930 ... Upper extremity study. 0144T ... CT heart wo dye; qual calc. in uncoded revenue codes and HCPCS
93931 ... Upper extremity study. C8951 .. IV inf, tx/dx, each addl hr. codes with a packaged status indicator
93965 ... Extremity study. C8955 .. Chemotx adm, IV inf, addl hr. account for 22 percent of observed costs
93970 ... Extremity study. G0008 .. Admin influenza virus vac. in the universe of all CY 2005 claims
93971 ... Extremity study. G0101 .. CA screen;pelvic/breast exam.
that we used to model the CY 2007
93975 ... Vascular study. G0127 .. Trim nail(s).
G0130 .. Single energy x-ray study. OPPS (including both the single and
93976 ... Vascular study.
G0166 .. Extrnl counterpulse, per tx. multiple procedure bills). Similarly, the
93978 ... Vascular study.
93979 ... Vascular study. G0175 .. OPPS Service,sched team conf. costs in uncoded revenue codes and
93990 ... Doppler flow testing. G0332 .. Preadmin IV immunoglobulin. HCPCS codes with a packaged status
94015 ... Patient recorded spirometry. G0340 .. Robt lin-radsurg fractx 2–5. indicator account for 18 percent of the
94690 ... Exhaled air analysis. G0344 .. Initial preventive exam. total cost in the subset of CY 2005 single
95115 ... Immunotherapy, one injection. G0365 .. Vessel mapping hemo access. bills that we used to calculate the
95117 ... Immunotherapy injections. G0367 .. EKG tracing for initial prev. median costs on which the relative
95165 ... Antigen therapy services. G0376 .. Smoke/tobacco counseling >10. weights are based.
95805 ... Multiple sleep latency test. M0064 .. Visit for drug monitoring. However, the bypass methodology
95806 ... Sleep study, unattended. Q0091 .. Obtaining screen pap smear.
creates a ‘‘pseudo’’ single bill for all
mstockstill on PROD1PC66 with PROPOSALS2

95807 ... Sleep study, attended. claims for services or items on the
95808 ... Polysomnography, 1–3. (2) Exploration of Allocation of bypass list, and these ‘‘pseudo’’ single
95812 ... Eeg, 41–60 minutes. Packaged Costs to Separately Paid
95813 ... Eeg, over 1 hour. bills have no associated packaging, by
Procedure Codes definition of the application of the
95816 ... Eeg, awake and drowsy.
95819 ... Eeg, awake and asleep. During its August 23–24, 2006 bypass list. Excluding the total cost
95822 ... Eeg, coma or sleep only. meeting, the APC Panel recommended associated with bypass codes, 28
95869 ... Muscle test, thor paraspinal. that CMS provide claims analysis of the percent of observed costs in the single

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42640 Federal Register / Vol. 72, No. 148 / Thursday, August 2, 2007 / Proposed Rules

bills are attributable to packaged descriptors, status indicators, deleted series (Pharmacy), 0260 series (IV
services, and 29 percent of observed code status, and CY 2007 APC Therapy), and 0630 series (Pharmacy—
costs across all claims are attributable to assignments in columns 1, 2, 3, and 4, Extension). These columns demonstrate
packaged services. Therefore, we respectively. HCPCS codes for that packaged costs substantially
conclude that, in general, the extent of additional hours of infusion services are contribute to median cost estimates for
packaging in all bills is similar to the not presented because these codes were the majority of drug administration
amount of packaging in the single included on the CY 2007 bypass list HCPCS codes.
procedure bills we use to set median and, therefore, we explicitly associated For all single bills for CPT code 90780
costs for most APCs. no packaged costs with them, as (Intravenous infusion for therapy/
We recognize that aggregate numbers discussed in the CY 2007 OPPS/ASC
do not address the packaging associated diagnosis, administered by physician or
final rule with comment period (71 FR under direct supervision of physician;
with single and multiple procedure 68117 through 68118). Column 6 of the
claims for specific services. We have up to one hour), on average, packaged
table contains the number of single bills costs were 31 percent of total cost
received comments stating that the
relative to total occurrences of the code (median 27 percent). For the same code,
amount of packaging in the single bills
in the CY 2005 claims, and column 8 packaged drug and pharmacy costs
for drug administration services is not
shows the percentage of single bills comprised, on average, 23 percent of
representative of the typical packaged
costs of these drug administration used to set payment rates. Drug total costs (median 15 percent). Single
services, which are usually performed administration services demonstrate bills make up 34 percent of all line-item
in combination with one another, reasonable single bill representation in occurrences of the service, suggesting
because the single bills represent less comparison with other OPPS services. that this single bill median cost was
complex and less resource-intensive Single bills for drug administration fairly robust and probably captured
services than the usual cases. constitute, roughly, 30 percent of all packaging adequately. On the other
We published a study in the CY 2007 observed occurrences of drug hand, CPT code 90784 (Therapeutic,
OPPS/ASC final rule with comment administration services, varying by code prophylactic or diagnostic injection
period (71 FR 68120 through 68121) that from 7 to 55 percent. Columns 10 (specify material injected);
discussed the amount of packaging on through 13 of the table show measures subcutaneous or intramuscular)
the single bills for drug administration of central tendency for packaged costs demonstrates limited packaging (median
procedure codes, and we promised to as a percentage of total cost on each 0 percent and mean 17 percent), and the
replicate that study for the APC Panel. single claim. Columns 10 and 11 show median cost for the code is derived from
We discussed the results of this study the mean and median of all packaged only 7 percent of all occurrences of the
with the APC Panel at its March 2007 costs as a percentage of total costs, and code. Across all drug administration
meeting, in accordance with the APC columns 12 and 13 break out the costs codes, over half show significant
Panel’s August 2006 recommendation. of packaged drug HCPCS codes and median packaged costs largely
Table 2 below shows the drug uncoded pharmacy revenue code attributable to packaged drug and
administration HCPCS codes and their charges for revenue codes in the 0250 pharmacy costs.
TABLE 2.—PACKAGED COST DATA FOR CY 2005 SINGLE CLAIMS FOR DRUG ADMINISTRATION SERVICES
All packaged costs as Packaged drug and
De- Percent a percent of total cost pharmacy costs as a
HCPCS Total fre- Median
Short descriptor SI leted APC Single bills single percent of total cost
code quency cost ($)
code bills Median Mean Median Mean

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13)

90780 .. IV infusion therapy, 1 hour S ... X .... 0440 1,008,055 2,974,785 33.9 110.43 27.1 30.8 15.3 22.6
90782 .. Injection, sc/im .................... S ... X .... 0437 1,326,094 2,894,231 45.8 24.77 0.0 10.1 0.0 8.7
90783 .. Injection, ia .......................... S ... X .... 0438 427 3,012 14.2 51.35 0.0 10.9 0.0 6.8
90784 .. Injection, iv .......................... S ... X .... 0438 183,096 2,812,204 6.5 49.54 0.0 16.7 0.0 9.7
90788 .. Injection of antibiotic ........... S ... X .... 0437 19,400 141,293 13.7 45.96 24.6 32.3 20.7 30.4
96400 .. Chemotherapy, sc/im .......... S ... ........ 0438 57,472 81,546 70.5 51.98 0.0 6.3 0.0 4.5
96405 .. Chemo intralesional, up to 7 S ... ........ 0438 142 181 78.5 193.65 0.0 12.0 0.0 10.5
96406 .. Chemo intralesional over 7 S ... ........ 0438 2 7 28.6 46.42 0.0 0.0 0.0 0.0
96408 .. Chemotherapy, push tech- S ... ........ 0439 21,113 134,447 15.7 96.85 10.6 21.3 2.4 13.6
nique.
96410 .. Chemotherapy, infusion S ... ........ 0441 161,872 555,170 29.2 151.55 21.4 27.0 12.4 19.6
method.
96414 .. Chemo, infuse method add- S ... ........ 0441 2,370 14,561 16.3 182.89 15.4 23.0 8.6 15.6
on.
96420 .. Chemo, ia, push tecnique ... S ... ........ 0439 170 933 18.2 99.86 9.6 27.6 4.2 15.4
96422 .. Chemo ia infusion up to 1 S ... ........ 0441 556 1,814 30.7 162.94 45.9 46.5 31.0 35.1
hr.
96425 .. Chemotherapy, infusion S ... ........ 0441 149 557 26.8 216.68 29.4 33.5 14.7 24.4
method.
96440 .. Chemotherapy, intracavitary S ... ........ 0439 38 104 36.5 37.12 0.0 2.1 0.0 1.5
96445 .. Chemotherapy, intracavitary S ... ........ 0439 43 137 31.4 61.98 23.8 25.0 23.7 21.1
96450 .. Chemotherapy, into CNS .... S ... ........ 0441 394 869 45.3 160.03 25.8 28.7 2.0 8.3
mstockstill on PROD1PC66 with PROPOSALS2

96520 .. Port pump refill & main ....... S ... ........ 0440 9,771 23,928 40.8 140.66 29.0 31.5 16.8 23.6
96530 .. Syst pump refill & main ....... S ... ........ 0440 8,334 19,283 43.2 100.00 7.4 22.2 0.7 13.7
96542 .. Chemotherapy injection ...... S ... ........ 0438 511 929 55.0 51.56 0.0 10.8 0.0 6.5

By definition, we are unable to packaging associated with drug bills. As a proxy, we estimated
precisely assess the amount of administration codes in the multiple packaging as a percent of total cost on

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Federal Register / Vol. 72, No. 148 / Thursday, August 2, 2007 / Proposed Rules 42641

each claim for two subsets of claims. as procedure codes with a status drugs and pharmacy revenue codes
Both analyses suggest the presence of indicator of ‘‘S,’’ ‘‘T,’’ ‘‘V,’’ ‘‘X,’’ or ‘‘P’’), comprise 6 percent of total cost at the
moderate packaged costs, especially we estimate that packaged costs are 22 median (10 percent, on average). The
drug and pharmacy costs, associated percent of total costs (27 percent, on amount of packaging in both proxy
with drug administration services in the average), where total costs consist of measures, but especially the first subset,
multiple bills. Table 3 below shows costs for all payable codes. Costs for closely resembles the packaged costs as
measures of central tendency for packaged drug HCPCS codes and a percentage of drug administration
packaging percentages in the multiple pharmacy revenue codes comprise 13 costs observed in the single bills for
bills or portions of multiple bills percent of total cost at the median (19 drug administration services. While
remaining after ‘‘pseudo’’ singles have percent, on average). For the second
finding a way to accurately use data
been created. We refer to this group of subset of ‘‘hardcore’’ multiple bills with
from the ‘‘hardcore’’ multiple bills to
the multiple bills as the ‘‘hardcore’’ any drug administration code, that is,
estimate drug administration median
multiple bills. For the first subset of where a drug administration code
‘‘hardcore’’ multiple bills with only appears with other payable codes costs undoubtedly would impact
drug administration codes, that is, (largely radiology services and visits), medians, these comparisons suggest that
where multiple drug administration we estimate packaged costs are 13 the multiple bill data probably would
codes are the only separately paid percent of total cost at the median (19 support current median estimates.
procedure codes on the claim (defined percent, on average). Costs for packaged

TABLE 3.—PACKAGED COSTS ON MULTIPLE BILL CLAIMS FOR DRUG ADMINISTRATION SERVICES
All packaged costs as a percent Packaged drug and pharmacy
of total cost costs as a percent of total cost
Total frequency
Median Mean Median Mean

Subset 1: ‘‘Hardcore’’ Multiple Claims with Only Drug Administration Codes

693,925 ............................................................................................................ 21.6 26.8 12.7 19.3

Subset 2: ‘‘Multiple’’ Claims with At Least One Drug Administration Code

4,816,338 ......................................................................................................... 13.2 19.4 5.8 10.0

We have received several comments the OPPS payment rates. We apply the charges for low cost items to a much
over the past few years offering hospital-specific CCR to the hospital’s greater extent than they mark up high
algorithms for packaging the costs charges at the most detailed level cost items, and that these items are often
associated with specific revenue codes possible, based on a revenue code-to- combined in a single cost center on their
or packaged drugs with certain drug cost center crosswalk that contains a Medicare cost report. Commenters
administration codes. Because of the hierarchy of CCRs used to estimate costs stated that when items with widely
complexity of even routine OPPS from charges for each revenue code. varying costs are combined in a single
claims, prior research suggests that such That crosswalk is available for review cost center using that cost center’s CCR
algorithms have limited power to and continuous comment on the CMS to estimate costs from charges for those
generate additional single bill claims Web site at: http://www.cms.hhs.gov/ items, this approach will overestimate
and do little to change median cost HospitalOutpatientPPS/ the cost of low cost items and
estimates. We continue to look for 03_crosswalk.asp#TopOfPage. underestimate the cost of high cost
simple, but powerful, methodologies Comments on the proposed items. This is commonly known as
like the bypass list and packaging of configuration of the crosswalk for CY ‘‘charge compression.’’ They stated that,
HCPCS codes for additional ancillary 2008 should be included with in the case of implantable devices, the
and supportive services to assign comments on this section of this charges for both high cost devices and
packaged costs to all services within the proposed rule. We calculate CCRs for
low cost supplies typically are reported
‘‘hardcore’’ multiple bills. Ideally, these the standard and nonstandard cost
under the medical supply revenue code
methodologies should be intuitive to the centers accepted by the electronic cost
series and that the costs of both
provider community, easily integrated report database. In general, the most
into the complexity of OPPS median detailed level at which we calculate typically are reported in the medical
cost estimation, and simple to maintain CCRs is the hospital-specific supply cost center on the cost report.
from year to year. We solicit and will departmental level. Commenters stated that the application
carefully consider methodologies for Following the expiration of most of one medical supply CCR to charges
creation of single bills that meet these medical devices from pass-through for all items reported under the medical
criteria. status in CY 2003, prior to which supply revenue code underestimates the
devices were paid at charges reduced to cost of expensive medical supplies and
c. Proposed Calculation of CCRs cost using the hospital’s overall CCR, we overestimates the cost of inexpensive
mstockstill on PROD1PC66 with PROPOSALS2

We calculate hospital-specific overall received comments that our OPPS cost supplies. They indicated that when
CCRs and hospital-specific estimates for device implantation these costs are packaged into the costs
departmental CCRs for each hospital for procedures systematically of the procedures in which they are
which we have claims data in the period underestimate the cost of the devices used, the result is inaccurate median
of claims being used to calculate the included in the packaged payment for costs for the HCPCS codes and APCs,
median costs that we convert to scaled the procedures. Commenters informed and thus the standard OPPS ratesetting
relative weights for purposes of setting us that hospitals routinely mark up methodology systematically distorts

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42642 Federal Register / Vol. 72, No. 148 / Thursday, August 2, 2007 / Proposed Rules

relative payment weights for procedures specifically recommends that RTI recommendation. Further, we
using devices. disaggregated CCRs be reestimated for estimate a CCR for blood that is often
In CY 2006, the device industry outpatient hospital charges. higher than that in the cost report based
commissioned a study to interpolate a Cost report CCRs combine both on a special methodology that is
device-specific CCR from the medical inpatient and outpatient services. discussed further in section X of this
supply CCR, using publicly available Ideally, RTI would be able to examine proposed rule. Therefore, the OPPS is
hospital claim and Medicare cost report the correlation between CCRs for already meeting, and in several cases
data rather than proprietary data on Medicare inpatient services and exceeding, the RTI recommendation for
device costs. After reviewing the device inpatient claim charges and the specificity with regard to estimating the
industry’s data analysis and study correlation between CCRs for Medicare costs associated with emergency
model, CMS contracted with RTI outpatient services and outpatient claim department and blood product services.
International (RTI) to study the impact charges. However, the comprehensive (3) RTI recommends reclassification
of charge compression on the cost-based nature of the cost report CCR (which of intermediate care charges from the
weight methodology adopted in the FY combines inpatient and outpatient intensive care unit to the routine cost
2007 IPPS final rule, to evaluate this services) argues for an analysis of the center (RTI study, pages 10 and 85).
model and to propose solutions. For correlation between CCRs and combined This recommendation is not relevant to
more information, interested inpatient and outpatient claim charges. the OPPS because our methodology for
individuals can view RTI’s report on the As noted, the RTI study accepted some calculating costs under the OPPS relies
CMS Web site at: http:// measurement error in its analysis by solely on ancillary cost centers and does
www.cms.hhs.gov/reports/downloads/ matching an ‘‘all charges’’ CCR to not use either cost center included in
Dalton.pdf. inpatient estimates of charges for groups the recommendation to estimate costs
Any study of cost estimation in of similar services represented by for hospital outpatient services.
general, and charge compression revenue codes because of short (4) RTI recommends establishment of
specifically, has obvious importance for timelines and because inpatient costs regression-based estimates as a
both the OPPS and the IPPS. RTI’s dominate outpatient costs in many temporary or permanent method for
research explicitly focused on the IPPS ancillary cost centers. We believe that disaggregating national average CCRs for
for several reasons, which include CCR adjustments used to calculate medical supplies, drugs, and radiology
greater Medicare expenditure under the payment should be based on the services under the IPPS (RTI study,
IPPS, a desire to evaluate the model comparison of cost report CCRs to pages 11 and 86). With regard to
quickly given IPPS regulation deadlines, combined inpatient and outpatient radiology services, RTI estimated
and a focus on other components of the charges. An ‘‘all charges’’ model would significantly lower CCRs for the cost
new FY 2007 IPPS cost-based weight reduce measurement error and estimate centers for computed tomography (CT)
methodology (CMS Contract No. 500– adjustments to disaggregated CCRs that scans and magnetic resonance imaging
00–0024–T012, ‘‘A Study of Charge could be used in both hospital inpatient (MRI) services. RTI triangulated its
Compression in Calculating DRG and outpatient payment systems. findings with lower observed CCRs for
Relative Weights,’’ page 5). The study RTI made several short-term the one-third of providers reporting
first addressed the possibility of cross- recommendations for improving the nonstandard cost centers, specifically
aggregation bias in the CCRs used to accuracy of DRG weight estimates from MRI Scan and CT Scan. However, in
estimate costs under the IPPS created by a cost-based methodology to address using CCRs for nonstandard cost
the IPPS methodology of aggregating bias in combining cost centers and centers, including MRI Scan and CT
cost centers into larger departments charge compression that could be Scan, the OPPS already has partially
before calculating CCRs. The report also considered in the context of OPPS implemented RTI’s recommendation to
addressed potential bias created by policy. We discuss each use lower CCRs to estimate costs for
estimating costs using a CCR that recommendation within the context of those OPPS services allocated to these
reflects the combined costs and charges the OPPS and provide our assessment of two imaging cost centers.
of services with wide variation in the its application to the OPPS. We do not For reasons discussed in more detail
amount of hospital markup. In its discuss RTI’s recommendations to below, we are proposing to develop an
assessment of the latter, RTI targeted its change cost report policy, which, by all-charges model that would compare
attempt to identify the presence of definition, would not have an effect on variation in CCRs with variation in
charge compression to those cost centers payment weight estimates until several combined inpatient and outpatient
presumably associated with revenue years in the future. charges for sets of similar services and
codes demonstrating significant IPPS (1) RTI recommends expansion of the establish disaggregated CCRs that could
expenditures and utilization. RTI number of CCRs used under the IPPS be applied to both inpatient and
assessed the correlation between cost (RTI study, pages 11 and 85). Our OPPS outpatient charges. We are proposing to
report CCRs and the percent of charges methodology is already more specific evaluate the results of that methodology
in a cost center attributable to a set of than the RTI recommendation. To the for purposes of determining whether the
similar services represented by a group extent possible, the OPPS uses hospital- resulting disaggregated CCRs should be
of revenue codes. RTI did not examine specific cost centers, both standard and proposed for use in developing the CY
the correlation between CCRs and nonstandard, to reduce charges to 2009 OPPS payment rates. The revised
revenue codes without significant IPPS estimated costs and, therefore, the OPPS all-charges model and resulting
expenditures or a demonstrated ratesetting methodology is already more disaggregated CCRs will not be available
concentration in a specific Diagnosis specific than the RTI recommendation. in time for use in the CY 2008 OPPS/
mstockstill on PROD1PC66 with PROPOSALS2

Related Group (DRG). For example, RTI (2) RTI recommends disaggregation of ASC final rule with comment period.
did not examine revenue code groups emergency department and blood There are several reasons that we are
within the pharmacy cost center with products from the ‘‘other services’’ CCR not proposing to use the
low proportionate inpatient charges that used in the IPPS (RTI study, pages 11 intradepartmental CCRs that RTI
might be important to the OPPS, such as and 85). Because we use standard and estimated using IPPS charges for the CY
‘‘Pharmacy Incident to Radiology.’’ RTI nonstandard cost center data, our OPPS 2008 OPPS estimation of median costs.
states this limitation in its study and methodology already comports with this We agree with RTI that the

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intradepartmental CCRs it calculated for 2. Proposed Calculation of Median Costs that contain hospital bill types paid
the IPPS would not always be under the OPPS.
In this section of this proposed rule, 1. Claims that were not bill types 12X,
appropriate for application to the OPPS
we discuss the use of claims to calculate 13X, 14X (hospital bill types), or 76X
(RTI study, pages 34 and 35). While RTI
the proposed OPPS payment rates for (CMHC bill types). Other bill types are
recommends that the model be
CY 2008. The hospital OPPS page on the not paid under the OPPS and, therefore,
recalibrated for outpatient charges
CMS Web site on which this proposed these claims were not used to set OPPS
before it is applied to the OPPS, we
rule is posted provides an accounting of payment.
believe that the combined nature of the
claims used in the development of the 2. Claims that were bill types 12X,
CCRs available from the cost report
proposed rates on the CMS Web site at: 13X, or 14X (hospital bill types). These
prevents an accurate outpatient
http://www.cms.hhs.gov/ claims are hospital outpatient claims.
recalibration that would be appropriate
HospitalOutpatientPPS. The accounting 3. Claims that were bill type 76X
for the OPPS alone. The addition of of claims used in the development of (CMHC). (These claims are later
outpatient charges could change the this proposed rule is included on the combined with any claims in item 2
variability of combined charges for some Web site under supplemental materials above with a condition code 41 to set
groups of services. For example, if for the CY 2008 proposed rule. That the per diem partial hospitalization rate
hospitals use a high volume of less accounting provides additional detail determined through a separate process.)
complex devices with lower charges in regarding the number of claims derived For the CCR calculation process, we
the outpatient department, the inclusion at each stage of the process. In addition, used the same general approach as we
or omission of the outpatient charges for below we discuss the files of claims that used in developing the final APC rates
these high volume and lower cost comprise the data sets that are available for CY 2007, using the revised CCR
devices could change the estimated for purchase under a CMS data user calculation which excluded the costs of
disaggregated device CCR. Furthermore, contract. Our CMS Web site, http:// paramedical education programs and
RTI’s analysis excluded some revenue www.cms.hhs.gov/ weighted the outpatient charges by the
codes with extensive outpatient charges HospitalOutpatientPPS, includes volume of outpatient services furnished
because these revenue codes play a information about purchasing the by the hospital. We refer readers to the
minor role in the IPPS. Therefore, we following two OPPS data files: ‘‘OPPS CY 2007 OPPS/ASC final rule with
believe that an all-charges model Limited Data Set’’ and ‘‘OPPS comment period for more information
examining an expanded subset of Identifiable Data Set.’’ (71 FR 67983 through 67985). We first
revenue codes is most appropriate, and We used the following methodology limited the population of cost reports to
that this model must be developed to establish the relative weights we are only those for hospitals that filed
before we could apply the resulting proposing to use in calculating the outpatient claims in CY 2006 before
disaggregated CCRs to the charges for OPPS payment rates for CY 2008 shown determining whether the CCRs for such
supplies paid under the OPPS. in Addenda A and B to this proposed hospitals were valid.
Moreover, to implement the rule. This methodology is as follows: We then calculated the CCRs for each
disaggregated IPPS-based CCRs in the cost center and the overall CCR for each
We used outpatient claims for the full hospital for which we had claims data.
OPPS that RTI estimated for CY 2008 CY 2006, processed before January 1,
could result in greater instability in We did this using hospital-specific data
2007, to set the proposed relative from the Healthcare Cost Report
relative payment weights for CY 2008 weights for CY 2008. To begin the
than would otherwise occur. Significant Information System (HCRIS). We used
calculation of the relative weights for the most recent available cost report
changes in CCRs, both increases and CY 2008, we pulled all claims for
decreases, could prompt the data, in most cases, cost reports for CY
outpatient services furnished in CY 2005. We used the most recently
reassignment of services to different 2006 from the national claims history submitted cost report to calculate the
APCs due to the new estimates of file. This is not the population of claims CCRs to be used to calculate median
median costs and require modification paid under the OPPS, but all outpatient costs for the proposed CY 2008 OPPS
of the overall APC structure. Not only claims (including, for example, CAH rates. If the most recent available cost
might there be significant fluctuations claims and hospital claims for clinical report was submitted but not settled, we
in payment between the CY 2007 and laboratory services for persons who are looked at the last settled cost report to
CY 2008 OPPS, but a subsequent change neither inpatients nor outpatients of the determine the ratio of submitted to
to application of the disaggregated CCRs hospital). settled cost using the overall CCR, and
resulting from development of an all- We then excluded claims with we then adjusted the most recent
charges model might also result in condition codes 04, 20, 21, and 77. available submitted but not settled cost
significant fluctuations in median costs These are claims that providers report using that ratio. We calculated
and increased instability in payments submitted to Medicare knowing that no both an overall CCR and cost center-
from CY 2008 to CY 2009. Therefore, payment will be made. For example, specific CCRs for each hospital. We
these sequential changes could result in providers submit claims with a used the overall CCR calculation
significant increases in median costs in condition code 21 to elicit an official discussed in section II.A.1.c. of this
one year and significant declines in denial notice from Medicare and proposed rule for all purposes that
median costs in the next year. document that a service is not covered. require use of an overall CCR.
Therefore, we are not proposing to We then excluded claims for services We then flagged CAH claims, which
adopt the RTI disaggregated CCRs under furnished in Maryland, Guam, the U.S. are not paid under the OPPS, and claims
mstockstill on PROD1PC66 with PROPOSALS2

the CY 2008 OPPS. We will consider Virgin Islands, American Samoa, and from hospitals with invalid CCRs. The
whether it would be appropriate to the Northern Mariana Islands because latter included claims from hospitals
adopt disaggregated CCRs for the OPPS hospitals in those geographic areas are without a CCR; those from hospitals
after we analyze the results of the use not paid under the OPPS. paid an all-inclusive rate; those from
of both inpatient and outpatient charges We divided the remaining claims into hospitals with obviously erroneous
across all payers to recalculate the three groups shown below. Groups CCRs (greater than 90 or less than
disaggregated CCRs. 2 and 3 comprise the 101 million claims .0001); and those from hospitals with

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overall CCRs that were identified as pneumonia (‘‘PPV’’) vaccines. Influenza We use status indicator ‘‘Q’’ in
outliers (3 standard deviations from the and PPV vaccines are paid at reasonable Addendum B to this proposed rule to
geometric mean after removing error cost and, therefore, these claims are not identify services that receive separate
CCRs). In addition, we trimmed the used to set OPPS rates. We note that the HCPCS code-specific payment when
CCRs at the cost center (that is, separate file containing partial specific criteria are met, and payment
departmental) level by removing the hospitalization claims is included in the for the individual service is packaged in
CCRs for each cost center as outliers if files that are available for purchase as all other circumstances. We are
they exceeded ±3 standard deviations discussed above. Unlike years past, we proposing several different sets of
from the geometric mean. We used a did not create a separate file of claims criteria to determine whether separate
four-tiered hierarchy of cost center CCRs containing observation services because payment would be made for specific
to match a cost center to every possible we are proposing to package all services. For example, HCPCS code
revenue code appearing in the observation care for the CY 2008 OPPS. G0379 (Direct admission of patient for
outpatient claims, with the top tier We next copied line-item costs for hospital observation care) is assigned to
being the most common cost center and drugs, blood, and devices (the lines stay status indicator ‘‘Q’’ in Addendum B to
the last tier being the default CCR. If a on the claim, but are copied onto this proposed rule because we are
hospital’s cost center CCR was deleted another file) to a separate file. No claims proposing that it receive separate
by trimming, we set the CCR for that were deleted when we copied these payment only if it is billed on the same
cost center to ‘‘missing,’’ so that another lines onto another file. These line-items date of service as HCPCS code G0378
cost center CCR in the revenue center are used to calculate a per unit mean (Hospital observation service, per hour),
hierarchy could apply. If no other cost and median and a per day mean and
center CCR could apply to the revenue without any services with status
median for drugs, radiopharmaceutical indicator ‘‘T’’ or ‘‘V,’’ or Critical Care
code on the claim, we used the agents, blood and blood products, and
hospital’s overall CCR for the revenue (APC 0617). Proposed payment for
devices, including, but not limited to, observation services is discussed in
code in question. For example, if a visit brachytherapy sources, as well as other
was reported under the clinic revenue section XI. of this proposed rule. The
information used to set payment rates, specific services in the proposed
code, but the hospital did not have a such as a unit-to-day ratio for drugs.
clinic cost center, we mapped the composite APCs discussed in section
We then divided the remaining claims
hospital-specific overall CCR to the II.A.4. of this proposed rule also are
into the following five groups:
clinic revenue code. The hierarchy of assigned to status indicator ‘‘Q’’ in
1. Single Major Claims: Claims with a
CCRs is available for inspection and Addendum B to this proposed rule
single separately payable procedure
comment on the CMS Web site: http:// because we are proposing that their
(that is, status indicator ‘‘S,’’ ‘‘ T,’’ ‘‘V,’’
www.cms.hhs.gov/ payment would be bundled into a single
or ‘‘X’’).
HospitalOutpatientPPS. composite payment for a combination of
2. Multiple Major Claims: Claims with
We then converted the charges to major procedures under certain
more than one separately payable
costs on each claim by applying the CCR circumstances. These services would
procedure (that is, status indicator ‘‘S,’’
that we believed was best suited to the only receive separate code-specific
‘‘T,’’ ‘‘V,’’ or ‘‘X’’), or multiple units for
revenue code indicated on the line with payment if certain criteria are met. The
the charge. Table 4 of this proposed rule one payable procedure. As discussed
below, some of these can be used in same is true for those less intensive
contains a list of the allowed revenue outpatient mental health treatment
codes. Revenue codes not included in median setting. We also included in this
set claims that contain one unit of one services for which payment is limited to
Table 4 are those not allowed under the the partial hospitalization per diem rate
OPPS because their services cannot be code when the bilateral modifier is
appended to the code and the code is and which also are assigned to status
paid under the OPPS (for example, indicator ‘‘Q’’ in Addendum B to this
inpatient room and board charges), and one that is conditionally or
independently bilateral. In these cases, proposed rule. According to
thus charges with those revenue codes longstanding OPPS payment policy (65
were not packaged for creation of the these claims represent more than one
unit of the service described by the FR 18455), payment for these individual
OPPS median costs. One exception is mental health services is bundled into a
the calculation of median blood costs, as code, notwithstanding that only one
unit is billed. single payment, APC 0034 (Mental
discussed in section X. of this proposed
3. Single Minor Claims: Claims with a Health Services Composite), when the
rule.
Thus, we applied CCRs as described single HCPCS code that is assigned to sum of the individual mental health
above to claims with bill types 12X, status indicator ‘‘F,’’ ‘‘G,’’ ‘‘H,’’ ‘‘K,’’ service payments for all of these mental
13X, or 14X, excluding all claims from ‘‘L,’’ or ‘‘N.’’ health services provided on the same
CAHs and hospitals in Maryland, Guam, 4. Multiple Minor Claims: Claims with day would exceed payment for a day of
the U.S. Virgin Islands, American multiple HCPCS codes that are assigned partial hospitalization services.
Samoa, and the Northern Mariana to status indicator ‘‘F,’’ ‘‘G,’’ ‘‘H,’’ ‘‘K,’’ However, the largest number of specific
Islands and claims from all hospitals for ‘‘L,’’ or ‘‘N.’’ HCPCS codes identified by status
which CCRs were flagged as invalid. 5. Non-OPPS Claims: Claims that indicator ‘‘Q’’ in Addendum B to this
We identified claims with condition contain no services payable under the proposed rule are those codes that we
code 41 as partial hospitalization OPPS (that is, all status indicators other identify as ‘‘special’’ packaged codes,
services of hospitals and moved them to than those listed for major or minor where we are proposing that a service
another file. These claims were status). These claims are excluded from receives separate payment when it
mstockstill on PROD1PC66 with PROPOSALS2

combined with the 76X claims the files used for the OPPS. Non-OPPS appears on the same day on a claim
identified previously to calculate the claims have codes paid under other fee without another service that is assigned
partial hospitalization per diem rate. schedules, for example, durable medical to status indicator ‘‘S,’’ ‘‘T,’’ ‘‘V,’’ or
We then excluded claims without a equipment or clinical laboratory tests, ‘‘X.’’ We are proposing to package
HCPCS code. We moved to another file and do not contain either a code for a payment for these HCPCS codes when
claims that contained nothing but separately paid service or a code for a the code appears on the same date of
influenza and pneumococcal packaged service. service with any other service that is

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assigned to status indicator ‘‘S,’’ ‘‘T,’’ claims and adding them to the public proposing to define ‘‘other’’ services as
‘‘V,’’ or ‘‘X.’’ use files. HCPCS codes that have a status
This last and largest subset of At its March 2007 meeting, the APC indicator other than those defined as
conditionally packaged services have to Panel recommended that CMS edit and major or minor procedures.
be integrated into the identification of return for correction claims that contain We continue to believe that using
single and multiple bills to ensure that a HCPCS code for a separately paid drug status indicators, with the proposed
the costs for these services are or device but that also do not contain a changes, is an appropriate way to sort
appropriately packaged when they HCPCS code assigned to a procedural the claims into these groups and also to
appear with any other separately paid APC (that is, those not assigned status make our process more transparent to
service. We handle these conditionally indicator ‘‘S,’’ ‘‘T,’’ ‘‘V,’’ or ‘‘X’’). The the public. We further believe that this
packaged services in the data by APC Panel stated that this edit should proposed method of sorting claims
assigning the HCPCS code an APC and improve the claims data and may would enhance the public’s ability to
a data status indicator of ‘‘N.’’ When the increase the number of single bills derive useful information for analysis
conditionally packaged HCPCS code available for ratesetting. We note that and public comment on this proposed
appears with a HCPCS code with a such an edit would be broader than the rule.
status indicator of ‘‘S,’’ ‘‘T,’’ ‘‘V,’’ or ‘‘X’’ device-to-procedure code edits we We set aside the single minor,
on the same date of service, it is treated implemented for CY 2007 for selected multiple minor, and non-OPPS claims
as a packaged code. The costs that devices. While we encourage hospitals (numbers 3, 4, and 5 above) because we
appear on the line with the code are to code correctly in accordance with did not use these claims in calculating
packaged into the cost of the HCPCS CPT, CMS, and local contractor median costs of procedural APCs. We
code with a status indicator of ‘‘S,’’ ‘‘T,’’ guidance, in general we have then examined the multiple major
‘‘V,’’ or ‘‘X.’’ When the conditionally historically implemented claims claims for dates of service to determine
packaged HCPCS code appears by itself, processing edits under the OPPS when if we could break them into single
we change the status indicator on the we believe that these edits help ensure procedure claims using the dates of
line to the status indicator of the APC complete claims data for ratesetting. In service on all lines on the claim. If we
to which the conditionally packaged the case of such Outpatient Code Editor could create claims with single major
code is assigned, converting the service (OCE) edits for drugs and devices that procedures by using date of service, we
from a minor to a major procedure. This are separately paid, it is unclear to us created a single procedure claim record
creates single bills for these that these edits would improve our for each separately paid procedure on a
conditionally packaged services that are claims data for median cost calculation different date of service (that is, a
then used to set the median cost for the because the items receive separate ‘‘pseudo’’ single).
conditionally packaged code and for the payment and do not result in multiple We then used the bypass codes listed
APC to which it is assigned when it is procedure claims when they are in Table 1 of this proposed rule and
separately paid. reported. We also are uncertain about discussed in section II.A.1.b. of this
The claims listed in numbers 1, 2, 3, the clinical circumstances that could proposed rule to remove separately
and 4 above are included in the data result in a hospital submitting an OPPS payable procedures that we determined
files that can be purchased as described claim that only reported a separately contain limited costs or no packaged
above. paid drug or device. We are soliciting costs or were otherwise suitable for
In years prior to the CY 2007 OPPS, comments specifically on the impact of inclusion on the bypass list from a
we made a determination of whether establishing such edits on hospital multiple procedure bill. When one of
each HCPCS code was a major code or billing processes and on related the two separately payable procedures
a minor code or a code other than a potential improvements to claims data on a multiple procedure claim was on
major or minor code. We used those used for median setting. the bypass list, we split the claim into
code-specific determinations to sort Therefore, in view of the prior public two ‘‘pseudo’’ single procedure claims
claims into the five groups identified comments and our desire to ensure that records. The single procedure claim
above. For the CY 2007 OPPS, we used the public data files contain all record that contained the bypass code
status indicators to sort the claims into appropriate data, for the CY 2008 OPPS, did not retain packaged services. The
these groups. We defined major we are proposing to define major single procedure claim record that
procedures as any procedure having a procedures as HCPCS codes that have a contained the other separately payable
status indicator of ‘‘S,’’ ‘‘T,’’ ‘‘V,’’ or status indicator of ‘‘S,’’ ‘‘T,’’ ‘‘V,’’ or procedure (but no bypass code) retained
‘‘X;’’ defined minor procedures as any ‘‘X.’’ We are proposing to define minor the packaged revenue code charges and
code having a status indicator of ‘‘N;’’ procedures as HCPCS codes that have a the packaged HCPCS code charges.
and classified ‘‘other’’ procedures as any status indicator of ‘‘F,’’ ‘‘G,’’ ‘‘H,’’ ‘‘K,’’ We also removed lines that contained
code having a status indicator other ‘‘L,’’ or ‘‘N’’ but, as we discuss above, multiple units of codes on the bypass
than ‘‘S,’’ ‘‘T,’’ ‘‘V,’’ ‘‘X,’’ or ‘‘N.’’ For the to make single bills out of any claims for list and treated them as ‘‘pseudo’’ single
CY 2007 OPPS proposed rule limited single procedures with a minor code claims by dividing the cost for the
data set and identifiable data set, these that also has an APC assignment. This multiple units by the number of units
definitions excluded claims on which ensures that the claims that contain only on the line. Where one unit of a single,
hospitals billed drugs and devices codes for drugs and biologicals or separately paid procedure code
without also billing separately paid devices but that do not contain codes for remained on the claim after removal of
procedure codes and, therefore, these procedures are included in the limited the multiple units of the bypass code,
public use files did not contain all data set and the identifiable data set. It we created a ‘‘pseudo’’ single claim
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claims used to calculate the drug and also ensures, as discussed above, that from that residual claim record, which
device frequencies and medians. We conditionally packaged services that retained the costs of packaged revenue
corrected this for the CY 2007 OPPS/ receive separate payment only when codes and packaged HCPCS codes. This
ASC final rule with comment period they are billed without any other enabled us to use claims that would
limited data set and identifiable data set separately payable OPPS services are otherwise be multiple procedure claims
by extracting claims containing drugs treated appropriately for purposes of and could not be used. We excluded
and devices from the set of ‘‘other’’ median cost calculations. We are those claims that we were not able to

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convert to single claims even after II.A.4. of this proposed rule for a more We also excluded claims that were
applying all of the techniques for complete discussion of the packaging outside 3 standard deviations from the
creation of ‘‘pseudo’’ singles. Among changes we are proposing for CY 2008. geometric mean of units for each HCPCS
those excluded were claims that contain After removing claims for hospitals code on the bypass list (because, as
codes that are viewed as independently with error CCRs, claims without HCPCS discussed above, we used claims that
or conditionally bilateral and that codes, claims for immunizations not contain multiple units of the bypass
contain the bilateral modifier (Modifier covered under the OPPS, and claims for codes).
50, Bilateral procedure) because the services not paid under the OPPS, We used the remaining claims to
line-item cost for the code represents approximately 54 million claims were calculate the CY 2008 proposed median
the cost of two units of the procedure, left. Of these 54 million claims, we were costs for each separately payable HCPCS
notwithstanding that the code appears able to use some portion of code and each APC. The comparison of
with a unit of one. Therefore, the charge approximately 50 million whole claims HCPCS and APC medians determines
on the line represents the charge for two (92 percent of approximately 54 million the applicability of the ‘‘2 times’’ rule.
services rather than a single service and potentially usable claims) to create Section 1833(t)(2) of the Act provides
using the line as reported would approximately 88 million single and that, subject to certain exceptions, the
overstate the cost of a single procedure. ‘‘pseudo’’ single claims, of which we items and services within an APC group
We then packaged the costs of packaged used 87 million single bills (after cannot be considered comparable with
HCPCS codes (codes with status trimming out just over 822,000 claims as respect to the use of resources if the
indicator ‘‘N’’ listed in Addendum B to discussed below) in the CY 2008 highest median (or mean cost, if elected
this proposed rule) and packaged median development and for ratesetting. by the Secretary) for an item or service
revenue codes into the cost of the single We also excluded (1) claims that had in the group is more than 2 times greater
major procedure remaining on the zero costs after summing all costs on the than the lowest median cost for an item
claim. claim and (2) claims containing or service within the same group (‘‘the
The list of packaged revenue codes is packaging flag number 3. Effective for 2 times rule’’). Finally, we reviewed the
shown in Table 4 of this proposed rule. services furnished on or after July 1,
medians and reassigned HCPCS codes to
At its March 2007 meeting the APC different APCs where we believed that
2004, the OCE assigns packaging flag
Panel recommended that CMS review it was appropriate. Section III. of this
number 3 to claims on which hospitals
the final list of packaged revenue codes proposed rule includes a discussion of
submit token charges for a service with
for consistency with OPPS policy and certain proposed HCPCS code
status indicator ‘‘S’’ or ‘‘T’’ (a major
ensure that future versions of the OCE assignment changes that resulted from
separately paid service under the OPPS)
edit accordingly. We compared the examination of the medians and for
for which the fiscal intermediary is
packaged revenue codes in the OCE to other reasons. The APC medians were
required to allocate the sum of charges
the finalized list of packaged revenue recalculated after we reassigned the
for services with a status indicator
codes for the CY 2007 OPPS (71 FR affected HCPCS codes. Both the HCPCS
equaling ‘‘S’’ or ‘‘T’’ based on the weight
67989 through 67990) that we used for medians and the APC medians were
packaging costs in median calculation. for the APC to which each code is weighted to account for the inclusion of
As a result of that analysis, we are assigned. We do not believe that these multiple units of the bypass codes in the
accepting the APC Panel’s charges, which were token charges as creation of ‘‘pseudo’’ single bills.
recommendation and we are proposing submitted by the hospital, are valid In our review of median costs for
to change the list of packaged revenue reflections of hospital resources. HCPCS codes and their assigned APCs,
codes for the CY 2008 OPPS in the Therefore, we deleted these claims. We we have frequently noticed that some
following manner. First, we are also deleted claims for which the services are consistently rarely
proposing to remove revenue codes charges equal the revenue center performed in the hospital outpatient
0274 (Prosthetic/Orthotic devices) and payment (that is, the Medicare payment) setting for the Medicare population. In
0290 (Durable Medical Equipment) from on the assumption that where the charge particular, there are a number of
the list of packaged revenue codes equals the payment, to apply a CCR to services, such as several procedures
because we do not permit hospitals to the charge would not yield a valid related to the care of pregnant women,
report implantable devices in these estimate of relative provider cost. that have annual Medicare claims
revenue codes (Internet Only Manual For the remaining claims, we then volume of 100 or fewer occurrences. By
100–4, Chapter 4, section 20.5.1.1). We standardized 60 percent of the costs of definition, these services also have a
also are proposing to add revenue code the claim (which we have previously small number of single bills from which
0273 (Take Home Supplies) to the list of determined to be the labor-related to estimate median costs. In addition, in
packaged revenue codes because we portion) for geographic differences in some cases, these codes have been
believe that the charges under this labor input costs. We made this historically assigned to clinical APCs
revenue code are for the incidental adjustment by determining the wage where all the services are low volume.
supplies that hospitals sometimes index that applied to the hospital that Therefore, the median costs for these
provide for patients who are discharged furnished the service and dividing the services and APCs often fluctuate from
at a time when it is not possible to cost for the separately paid HCPCS code year to year, in part due to the
secure the supplies needed for a brief furnished by the hospital by that wage variability created by such a small
time at home. We are proposing to index. As has been our policy since the number of claims. One of the benefits of
conform the list of packaged revenue inception of the OPPS, we are proposing basing payment on the median cost of
codes in the OCE to the OPPS for CY to use the pre-reclassified wage indices many HCPCS codes with sufficient
mstockstill on PROD1PC66 with PROPOSALS2

2008. for standardization because we believe single bill representation in an APC is


We packaged the costs of the HCPCS that they better reflect the true costs of that such fluctuation is moderated by
codes that are shown with status items and services in the area in which the increased number of observations
indicator ‘‘N’’ into the cost of the the hospital is located than the post- for similar services on which the APC
independent service to which the reclassification wage indices and, median cost is also based. We
packaged service is ancillary or therefore, would result in the most considered proposing a distinct
supportive. We refer readers to section accurate unadjusted median costs. methodology for calculation of the

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median cost of low total volume APCs services only because they are not often of services less than 100, and only 17
in order to provide more stability in furnished to the Medicare population. APCs have a total volume of less than
payment from year to year for these low Therefore, we are proposing to 1,000, in comparison with CY 2007
total volume services. However, after reconfigure certain clinical APCs for CY where 9 APCs (including 3 New
examination of the low total volume 2008 as a way to promote stability and Technology APCs) had a total volume of
OPPS services and their assigned APCs, appropriate payment for the services less than 100 and 36 APCs had a total
we concluded that there were other assigned to them, including low total volume of less than 1,000.
clinical APCs with higher volumes of volume services. We believe that these A detailed discussion of the medians
total claims to which these low total proposed reconfigurations maintain for blood and blood products is
volume services could be reassigned, APC clinical and resource homogeneity. included in section X. of this proposed
while ensuring the continued clinical We are proposing these changes as an rule. A discussion of the medians for
and resource homogeneity of the alternative to developing specific APCs that require one or more devices
clinical APCs to which they would be quantitative approaches to treating low when the service is performed is
newly reassigned. Therefore, we believe total volume APCs differently for included in section IV.A. of this
that it is more appropriate to reconfigure purposes of median calculation. As a proposed rule. A discussion of the
clinical APCs to eliminate most of the result of this proposal, 3 APCs proposed median for partial hospitalization is
low total volume APCs. These low for CY 2008 (all of which are New included below in section II.B. of this
volume services differ from other OPPS Technology APCs) have a total volume proposed rule.

TABLE 4.—PROPOSED CY 2008 PACKAGED REVENUE CODES


Revenue Description
code

0250 ......... PHARMACY.


0251 ......... GENERIC.
0252 ......... NONGENERIC.
0254 ......... PHARMACY INCIDENT TO OTHER DIAGNOSTIC.
0255 ......... PHARMACY INCIDENT TO RADIOLOGY.
0257 ......... NONPRESCRIPTION DRUGS.
0258 ......... IV SOLUTIONS.
0259 ......... OTHER PHARMACY.
0260 ......... IV THERAPY, GENERAL CLASS.
0262 ......... IV THERAPY/PHARMACY SERVICES.
0263 ......... SUPPLY/DELIVERY.
0264 ......... IV THERAPY/SUPPLIES.
0269 ......... OTHER IV THERAPY.
0270 ......... M&S SUPPLIES.
0271 ......... NONSTERILE SUPPLIES.
0272 ......... STERILE SUPPLIES.
0273 ......... TAKE HOME SUPPLIES.
0275 ......... PACEMAKER DRUG.
0276 ......... INTRAOCULAR LENS SOURCE DRUG.
0278 ......... OTHER IMPLANTS.
0279 ......... OTHER M&S SUPPLIES.
0280 ......... ONCOLOGY.
0289 ......... OTHER ONCOLOGY.
0343 ......... DIAGNOSTIC RADIOPHARMS.
0344 ......... THERAPEUTIC RADIOPHARMS.
0370 ......... ANESTHESIA.
0371 ......... ANESTHESIA INCIDENT TO RADIOLOGY.
0372 ......... ANESTHESIA INCIDENT TO OTHER DIAGNOSTIC.
0379 ......... OTHER ANESTHESIA.
0390 ......... BLOOD STORAGE AND PROCESSING.
0399 ......... OTHER BLOOD STORAGE AND PROCESSING.
0560 ......... MEDICAL SOCIAL SERVICES.
0569 ......... OTHER MEDICAL SOCIAL SERVICES.
0621 ......... SUPPLIES INCIDENT TO RADIOLOGY.
0622 ......... SUPPLIES INCIDENT TO OTHER DIAGNOSTIC.
0624 ......... INVESTIGATIONAL DEVICE (IDE).
0630 ......... DRUGS REQUIRING SPECIFIC IDENTIFICATION, GENERAL CLASS.
0631 ......... SINGLE SOURCE.
0632 ......... MULTIPLE.
0633 ......... RESTRICTIVE PRESCRIPTION.
0681 ......... TRAUMA RESPONSE, LEVEL I.
0682 ......... TRAUMA RESPONSE, LEVEL II.
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0683 ......... TRAUMA RESPONSE, LEVEL III.


0684 ......... TRAUMA RESPONSE, LEVEL IV.
0689 ......... TRAUMA RESPONSE, OTHER.
0700 ......... CAST ROOM.
0709 ......... OTHER CAST ROOM.
0710 ......... RECOVERY ROOM.
0719 ......... OTHER RECOVERY ROOM.
0720 ......... LABOR ROOM.

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TABLE 4.—PROPOSED CY 2008 PACKAGED REVENUE CODES—Continued


Revenue Description
code

0721 ......... LABOR.


0762 ......... OBSERVATION ROOM.
0810 ......... ORGAN ACQUISITION.
0819 ......... OTHER ORGAN ACQUISITION.
0942 ......... EDUCATION/TRAINING.

3. Proposed Calculation of OPPS Scaled base for the CY 2008 OPPS relative 4. Proposed Changes to Packaged
Payment Weights weights. Services
Using the median APC costs Section 1833(t)(9)(B) of the Act (If you choose to comment on the
discussed previously, we calculated the requires that APC reclassification and issues in this section, please include the
proposed relative payment weights for recalibration changes, wage index caption ‘‘OPPS: Packaged Services’’ at
each APC for CY 2008 shown in changes, and other adjustments be made the beginning of your comment.)
Addenda A and B to this proposed rule. in a manner that assures that aggregate a. Background
In years prior to CY 2007, we payments under the OPPS for CY 2008
standardized all the relative payment When the Medicare program was first
are neither greater than nor less than the
weights to APC 0601 (Mid Level Clinic implemented, it paid for hospital
aggregate payments that would have services (inpatient and outpatient) based
Visit) because it is one of the most
been made without the changes. To on hospital-specific reasonable costs
frequently performed services in the
comply with this requirement attributable to furnishing services to
hospital outpatient setting. We assigned
APC 0601 a relative payment weight of concerning the APC changes, we Medicare beneficiaries. Later the law
1.00 and divided the median cost for compared aggregate payments using the was amended to limit payment to the
each APC by the median cost for APC CY 2007 relative weights to aggregate lesser of the hospital’s reasonable cost
0601 to derive the relative payment payments using the CY 2008 proposed or customary charges for services
weight for each APC. relative weights. This year, we included furnished to Medicare beneficiaries.
Beginning with the CY 2007 OPPS, payments to CMHCs in our comparison. Specific service-based methodologies
we standardized all of the relative Based on this comparison, we adjusted were then developed for certain types of
payment weights to APC 0606 (Level 3 the relative weights for purposes of services, such as clinical laboratory tests
Clinic Visits) because we deleted APC budget neutrality. The unscaled relative and durable medical equipment, while
0601 as part of the reconfiguration of the payment weights were adjusted by a payments for outpatient surgical
visit APCs. We chose APC 0606 as the weight scaler of 1.3665 for budget procedures and other diagnostic tests
base because under our proposal to neutrality. In addition to adjusting for were based on a blend of the hospital’s
reconfigure the APCs where clinic visits increases and decreases in weight due to aggregate Medicare costs for these
are assigned for CY 2007, APC 0606 is the recalibration of APC medians, the services and Medicare’s payment for
the middle level clinic visit APC (that scaler also accounts for any change in similar services in other ambulatory
is, Level 3 of five levels). We have settings. While this mix of different
the base, other than changes in volume,
historically used the median cost of the payment methodologies was in use,
which are not a factor in the weight
middle level clinic visit APC (that is hospital outpatient services were
scaler. growing rapidly following the
APC 0601 through CY 2006) to calculate
unscaled weights because mid-level The proposed relative payment implementation of the IPPS in 1983.
clinic visits are among the most weights listed in Addenda A and B to The brisk increase in hospital outpatient
frequently performed services in the this proposed rule incorporate the services led to an interest in creating
hospital outpatient setting. Therefore, to recalibration adjustments discussed in payment incentives to promote more
maintain consistency in using a median sections II.A.1. and 2. of this proposed efficient delivery of hospital outpatient
for calculating unscaled weights rule. services through a Medicare prospective
representing the median cost of some of payment system for hospital outpatient
Section 1833(t)(14)(H) of the Act, as
the most frequently provided services, services, and the final statutory
added by section 621(a)(1) of Pub. L.
we proposed to continue to use the requirements for the OPPS were
108–173, states that ‘‘Additional established by the BBA and the BBRA.
median cost of the mid-level clinic APC,
expenditures resulting from this During the period of time when
proposed APC 0606, to calculate
unscaled weights. Following our paragraph shall not be taken into different approaches to prospective
standard methodology, but using the CY account in establishing the conversion payment for hospital outpatient services
2007 median for APC 0606, for CY 2007 factor, weighting and other adjustment were being considered, a variety of
we assigned APC 0606 a relative factors for 2004 and 2005 under reports to Congress (June 1988,
payment weight of 1.00 and divided the paragraph (9) but shall be taken into September 1990, and March 1995)
median cost of each APC by the median account for subsequent years.’’ Section discussed three major issues related to
cost for APC 0606 to derive the unscaled 1833(t)(14) of the Act provides the defining the unit of payment for the
mstockstill on PROD1PC66 with PROPOSALS2

relative payment weight for each APC. payment rates for certain ‘‘specified payment system, specifically the extent
The choice of the APC on which to base covered outpatient drugs.’’ Therefore, to which clinically similar procedures
the relative weights for all other APCs the cost of those specified covered should be grouped for payment
does not affect the payments made outpatient drugs (as discussed in section purposes and the logic that should be
under the OPPS because we scale the V. of this proposed rule) is included in used for the groupings; the extent to
weights for budget neutrality. We are the budget neutrality calculations for which payment for minor, ancillary
again proposing to use APC 0606 as the the CY 2008 OPPS. services associated with a significant

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procedure should be packaged into a services, rather than the efficient services that were performed, consistent
single payment for the procedure delivery of those services. Over the past with CPT or CMS coding guidelines, but
(which we refer to as ‘‘packaging’’); and several years of the OPPS, greater packaged costs also may be uncoded
the extent to which payment for unpackaging of payment has occurred and included in specific revenue code
multiple significant procedures related simultaneously with continued charges. Hospitals include charges for
to an outpatient encounter or to an tremendous growth in OPPS packaged services on their claims, and
episode of care should be bundled into expenditures as a result of increasing the costs associated with those packaged
a single unit of payment (which we refer volumes of individual services, as services are then added into the costs of
to as ‘‘bundling’’). Both packaging and discussed in further detail below. Also separately payable procedures on the
bundling were presented as approaches discussed in further detail below, most same claims in establishing payment
to creating incentives for efficiency, recently in its comments to the CY 2007 rates for the separately payable services.
with their potential policy OPPS/ASC proposed rule and in the Packaging and bundling payment for
disadvantages including inconsistency context of this rapid spending growth, multiple interrelated services into a
with other ambulatory fee schedules, the Medicare Payment Advisory single payment creates incentives for
reduced transparency of service-specific Commission (MedPAC) encouraged providers to furnish services in the most
payment, and the potential for hospitals CMS to broaden the payment bundles efficient way by enabling hospitals to
shifting the delivery of packaged or under the OPPS to encourage providers manage their resources with maximum
bundled services to delivery settings to use resources efficiently. flexibility, thereby encouraging long-
other than the hospital outpatient As permitted under section term cost containment. For example,
department (HOPD). 1833(t)(2)(B) of the Act, the OPPS where there are a variety of supplies
establishes groups of covered HOPD that could be used to furnish a service,
The OPPS, like other prospective
services, namely APC groups, and uses some of which are more expensive than
payment systems, relies on the concept
them as the basic unit of payment. others, packaging encourages hospitals
of averaging, where the payment may be
During the evolution of the OPPS over to use the least expensive item that
more or less than the estimated costs of
the past 7 years, significant attention meets the patient’s needs, rather than to
providing a service or package of
has been concentrated on service- routinely use a more expensive item.
services for a particular patient, but
specific payment for services furnished Packaging also encourages hospitals to
with the exception of outlier cases, it is
to particular patients, rather than on negotiate carefully with manufacturers
adequate to ensure access to appropriate creating incentives for the efficient and suppliers to reduce the costs of
care. Decisions about packaging and delivery of services through encounter purchased items and services or to
bundling payment involve a balance or episode-of-care-based payment. explore alternative group purchasing
between ensuring some separate Overall packaging included in the arrangements, thereby encouraging the
payment for individual services and clinical APCs has decreased, and the most economical health care. Similarly,
establishing incentives for efficiency procedure groupings have become packaging encourages hospitals to
through larger units of payment. In smaller as the focus has shifted to establish protocols that ensure that
many situations, the final payment rate refining service-level payment. services are furnished only when they
for a package of services may do a better Specifically, in the CY 2003 OPPS, there are important and to carefully scrutinize
job of balancing variability in the were 569 APCs, but by CY 2007, the the services ordered by practitioners to
relative costs of component services number of APCs had grown to 862, a 51- maximize the efficient use of hospital
compared to individual rates covering a percent increase in 4 years. Similarly, resources. Finally, packaging payments
smaller unit of service without the percentage of CPT codes for into larger payment bundles promotes
packaging or bundling. Packaging procedural services that receive the stability of payment for services over
payments into larger payment bundles packaged payment declined by over 10 time. Packaging also may reduce the
promotes the stability of payment for percent between CY 2003 and CY 2007. importance of refining service-specific
services over time, a characteristic that Currently, the APC groups reflect a payment because there is more
reportedly is very important to modest degree of packaging, including opportunity for hospitals to average
hospitals. Unlike packaged services, the packaged payment for minor ancillary payment across higher cost cases
costs of individual services typically services, inexpensive drugs, medical requiring many ancillary services and
show greater variation because the supplies, implantable devices, capital- lower cost cases requiring fewer
higher variability for some component related costs, operating and recovery ancillary services.
items and services cannot be balanced room use, and anesthesia services.
with lower variability for others and Bundling payment for multiple b. Addressing Growth in OPPS Volume
because relative weights are typically significant services provided in the and Spending
estimated using a smaller set of claims. same hospital outpatient encounter or Creating additional incentives for
When compared to service-specific during an episode of care is not providing only necessary services in the
payment, packaging or bundling currently a common OPPS payment most efficient manner is of vital
payment for component services may practice, because the APC groups importance to Medicare today, in view
change payment at the hospital level to generally reflect only the modest of the recent explosion of growth in
the extent that there are systematic packaging associated with individual program expenditures for hospital
differences across hospitals in their procedures or services. Unconditionally outpatient services paid under the
performance of the services included in packaged services with HCPCS codes OPPS. As illustrated in Table 5 below,
that unit of payment. Hospitals are identified by the status indicator total spending has been growing at a
mstockstill on PROD1PC66 with PROPOSALS2

spending more per case than payment ‘‘N.’’ Conditionally packaged services, rate of roughly 10 percent per year
received would be encouraged to review specifically those services whose under the OPPS, and the Medicare
their service patterns to ensure that they payment is packaged unless specific Trustees project that total spending
furnish services as efficiently as criteria for separate payment are met, under the OPPS will increase by more
possible. Similarly, we believe that are assigned to status indicator ‘‘Q.’’ To than $3 billion from CY 2007 through
unpackaging services heightens the the extent possible, hospitals may use CY 2008 to nearly $35 billion.
hospital’s focus on pricing individual HCPCS codes to report any packaged Implementation of the OPPS has not

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slowed outpatient spending growth over spending growth has generally been with this rate of increase in program
the past few years; in fact, double-digit occurring. We are greatly concerned expenditures under the OPPS.

TABLE 5.—GROWTH IN EXPENDITURES UNDER OPPS FROM CY 2001–CY 2008


[Projected Expenditures for CY 2006–CY 2008, in Billions]

OPPS growth CY 2001 CY 2002 CY 2003 CY 2004 CY 2005 CY 2006 CY 2007 CY 2008

Incurred Cost ................................................................... 17.702 19.561 21.156 23.866 26.572 29.338 31.641 34.960
Percent Increase .............................................................. .............. 10.5 8.2 12.8 11.3 10.4 7.8 10.5
Source: CY 2007 Medicare Trustees’ Report.

As with the other Medicare fee-for- utilization of services is the major illustrates the increases in the volume
service payment systems that are reason for the current rates of growth in and intensity of hospital outpatient
experiencing rapid spending growth, the OPPS, rather than general price or services over the past several years.
brisk growth in the intensity and enrollment changes. Table 6 below

TABLE 6.—PERCENT INCREASE IN VOLUME AND INTENSITY OF HOSPITAL OUTPATIENT SERVICES


CY CY CY
CY CY CY CY 2006 2007 2008
2002 2003 2004 2005 (Est.) (Est.) (Est.)

Percent Increase ............................................................................................................ 3.5 2.5 7.6 7.4 8.6 6.4 5.8
Source: CY 2007 Medicare Trustees’ Report.

For hospital outpatient services, the fewer basic services, which increases working closely with stakeholder
volume and intensity of services are overall service complexity. The partners.
estimated to have continued to increase MedPAC expressed concern about this We continue to believe that the
significantly in recent years, at a rate of relationship and concluded that the collection and submission of
8.6 percent between CY 2005 and CY historically large increases in outpatient performance data and the public
2006, the last two completed calendar volume and service complexity suggest reporting of comparative information
years. As we discussed in the CY 2007 a need to recalibrate the OPPS. In the are strong incentives for hospital
OPPS/ASC final rule with comment future, MedPAC plans to examine accountability in general and quality
period (71 FR 68189 through 68190), the options for recalibrating the payment improvement in particular, while
rapid growth in utilization of services system to accurately match payments to encouraging the most efficient and
under the OPPS shows that Medicare is the costs of individual services effective care. Measurement and
paying mainly for more services each (Medicare Payment Advisory reporting can focus the attention of
year, regardless of their quality or Commission Report to the Congress: hospitals and consumers on specific
impact on beneficiary health. In its Medicare Payment Policy, March 2007, goals and on hospitals’ performance
March 2007 Report to Congress (pages pages 55 and 56). relative to those goals. Development and
55 and 56), MedPAC confirmed that implementation of performance
much of the growth in service volume As proposed for the CY 2007 OPPS measurement and reporting by hospitals
from 2003 to 2005 resulted from and finalized for the CY 2009 OPPS, we can thus produce quality improvement
increases in the number of services per developed a plan to promote higher in health care delivery. Hospital
beneficiary who received care, rather quality services under the OPPS, so that performance measures may also provide
than from increases in the number of Medicare spending would be directed a foundation for performance-based
beneficiaries served. The MedPAC toward those higher quality services (71 rather than volume-based payments.
found that while the rate of growth in FR 68189 through 68197). We believe In the CY 2007 OPPS/ASC final rule
service volume declined over that time that Medicare payments should with comment period, as a first step in
period, the complexity of services, encourage physicians and other the OPPS toward value-based
defined as the sum of the relative providers in their efforts to achieve purchasing, we finalized a policy that
payment weights of all OPPS services better health outcomes for Medicare would employ our equitable adjustment
divided by the volume of all services, beneficiaries at a lower cost. In the CY authority under section 1833(t)(2)(E) of
increased, and that most of the growth 2007 OPPS/ASC final rule with the Act to establish an OPPS Reporting
was attributable to the insertion of comment period, we discussed the Hospital Quality Data for Annual
devices and the provision of complex concept of ‘‘value-based purchasing’’ in Payment Update (RHQDAPU) program
imaging services. The MedPAC further the OPPS as well as in other Medicare based on measures specifically
found that regression analysis suggested payment systems. ‘‘Value-based developed to characterize the quality of
that relatively complex hospital purchasing’’ may use a range of outpatient care (71 FR 68197). We
mstockstill on PROD1PC66 with PROPOSALS2

outpatient services may be more incentives to achieve identified quality finalized implementation of the program
profitable for hospitals than less and efficiency goals, as a means of for CY 2009, when we would implement
complex services. In addition, its promoting better quality of care and a 2.0 point reduction to the OPPS
analysis indicated that favorable more effective resource use in the conversion factor update for those
payments for complex services give Medicare payment systems. In hospitals that do not meet the specific
hospitals an incentive to provide more developing the concept of value-based requirements of the CY 2009 OPPS
of those complex services rather than purchasing for Medicare, we have been RHQDAPU program. We described the

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CY 2009 program which would be based With respect to the first alternative, revised ASC payment system proposed
upon CY 2008 hospital reporting of section 1833(t)(2)(F) of the Act requires to package payment for all items and
appropriate measures of the quality of us to establish a methodology for services directly related to the provision
hospital outpatient care that have been controlling unnecessary increases in the of covered surgical procedures into the
carefully developed and evaluated, and volume of covered OPPS services, and ASC facility payment for the associated
endorsed as appropriate, with section 1833(t)(9)(C) of the Act surgical procedure (71 FR 49468). These
significant input from stakeholders. We authorizes us to adjust the update to the other items and services included all
reiterated our belief that ensuring that conversion factor if, under section drugs, biologicals, contrast agents,
Medicare beneficiaries receive the care 1833(t)(2)(F) of the Act, we determine implantable devices, and diagnostic
they need and that such services are of that there is growth in volume that services such as imaging. Because a
high quality are the necessary initial exceeds established tolerances. As we number of these items and services are
steps to incorporating value-based indicated in the September 8, 1998 separately paid under the OPPS and the
purchasing into the OPPS. We proposed rule proposing the proposal included the establishment of
explained that we are specifically establishment of the OPPS (63 FR most ASC payment weights based on
seeking to encourage care that is both 47585), we considered creating a system the procedures’ corresponding OPPS
efficient and of high quality in the that mirrors the sustainable growth rate payment weights, MedPAC encouraged
HOPD. (SGR) methodology applied to the MPFS us to align the payment bundles in the
Subsequent to the publication of the update to control unnecessary growth in two payment systems by increasing the
CY 2007 OPPS/ASC final rule with service volume. However, implementing size of the payment bundles under the
comment period, section 109(b) of the such a system could have the OPPS.
MIEA-TRHCA specifies that in the case potentially undesirable effect of Moreover, MedPAC staff indicated in
of a subsection (d) hospital (defined escalating service volume as payment testimony at the January 9, 2007
under section 1886(d)(1)(B) of the Act as rates stagnate and hospital costs rise, MedPAC public meeting that the growth
hospitals that are located in the 50 thus actually resulting in a growth in in OPPS spending and volume raises
States or the District of Columbia other volume rather than providing an questions about whether the OPPS
than those categories of hospitals or incentive to control volume. Therefore, should be changed to encourage greater
hospital units that are specifically this approach to addressing the volume efficiency (page 390 of the January 9,
excluded from the IPPS, including growth under the OPPS could 2007 MedPAC meeting transcript
psychiatric, rehabilitation, long-term inadvertently result in the exact available at http://www.medpac.gov).
care, children’s, and cancer hospitals or opposite of our desired outcome. MedPAC staff explained at that time
hospital units) that does not submit to The second alternative we considered that MedPAC intends to perform a long-
the Secretary the quality reporting data is to expand the packaging of supportive term assessment of the design of the
required for CY 2009 and each ancillary services and ultimately bundle OPPS, including considering the
subsequent year, the OPPS annual payment for multiple independent bundling of payments for procedures
update factor shall be reduced by 2.0 services into a single OPPS payment. and visits furnished over a period of
percentage points. The quality reporting We believe that this would create time into a single payment, assessing
program proposed for CY 2008 incentives for hospitals to monitor and whether there should be an expenditure
according to this provision is referred to adjust the volume and efficiency of target for hospital outpatient services,
as the Hospital Outpatient Quality Data services themselves, by enabling them evaluating whether payments for
Reporting Program (HOP QDRP) and is to manage their resources with multiple imaging services provided in
discussed in detail in section XVII. of maximum flexibility. Instead of external the same session should be discounted,
this proposed rule. controls on volume, we believe that it is and reviewing the methodology used by
As the next step in our movement preferable for the OPPS to create CMS to determine relative payment
toward value-based purchasing under payment incentives for hospitals to weights for hospital outpatient services.
the OPPS and to complement the HOP carefully scrutinize their service We welcome MedPAC’s study of these
QDRP for CY 2009, with measure patterns to ensure that they furnish only areas, particularly with regard to how
reporting beginning in CY 2008, we those services that are necessary for we might develop appropriate payment
believe it is important to initiate specific high quality care and to ensure that they rates for larger bundles of services.
payment approaches to explicitly provide care as efficiently as possible. Because we believe it is important
encourage efficiency in the hospital Specifically, we believe that increased that the OPPS create enhanced
outpatient setting that we believe will packaging and bundling are the most incentives for hospitals to provide only
control future growth in the volume of appropriate payment strategies to necessary, high quality care and to
OPPS services. While the HOP QDRP establish such incentives in a provide that care as efficiently as
will encourage the provision of higher prospective payment system, and that possible, we have given considerable
quality hospital outpatient services that this approach is clearly preferable to the thought to how we could increase
lead to improved health outcomes for establishment of an SGR or other packaging under the OPPS in a manner
Medicare beneficiaries, we believe that methodology that seeks to control that would not place hospitals at
more targeted approaches are also spending by addressing significant substantial financial risk but which
necessary to encourage increased growth in volume and program would create incentives for efficiency
hospital efficiency. Two alternatives we spending with lower payments. and volume control, while providing
have considered that would be feasible In its October 6, 2006 letter of hospitals with flexibility to provide care
under current law include establishing comment on the CY 2007 OPPS/ASC in the most appropriate way for each
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a methodology to measure the growth in proposed rule, MedPAC urged us to Medicare beneficiary. We are
volume and reduce OPPS payment rates establish broader payment bundles in considering the possibility of greater
to account for unnecessary increases in both the revised ASC and hospital bundling of payment for major hospital
volume or developing payment outpatient prospective payment systems outpatient services, which could result
incentives for hospitals to ensure that to promote efficient resource use and in establishing OPPS payments for
they provide necessary services as better align the two payment systems. In episodes of care, and for this reason we
efficiently as possible. particular, our proposal for the CY 2008 particularly welcome MedPAC’s

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42652 Federal Register / Vol. 72, No. 148 / Thursday, August 2, 2007 / Proposed Rules

exploration of how such an approach based payment groups, and we look defibrillator leads including
might be incorporated into the OPPS forward to the findings and defibrillation threshold evaluation
payment methodology. We are recommendations of MedPAC in this (induction of arrhythmia, evaluate of
particularly concerned about the area. This is a significant change in sensing an pacing for arrhythmia
potential for shifting higher cost direction for the OPPS, and we termination) at the time of initial
bundled services to other ambulatory specifically seek the recommendations implantation or replacement; with
settings, and we welcome ideas on of all stakeholders with regard to which testing of single chamber or dual
deterring such activity. We are currently ancillary services could be packaged chamber cardioverter defibrillator) went
considering the complex policy issues and those combinations of services from separate to packaged payment.
related to the possible development and provided in a single encounter or over This service is only performed during
implementation of a bundled payment time that could be bundled together for the course of a surgical procedure for
policy for hospital outpatient services payment. We are hopeful that expanded implantation or replacement of
that involves significant services packaging and, ultimately, greater implantable cardioverter-defibrillator
provided over a period of time which bundling under the OPPS may result in (ICD) leads, and these surgical
could be paid through an episode-based sufficient moderation of growth in implantation procedures are currently
payment methodology, but we consider volume and spending that further assigned to APC 0106 (Insertion/
this possible approach to be a long-term controls would not be needed. However, Replacement/Repair of Pacemaker and/
policy objective. We encourage public if spending were to continue to escalate or Electrodes) and APC 0108 (Insertion/
comments regarding the specific at the current rates, even after we have Replacement/Repair of Cardioverter-
hospital outpatient services, clinical and exhausted our options for increased Defibrillator Leads). We considered the
financial issues, ratesetting packaging and bundling, we are electrophysiologic evaluation service
methodologies, and operational considering multiple options under our (CPT code 93641) to be an ancillary
challenges we should consider in our authority to address these issues, supportive service that may be
exploratory work in this area. including the possibility of imposing performed only in the same operative
We also are examining how we might external controls that could link growth session as a procedure that could
possibly establish payments for same- in volume to reduced payments under otherwise be performed independently
day care encounters, building upon the the OPPS in the future. of the electrophysiologic evaluation
current use of APCs for payment service. In this particular case, the APC
through greater packaging of supportive c. Proposed Packaging Approach
Panel recommended for CY 2007 that
ancillary services. This could include With the exception of the two we package payment for this diagnostic
conditional packaging of supportive composite APCs that we are proposing test and we adopted that
ancillary services into payment for the for CY 2008 and discuss in detail in recommendation for the CY 2007 OPPS.
procedure that is the reason for the section II.A.4.d. of this proposed rule, Making this payment change in this
OPPS encounter (for example, we are not currently prepared to specific case resulted in the availability
diagnostic tests performed on the day of propose an episode-based or fully of significantly more claims data and,
a scheduled procedure). Another developed encounter-based payment therefore, establishment of more valid
approach could include creation of methodology for CY 2008 as our next and representative estimated median
composite APCs for frequently step in value-based purchasing for the costs for the lead insertion and
performed combinations of surgical OPPS. However, in reviewing our electrophysiologic evaluation services
procedures (for example, one APC approach to revising payment packages furnished in the single hospital
payment for multiple cardiac and bundles, we have examined encounter.
electrophysiologic procedures services currently provided under the In the case of much of the care
performed on the same date). Not only OPPS, looking for categories of ancillary furnished in the HOPD, we believe that
could these encounter-based payment items and services for which we believe it is appropriate to view a complete
groups create enhanced incentives for payment could be appropriately service as potentially being reported by
efficiency, but they may also enable us packaged into larger payment packages a combination of two or more HCPCS
to utilize for ratesetting many of the for the encounter. For this first step in codes, rather than a single code, and to
multiple procedure claims that are not creating larger payment groups, we establish payment policy that supports
now used in our establishment of OPPS examined the HCPCS code definitions this view. Ideally, we would consider a
rates for single procedures. (We refer (including CPT code descriptors) to see complete HOPD service to be the totality
readers to section II.A.1.b. of this whether there were categories of codes of care furnished in a hospital
proposed rule for a more detailed for which packaging would be a logical outpatient encounter or in an episode of
discussion of the treatment of multiple expansion of the longstanding care. In general, we believe that it is
procedure claims in the ratesetting packaging policy that has been a part of particularly appropriate to package
process.) For CY 2008, we are proposing the OPPS since its inception. In general, payment for those items and services
two new composite APCs for CY 2008 we have often packaged the costs of that are typically ancillary and
payment of combinations of services in selected HCPCS codes into payment for supportive into the payment for the
two clinical care areas, as discussed services reported with other HCPCS primary diagnostic or therapeutic
under section II.A.4.d. of this proposed codes where we believed that one code modalities in which they are used. As
rule. We look forward to receiving reported an item or service that was a significant first step towards creating
public comment on this proposal as we integral to the provision of care that was payment units that represent larger
explore the possibility of moving toward reported by another HCPCS code. units of service, we examined whether
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basing OPPS payment on larger As an example of a previous change there are categories of HCPCS codes that
packages and bundles of services in the OPPS packaging status for a are typically ancillary and supportive to
provided in a single hospital outpatient HCPCS code that is ancillary and diagnostic and therapeutic modalities.
encounter. supportive, under the CY 2007 OPPS, Specifically, as our initial substantial
We intend to involve the APC Panel we note that CPT code 93641 step toward creating larger payment
in our future exploration of how we can (Electrophysiologic evaluation of single groups for hospital outpatient care, we
develop encounter-based and episode- or dual chamber pacing cardioverter are proposing to package payment for

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items and services in the seven • Observation services. reflect small distributional changes and
categories listed below into the payment We identify the HCPCS codes we are also because changes to the packaged
for the primary diagnostic or therapeutic proposing to package for CY 2008, HCPCS codes affect both the number
modality to which we believe these explain our rationale for proposing to and composition of single bills and the
items and services are typically package the codes in these categories, mix of hospitals contributing those
ancillary and supportive. We provide examples of how HCPCS and single bills. Such a decline, no change,
specifically chose these categories of APC median costs and payments would or an increase in the median cost at the
HCPCS codes for packaging because we change under these proposals, and HCPCS code level could result from a
believe that the items and services discuss the impact of these changes in change in the number of single bills
described by the codes in these the discussion below under each used to set the median cost. With greater
categories are the HCPCS codes that are category. packaging, more ‘‘natural’’ single bills
typically ancillary and supportive to a The median costs of services at the are created for some codes but fewer
primary diagnostic or therapeutic HCPCS level for many separately paid ‘‘pseudo’’ single bills are created. Thus,
modality and, in those cases, are an procedures change as a result of this some APCs gain single bills and some
integral part of the primary service they proposal because we are proposing to lose single bills due to packaging
support. We are proposing to assign change the composition of the payment changes, as well as to the reassignment
status indicator ‘‘N’’ to those HCPCS packages associated with the HCPCS of some codes to different APCs. When
codes that we believe are always codes. Moreover, as a result of changes more claims from a different mix of
integral to the performance of the to the HCPCS median costs, we are providers are used to set the median
primary modality and to package their proposing to reassign some HCPCS cost for the HCPCS code, the median
costs into the costs of the separately codes to different clinical APCs for CY cost could move higher or lower within
paid primary services with which they 2008 to avoid 2 times violations and to the array of per claim costs.
are billed. We are proposing to assign ensure continuing clinical and resource Similarly, proposed revisions to APC
status indicator ‘‘Q’’ to those HCPCS homogeneity of the APCs. Therefore, the assignments that are necessary to
codes that we believe are typically APC median costs change not only as a resolve 2 times violations that could
integral to the performance of the result of the increased packaging itself arise as a result of changes in the
primary modality and to package but also as a result of the migration of HCPCS median cost for one or more
payment for their costs into the costs of HCPCS codes into and out of APCs codes due to additional packaging may
the separately paid primary services through APC reconfiguration. The file of also result in increases or decreases to
with which they are usually billed but HCPCS code and APC median costs APC median costs and, therefore, to
to pay them separately in those resulting from our proposal is found increases or decreases in the payments
uncommon cases in which no other under supporting documentation for for HCPCS codes that would not be
separately paid primary service is this proposed rule on the CMS Web site otherwise affected except for the CY
furnished in the hospital outpatient at http://www.cms.hhs.gov/ 2008 proposed packaging approach for
encounter. HospitalOutpatientPPS/HORD/ the seven categories of items and
For ease of reference in our list.asp#TopOfPage. services.
subsequent discussion in each of the Review of the HCPCS median costs We have examined the proposed
seven areas, we refer to the HCPCS indicates that, while the proposed aggregate impact of making these
codes for which we are proposing to median costs rise for some HCPCS codes changes on payment for CY 2008.
package (or conditionally package) as a result of increased packaging that Because the OPPS is a budget neutral
payment as dependent services. We use expands the costs included in the payment system in which the amount of
the term ‘‘independent service’’ to refer payment packages, there are also cases payment weight in the system is
to the HCPCS codes that represent the in which the proposed median costs annually adjusted for changes in
primary therapeutic or diagnostic decline as a result of these proposed expenditures created by changes in APC
modality into which we are proposing changes. While it seems intuitive to weights and codes (but is not currently
to package payment for the dependent believe that the proposed median costs adjusted based on estimated growth in
service. We note that, in future years as of the remaining separately paid service volume), the effects of the
we consider the development of larger services should rise when the costs of packaging changes we are proposing
services previously paid separately are result in changes to scaled weights and,
payment groups that more broadly
packaged into larger payment groups, it therefore, to the payment rates for all
reflect services provided in an
is more challenging to understand why separately paid procedures. These
encounter or episode of care, it is
the proposed median costs of separately changes result from both shifts in
possible that we might propose to
paid services would not change or median costs as a result of increased
bundle payment for a service that we
would decline when the costs of packaging, changes in multiple
now refer to as ‘‘independent’’ in this
previously paid services are packaged. procedure discounting patterns, and a
proposed rule. Medians are generally more stable
Specifically, we are proposing to higher weight scaler that is applied to
than means because they are less all unscaled APC weights. (We refer
package the payment for HCPCS codes
sensitive to extreme observations, but readers to section II.A.3. of this
describing the dependent items and
medians typically do not reflect subtle proposed rule for an explanation of the
services in the following seven
changes in cost distributions. The OPPS’ weight scaler.) In a budget neutral
categories into the payment for the
use of medians rather than means system, the monies previously paid for
independent services with which they
usually results in relative weight services that are now proposed to be
are furnished:
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• Guidance services. estimates being less sensitive to packaged are not lost, but are
• Image processing services. packaging decisions. Specifically, the redistributed to all other services. A
• Intraoperative services. median cost for a particular higher weight scaler would increase
• Imaging supervision and independent procedure generally will payment rates relative to observed
interpretation services. be higher as a result of added packaging, median costs for independent services
• Diagnostic radiopharmaceuticals. but also could change little or be lower by redistributing the lost weight of
• Contrast media and. because median costs typically do not packaged items that historically have

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42654 Federal Register / Vol. 72, No. 148 / Thursday, August 2, 2007 / Proposed Rules

been paid separately and the lost weight most general type of category. The code for the primary procedure. We also
when the median costs of independent hierarchy of categories is as follows: note that there are a number of CPT
services do not completely reflect the guidance services, image processing codes describing independent surgical
full incremental cost of the packaged services, intraoperative services, and procedures but which the code
services. The impact of this proposed imaging supervision and interpretation descriptors indicate that guidance is
change on proposed CY 2008 OPPS services. Therefore, while CPT code included in the code reported for the
payments is discussed in section XXII B. 93325 may logically be grouped with surgical procedure if it is used and,
of this proposed rule, and the impact on either imaging processing services or therefore, packaged payment is already
various classifications of hospitals is intraoperative services, it is treated as made for the associated guidance
shown in Column 2B in Table 67 in that an image processing service because service under the OPPS. For example,
section. that group is more clinically specific the independent procedure described by
We estimate that our CY 2008 and precedes intraoperative services in CPT code 55873 (Cryosurgical ablation
proposal would redistribute the hierarchy. We did not believe it was of the prostate (includes ultrasonic
approximately 1.2 percent of the necessary to include diagnostic guidance for interstitial cryosurgical
estimated CY 2007 base year radiopharmaceuticals, contrast media, probe placement)) already includes the
expenditures under the OPPS. The or observation categories in this list ultrasound guidance that may be used.
monies associated with this because those services generally map to We believe packaging payment for every
redistribution would be in addition to only one of those categories. We note guidance service under the OPPS would
any increase that would otherwise occur that there is no cost estimation or provide consistently packaged payment
due to a proposed higher median cost payment implications related to the for all these services that are used to
for the APC as a result of the expanded assignment of a HCPCS code for direct independent procedures, even if
payment package. If the relative weight purposes of discussion to any specific they are currently separately reported.
for a particular APC decreases as a category. Because these dependent guidance
result of the proposed packaging procedures support the performance of
approach, the increased weight scaler (1) Guidance Services an independent procedure and they are
may or may not result in a relative We are proposing to package payment generally provided in the same
weight that is equal to or greater than for HCPCS guidance codes for CY 2008, operative session as the independent
the relative weight that would occur specifically those codes that are procedure, we believe that it would be
without the proposed packaging reported for supportive guidance appropriate to package their payment
approach. In general, the packaging that services, such as ultrasound, into the OPPS payment for the
we are proposing would have more fluoroscopic, and stereotactic navigation independent procedure performed.
effect on payment for some services services, that aid the performance of an However, guidance services differ from
than on payment for others because the independent procedure. We performed a some of the other categories of services
dependent items and services that we broad search for such services, relying that we are proposing to package for CY
are proposing for packaging are upon the American Medical 2008. Hospitals sometimes may have the
furnished more often with some Association’s (AMA’s) CY 2007 book of option of choosing whether to perform
independent services than with others. CPT codes and the CY 2007 book of a guidance service immediately
However, because of the amount of Level II HCPCS codes, which identified preceding or during the main
payment weight that would be specific HCPCS codes as guidance independent procedure, or not at all,
redistributed by this proposal, there codes. Moreover, we performed a unlike many of the imaging supervision
would be some impact on payments for clinical review of all HCPCS codes to and interpretation services, for example,
all OPPS services whose rates are set capture additional codes that are not which are generally always reported
based on payment weights, and the necessarily identified as ‘‘guidance’’ when the independent procedure is
impact on any given hospital would services but describe services that performed. Once a hospital decides that
vary based on the mix of services provide directional information during guidance is appropriate, the hospital
furnished by the hospital. the course of performing an may have several options regarding the
The following discussion separately independent procedure. For example, type of guidance service that can be
addresses each of the seven categories of we are proposing to package CPT code performed. For example, when inserting
items and services for which we are 61795 (Stereotactic computer-assisted a central venous access device, hospitals
proposing to package payment under volumetric (navigational) procedure, have the option of using no guidance,
the CY 2008 OPPS as part of our intracranial, extracranial, or spinal (List ultrasound guidance, or fluoroscopic
packaging proposal. Many codes that we separately in addition to code for guidance, and the selection in any
are proposing to package for CY 2008 primary procedure)) because we specific case will depend upon the
could fit into more than one of those consider it to be a guidance service that specific clinical circumstances of the
seven categories. For example, CPT code provides three-dimensional information device insertion procedure. In fact, the
93325 (Doppler echocardiography color to direct the performance of intracranial historical hospital claims data
flow velocity mapping (List separately or other diagnostic or therapeutic demonstrate that various guidance
in addition to codes for procedures. We also included HCPCS services for the insertion of these
echocardiography)) could be included codes that existed in CY 2006 but were devices, which have historically
in both the intraoperative and image deleted and were replaced in CY 2007. received packaged payment under the
processing categories. Therefore, for We included the CY 2006 HCPCS codes OPPS, are used frequently for the
organizational purposes, both to ensure because we are proposing to use the CY insertion of vascular access devices.
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that each code appears in only one 2006 claims data to calculate the CY Thus, we recognize hospitals have
category and to facilitate discussion of 2008 OPPS median costs on which the several options regarding the
our CY 2008 proposal, we have created CY 2008 payment rates would be based. performance and types of guidance
a hierarchy of categories that determines Many, although not all, of the CPT services they use. However, we believe
which category each code appropriately guidance codes we identified are that hospitals utilize the most
falls into. This hierarchy is organized designated by CPT as add-on codes that appropriate form of guidance for the
from the most clinically specific to the are to be reported in addition to the CPT specific procedure that is performed.

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We do not want to create payment previously, the median cost for a status indicator ‘‘N.’’ We are not
incentives to use guidance for all particular independent procedure proposing status indicator changes for
independent procedures or to provide generally will be higher as a result of the five guidance procedures that were
one form of guidance instead of another. added packaging, but also could change unconditionally packaged for CY 2007.
Therefore, by proposing to package little or be lower because median costs We are proposing to change the status
payment for all forms of guidance, we typically do not reflect small indicators for 31 guidance procedures
are specifically encouraging hospitals to distributional changes and because from separately paid to unconditionally
utilize the most cost effective and changes to the packaged HCPCS codes packaged (status indicator ‘‘N’’) for the
clinically advantageous method of affect both the number and composition CY 2008 OPPS. We believe that these
guidance that is appropriate in each of single bills and the mix of hospitals services are always integral to and
situation by providing them with the contributing those single bills. In fact, dependent upon the independent
maximum flexibility associated with a the CY 2007 CPT book indicates that if services that they support and,
single payment for the independent guidance is performed with CPT code therefore, their payment would be
procedure. Similarly, hospitals may 20610, it may be appropriate to bill CPT appropriately packaged because they
appropriately not utilize guidance code 76942 (Ultrasonic guidance for would generally be performed on the
services in certain situations based on needle placement (e.g. biopsy, same date and in the same hospital as
clinical indications. aspiration, injection, localization the independent services.
Because guidance services can be device), imaging supervision and We are proposing to change the status
appropriately reported in association interpretation); 77002 (Fluoroscopic indicator for 1 guidance procedure from
with many independent procedures, guidance for needle placement (e.g. separately paid to conditionally
under our proposed packaging of biopsy, aspiration, injection, packaged (status indicator ‘‘Q’’), and we
guidance services for CY 2008, the costs localization device)); 77012 (Computed will treat it as a ‘‘special’’ packaged
associated with guidance services tomography guidance for needle code for the CY 2008 OPPS, specifically,
would be mapped to a larger number of placement (e.g. biopsy, aspiration, CPT code 76000 (Fluoroscopy (separate
independent procedures than some injection, localization device), procedure), up to 1 hour physician time,
other categories of codes that we are radiological supervision and other than 71023 or 71034 (e.g. cardiac
proposing to package. For example, CPT interpretation); or 77021 (Magnetic fluoroscopy)). This code was discussed
code 76001 (Fluoroscopy, physician resonance guidance for needle in the past with the Packaging
time more than one hour, assisting a placement (e.g., for biopsy, needle Subcommittee of the APC Panel which
non-radiologic physician (e.g., aspiration, injection, or placement of determined that, consistent with its
nephrostolithotomy, ERCP, localization device) radiological code descriptor as a separate procedure,
bronchoscopy, transbronchial biopsy)) supervision and interpretation). The CY this procedure could sometimes be
can be reported with a wide range of 2007 CPT book also implies that it is not provided alone, without any other
services. According to the CPT code always clinically necessary to use services on the claim. We believe that
descriptor, these procedures include guidance in performing an this procedure would usually be
nephrostolithotomy, which may be arthrocentesis described by CPT code provided by a hospital as guidance in
reported with CPT code 50080 20610. conjunction with another significant
(Percutaneous nephrostolithotomy or The guidance procedures that we are independent procedure on the same
pyelostolithotomy, with or without proposing to package for CY 2008 vary date of service but may occasionally be
dilation, endoscopy, lithotripsy, in their resource costs. Resource cost provided without another independent
stenting, or basket extraction; up to 2 was not a factor we considered when service. As a ‘‘special’’ packaged code,
cm), and endoscopic retrograde proposing to package guidance if the fluoroscopy service were billed
cholangiopancreatography, which may procedures. Notably, most of the without any other service assigned to
be reported with CPT code 43260 guidance procedures are relatively low status indicator ‘‘S,’’ ‘‘T,’’ ‘‘V,’’ or ‘‘X’’
(Endoscopic retrograde cost in comparison to the independent reported on the same date of service,
cholangiopancreatography (ERCP); services they frequently accompany. under our proposal we would not treat
diagnostic, with or without collection of The codes we are proposing to the fluoroscopy procedure as a
specimen(s) by brushing or washing identify as guidance codes for CY 2008 dependent service for purposes of
(separate procedure)). Therefore, the that would receive packaged payment payment. If we were to unconditionally
cost of the fluoroscopic guidance would are listed in Table 8 below. package payment for this procedure,
be reflected in the payment for each of Several of these codes, including CPT treating it as a dependent service,
these independent services, in addition code 76937 (Ultrasound guidance for hospitals would receive no payment at
to numerous other procedures, rather vascular access requiring ultrasound all when providing this service alone,
than in the payment for only one or two evaluation of potential access sites, although the procedure would not be
independent services, as is the case for documentation of selected vessel functioning as a guidance service in that
some of the other categories of codes patency, concurrent realtime ultrasound case. However, according to our
that we are proposing to package for CY visualization of vascular needle entry, proposal, its conditionally packaged
2008. with permanent recording and reporting status with its designation as a ‘‘special’’
In addition, because independent (List separately in addition to code for packaged code would allow payment to
procedures such as CPT code 20610 primary procedure)), are already be provided for this ‘‘Q’’ status
(Arthrocentesis, aspiration and/or unconditionally (that is, always) fluoroscopy procedure, in which case it
injection; major joint or bursa (e.g., packaged under the CY 2007 OPPS, would be treated as an independent
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shoulder, hip, knee joint, subacromial where they have been assigned to status service under these limited
bursa)) may be reported with or without indicator ‘‘N.’’ Payment for these circumstances. On the other hand, when
guidance, the cost for the guidance will services is currently made as part of the the fluoroscopy service is furnished as
be reflected in the median cost for the payment for the separately payable, a guidance procedure on the same day
independent procedure as a function of independent services with which they and in the same hospital as
the frequency that guidance is reported are billed. No separate payment is made independent, separately paid services
with that procedure. As we stated for services that we have assigned to that are assigned to status indicator ‘‘S,’’

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42656 Federal Register / Vol. 72, No. 148 / Thursday, August 2, 2007 / Proposed Rules

‘‘T,’’ ‘‘V,’’ or ‘‘X,’’ we are proposing to was billed with CPT code 47382 the budget neutrality adjustment that
package payment for it as a dependent (Ablation, one or more liver tumor(s), would result from the aggregate effects
service. In all cases, we are proposing percutaneous, radiofrequency) 148 of the CY 2008 packaging proposal
that hospitals that furnish independent times in the CY 2008 OPPS proposed (were there no further budget neutrality
services on the same date as dependent rule claims data, and 42 percent of the adjustment for other reasons)
guidance services must bill them all on claims for CPT code 76940 reported CPT significantly changes the final payment
the same claim. We believe that when code 47382 on the same date of service. rates relative to median cost estimates.
dependent guidance services and Similarly, we note that almost 19 Table 7 presents a comparison of the CY
independent services are furnished on percent of the claims for CPT code 2007 payment for CPT codes 47382 and
the same date and in the same facility, 47382 also reported the ultrasound 76940, where CPT code 76940 is paid
they are part of a single complete guidance service described by CPT code separately, to the CY 2008 payment we
hospital outpatient service that is 76940. Under our proposed policy for are proposing for CPT codes 47382 and
reported with more than one HCPCS the CY 2008 OPPS, we are proposing to 76940, where payment for CPT code
code, and no separate payment should expand the packaging associated with 76940 would be packaged. This example
be made for the guidance service which CPT code 47382 so that payment for the cannot demonstrate the overall impact
supports the independent service. ultrasound guidance, if performed, of packaging guidance services on
We have calculated the median costs would be packaged into the payment for payment to any given hospital because
on which the proposed CY 2008 the liver tumor ablation. Specifically, each individual hospital’s case-mix and
payment rates are based using the we would package payment for CPT billing patterns would be different. The
packaging status of each code as code 76940 so that under the CY 2008 overall impact of packaging payment for
provided in Table 8 below. As we OPPS, the dependent procedure, in this CPT code 76940, as well as all the other
discussed earlier in more detail, this has case ultrasound guidance, would proposed packaging changes we are
the effect of both changing the median receive packaged payment through the proposing for CY 2008, can only be
cost for the independent service into separate OPPS payment for the assessed in the aggregate for classes of
which the cost of the dependent service independent procedure, in this case, the hospitals. Section XXII.B. of this
is packaged and also of redistributing liver tumor ablation. The payment rates proposed rule displays the overall
payment that would otherwise have for this example associated with our CY impact of APC weight recalibration and
been made separately for the service we 2008 proposal are outlined in Table 7 packaging changes we are proposing by
are proposing to newly package for CY below. classes of hospitals, and the OPPS
2008. In this case, the proposed CY 2008 Hospital-Specific Impacts—Provider-
For example, CPT code 76940 median cost for APC 0423 (Level II Specific Data file presents our estimates
(Ultrasound guidance for, and Percutaneous Abdominal and Biliary of CY 2008 hospital payment for those
monitoring of, parenchymal tissue Procedures) to which CPT code 47382 is hospitals we include in our ratesetting
ablation) is assigned to APC 0268 (Level assigned is $2,775.33, while the CY and payment simulation database. The
I Ultrasound Guidance Procedures) for 2007 median cost of APC 0423 is hospital-specific impacts file can be
CY 2007. We are proposing to $2,283.08 and of APC 0268 is $72.61. found on the CMS Web site at http://
discontinue APC 0268 for CY 2008 and However, as discussed in section www.cms.hhs.gov/
to provide packaged payment for the II.A.4.c. of this proposed rule HospitalOutpatientPPS/ under
HCPCS codes that were previously concerning our general proposed supporting documentation for this
assigned to APC 0268. CPT code 76940 packaging approach, the added effect of proposed rule.

TABLE 7.—EXAMPLE OF THE EFFECTS OF THE CY 2008 PACKAGING PROPOSAL ON PAYMENT FOR CPT CODES 76940
AND 47382

Sum of CY
Sum of CY 2008 proposed
2007 payment
HCPCS code Short descriptor payment
(76940 paid (76940 pack-
separately) aged)

76940 ......................... Us guide, tissue ablation spine (dependent service) ...................................................... $73.04 $0.00
47382 ......................... Percut ablate liver rf (independent service) .................................................................... 2,296.47 2,810.08

Total Payment .... .......................................................................................................................................... 2,369.51 2,810.08

The estimated overall impact of these data would show such a change in for the guidance service to meaningfully
changes presented in section XXII.B. of practice in future years and that change contribute to the treatment of the patient
this proposed rule is based on the would be reflected in future budget in directing the performance of the
assumption that hospital behavior neutrality adjustments. However, with independent procedure. We do not
would not change with regard to when respect to guidance services in believe the clinical characteristics of the
these dependent services are performed particular, we believe that hospitals are guidance services reported with the
mstockstill on PROD1PC66 with PROPOSALS2

on the same date and by the same limited in the extent to which they guidance HCPCS codes listed in Table 8
hospital that performs the independent could change their behavior with regard below will change in the immediate
services. To the extent that hospitals to how they furnish these services. By future.
could change their behavior and their definition, these guidance services As we indicated earlier, in all cases
perform the guidance services more or generally must be furnished on the same we are proposing that hospitals that
less frequently, on subsequent dates, or date and at the same operative location furnish the guidance service on the
at settings outside of the hospital, the as the independent procedure in order same date as the independent service

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Federal Register / Vol. 72, No. 148 / Thursday, August 2, 2007 / Proposed Rules 42657

must bill both services on the same basis to determine whether there is to request that Program Safeguard
claim. We expect to carefully monitor reason to request that Quality Contractors review the claims against
any changes in billing practices on a Improvement Organizations (QIOs) the medical record.
service-specific and hospital-specific review the quality of care furnished or

TABLE 8.—GUIDANCE HCPCS CODES PROPOSED FOR PACKAGED PAYMENT IN CY 2008


Inactive
HCPCS Code
effective 1/1/
Proposed Proposed
CY 2007 CY 2007 2008 or earlier Short descriptor of the inac-
HCPCS code Short descriptor CY 2008 CY 2008
SI APC (listed on the tive HCPCS code
SI APC same line as
its replace-
ment code)

19295 .......... Place breast clip, precut ........ S 0657 N n/a


61795 .......... Brain surgery using computer S 0302 N n/a
62160 .......... Neuroendoscopy add-on ....... T 0122 N n/a
76000 .......... Fluoroscope examination ....... X 0272 Q 0272
76001 .......... Fluoroscope exam, extensive N n/a N n/a
76930 .......... Echo guide, cardiocentesis .... S 0268 N n/a
76932 .......... Echo guide for heart biopsy .. S 0309 N n/a
76936 .......... Echo guide for artery repair ... S 0309 N n/a
76937 .......... Us guide, vascular access ..... N n/a N n/a
76940 .......... Us guide, tissue ablation ....... S 0268 N n/a
76941 .......... Echo guide for transfusion ..... S 0268 N n/a
76942 .......... Echo guide for biopsy ............ S 0268 N n/a
76945 .......... Echo guide, villus sampling ... S 0268 N n/a
76946 .......... Echo guide for amniocentesis S 0268 N n/a
76948 .......... Echo guide, ova aspiration .... S 0309 N n/a
76950 .......... Echo guidance radiotherapy .. S 0268 N n/a
76965 .......... Echo guidance radiotherapy .. S 0308 N n/a
76975 .......... GI endoscopic ultrasound ...... S 0266 N n/a
76998 .......... Us guide, intraop ................... S 0266 N n/a 76986 Ultrasound guide intraoper.
77001 .......... Fluoro guide for vein device .. N n/a N n/a 75998 Fluoro guide for vein device.
77002 .......... Needle localization by xray .... N n/a N n/a 76003 Needle localization by xray.
77003 .......... Fluoroguide for spine inject ... N n/a N n/a 76005 Fluoroguide for spine inject.
77011 .......... Ct scan for localization .......... S 0283 N n/a 76355 Ct scan for localization.
77012 .......... Ct scan for needle biopsy ...... S 0283 N n/a 76360 Ct scan for needle biopsy.
77013 .......... Ct guide for tissue ablation .... S 0333 N n/a 76362 Ct guide for tissue ablation.
77014 .......... Ct scan for therapy guide ...... S 0282 N n/a 76370 Ct scan for therapy guide.
77021 .......... Mr guidance for needle place S 0335 N n/a 76393 Mr guidance for needle place.
77022 .......... Mri for tissue ablation ............ S 0335 N n/a 76394 Mri for tissue ablation.
77031 .......... Stereotact guide for brst bx ... X 0264 N n/a 76095 Stereotactic breast biopsy.
77032 .......... Guidance for needle, breast .. X 0263 N n/a
77417 .......... Radiology port film(s) ............. X 0260 N n/a
77421 .......... Stereoscopic x-ray guidance S 0257 N n/a
95873 .......... Guide nerv destr, elec stim ... S 0215 N n/a
95874 .......... Guide nerv destr, needle emg S 0215 N n/a
0054T .......... Bone surgery using computer S 0302 N n/a
0055T .......... Bone surgery using computer S 0302 N n/a
0056T .......... Bone surgery using computer S 0302 N n/a

(2) Image Processing Services processing. For example, we are processing services that we are
proposing to package payment for CPT proposing to package for CY 2008 do not
We are proposing to package payment
code 93325 (Doppler echocardiography need to be provided face-to-face with
for ‘‘image processing’’ HCPCS codes for
color flow velocity mapping (List the patient in the same encounter as the
CY 2008, specifically those codes that
are reported as supportive dependent separately in addition to codes for independent service. While this
services to process and integrate echocardiography)) because it is an approach to service delivery may be
diagnostic test data in the development image processing procedure, even administratively advantageous from a
of images, performed concurrently or though the code descriptor does not hospital’s perspective, providing
after the independent service is specifically indicate it as such. separate payment for each image
complete. We performed a broad search An image processing service processing service whenever it is
for such services, relying upon the processes and integrates diagnostic test performed is not consistent with
mstockstill on PROD1PC66 with PROPOSALS2

AMA’s CY 2007 book of CPT codes and data that were captured during another encouraging value-based purchasing
the CY 2007 book of Level II HCPCS independent procedure, usually one under the OPPS. We believe it is
codes, which identified specific codes that is separately payable under the important to package payment for
as ‘‘processing’’ codes. In addition, we OPPS. The image processing service is supportive dependent services that
performed a clinical review of all not necessarily provided on the same accompany independent services but
HCPCS codes to capture additional date of service as the independent that may not need to be provided face-
codes that we consider to be image procedure. In fact, several of the image to-face with the patient in the same

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42658 Federal Register / Vol. 72, No. 148 / Thursday, August 2, 2007 / Proposed Rules

encounter because the supportive proposed rule claims data. CPT code 0697 is $302.40. CPT code 93325 was
services utilize data that were collected 76376 was provided with CPT code billed with CPT code 93350
during the preceding independent 70450 less than 2 percent of the total (Echocardiography, transthoracic, real-
services and packaging their payment instances that CPT code 70450 was time with image documentation (2D),
encourages the most efficient use of billed. Therefore, as the frequency of with or without M-mode recording,
hospital resources. We are particularly CPT code 76376 provided in during rest and cardiovascular stress
concerned with any continuance of conjunction with CPT code 70450 test using treadmill, bicycle exercise
current OPPS payment policies that increases, the median cost for CPT code and/or pharmacologically induced
could encourage certain inefficient and 70450 would be more likely to reflect stress, with interpretation and report)
more costly service patterns. As stated that additional cost. approximately 43,000 times in the CY
above, packaging encourages hospitals The image processing services that we 2008 OPPS proposed rule data, and 5
to establish protocols that ensure that are proposing to package vary in their percent of the claims for CPT code
services are furnished only when they hospital resource costs. Resource cost 93325 reported CPT code 93350 on the
are medically necessary and to carefully was not a factor we considered when same date of service. Similarly, we note
scrutinize the services ordered by proposing to package supportive image that almost 35 percent of the claims for
practitioners to minimize unnecessary processing services. Notably, the CPT code 93350 also reported the image
use of hospital resources. Our standard majority of image processing services processing service described by CPT
methodology to calculate median costs that we are proposing to package have code 93325. Because CPT code 93350 is
packages the costs of dependent services modest median costs in relationship to designated by CPT as an add-on code to
with the costs of independent services the cost of the independent service that a stress test service, as would be
on ‘‘natural’’ single claims across they typically accompany. expected, we also observed that a CPT
different dates of service, so we are Several of these codes, including CPT code for a stress test, most commonly
confident that we would capture the code 76350 (Subtraction in conjunction CPT code 93017 (Cardiovascular stress
costs of the supportive image processing with contrast studies), are already test using maximal or submaximal
services for ratesetting when they are unconditionally (that is, always) treadmill or bicycle exercise,
packaged according to our CY 2008 packaged under the CY 2007 OPPS, continuous electrocardiographic
proposal, even if they were provided on where they have been assigned to status monitoring, and/or pharmacological
a different date than the independent indicator ‘‘N.’’ Payment for these stress; with physician supervision, with
procedure. services is made as part of the payment interpretation and report) was also
We list the image processing services for the separately payable, independent frequently reported on the same claim
that would be packaged for CY 2008 in services with which they are billed. No on the same day as both of the other two
Table 10 below. As these services separate payment is made for services CPT codes. CPT code 93017 is assigned
support the performance of an that we have assigned to status indicator
to APC 0100 (Cardiac Stress Tests) with
independent service, we believe it ‘‘N.’’ We are not proposing status
a proposed CY 2008 median cost of
would be appropriate to package their indicator changes for the four image
$180.10. Under our proposed policy for
payment into the OPPS payment for the processing services that were
the CY 2008, we are proposing to
independent service provided. unconditionally packaged for CY 2007.
We are proposing to change the status expand the packaging associated with
As many independent services may be
indicator for seven image processing the independent stress test and
reported with or without image
services from separately paid to echocardiography services so that
processing services, the cost of the
unconditionally packaged (status payment for the echocardiography color
image processing services will be
indicator ‘‘N’’) for the CY 2008 OPPS. flow velocity mapping, if performed,
reflected in the median cost for the
independent HCPCS code as a function We believe that these services are would be packaged. Specifically, we
of the frequency that image processing always integral to and dependent upon would package payment for CPT code
services are reported with that the independent service that they 93325, the echocardiography color flow
particular HCPCS code. Again, while support and, therefore, their payment velocity mapping, so that this
the median cost for a particular would be appropriately packaged. We dependent procedure would receive
independent procedure generally will have calculated the median costs on packaged payment through the separate
be higher as a result of added packaging, which the proposed CY 2008 payment OPPS payments for the independent
it could also change little or be lower rates are based using the packaging procedures, here the stress test and
because median costs typically do not status of each code as provided in Table echocardiography services. The
reflect small distributional changes and 10 below. As we discuss above in more payment rates for this example
because changes to the packaged HCPCS detail, this has the effect of both associated with our CY 2008 proposal
codes affect both the number and changing the median cost for the are outlined in Table 9 below.
composition of single bills and the mix independent service into which the cost In this case, the proposed CY 2008
of hospitals contributing those single of the dependent service is packaged median cost for APC 0100 to which CPT
bills. For example, CPT code 70450 and also of redistributing payment that code 93017 is assigned is $180.10. The
(Computed tomography, head or brain; would otherwise have been made proposed CY 2008 median cost for APC
without contrast material) may be separately for the service we are 0697, to which CPT code 93350 is
provided alone or in conjunction with proposing to newly package for CY assigned, is $302.40. The CY 2007
CPT code 76376 (3D rendering with 2008. median cost for APC 0100 is $154.83
interpretation and reporting of For example, CPT code 93325 and the median cost for APC 0697 is
mstockstill on PROD1PC66 with PROPOSALS2

computed tomography, magnetic (Doppler echocardiography color flow $97.61. However, as discussed in
resource imaging, ultrasound, or other velocity mapping (List separately in section II.A.4.c. of this proposed rule
tomographic modality; not requiring addition to codes for echocardiography)) concerning our general proposed
image postprocessing on an is assigned to APC 0697 (Level I packaging approach, the added effect of
independent workstation). In fact, CPT Echocardiogram Except the budget neutrality adjustment that
code 70450 was provided approximately Transesophageal) for CY 2007. The would result from the aggregate effects
1.5 million times based on CY 2008 proposed CY 2008 median cost of APC of the CY 2008 packaging proposal

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Federal Register / Vol. 72, No. 148 / Thursday, August 2, 2007 / Proposed Rules 42659

(were there no further budget neutrality demonstrate the overall impact of packaging changes that we are
adjustment for other reasons) packaging image processing services on proposing by classes of hospitals, and
significantly changes the final payment payment to any given hospital because the OPPS Hospital-Specific Impacts—
rates relative to the median cost each individual hospital’s case-mix and Provider-Specific Data file presents our
estimates. Table 9 presents a billing patterns would be different. The estimates of CY 2008 hospital payment
comparison of payments for CPT codes overall impact of packaging payment for for those hospitals we include in our
93017, 93350, and 93325 in CY 2007, CPT code 93325, as well as the ratesetting and payment simulation
where payment for CPT code 93325 is proposed packaging changes that we are database. The hospital-specific impacts
made separately, to our CY 2008 proposing for CY 2008, can only be file can be found on the CMS Web site
proposed payments for CPT codes assessed in the aggregate for classes of at http://www.cms.hhs.gov/
93017, 93350, and 93325, where hospitals. Section XXII.B. of this HospitalOutpatientPPS/ under
payment for CPT code 93325 would be proposed rule displays the overall supporting documentation for this
packaged. This example cannot impact of APC weight recalibration and proposed rule.

TABLE 9.—EXAMPLE OF THE EFFECTS OF THE CY 2008 PACKAGING PROPOSAL ON PAYMENT FOR CPT CODES 93325,
93350, AND 93017
Sum of CY
Sum of CY 2008 proposed
2007 payment
HCPCS code Short descriptor payment
(93325 paid (93325 Pack-
separately) aged)

93325 ......................... Doppler color flow add-on (dependent service) .............................................................. $98.18 $0.00
93350 ......................... Echo transthoracic (independent service) ....................................................................... 197.64 306.18
93017 ......................... Cardiovascular stress test (independent service) ........................................................... 155.74 182.36

Total Payment .... .......................................................................................................................................... 451.56 488.54

The estimated overall impact of these processing services more or less same claim. We expect to carefully
proposed changes presented in section frequently, the data would show such a monitor any changes in billing practices
XXII.B. of this proposed rule is based on change in practice in future years and on a service-specific and hospital-
the assumption that hospital behavior that change would be reflected in future specific basis to determine whether
would not change with regard to how budget neutrality adjustments. there is reason to request that QIOs
often these dependent image processing As we indicated earlier, in all cases review the quality of care furnished or
services are performed in conjunction we are proposing that hospitals that to request that Program Safeguard
with the independent services. To the furnish the image processing procedure Contractors review the claims against
extent that hospitals could change their in association with the independent the medical record.
behavior and perform the image service must bill both services on the

TABLE 10.—IMAGE PROCESSING HCPCS CODES PROPOSED FOR PACKAGED PAYMENT IN CY 2008
Inactive CPT
code effective 1/
1/08 or earlier
HCPCS CY 2007 Proposed CY Short descriptor of the inac-
Short descriptor CY 2007 SI (listed on the
code APC 2008 SI tive CPT code
same line as its
replacement
code

76125 ......... Cine/video x-rays add-on ....... X .................. 0260 ............ N


76350 ......... Special x-ray contrast study .. N ................. n/a ............... N
76376 ......... 3d render w/o postprocess .... X .................. 0340 ............ N
76377 ......... 3d rendering w/postprocess .. S .................. 0282 ............ N
93325 ......... Doppler color flow add-on ...... S .................. 0697 ............ N
93613 ......... Electrophys map 3d, add-on .. T .................. 0087 ............ N
95957 ......... EEG digital analysis ............... S .................. 0214 ............ N
0159T ......... Cad breast MRI ..................... N ................. n/a ............... N
0174T ......... Cad cxr remote ...................... N .................. n/a ............... N ................. 0152T Computer chest add-on.
0175T ......... Cad cxr with interp ................. N .................. n/a ............... N ................. 0152T Computer chest add-on.
G0288 ........ Recon, CTA for surg plan ...... S .................. 0417 ............ N

(3) Intraoperative Services independent procedures. We performed HCPCS codes to capture additional
mstockstill on PROD1PC66 with PROPOSALS2

a broad search for possible supportive diagnostic testing or other


We are proposing to package payment intraoperative HCPCS codes, relying minor intraoperative or intraprocedural
for ‘‘intraoperative’’ HCPCS codes for upon the AMA’s CY 2007 book of CPT codes that are not necessarily identified
CY 2008, specifically those codes that codes and the CY 2007 book of Level II as ‘‘intraoperative’’ codes. For example,
are reported for supportive dependent HCPCS codes, to identify specific codes we are proposing to package payment
diagnostic testing or other minor as ‘‘intraoperative’’ codes. Furthermore, for CPT code 95955
procedures performed during we performed a clinical review of all (Electroencephalogram (EEG) during

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42660 Federal Register / Vol. 72, No. 148 / Thursday, August 2, 2007 / Proposed Rules

nonintracranial surgery (e.g., carotid resource costs. Resource cost was not a were billed without any other service
surgery)) because it is a minor factor we considered when determining assigned to status indicator ‘‘S,’’ ‘‘T,’’
intraoperative diagnostic testing which supportive intraoperative ‘‘V,’’ or ‘‘X’’ reported on the same date
procedure even though the code procedures to package. of service, under our proposal we would
descriptor does not indicate it as such. The codes we are proposing to not treat the IMT study as a dependent
Although we use the term identify as intraoperative services for service for purposes of payment. If we
‘‘intraoperative’’ to categorize these CY 2008 that would receive packaged were to continue to unconditionally
procedures, we also have included payment under the OPPS are listed in package payment for this procedure,
supportive dependent services in this Table 12 below. treating it as a dependent service,
group that are provided during an Several of these codes, including CPT hospitals would receive no payment at
independent procedure, although that code 93640 (Electrophysiologic all when providing this service alone,
procedure may not necessarily be a evaluation of single or dual chamber although the procedure would not be
surgical procedure. These dependent pacing cardioverter-defibrillator leads functioning as an intraoperative service
services clearly fit into this category including defibrillation threshold in that case. However, according to our
because they are provided during, and evaluation (induction of arrhythmia, proposal, its conditionally packaged
are integral to, an independent evaluation of sensing and pacing for status as a ‘‘special’’ packaged code
procedure, like all the other arrhythmia termination) at the time of would allow payment to be provided for
intraoperative codes, but the initial implantation or replacement), are this ‘‘Q’’ status IMT study when
independent procedure they accompany already unconditionally (that is, always) provided alone, in which case it would
may not necessarily be a surgical packaged under the CY 2007 OPPS, be treated as an independent service
procedure. For example, we are where they have been assigned to status under these limited circumstances. On
proposing to package HCPCS code indicator ‘‘N.’’ Payment for these the other hand, when this service is
G0268 (Removal of impacted cerumen services is made through the payment furnished as an intraoperative
(one or both ears) by physician on same for the separately payable, independent procedure on the same day and in the
date of service as audiologic function services with which they are billed. No same hospital as independent,
testing). While specific audiologic separate payment is made for services separately paid services that are
function testing procedures are not that we have assigned to status indicator assigned to status indicator ‘‘S,’’ ‘‘T,’’
surgical procedures performed in an ‘‘N.’’ We are not proposing status ‘‘V,’’ or ‘‘X,’’ we are proposing to
operating room, they are independent indicator changes for the five diagnostic package payment for it as a dependent
procedures that are separately payable intraoperative services that were service. In all cases, we are proposing
under the OPPS, and HCPCS code unconditionally packaged for CY 2007. that hospitals that furnish independent
We are proposing to change the status services on the same date as this IMT
G0268 is a supportive dependent service
indicator for 34 intraoperative services procedure must bill them all on the
always provided in association with one
from separately paid to unconditionally same claim. We believe that when
of these independent services. All packaged (status indicator ‘‘N’’) for the
references to ‘‘intraoperative’’ below dependent and independent services are
CY 2008 OPPS. We believe that these furnished on the same date and in the
refer to services that are usually or services are always integral to and
always provided during a surgical same facility, they are part of a single
dependent upon the independent complete hospital outpatient service
procedure or other independent services that they support and,
procedure. that is reported with more than one
therefore, their payment would be HCPCS code, and no separate payment
By definition, a service that is appropriately packaged because they should be made for the intraoperative
performed intraoperatively is provided would generally be performed on the procedure that supports the
during and, therefore, on the same date same date and in the same hospital as independent service.
of service as another procedure that is the independent services. We have calculated the median costs
separately payable under the OPPS. We are also proposing to change the on which the proposed CY 2008
Because these intraoperative services status indicator for one intraoperative payment rates are based using the
support the performance of an procedure from unconditionally packaging status of each code as
independent procedure and they are packaged to conditionally packaged provided in Table 12 below. As we
provided in the same operative session (status indicator ‘‘Q’’) as a ‘‘special’’ discuss above in more detail, this has
as the independent procedure, we packaged code for the CY 2008 OPPS, the effect of both changing the median
believe it would be appropriate to specifically, CPT code 0126T (Common cost for the independent service into
package their payment into the OPPS carotid intima-media thickness (IMT) which the cost of the dependent service
payment for the independent procedure study for evaluation of atherosclerotic is packaged and also of redistributing
performed. Therefore, we are not burden or coronary heart disease risk payment that would otherwise have
proposing to package payment for CY factor assessment). This code was been made separately for the service we
2008 for those diagnostic services, such discussed in the past with the Packaging are proposing to newly package for CY
as CPT code 93005 (Electrocardiogram, Subcommittee of the APC Panel which 2008.
routine ECG with at least 12 leads; determined that, consistent with its For example, CPT code 92547 (Use of
tracing only, without interpretation and code descriptor as a separate procedure, vertical electrodes (List separately in
report) that are sometimes or only rarely this procedure could sometimes be addition to code for primary procedure))
performed and reported as supportive provided alone, without any other OPPS is assigned to APC 0363 (Level I
services in association with other services on the claim. We believe that Otorhinolaryngologic Function Tests)
mstockstill on PROD1PC66 with PROPOSALS2

independent procedures. Instead, we are this procedure would usually be for CY 2007. The proposed CY 2008
proposing to include those HCPCS provided by a hospital in conjunction median cost of APC 0363 is $53.73. CPT
codes that are usually or always with another independent procedure on code 92547 was billed with CPT code
performed intraoperatively, based upon the same date of service but may 92541 (Spontaneous nystagmus test,
our review of the codes described above. occasionally be provided without including gaze and fixation nystagmus,
The intraoperative services that we are another independent service. As a with recording) 6,056 times in the CY
proposing to package vary in hospital ‘‘special’’ packaged code, if the study 2008 OPPS proposed rule data, and 97

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percent of the claims for CPT code CPT code 92541 is assigned, is $53.73, any given hospital because each
92547 reported CPT code 92541 on the while the CY 2007 median cost of this individual hospital’s case-mix and
same date of service. Similarly, we note APC with status indicator ‘‘S’’ and to billing patterns would be different. The
that over half of the claims for CPT code which both CPT codes 92547 and 02541 overall impact of packaging payment for
92541 also reported the service are assigned is $52.09. However, as CPT code 92547, as well as all other
described by CPT code 92547. Under discussed in the section II.A.4. of this packaging changes we are proposing for
our proposed policy for the CY 2008 proposed rule concerning our general CY 2008, can only be assessed in the
OPPS, we are proposing to expand the proposed packaging approach, the aggregate for classes of hospitals.
packaging associated with the added effect of the budget neutrality Section XXII.B. of this proposed rule
independent nystagmus test so that adjustment that would result from the
displays the overall impact of APC
payment for the use of vertical aggregate effects of the complete CY
weight recalibration and packaging
electrodes, if used, would be packaged. 2008 packaging proposal (were there no
Specifically, we would package further budget neutrality adjustment for changes we are proposing by classes of
payment for CPT code 92547 so that other reasons) significantly changes the hospitals, and the OPPS Hospital-
under the CY 2008 OPPS the commonly final payment rates relative to median Specific Impacts—Provider-Specific
billed dependent procedure, the use of cost estimates. Table 11 presents a Data file presents our estimates of CY
vertical electrodes, would receive comparison of payment for CPT codes 2008 hospital payment for those
packaged payment through the separate 92541 and 92547 in CY 2007, where hospitals we include in our ratesetting
OPPS payment for the independent CPT code 92547 is paid separately, to and payment simulation database. The
procedure, in this case the nystagmus our CY 2008 proposed payment for CPT hospital-specific impacts file can be
test. The payment rates for this example codes 92541 and 92547, where payment found on the CMS Web site at
associated with our CY 2008 proposal for CPT code 92547 would be packaged. http://www.cms.hhs.gov/
are outlined in Table 11 below. This example cannot demonstrate the HospitalOutpatientPPS/ under
In this case, the proposed CY 2008 overall impact of packaging supporting documentation for this
median cost for APC 0363, to which intraoperative services on payment to proposed rule.

TABLE 11.— EXAMPLE OF THE EFFECTS OF THE CY 2008 PACKAGING PROPOSAL ON PAYMENT FOR CPT CODES
92541 AND 92547
Sum of CY
Sum of CY 2008 proposed
2007 payment
HCPCS Code Short descriptor payment
(92547 paid (92547
separately) packaged)

92541 ......................... Spontaneous nystagmus study (independent service) ................................................... $52.40 $54.41
92547 ......................... Supplemental electrical test (dependent service) ........................................................... 52.40 0.00

Total Payment .................................................................................................................................................. 104.80 54.41

The estimated overall impact of these with respect to intraoperative services As we indicated earlier, in all cases
proposed changes is based on the in particular, we believe that hospitals we are proposing that hospitals that
assumption that hospital behavior are limited in the extent to which they furnish the intraoperative procedure on
would not change with regard to when could change their behavior with regard the same date as the independent
these dependent intraoperative services to how they furnish these services. By service must bill both services on the
are performed on the same date and by their definition, these intraoperative same claim. We expect to carefully
the same hospital that performs the services generally must be furnished on monitor any changes in billing practices
independent services. To the extent that the same date and at the same operative on a service-specific and hospital-
hospitals could change their behavior location as the independent procedure specific basis to determine whether
and perform the intraoperative services in order to be considered intraoperative.
there is reason to request that QIOs
more or less frequently, on subsequent For these codes, we assume that both
review the quality of care furnished or
dates, or at settings outside of the the dependent and independent services
hospital, the data would show such a would be furnished on the same date in to request that Program Safeguard
change in practice in future years and the same hospital, and hospitals should Contractors review the claims against
that change would be reflected in future bill them on the same claim with the the medical record.
budget neutrality adjustments. However, same date of service.

TABLE 12.—INTRAOPERATIVE HCPCS CODES PROPOSED FOR PACKAGED PAYMENT IN CY 2008


HCPCS Proposed CY
Short descriptor CY 2007 SI CY 2007 APC
Code 2008 SI

20975 .......... Electrical bone stimulation ...................................................................................... X .................. 0340 N


mstockstill on PROD1PC66 with PROPOSALS2

31620 .......... Endobronchial us add-on ........................................................................................ S .................. 0670 N


37250 .......... Iv us first vessel add-on ......................................................................................... S .................. 0416 N
37251 .......... Iv us each add vessel add-on ................................................................................ S .................. 0416 N
58110 .......... Bx done w/colposcopy add-on ............................................................................... T .................. 0188 N
67299 .......... Eye surgery procedure ........................................................................................... T .................. 0235 N
73530 .......... X-ray exam of hip ................................................................................................... X .................. 0261 N
74300 .......... X-ray bile ducts/pancreas ....................................................................................... X .................. 0263 N

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42662 Federal Register / Vol. 72, No. 148 / Thursday, August 2, 2007 / Proposed Rules

TABLE 12.—INTRAOPERATIVE HCPCS CODES PROPOSED FOR PACKAGED PAYMENT IN CY 2008—Continued


HCPCS Proposed CY
Short descriptor CY 2007 SI CY 2007 APC
Code 2008 SI

74301 .......... X-rays at surgery add-on ........................................................................................ X .................. 0263 N


75898 .......... Follow-up angiography ........................................................................................... X .................. 0263 N
78020 .......... Thyroid met uptake ................................................................................................. S .................. 0399 N
78478 .......... Heart wall motion add-on ....................................................................................... S .................. 0399 N
78480 .......... Heart function add-on ............................................................................................. S .................. 0399 N
78496 .......... Heart first pass add-on ........................................................................................... S .................. 0399 N
92547 .......... Supplemental electrical test .................................................................................... X .................. 0363 N
92978 .......... Intravasc us, heart add-on ...................................................................................... S .................. 0670 N
92979 .......... Intravasc us, heart add-on ...................................................................................... S .................. 0416 N
93320 .......... Doppler echo exam, heart ...................................................................................... S .................. 0697 N
93321 .......... Doppler echo exam, heart ...................................................................................... S .................. 0697 N
93571 .......... Heart flow reserve measure ................................................................................... S .................. 0670 N
93572 .......... Heart flow reserve measure ................................................................................... S .................. 0416 N
93609 .......... Map tachycardia, add-on ........................................................................................ T .................. 0087 N
93613 .......... Electrophys map 3d, add-on .................................................................................. T .................. 0087 N
93621 .......... Electrophysiology evaluation .................................................................................. T .................. 0085 N
93622 .......... Electrophysiology evaluation .................................................................................. T .................. 0085 N
93623 .......... Stimulation, pacing heart ........................................................................................ T .................. 0087 N
93631 .......... Heart pacing, mapping ........................................................................................... T .................. 0087 N
93640 .......... Evaluation heart device .......................................................................................... N ................. n/a N
93641 .......... Electrophysiology evaluation .................................................................................. N ................. n/a N
93662 .......... Intracardiac ecg (ice) .............................................................................................. S .................. 0670 N
95829 .......... Surgery electrocorticogram ..................................................................................... S .................. 0214 N
95920 .......... Intraop nerve test add-on ....................................................................................... S .................. 0216 N
95955 .......... EEG during surgery ................................................................................................ S .................. 0213 N
95999 .......... Neurological procedure ........................................................................................... S .................. 0215 N
96020 .......... Functional brain mapping ....................................................................................... X .................. 0373 N
0126T .......... Chd risk imt study ................................................................................................... N ................. n/a Q
0173T .......... Iop monit io pressure .............................................................................................. N ................. n/a N
G0268 .......... Removal of impacted wax md ................................................................................ X .................. 0340 N
G0275 .......... Renal angio, cardiac cath ....................................................................................... N .................. n/a N
G0278 .......... Iliac art angio, cardiac cath .................................................................................... N ................. n/a N

(4) Imaging Supervision and designated as ‘radiological supervision CPT codes in other series that describe
Interpretation Services and interpretation’.’’ In addition, CPT similar procedures that we are
We are proposing to change the guidance notes that, ‘‘When a physician proposing to include in the group of
packaging status of many imaging performs both the procedure and imaging supervision and interpretation
supervision and interpretation codes for provides imaging supervision and codes proposed for packaging under the
CY 2008. We define ‘‘imaging interpretation, a combination of CY 2008 OPPS. For example, CPT code
supervision and interpretation codes’’ as procedure codes outside the 70000 93555 (Imaging supervision,
HCPCS codes for services that are series and imaging supervision and interpretation and report for injection
defined as ‘‘radiological supervision and interpretation codes are to be used.’’ In procedure(s) during cardiac
interpretation’’ in the radiology series, the hospital outpatient setting, the catheterization; ventricular and/or atrial
70000 through 79999, of the AMA’s CY concept of one or more than one angiography) whose payment under the
2007 book of CPT codes, with the physician performing related OPPS is currently packaged, is
addition of some services in other code procedures does not apply to the commonly reported with an injection
ranges of CPT, Category III CPT tracking reporting of these codes, but the procedure code, such as CPT code
codes, or Level II HCPCS codes that are radiological supervision and 93543 (Injection procedure during
clinically similar or directly crosswalk interpretation codes clearly are cardiac catheterization; for selective left
to codes defined as radiological established for reporting in association ventricular or left atrial angiography),
supervision and interpretation services with other procedural services outside whose payment is also currently
in the CPT radiology range. We also the CPT 70000 series. Because these packaged under the OPPS, and a cardiac
included HCPCS codes that existed in imaging supervision and interpretation catheterization procedure code, such as
CY 2006 but were deleted and were codes are always reported for imaging CPT code 93526 (Combined right heart
replaced in CY 2007. We included the services that support the performance of catheterization and retrograde left heart
CY 2006 HCPCS codes because we are an independent procedure and they are, catheterization), that is separately paid.
proposing to use the CY 2006 claims by definition, always provided in the In the case of cardiac catheterization,
data to calculate the CY 2008 OPPS same operative session as the CPT code 93555 describes an imaging
mstockstill on PROD1PC66 with PROPOSALS2

median costs on which the CY 2008 independent procedure, we believe that supervision and interpretation service
payment rates would be based. it would be appropriate to package their in support of the cardiac catheterization
In its discussion of ‘‘radiological payment into the OPPS payment for the procedure, and this dependent service is
supervision and interpretation,’’ CPT independent procedure performed. clinically quite similar to radiological
indicates that ‘‘when a procedure is In addition to radiological supervision supervision and interpretation codes in
performed by two physicians, the and interpretation codes in the the radiology range of CPT. Payment for
radiologic portion of the procedure is radiology range of CPT codes, there are the cardiac catheterization imaging

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Federal Register / Vol. 72, No. 148 / Thursday, August 2, 2007 / Proposed Rules 42663

supervision and interpretation services ‘‘special’’ packaged codes would allow For example, CPT code 72265
has been packaged since the beginning payment to be provided for these ‘‘Q’’ (Myelography, lumbosacral, radiological
of the OPPS. Therefore, in developing status imaging supervision and supervision and interpretation) is
this proposal for the CY 2008 proposed interpretation services as independent assigned to APC 0274 (Myelography) for
rule, we conducted a comprehensive services in these limited circumstances, CY 2007. The proposed CY 2008 median
clinical review of all Category I and and for which payment for the cost of APC 0274 is $245.38. CPT code
Category III CPT codes and Level II accompanying minor procedure would 72265 was billed with CPT code 72132
HCPCS codes to identify all codes that be packaged. However, when these (Computed tomography, lumbar spine;
describe imaging supervision and imaging supervision and interpretation with contrast material) 20,233 times in
interpretation services. The codes we dependent services are furnished on the the CY 2008 OPPS proposed rule data,
are proposing to identify as imaging same day and in the same hospital as and 62 percent of the claims for CPT
supervision and interpretation codes for independent separately paid services, code 72265 reported CPT code 72132 on
CY 2008 that would receive packaged specifically, any service assigned to the same date of service. Similarly, we
payment are listed in Table 14 below. status indicator ‘‘S,’’ ‘‘T,’’ ‘‘V,’’ or ‘‘X,’’ note that over half of the claims for CPT
Several of these codes, including CPT we are proposing to package payment code 72132 also reported the
code 93555 discussed above, are already for them as dependent services. In all myelography service described by CPT
unconditionally (that is, always) cases, we are proposing that hospitals code 72265. As would be expected, we
packaged under the CY 2007 OPPS, that furnish the independent services on also observed that a CPT code for the
where they have been assigned to status the same date as the dependent services clinically necessary intrathecal
indicator ‘‘N.’’ Payment for these must bill them all on the same claim. injection, specifically CPT code 62284
services is made as part of the payment We believe that when the dependent (Injection procedure for myelography
for the separately payable, independent and independent services are furnished and/or computed tomography, spinal
services with which they are billed. No on the same date and in the same (other than C1–C2 and posterior fossa))
separate payment is made for services hospital, they are part of a single was also frequently reported on the
that we have assigned to status indicator complete hospital outpatient service same claim on the same day as both of
‘‘N.’’ We are not proposing status that is reported with more than one the other two CPT codes. Payment for
indicator changes for the six imaging HCPCS code, and no separate payment CPT code 62284 is already packaged
supervision and interpretation services should be made for the imaging under the OPPS for CY 2007, as is
that were unconditionally packaged for supervision and interpretation service payment for most HCPCS codes that
CY 2007. that supports the independent service. describe dependent injection
We are proposing to change the status In the case of services for which we procedures that accompany
indicator for 33 imaging supervision are proposing conditional packaging, we independent procedures. Under our
and interpretation services from would expect that, although these proposed policy for the CY 2008 OPPS,
separately paid to unconditionally services would always be performed in we are proposing to expand the
packaged (status indicator ‘‘N’’) for the the same session as another procedure, packaging associated with the
CY 2008 OPPS. We believe that these in some cases that other procedure’s independent spinal computed
services are always integral to and payment would also be packaged. For tomography (CT) scan so that payment
dependent upon the independent example, CPT code 73525 (Radiological for both the associated injection
services that they support and, examination, hip, arthrography, procedure and the related myelography
therefore, their payment would be radiological supervision and
service, if performed, would be
appropriately packaged because they interpretation) and CPT code 27093
packaged. Specifically, we would
would generally be performed on the (Injection procedure for hip
same date and in the same hospital as package payment for CPT code 72265
arthrography; without anesthesia) could
the independent services. when it appears on the same claim with
be provided in a single hospital
We are proposing to change the status a separately paid service such as CPT
outpatient encounter and reported as
indicator for 93 imaging supervision code 72132, so that, under the CY 2008
the only two services on a claim. In the
and interpretation services from OPPS, both commonly billed dependent
case where only these two services were
separately paid to conditionally procedures, the injection procedure and
performed, the conditionally packaged
packaged (status indicator ‘‘Q’’) as the myelography service, would receive
status of CPT code 73525 would
‘‘special’’ packaged codes for the CY appropriately allow for its separate packaged payment through the separate
2008 OPPS. These services may payment as an independent imaging OPPS payment for the independent
occasionally be provided at the same supervision and interpretation procedure, the CT scan. The payment
time and at the same hospital with one arthrography service, into which rates for this example associated with
or more other procedures for which payment for the dependent injection our CY 2008 proposal are outlined in
payment is currently packaged under procedure would be packaged. Table 13 below. The proposed
the OPPS, most commonly injection We have calculated the median costs conditionally packaged status for CPT
procedures, and in these cases we on which the proposed CY 2008 code 72265 would ensure that if
would not treat the imaging supervision payment rates are based using the lumbosacral myelography was
and interpretation services as dependent packaging status of each code as performed alone, separate payment for
services for purposes of payment. If we provided in Table 14 below. As we the myelography service would be made
were to unconditionally package discuss above in more detail, this has under the OPPS as the myelography
payment for these imaging supervision the effect of both changing the median service would not be a dependent
mstockstill on PROD1PC66 with PROPOSALS2

and interpretation services as dependent cost for the independent service into service in that situation.
services, hospitals would receive no which the cost of the dependent service The proposed policy would result in
payment at all for providing the imaging is packaged and also of redistributing no separate payment for CPT code
supervision and interpretation service payment that would otherwise have 72265 when it is billed on the same day
and the other minor procedure(s). been made separately for the service we and by the same hospital as any
However, according to our proposal, are proposing to newly package for CY separately paid service, such as CPT
their conditional packaging status as 2008. code 72132. Moreover, as discussed

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42664 Federal Register / Vol. 72, No. 148 / Thursday, August 2, 2007 / Proposed Rules

later in this section, the proposed policy is assigned is $156.10. However, as mix and billing patterns would be
would provide packaged payment for discussed in section II.A.4.c. of this different. The overall impact of
the contrast agent that is required to proposed rule concerning our general packaging payment CPT code 77265
perform the independent computed proposed packaging approach, the when it appears with any other
tomography service. For purposes of the added effect of the budget neutrality separately paid service, as well as all
example in Table 13 below, we include adjustment that would result from the other packaging changes that we are
the payment for HCPCS code Q9947 aggregate effects of the CY 2008 proposing for CY 2008, can only be
(Low osmolar contrast material 200–249 packaging proposal (were there no assessed in aggregate for classes of
mg/ml iodine concentration, per ml) further budget neutrality adjustment for hospitals. Section XXII.B. of this
which was reported on about one-third other reasons) significantly changes the
proposed rule displays the overall
of the CY 2008 proposed rule claims for final payment rates relative to median
impact of APC weight recalibration and
CPT code 72132. To calculate the CY cost estimates. Table 13 presents a
2007 payment for the contrast agent, we comparison of payment for CPT codes packaging changes we are proposing by
multiplied the mean number of units 72132 and 72265 and HCPCS code classes of hospitals, and the OPPS
per day from our CY 2008 proposed rule Q9947 in CY 2007, where CPT code Hospital-Specific Impacts—Provider-
data (48.3) by the April 2007 per unit 72265 and HCPCS code Q9947 are paid Specific Data file presents our estimates
payment rate for HCPCS code Q9947 separately, to our CY 2008 proposed of CY 2008 hospital payment for those
($1.33). payment for CPT codes 72132 and hospitals we include in our ratesetting
In this case, the proposed CY 2008 77265 and HCPCS code Q9947, where and payment simulation database. The
median cost for APC 0316 (Level II payment for CPT code 72265 and hospital-specific impacts file can be
Computed Tomography with Contrast) HCPCS code Q9947 would be packaged. found on the CMS Web site at http://
to which CPT code 72132 is assigned is This example cannot demonstrate the www.cms.hhs.gov/
$741.80. The CY 2007 median cost for overall impact of packaging imaging HospitalOutpatientPPS/ under
APC 0283 to which CPT code 72132 is supervision and interpretation services supporting documentation for this
assigned is $249.48 and the median cost on payment to any given hospital proposed rule.
of APC 0274 to which CPT code 72265 because each individual hospital’s case-

TABLE 13.—EXAMPLE OF THE EFFECTS OF THE CY 2008 PACKAGING PROPOSAL ON PAYMENT FOR CPT CODES 72265
AND 72132 AND HCPCS CODE Q9947

Sum of CY
Sum of CY 2008 proposed
2007 payment
HCPCS code Short descriptor payment
(72265 paid (72265 pack-
separately) aged)

62284 ................................................................... Injection for myelogram (dependent service) ........................ $0.00 $0.00
Q9947* ................................................................. LOCM 200–249mg/ml iodine, 1ml (dependent service) ....... 64.24 0.00
72265 ................................................................... Contrast x-ray lower spine (dependent service) ................... 157.01 0.00
72132 ................................................................... CT lumbar spine w/dye (independent service) ..................... 250.94 751.09

Total Payment .............................................. ................................................................................................ 472.14 751.09


* Based on the mean number of units per day from our CY 2008 proposed rule data (48.3) and the April 2007 per unit payment rate for Q9947
($1.33).

The estimated overall impact of these believe that hospitals are limited in the hospital, and hospitals should bill them
changes presented in XXII.B. of this extent to which they could change their on the same claim with the same date
proposed rule is based on the behavior with regard to how they of service.
assumption that hospital behavior furnish these services. By their As we indicated earlier in this
would not change with regard to when definition, these imaging and
section, in all cases we are proposing
these dependent services are performed supervision services generally must be
that hospitals that furnish the imaging
on the same date and by the same furnished on the same date and at the
hospital that performs the independent same operative location as the supervision and interpretation service
services. To the extent that hospitals independent procedure in order for the on the same date as the independent
could change their behavior and imaging service to meaningfully service must bill both services on the
perform the imaging supervision and contribute to the diagnosis or treatment same claim. We expect to carefully
interpretation services more or less of the patient. For those radiological monitor any changes in billing practices
frequently, on subsequent dates, or at supervision and interpretation codes in on a service-specific and hospital-
settings outside of the hospital, the data the radiology range of CPT in particular, specific basis to determine whether
would show such a change in practice if the same physician is able to perform there is reason to request that QIOs
in future years and that change would both the procedure and the supervision review the quality of care furnished or
be reflected in future budget neutrality and interpretation as stated by CPT, we to request that Program Safeguard
mstockstill on PROD1PC66 with PROPOSALS2

adjustments. However, with respect to assume that both the dependent and Contractors review the claims against
the imaging supervision and independent services would be the medical record.
interpretation services in particular, we furnished on the same date in the same

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Federal Register / Vol. 72, No. 148 / Thursday, August 2, 2007 / Proposed Rules 42665

TABLE 14.—IMAGING SUPERVISION AND INTERPRETATION HCPCS CODES PROPOSED FOR PACKAGED PAYMENT IN CY
2008
Inactive
CPT code
effective 1/
1/2008 or
Proposed Proposed
HCPCS CY 2007 CY 2007 earlier (list- Short descriptor of the
Short descriptor CY 2008 CY 2008
code SI APC ed on the inactive CPT code
SI APC same line
as its re-
placement
code)

70010 ....... Contrast x-ray of brain ................... S .............. 0274 Q .............. 0274
70015 ....... Contrast x-ray of brain ................... S .............. 0274 Q .............. 0274
70170 ....... X-ray exam of tear duct ................. X .............. 0264 Q .............. 0264
70332 ....... X-ray exam of jaw joint .................. S .............. 0275 Q .............. 0275
70373 ....... Contrast x-ray of larynx ................. X .............. 0263 Q .............. 0263
70390 ....... X-ray exam of salivary duct ........... X .............. 0263 Q .............. 0263
71040 ....... Contrast x-ray of bronchi ............... X .............. 0263 Q .............. 0263
71060 ....... Contrast x-ray of bronchi ............... X .............. 0263 Q .............. 0263
71090 ....... X-ray & pacemaker insertion ......... X .............. 0272 N .............. n/a
72240 ....... Contrast x-ray of neck spine .......... S .............. 0274 Q .............. 0274
72255 ....... Contrast x-ray, thorax spine .......... S .............. 0274 Q .............. 0274
72265 ....... Contrast x-ray, lower spine ............ S .............. 0274 Q .............. 0274
72270 ....... Contrast x-ray, spine ...................... S .............. 0274 Q .............. 0274
72275 ....... Epidurography ................................ S .............. 0274 N .............. n/a
72285 ....... X-ray c/t spine disk ........................ S .............. 0388 Q .............. 0388
72291 ....... Perq vertebroplasty, fluor ............... S .............. 0274 N .............. n/a 76012 Perq vertebroplasty,
fluor.
72292 ....... Perq vertebroplasty, ct ................... S .............. 0274 N .............. n/a 76013 Perq vertebroplasty,
ct.
72295 ....... X-ray of lower spine disk ............... S .............. 0388 Q .............. 0388
73040 ....... Contrast x-ray of shoulder ............. S .............. 0275 Q .............. 0275
73085 ....... Contrast x-ray of elbow .................. S .............. 0275 Q .............. 0275
73115 ....... Contrast x-ray of wrist .................... S .............. 0275 Q .............. 0275
73525 ....... Contrast x-ray of hip ...................... S .............. 0275 Q .............. 0275
73542 ....... X-ray exam, sacroiliac joint ............ S .............. 0275 Q .............. 0275
73580 ....... Contrast x-ray of knee joint ........... S .............. 0275 Q .............. 0275
73615 ....... Contrast x-ray of ankle .................. S .............. 0275 Q .............. 0275
74190 ....... X-ray exam of peritoneum ............. S .............. 0264 Q .............. 0264
74235 ....... Remove esophagus obstruction .... S .............. 0257 N .............. n/a
74305 ....... X-ray bile ducts/pancreas .............. X .............. 0263 N .............. n/a
74320 ....... Contrast x-ray of bile ducts ............ X .............. 0264 Q .............. 0264
74327 ....... X-ray bile stone removal ................ S .............. 0296 N .............. n/a
74328 ....... X-ray bile duct endoscopy ............. N .............. n/a N .............. n/a
74329 ....... X-ray for pancreas endoscopy ....... N .............. n/a N .............. ma
74330 ....... X-ray bile/panc endoscopy ............ N .............. n/a N .............. n/a
74340 ....... X-ray guide for GI tube .................. X .............. 0272 N .............. n/a
74350 ....... X-ray guide, stomach tube ............. X .............. 0263 N .............. n/a
74355 ....... X-ray guide, intestinal tube ............ X .............. 0263 N .............. n/a
74360 ....... X-ray guide, GI dilation .................. S .............. 0257 N .............. n/a
74363 ....... X-ray, bile duct dilation .................. S .............. 0297 N .............. n/a
74425 ....... Contrast x-ray, urinary tract ........... S .............. 0278 Q .............. 0278
74430 ....... Contrast x-ray, bladder .................. S .............. 0278 Q .............. 0278
74440 ....... X-ray, male genital tract ................. S .............. 0278 Q .............. 0278
74445 ....... X-ray exam of penis ....................... S .............. 0278 Q .............. 0278
74450 ....... X-ray, urethra/bladder .................... S .............. 0278 Q .............. 0278
74455 ....... X-ray, urethra/bladder .................... S .............. 0278 Q .............. 0278
74470 ....... X-ray exam of kidney lesion .......... X .............. 0263 Q .............. 0263
74475 ....... X-ray control, cath insert ................ S .............. 0297 Q .............. 0297
74480 ....... X-ray control, cath insert ................ S .............. 0296 Q .............. 0296
74485 ....... X-ray guide, GU dilation ................ S .............. 0296 Q .............. 0296
74740 ....... X-ray, female genital tract .............. X .............. 0264 Q .............. 0264
74742 ....... X-ray, fallopian tube ....................... X .............. 0264 N.
75600 ....... Contrast x-ray exam of aorta ......... S .............. 0280 Q .............. 0280
75605 ....... Contrast x-ray exam of aorta ......... S .............. 0280 Q .............. 0280
75625 ....... Contrast x-ray exam of aorta ......... S .............. 0280 Q .............. 0280
mstockstill on PROD1PC66 with PROPOSALS2

75630 ....... X-ray aorta, leg arteries ................. S .............. 0280 Q .............. 0280
75635 ....... Ct angio abdominal arteries ........... S .............. 0662 Q .............. 0662
75650 ....... Artery x-rays, head & neck ............ S .............. 0280 Q .............. 0280
75658 ....... Artery x-rays, arm .......................... S .............. 0279 Q .............. 0279
75660 ....... Artery x-rays, head & neck ............ S .............. 0668 Q .............. 0668
75662 ....... Artery x-rays, head & neck ............ S .............. 0280 Q .............. 0280
75665 ....... Artery x-rays, head & neck ............ S .............. 0280 Q .............. 0280
75671 ....... Artery x-rays, head & neck ............ S .............. 0280 Q .............. 0280

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TABLE 14.—IMAGING SUPERVISION AND INTERPRETATION HCPCS CODES PROPOSED FOR PACKAGED PAYMENT IN CY
2008—Continued
Inactive
CPT code
effective 1/
1/2008 or
Proposed Proposed
HCPCS CY 2007 CY 2007 earlier (list- Short descriptor of the
Short descriptor CY 2008 CY 2008
code SI APC ed on the inactive CPT code
SI APC same line
as its re-
placement
code)

75676 ....... Artery x-rays, neck ......................... S .............. 0280 Q .............. 0280
75680 ....... Artery x-rays, neck ......................... S .............. 0280 Q .............. 0280
75685 ....... Artery x-rays, spine ........................ S .............. 0280 Q .............. 0280
75705 ....... Artery x-rays, spine ........................ S .............. 0668 Q .............. 0668
75710 ....... Artery x-rays, arm/leg .................... S .............. 0280 Q .............. 0280
75716 ....... Artery x-rays, arms/legs ................. S .............. 0280 Q .............. 0280
75722 ....... Artery x-rays, kidney ...................... S .............. 0280 Q .............. 0280
75724 ....... Artery x-rays, kidneys .................... S .............. 0280 Q .............. 0280
75726 ....... Artery x-rays, abdomen ................. S .............. 0280 Q .............. 0280
75731 ....... Artery x-rays, adrenal gland .......... S .............. 0280 Q .............. 0280
75733 ....... Artery x-rays, adrenals ................... S .............. 0668 Q .............. 0668
75736 ....... Artery x-rays, pelvis ....................... S .............. 0280 Q .............. 0280
75741 ....... Artery x-rays, lung .......................... S .............. 0279 Q .............. 0279
75743 ....... Artery x-rays, lungs ........................ S .............. 0280 Q .............. 0280
75746 ....... Artery x-rays, lung .......................... S .............. 0279 Q .............. 0279
75756 ....... Artery x-rays, chest ........................ S .............. 0279 Q .............. 0279
75774 ....... Artery x-ray, each vessel ............... S .............. 0279 N .............. n/a
75790 ....... Visualize A–V shunt ....................... S .............. 0279 Q .............. 0279
75801 ....... Lymph vessel x-ray, arm/leg .......... X .............. 0264 Q .............. 0264
75803 ....... Lymph vessel x-ray,arms/legs ....... X .............. 0264 Q .............. 0264
75805 ....... Lymph vessel x-ray, trunk .............. X .............. 0264 Q .............. 0264
75807 ....... Lymph vessel x-ray, trunk .............. X .............. 0264 Q .............. 0264
75809 ....... Nonvascular shunt, x-ray ............... X .............. 0263 Q .............. 0263
75810 ....... Vein x-ray, spleen/liver .................. S .............. 0279 Q .............. 0279
75820 ....... Vein x-ray, arm/leg ......................... S .............. 0668 Q .............. 0668
75822 ....... Vein x-ray, arms/legs ..................... S .............. 0668 Q .............. 0668
75825 ....... Vein x-ray, trunk ............................. S .............. 0279 Q .............. 0279
75827 ....... Vein x-ray, chest ............................ S .............. 0279 Q .............. 0279
75831 ....... Vein x-ray, kidney .......................... S .............. 0279 Q .............. 0279
75833 ....... Vein x-ray, kidneys ........................ S .............. 0279 Q .............. 0279
75840 ....... Vein x-ray, adrenal gland ............... S .............. 0280 Q .............. 0280
75842 ....... Vein x-ray, adrenal glands ............. S .............. 0280 Q .............. 0280
75860 ....... Vein x-ray, neck ............................. S .............. 0668 Q .............. 0668
75870 ....... Vein x-ray, skull ............................. S .............. 0668 Q .............. 0668
75872 ....... Vein x-ray, skull ............................. S .............. 0279 Q .............. 0279
75880 ....... Vein x-ray, eye socket ................... S .............. 0668 Q .............. 0668
75885 ....... Vein x-ray, liver .............................. S .............. 0280 Q .............. 0280
75887 ....... Vein x-ray, liver .............................. S .............. 0279 Q .............. 0279
75889 ....... Vein x-ray, liver .............................. S .............. 0280 Q .............. 0280
75891 ....... Vein x-ray, liver .............................. S .............. 0279 Q .............. 0279
75893 ....... Venous sampling by catheter ........ Q .............. 0668 Q .............. 0668
75894 ....... X-rays, transcath therapy ............... S .............. 0298 N .............. n/a
75896 ....... X-rays, transcath therapy ............... S .............. 0263 N .............. n/a
75901 ....... Remove cva device obstruct ......... X .............. 0263 N .............. n/a
75902 ....... Remove cva lumen obstruct .......... X .............. 0263 N .............. n/a
75940 ....... X-ray placement, vein filter ............ S .............. 0298 N .............. n/a
75945 ....... Intravascular us .............................. S .............. 0267 Q .............. 0267
75946 ....... Intravascular us add-on ................. S .............. 0266 N .............. n/a
75960 ....... Transcath iv stent rs&i ................... S .............. 0668 N .............. n/a
75961 ....... Retrieval, broken catheter .............. S .............. 0668 N .............. n/a
75962 ....... Repair arterial blockage ................. S .............. 0668 Q .............. 0668
75964 ....... Repair Artery blockage, each ........ S .............. 0668 N .............. n/a
75966 ....... Repair arterial blockage ................. S .............. 0668 Q .............. 0668
75968 ....... Repair Artery blockage, each ........ S .............. 0668 N .............. n/a
75970 ....... Vascular biopsy .............................. S .............. 0668 N .............. n/a
mstockstill on PROD1PC66 with PROPOSALS2

75978 ....... Repair venous blockage ................ S .............. 0668 Q .............. 0668
75980 ....... Contrast xray exam bile duct ......... S .............. 0297 N .............. n/a
75982 ....... Contrast xray exam bile duct ......... S .............. 0297 N .............. n/a
75984 ....... Xray control catheter change ......... X .............. 0263 N .............. n/a
75989 ....... Abscess drainage under x-ray ....... N .............. .................... N .............. n/a
75992 ....... Atherectomy, x-ray exam ............... S .............. 0668 N .............. n/a
75993 ....... Atherectomy, x-ray exam ............... S .............. 0668 N .............. n/a
75994 ....... Atherectomy, x-ray exam ............... S .............. 0668 N .............. n/a

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TABLE 14.—IMAGING SUPERVISION AND INTERPRETATION HCPCS CODES PROPOSED FOR PACKAGED PAYMENT IN CY
2008—Continued
Inactive
CPT code
effective 1/
1/2008 or
Proposed Proposed
HCPCS CY 2007 CY 2007 earlier (list- Short descriptor of the
Short descriptor CY 2008 CY 2008
code SI APC ed on the inactive CPT code
SI APC same line
as its re-
placement
code)

75995 ....... Atherectomy, x-ray exam ............... S .............. 0668 N .............. n/a
75996 ....... Atherectomy, x-ray exam ............... S .............. 0668 N .............. n/a
76080 ....... X-ray exam of fistula ...................... X .............. 0263 Q .............. 0263
76975 ....... GI endoscopic ultrasound .............. S .............. 0266 Q .............. 0266
77053 ....... X-ray of mammary duct ................. X .............. 0263 Q .............. 0263 76086 X-ray of mammary
duct.
77054 ....... X-ray of mammary ducts ............... X .............. 0263 Q .............. 0263 76088 X-ray of mammary
ducts.
93555 ....... Imaging, cardiac cath ..................... N .............. n/a N .............. n/a
93556 ....... Imaging, cardiac cath ..................... N .............. n/a N .............. n/a

(5) Diagnostic Radiopharmaceuticals radiopharmaceutical. At that time, we radiopharmaceuticals could provoke


believed that there could be two reasons treatment decisions that may not reflect
For CY 2008, we are proposing to for the presence of these claims in the use of the most clinically appropriate
change the packaging status of data. One reason could be that the radiopharmaceutical for a particular
diagnostic radiopharmaceuticals as part radiopharmaceutical used for the nuclear medicine procedure in any
of our overall enhanced packaging procedure was packaged under the specific case (71 FR 68094).
approach for the CY 2008 OPPS. OPPS and, therefore, some hospitals After considering this issue further
Packaging costs into a single aggregate may have decided not to include the and examining our CY 2006 claims data
payment for a service, encounter, or specific radiopharmaceutical HCPCS for the CY 2008 OPPS update, we
episode of care is a fundamental code and an associated charge on the believe that it is most appropriate to
principle that distinguishes a claim. A second reason could be that the package payment for some
prospective payment system from a fee hospitals may have incorporated the radiopharmaceuticals, specifically
schedule. In general, packaging the costs cost of the radiopharmaceutical into the diagnostic radiopharmaceuticals, into
of supportive items and services into the charges for the associated nuclear the payment for diagnostic nuclear
payment for the independent procedure medicine procedures. A third possibility medicine procedures for CY 2008. We
or service with which they are not offered in the CY 2007 OPPS/ASC expect that packaging would encourage
associated encourages hospital proposed rule is that hospitals may have hospitals to use the most cost efficient
efficiencies and also enables hospitals to included the charges for diagnostic radiopharmaceutical
manage their resources with maximum radiopharmaceuticals on an uncoded products that are clinically appropriate.
flexibility. As we stated in the CY 2007 revenue code line. We anticipate that hospitals would
OPPS/ASC final rule with comment In the CY 2007 OPPS/ASC proposed continue to provide care that is aligned
period, we believe that a policy to rule, we did not propose packaging with the best interests of the patient.
package payment for additional payment for radiopharmaceuticals with Furthermore, we believe that it would
radiopharmaceuticals (other than those per day costs above the $55 CY 2007 be the intent of most hospitals to
already packaged when their per day packaging threshold because we provide both the diagnostic
costs are below the packaging threshold indicated that we were concerned that radiopharmaceutical and the associated
for OPPS drugs, biologicals, and payments for certain nuclear medicine diagnostic nuclear medicine procedure
radiopharmaceuticals based on data for procedures could potentially be less at the time the diagnostic
the update year) is consistent with than the costs of some of the packaged radiopharmaceutical is administered
OPPS packaging principles and would radiopharmaceuticals, especially those and not to send patients to a different
provide greater administrative that are relatively expensive. At the provider for administration of the
simplicity for hospitals (71 FR 68094). same time, we also noted the GAO’s radiopharmaceutical. We do not believe
All nuclear medicine procedures comment in reference to the CY 2006 that our packaging proposal would limit
require the use of at least one OPPS proposed rule that stated a beneficiaries’ ability to receive clinically
radiopharmaceutical, and there are only methodology that includes packaging all appropriate diagnostic procedures.
a small number of radiopharmaceuticals radiopharmaceutical costs into the Again, the OPPS is a system of averages,
that may be appropriately billed with payments for the nuclear medicine and payment in the aggregate is
each diagnostic nuclear medicine procedures may result in payments that intended to be adequate, although
mstockstill on PROD1PC66 with PROPOSALS2

procedure. While examining the CY exceed hospitals’ acquisition costs for payment for any one service may be
2005 hospital claims data in preparation certain radiopharmaceuticals because higher or lower than a hospital’s actual
for the CY 2007 OPPS/ASC proposed there may be more than one costs in that case.
rule, we identified a significant number radiopharmaceutical that may be used For CY 2008, we have separated
of diagnostic nuclear medicine for a particular procedure. We also radiopharmaceuticals into two
procedure claims that were missing expressed concern that packaging groupings. The first group includes
HCPCS codes for the associated payment for additional diagnostic radiopharmaceuticals, while

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42668 Federal Register / Vol. 72, No. 148 / Thursday, August 2, 2007 / Proposed Rules

the second group includes therapeutic than $60 as discussed in section V.B.3. radiopharmaceutical billed. These
radiopharmaceuticals. We identified all of this proposed rule. In that section, we statistics indicate that, in a majority of
diagnostic radiopharmaceuticals as review our reasons for treating our single bills for diagnostic nuclear
those Level II HCPCS codes that include diagnostic radiopharmaceuticals (as medicine procedures, a diagnostic
the term ‘‘diagnostic’’ along with a well as contrast media) differently from radiopharmaceutical HCPCS code is
radiopharmaceutical in their long code other types of specified covered included on the single bill. Table 15
descriptors. Therefore, we were able to outpatient drugs identified in section presents the top 20 diagnostic nuclear
distinguish therapeutic 1833(t)(B) of the Act. medicine procedures in terms of the
radiopharmaceuticals from diagnostic Diagnostic radiopharmaceuticals are overall frequency with which they are
radiopharmaceuticals as those Level II always intended to be used with a reported in the OPPS claims data.
HCPCS codes that have the term diagnostic nuclear medicine procedure.
Among these high volume diagnostic
‘‘therapeutic’’ along with a In examining our CY 2006 claims data,
nuclear medicine procedures, their
radiopharmaceutical in their long code we were able to match most diagnostic
radiopharmaceuticals to their associated single bills include a HCPCS code for a
descriptors. There currently are no
diagnostic procedures and most diagnostic radiopharmaceutical at least
HCPCS C-codes used to report
radiopharmaceuticals under the OPPS. diagnostic nuclear medicine procedures 84 percent of the time for 19 out of the
For CY 2008, we are proposing to to their associated diagnostic top 20 procedures. More specifically, 84
package payment for all diagnostic radiopharmaceuticals in the vast to 86 percent of the single bills for 4
radiopharmaceuticals that are not majority of single bills used for diagnostic nuclear medicine procedures
otherwise packaged according to the ratesetting. We estimate that less than 5 include a diagnostic
proposed CY 2008 packaging threshold percent of all claims with a diagnostic radiopharmaceutical, 87 to 89 percent of
for drugs, biologicals, and radiopharmaceutical had no the single bills for 8 diagnostic nuclear
radiopharmaceuticals. We are proposing corresponding diagnostic nuclear medicine procedures include a
this packaging approach for diagnostic medicine procedure. In addition, we diagnostic radiopharmaceutical, and 90
radiopharmaceuticals, while we are found that only about 13 percent of all percent or more of the single bills for 7
proposing to continue to pay separately single bills with a diagnostic nuclear diagnostic nuclear medicine procedures
for therapeutic radiopharmaceuticals medicine procedure code had no include a diagnostic
with an average per day cost of more corresponding diagnostic radiopharmaceutical.

TABLE 15.—TOP 20 DIAGNOSTIC NUCLEAR MEDICINE PROCEDURES SORTED BY CY 2006 OPPS TOTAL VOLUME
Single bills
with a radio- Single bills as
HCPCS Total line-item pharmaceuti- a percent of
Short descriptor SI APC
code frequency cal as a per- total line-item
cent of all sin- frequency
gle bills

78465 ....... Heart image (3d), multiple ................................... S .............. 0377 566,252 88 9
78306 ....... Bone imaging, whole body .................................. S .............. 0396 368,452 90 76
78815 ....... Tumorimage pet/ct skul-thigh .............................. S .............. 0308 122,126 100 84
78223 ....... Hepatobiliary imaging .......................................... S .............. 0394 69,066 85 90
78315 ....... Bone imaging, 3 phase ....................................... S .............. 0396 56,524 89 88
78464 ....... Heart image (3d), single ...................................... S .............. 0398 35,866 93 29
78472 ....... Gated heart, planar, single .................................. S .............. 0398 32,154 89 80
78264 ....... Gastric emptying study ........................................ S .............. 0395 31,190 88 94
78812 ....... Tumor image (pet)/skul-thigh .............................. S .............. 0308 27,345 100 86
78007 ....... Thyroid image, mult uptakes ............................... S .............. 0391 23,703 84 96
78195 ....... Lymph system imaging ........................................ S .............. 0400 20,187 89 18
78585 ....... Lung V/Q imaging ................................................ S .............. 0378 20,036 91 48
78070 ....... Parathyroid nuclear imaging ................................ S .............. 0391 18,752 94 84
78006 ....... Thyroid imaging with uptake ............................... S .............. 0390 18,613 86 95
78300 ....... Bone imaging, limited area .................................. S .............. 0396 18,333 89 90
78320 ....... Bone imaging (3D) .............................................. S .............. 0396 16,710 84 35
78588 ....... Perfusion lung image ........................................... S .............. 0378 14,323 88 48
78707 ....... K flow/funct image w/o drug ................................ S .............. 0404 13,820 89 90
78580 ....... Lung perfusion imaging ....................................... S .............. 0401 13,011 66 19
78816 ....... Tumor image pet/ct full body ............................... S .............. 0308 12,349 100 86

Among the lower volume diagnostic radiopharmaceutical HCPCS code; about procedures where less than 50 percent
nuclear medicine procedures (which are 37 percent of the low volume diagnostic of the single bills include a diagnostic
outside the top 20 in terms of volume), procedures have between 50 to 79 radiopharmaceutical HCPCS code, we
there is still good representation of percent of the single bills that include believe there could be several reasons
mstockstill on PROD1PC66 with PROPOSALS2

diagnostic radiopharmaceutical HCPCS a diagnostic radiopharmaceutical why the percentage of single bills for the
codes on the single bills for most HCPCS code; and about 23 percent of diagnostic nuclear medicine procedure
procedures. About 40 percent of the low the low volume diagnostic procedures with a diagnostic radiopharmaceutical
volume diagnostic nuclear medicine have less than 50 percent of the single HCPCS code is low.
procedures have at least 80 percent of bills that include a diagnostic As noted earlier, it is possible that
the single bills for that diagnostic radiopharmaceutical HCPCS code. For hospitals may be including the charge
procedure that include a diagnostic the few diagnostic nuclear medicine for the radiopharmaceutical in the

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Federal Register / Vol. 72, No. 148 / Thursday, August 2, 2007 / Proposed Rules 42669

charge for the diagnostic nuclear above discussion on the representation diagnostic nuclear medicine procedures.
medicine procedure itself or on an of diagnostic radiopharmaceuticals in Typically, packaging more procedures
uncoded revenue code line instead of the single bills for diagnostic nuclear should improve the number of single
reporting charges for a specific medicine procedures, the presence of bill claims from which to derive median
diagnostic radiopharmaceutical HCPCS uncoded revenue code charges specific cost estimates because packaging
code. We found that 24 percent of all to diagnostic radiopharmaceuticals on reduces the number of separately paid
single bills for a diagnostic nuclear claims without a coded diagnostic procedures on a claim, thereby creating
medicine procedure but without a radiopharmaceutical, and our proposal more single procedure bills. In the case
coded diagnostic radiopharmaceutical to package payment for all diagnostic of diagnostic nuclear medicine
had uncoded costs in a revenue code radiopharmaceuticals. procedures, packaging diagnostic
that might contain diagnostic It has come to our attention that radiopharmaceuticals reduces the
radiopharmaceutical costs, specifically, several diagnostic radiopharmaceuticals overall number of single bills available
revenue codes 0254 (Drugs Incident to may be used for multiple day studies; to calculate median costs by increasing
Other Diagnostic Services), 0255 (Drugs that is, a particular diagnostic packaged costs that previously were
Incident to Radiology), 0343 (Diagnostic radiopharmaceutical may be ignored in the bypass process. In prior
Radiopharmaceuticals), 0621 (Supplies administered on one day and a related years, we did not consider the costs of
Incident to Radiology), and 0622 diagnostic nuclear medicine procedure radiopharmaceuticals when we used our
(Supplies Incident to Other Diagnostic may be performed on a subsequent day. bypass methodology to extract ‘‘pseudo’’
Services). In comparison, we found that While we understand that multiple day single claims because we assumed that
only 2 percent of diagnostic nuclear episodes for diagnostic the cost of radiopharmaceutical
medicine single bills with a nuclear radiopharmaceuticals and the related overhead and handling would be
medicine procedure and a coded diagnostic nuclear medicine procedures included in the line-item charge for the
diagnostic radiopharmaceutical had occur, we expect that this would be a radiopharmaceutical, and the diagnostic
uncoded costs in these revenue codes. It small proportion of all diagnostic radiopharmaceuticals were subject to
is also possible that some of these nuclear medicine imaging procedures. potential separate payment if their mean
procedures typically use a diagnostic We estimate that, roughly, 15 diagnostic per day cost fell above the packaging
radiopharmaceutical subject to radiopharmaceuticals have a half-life threshold. The bypass process sets
packaged payment under the CY 2006 longer than one day such that they empirical and clinical criteria for
OPPS, and hospitals may have chosen could support diagnostic nuclear minimal packaging for a specific list of
not to report a separate charge for the medicine scans on different days. We procedures and services in order to
diagnostic radiopharmaceutical. believe these diagnostic assign packaged costs to other
Payment for diagnostic radiopharmaceuticals would be procedures on a claim and is discussed
radiopharmaceuticals commonly used concentrated in a specific set of at length in section II.A.1. of this
with some diagnostic nuclear medicine diagnostic procedures. Excluding the 5 proposed rule. Generally, changing the
procedures would already be packaged percent of diagnostic status of diagnostic
because these diagnostic radiopharmaceutical claims with no radiopharmaceuticals to packaged
radiopharmaceuticals’ average per day matching diagnostic nuclear medicine increases packaging on each claim. This
cost were less than $50 in CY 2006. The scan for the same beneficiary, we found could make it both harder for nuclear
that a diagnostic nuclear medicine scan
CY 2008 proposal to package additional medicine procedures to qualify for the
was reported on the same day as a
diagnostic radiopharmaceuticals would bypass list and more difficult to assign
coded diagnostic radiopharmaceutical
have little impact on the payment for packaging to individual diagnostic
90 percent or more of the time for 10 of
those diagnostic procedures that nuclear medicine procedures, resulting
these 15 diagnostic
typically use inexpensive diagnostic in a possible reduction of the number of
radiopharmaceuticals. Further, between
radiopharmaceuticals that would be ‘‘pseudo’’ singles that are produced by
80 and 90 percent single bills for each
packaged under our proposed CY 2008 the bypass process. Notwithstanding
of the remaining 5 diagnostic
packaging threshold of $60, except to this potentiality, diagnostic nuclear
radiopharmaceuticals had a diagnostic
the extent that the budget neutrality medicine procedures continue to have
nuclear medicine scan on the same day.
adjustment due to the broader packaging In the ‘‘natural’’ single bills we use for
good representation in the single bills.
proposal leads to an increase in the ratesetting, we package payment across On average, single bills as a percent of
scaler and an increase in the payment dates of service. In light of such high total occurrences remains substantial at
for procedures in general. percentages of extended half-life 55 percent for individual procedures.
At its March 2007 meeting, the APC diagnostic radiopharmaceuticals with We discuss our process for ratesetting,
Panel recommended that CMS work same day diagnostic nuclear medicine including the construction and use of
with stakeholders on issues related to scans and the ability of ‘‘natural’’ single and multiple bills, in greater
payment for radiopharmaceuticals, singles to package costs across days, we detail in section II.A.1. of this proposed
including evaluating claims data for believe that our standard OPPS rule.
different classes of ratesetting methodology of using We believe our CY 2006 claims data
radiopharmaceuticals and ensuring that median costs calculated from claims support our CY 2008 proposal to
a nuclear medicine procedure claim data adequately captures the costs of package payment for all diagnostic
always includes at least one reported diagnostic radiopharmaceuticals radiopharmaceuticals and lead to
radiopharmaceutical agent. We are associated with diagnostic nuclear proposed payment rates for diagnostic
mstockstill on PROD1PC66 with PROPOSALS2

accepting the APC Panel’s medicine procedures that are not nuclear medicine procedures that
recommendation, and we specifically provided on the same date of service. appropriately reflect payment for the
welcome public comment on the This packaging proposal reduces the costs of the diagnostic
hospitals’ burden involved should we overall frequency of single bills for radiopharmaceuticals that are
require such precise reporting. We also diagnostic nuclear medicine procedures, administered to carry out those
are seeking comment on the importance but the percent of single bills out of total diagnostic nuclear medicine procedures.
of such a requirement in light of our claims remains robust for the majority of Among the top 20 high volume

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42670 Federal Register / Vol. 72, No. 148 / Thursday, August 2, 2007 / Proposed Rules

diagnostic nuclear medicine procedures, commonly used with a particular would receive packaged payment
at least 84 percent of the single bills for diagnostic nuclear medicine procedure through the separate OPPS payment for
almost every diagnostic nuclear are already packaged, the proposal to CPT code 78815. CPT code 78815 is
medicine procedure included a package additional diagnostic assigned to APC 1511 (New
diagnostic radiopharmaceutical HCPCS radiopharmaceuticals would have little Technology—Level XI ($900–$1000)) for
code. While a diagnostic impact on the payment for these CY 2007 with a CY 2007 median cost for
radiopharmaceutical, by definition, procedures. PET/CT procedures of $850.36 and to
would be anticipated to accompany 100 We have calculated the median costs APC 0308 (Non-Myocardial Positron
percent of the diagnostic nuclear on which we are proposing to base the Emission Tomography (PET) Imaging)
medicine procedures, it is not CY 2008 payment rates using the for CY 2008 with a proposed CY 2008
unexpected that while percentages in packaging status of each diagnostic APC median cost of $1,093.52.
our claims data are high, they are less radiopharmaceutical HCPCS code as The proposed CY 2008 payment rates
than 100 percent. As noted previously, provided in Table 17 below. As we associated with this example are
we have heard anecdotal reports that discussed earlier in more detail, this has outlined in Table 16 below. The table
some hospitals may include the charges the effect of both changing the median indicates that the proposed CY 2008
for diagnostic radiopharmaceuticals in cost for the independent service (the payment rate for the skull base to mid-
their charge for the diagnostic nuclear diagnostic nuclear medicine procedure) thigh PET/CT scan would be
medicine procedure or on an uncoded into which the cost of the dependent substantially higher than the CY 2007
revenue code line, rather than reporting service (the diagnostic payment amount for that code. The
a HCPCS code for the diagnostic radiopharmaceutical) is packaged and proposed increase for the PET/CT scan
radiopharmaceutical. Thus, it is likely also of redistributing payment that is slightly more than the estimated
that the frequency of diagnostic would otherwise have been made average CY 2007 payment for the
radiopharmaceutical costs reflected in separately for the service we are separately payable FDG (paid in CY
our claims data are even higher than the proposing to newly package for CY 2007 at charges reduced to cost).
percentages indicate. Furthermore, we 2008. This example cannot demonstrate the
note that the OPPS ratesetting For example, HCPCS code A9552 overall impact of packaging diagnostic
methodology is based on medians, (Fluorodeoxyglucose F–18 FDG, radiopharmaceuticals on payment to
which are less sensitive to extremes Diagnostic, per study dose, up to 45 any given hospital because each
than means and typically do not reflect millicuries) that describes the diagnostic individual hospital’s case mix and
subtle changes in cost distributions. radiopharmaceutical commonly called billing patterns would be different. The
Therefore, to the extent that the vast FDG is frequently billed with CPT code overall impact of packaging diagnostic
majority of single bills for a particular 78815 (Tumor imaging, positron radiopharmaceuticals, as well as all
diagnostic nuclear medicine procedure emission tomography (PET) with other packaging changes proposed for
include a diagnostic concurrently acquired computed CY 2008, can only be assessed in the
radiopharmaceutical HCPCS code, the tomography (CT) for attenuation aggregate for each hospital. Section
fact that the percentage is somewhat less correction and anatomical localization; XXII.B. of this proposed rule displays
than 100 percent is likely to have skull base to mid-thigh). HCPCS code the overall impact of APC weight
minimal impact on the median cost of A9552 is assigned to APC 1651 (F18 fdg) recalibration and packaging changes
the procedure in most cases. Even in for CY 2007. HCPCS code A9552 was that we are proposing by classes of
those few instances where we have a billed with CPT code 78815 101,242 hospitals, and the OPPS Hospital-
low total number of single bills, largely times in the single bills available for this Specific Impacts—Provider-Specific
because of low overall volume, we have CY 2008 proposed rule, and 97 percent Data file presents our estimates of CY
ample representation of diagnostic of the single bills for CPT code 78815 2008 hospital payment for those
radiopharmaceutical HCPCS codes on also reported HCPCS code A9552. hospitals we include in our ratesetting
the single bills for the majority of lower Under our proposed policy for CY 2008, and payment simulation database. The
volume nuclear medicine procedures. we are proposing to package payment hospital-specific impacts file can be
We also continue to have reasonable for HCPCS code A9552 into the found on the CMS Web site at http://
representation of single bills out of total payment for separately payable www.cms.hhs.gov/
claims in general. Finally, as noted procedures that are provided in HospitalOutpatientPPS/ under
previously, to the extent that the conjunction with HCPCS code A9552. supporting documentation for this
diagnostic radiopharmaceuticals In this example, HCPCS code A9552 proposed rule.

TABLE 16.—EXAMPLE OF THE EFFECTS OF THE CY 2008 PACKAGING PROPOSAL ON PAYMENT FOR HCPCS CODE
A9552 AND CPT CODE 78815
Sum of CY Sum of CY
2007 payment 2008 proposed
HCPCS code Short descriptor (A9552 paid payment
separately at (A9552 pack-
cost) aged)

A9552 ........................ F18 fdg (dependent service) ........................................................................................... *$279.29 0.00


78815 ......................... Tumor image pet/ct skul-thigh (independent service) ..................................................... 950.00 1,107.22
mstockstill on PROD1PC66 with PROPOSALS2

Total Payment .................................................................................................................................................. 1,229.29 1,107.22


*Estimated average CY 2007 payment at charges reduced to cost.

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Federal Register / Vol. 72, No. 148 / Thursday, August 2, 2007 / Proposed Rules 42671

The estimated overall impact of these believe that hospitals are limited in the As we indicate above, in all cases, we
changes that we are proposing for CY extent to which they could change their are proposing that hospitals that furnish
2008 is based on the assumption that behavior with regard to how they diagnostic radiopharmaceuticals in
hospital behavior would not change furnish these items because diagnostic association with diagnostic nuclear
with regard to when the dependent radiopharmaceuticals are typically medicine procedures bill both the item
diagnostic radiopharmaceuticals are provided on the same day as a and the procedure on the same claim so
provided by the same hospital that diagnostic nuclear medicine procedure. that the costs of the diagnostic
performs the independent services. In It would be difficult for Hospital A to radiopharmaceuticals can be
order to provide diagnostic nuclear send patients to receive diagnostic appropriately packaged into payment
medicine procedures under this radiopharmaceuticals from Hospital B
for the diagnostic nuclear medicine
proposal, hospitals would either need to and then have the patients return to
procedure. We expect to carefully
administer the necessary diagnostic Hospital A for the diagnostic nuclear
radiopharmaceuticals themselves or medicine procedure in the appropriate monitor any changes in billing practices
refer patients elsewhere for the timeframe (given the on a service-specific and hospital-
administration of the diagnostic radiopharmaceutical’s half life) to specific basis to determine whether
radiopharmaceuticals. In the latter case, perform a high quality study. We would there is reason to request that QIOs
claims data would show such a change expect that hospitals would always bill review the quality of care furnished or
in practice in future years and that the diagnostic radiopharmaceutical on to request that Program Safeguard
change would be reflected in future the same claim as the other independent Contractors review the claims against
ratesetting. However, with respect to services for which the the medical record.
diagnostic radiopharmaceuticals, we radiopharmaceutical was administered.

TABLE 17.—DIAGNOSTIC RADIOPHARMACEUTICAL HCPCS CODES PROPOSED FOR PACKAGED PAYMENT IN CY 2008
CY 2008
HCPCS code Short descriptor CY 2007 SI CY 2007 APC proposed SI

A4641 .......... Radiopharm dx agent noc ...................................................................................... N ................. n/a N


A4642 .......... In111 satumomab ................................................................................................... H .................. 0704 N
A9500 .......... Tc99m sestamibi ..................................................................................................... H ................. 1600 N
A9502 .......... Tc99m tetrofosmin .................................................................................................. H ................. 0705 N
A9503 .......... Tc99m medronate ................................................................................................... N .................. n/a N*
A9504 .......... Tc99m apcitide ....................................................................................................... N ................. n/a N*
A9505 .......... TL201 thallium ........................................................................................................ H ................. 1603 N
A9507 .......... In111 capromab ...................................................................................................... H ................. 1604 N
A9508 .......... I131 iodobenguate, dx ............................................................................................ H ................. 1045 N
A9510 .......... Tc99m disofenin ..................................................................................................... N ................. n/a N*
A9512 .......... Tc99m pertechnetate .............................................................................................. N .................. n/a N*
A9516 .......... I123 iodide cap, dx ................................................................................................. H .................. 9148 N
A9521 .......... Tc99m exametazime .............................................................................................. H ................. 1096 N
A9524 .......... I131 serum albumin, dx .......................................................................................... H ................. 9100 N
A9526 .......... Nitrogen N–13 ammonia ......................................................................................... H ................. 0737 N
A9528 .......... Iodine I–131 iodide cap, dx .................................................................................... H ................. 1088 N
A9529 .......... I131 iodide sol, dx .................................................................................................. N ................. n/a N
A9531 .......... I131 max 100uCi .................................................................................................... N .................. n/a N*
A9532 .......... I125 serum albumin, dx .......................................................................................... N ................. n/a N
A9536 .......... Tc99m depreotide ................................................................................................... H .................. 0739 N
A9537 .......... Tc99m mebrofenin .................................................................................................. N ................. n/a N*
A9538 .......... Tc99m pyrophosphate ............................................................................................ N .................. n/a N*
A9539 .......... Tc99m pentetate ..................................................................................................... H .................. 0722 N*
A9540 .......... Tc99m MAA ............................................................................................................ N ................. n/a N*
A9541 .......... Tc99m sulfur colloid ................................................................................................ N ................. n/a N*
A9542 .......... In111 ibritumomab, dx ............................................................................................ H ................. 1642 N
A9544 .......... I131 tositumomab, dx ............................................................................................. H ................. 1644 N
A9546 .......... Co57/58 .................................................................................................................. H ................. 0723 N
A9547 .......... In111 oxyquinoline .................................................................................................. H ................. 1646 N
A9548 .......... In111 pentetate ....................................................................................................... H ................. 1647 N
A9550 .......... Tc99m gluceptate ................................................................................................... H ................. 0740 N
A9551 .......... Tc99m succimer ..................................................................................................... H .................. 1650 N
A9552 .......... F18 fdg .................................................................................................................... H ................. 1651 N
A9553 .......... Cr51 chromate ........................................................................................................ H ................. 0741 N
A9554 .......... I125 iothalamate, dx ............................................................................................... N ................. n/a N
A9555 .......... Rb82 rubidium ........................................................................................................ H ................. 1654 N
A9556 .......... Ga67 gallium ........................................................................................................... H ................. 1671 N
A9557 .......... Tc99m bicisate ........................................................................................................ H .................. 1672 N
mstockstill on PROD1PC66 with PROPOSALS2

A9558 .......... Xe133 xenon 10mci ................................................................................................ N ................. n/a N*


A9559 .......... Co57 cyano ............................................................................................................. H ................. 0724 N
A9560 .......... Tc99m labeled rbc .................................................................................................. H ................. 0742 N
A9561 .......... Tc99m oxidronate ................................................................................................... N ................. n/a N*
A9562 .......... Tc99m mertiatide .................................................................................................... H .................. 0743 N
A9565 .......... In111 pentetreotide ................................................................................................. H ................. 1677 N
A9566 .......... Tc99m fanolesomab ............................................................................................... H .................. 1678 N
A9567 .......... Technetium TC–99m aerosol ................................................................................. H ................. 0829 N*

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42672 Federal Register / Vol. 72, No. 148 / Thursday, August 2, 2007 / Proposed Rules

TABLE 17.—DIAGNOSTIC RADIOPHARMACEUTICAL HCPCS CODES PROPOSED FOR PACKAGED PAYMENT IN CY 2008—
Continued
CY 2008
HCPCS code Short descriptor CY 2007 SI CY 2007 APC proposed SI

A9568 .......... Tc99m arcitumomab ............................................................................................... H ................. 1648 N


* Indicates that the radiopharmaceutical would have been packaged under the $60 packaging threshold methodology in CY 2008, even in the
absence of the broader packaging proposal for radiopharmaceuticals.

(6) Contrast Agents of this proposed rule.) Seventy-five others. If the 5 agents remained
percent of contrast agents HCPCS codes separately payable, there would
For CY 2008, we are proposing to
have an estimated mean per day cost effectively be two payments for contrast
package payment for all contrast media
equal to or less than $60 based on our agents when these 5 agents were
into their associated independent
CY 2006 claims data. billed—a separate payment and a
diagnostic and therapeutic procedures Contrast agents are described by those payment for packaged contrast agents
as part of our proposed packaging Level II HCPCS codes in the range from that was part of the procedure payment.
approach for the CY 2008 OPPS. As Q9945 through Q9964. There currently This could potentially provide a
noted in section II.A.4.c. of this are no HCPCS C-codes or other Level II payment incentive to administer certain
proposed rule, packaging the costs of HCPCS codes outside the range contrast agents that might not be the
supportive items and services into the specified above used to report contrast most clinically appropriate or cost
payment for the independent procedure agents under the OPPS. As shown in effective. Moreover, as noted previously,
or service with which they are Table 19, in CY 2007, we packaged 7 out contrast agents are always provided
associated encourages hospital of 20 of these contrast agent HCPCS with independent procedures and,
efficiencies and also enables hospitals to codes based on the $55 packaging under a consistent approach to
manage their resources with maximum threshold. For CY 2008, we are packaging in keeping with our enhanced
flexibility. We believe that contrast proposing to package all drugs with a efforts to encourage hospital efficiency
agents are particularly well suited for per day mean cost of $60 or less. For CY and promote value-based purchasing
packaging because they are always 2008, the vast majority of contrast under the OPPS, their payment would
provided in support of an independent agents would be packaged under the be appropriately packaged for CY 2008.
diagnostic or therapeutic procedure that traditional OPPS packaging We have calculated the median costs
involves imaging, and thus payment for methodology using the $60 packaging on which the proposed CY 2008
contrast agents can be packaged into the threshold, based on the CY 2006 claims payment rates are based using the
payment for the associated separately data available for this proposed rule. In packaging status of each contrast agent
payable procedures. fact, of the 20 contrast agent HCPCS HCPCS code as provided in Table 19
Contrast agents are generally codes we are including in our proposed below. As we discussed earlier in more
considered to be those substances packaging approach, 15 would have detail, this has the effect of both
introduced into or around a structure been proposed to be packaged for CY changing the median cost for the
that, because of the differential 2008 under our drug packaging independent service (the diagnostic or
absorption of x-rays, alteration of methodology. These 15 codes represent therapeutic procedure requiring
magnetic fields, or other effects of the 94 percent of all occurrences of contrast imaging) into which the cost of the
contrast medium in comparison with agents billed under the OPPS. We dependent service (the contrast agent) is
surrounding tissues, permit believe that this shift in the packaging packaged and also of redistributing
visualization of the structure through an status for several of these agents payment that would otherwise have
imaging modality. The use of certain between CYs 2007 and 2008 may be been made separately for the service we
contrast agents is generally associated because, in CY 2007, a number of the are proposing to newly package for CY
with specific imaging modalities, contrast agents exceeded the $55 2008.
including x-ray, computed tomography threshold by only a small amount and, For example, HCPCS code Q9947
(CT), ultrasound, and magnetic based on our latest claims data for CY (Low osmolar contrast material, 200–
resonance imaging (MRI), for purposes 2008, a number of these products have 249 mg/ml iodine concentration, per ml)
of diagnostic testing or treatment. They now fallen below the proposed $60 is one of the contrast agents that we are
are most commonly administered threshold. Given that the vast majority proposing to package that would not
through an oral or intravascular route in of contrast agents billed would already otherwise be packaged in CY 2008
association with the performance of the be packaged under the OPPS in CY under the proposed $60 packaging
independent procedures involving 2008, we believe it would be desirable threshold. HCPCS code Q9947 is
imaging that are the basis for their to package payment for the remaining sometimes billed with CPT code 71260
administration. Even in the absence of contrast agents as it promotes efficiency (Computed tomography, thorax; with
this proposal to package payment for all and results in a consistent payment contrast material(s)). HCPCS code
contrast agents, we would propose to policy across products that may be used Q9947 is assigned to APC 9159 (LOCM
package the majority of HCPCS codes in many of the same independent 200–249 mg/ml iodine, 1ml) for CY
for contrast agents recognized under the procedures. We also note that the 2007. HCPCS code Q9947 was billed
mstockstill on PROD1PC66 with PROPOSALS2

OPPS in CY 2008. We consider contrast significant costs associated with these with CPT code 71260 8,172 times in the
agents to be drugs under the OPPS, and 15 contrast agents would already be single bills available for this CY 2008
as a result they are packaged if their reflected in the proposed median costs proposed rule, and 2 percent of the
estimated mean per day cost is equal to for those independent procedures and, single bills for CPT code 71260 also
or less than $60 for CY 2008. (For more if we were to pay for the 5 remaining reported HCPCS code Q9947. Under our
discussion of our drug packaging agents separately, we would be treating proposed policy for CY 2008, we are
criteria, we refer readers to section V.B.2 these 5 agents differently than the proposing to package payment for

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Federal Register / Vol. 72, No. 148 / Thursday, August 2, 2007 / Proposed Rules 42673

HCPCS code Q9947 into the payment payment for the separately payable (Computed tomography, lumbar spine;
for separately payable procedures that HCPCS code Q9947. Notably, a number with contrast material)).
are provided in conjunction with the of low osmolar contrast agents other This example cannot demonstrate the
contrast agent. Specifically, we would than HCPCS code Q9947 that were overall impact of packaging contrast
package payment for HCPCS code separately paid in CY 2007 also are agents on any given hospital because
Q9947 so that, in this example, HCPCS proposed for packaged payment in CY each individual hospital’s case mix and
code Q9947 would receive packaged 2008 because their mean per day cost
billing pattern differs. The overall
payment through the separate OPPS falls below the $60 packaging threshold
impact of packaging contrast agents, as
payment for CPT code 71260. CPT code for drugs, biologicals, and
well as all the other proposed packaging
71260 is assigned to APC 0283 radiopharmaceuticals for CY 2008.
(Computed Tomography with Contrast) Packaging the costs of these contrast changes, can only be assessed in the
for CY 2007 with a CY 2007 median cost media also affects the proposed aggregate for classes of hospitals.
of $249.48. The procedure is assigned to payment rate for CPT code 71260. For Section XXII.B. of this proposed rule
APC 0283, with a proposed APC name another example of packaging contrast displays the overall impact of APC
change to ‘‘Level I Computed agents, we refer readers to the example weight recalibration and packaging
Tomography with Contrast’’ for CY 2008 included in Table 13 of section changes we are proposing by classes of
and a proposed CY 2008 median cost of II.A.4.c.(4) of this proposed rule on hospitals, and the OPPS Hospital-
$286.13. packaging imaging supervision and Specific Impacts—Provider-Specific
The proposed CY 2008 payment rates interpretation services. That example Data file presents our estimates of CY
associated with this example are illustrates the effect of packaging both a 2008 hospital payment for those
outlined in Table 18 below. The table supervision and interpretation service hospitals we include in our ratesetting
indicates that the CY 2008 payment that (CPT code 72265 (Myelography, and payment simulation database. The
we are proposing for CPT code 71260 is lumbosacral, radiological supervision hospital-specific impact file can be
higher than the CY 2007 payment and interpretation)) and a contrast agent found on the CMS Web site at http://
amount for that code. The proposed (HCPCS code Q9947 (low osmolar www.cms.hhs.gov/
increase in the payment rate for CPT contrast material, 200–249 mg/ml HospitalOutpatientPPS/ under
code 71260 in CY 2008 is slightly iodine, per ml)) into the payment for an supporting documentation for this
greater than the estimated CY 2007 imaging procedure (CPT code 72132 proposed rule.

TABLE 18.—EXAMPLE OF THE EFFECTS OF THE CY 2008 PACKAGING PROPOSAL ON PAYMENT FOR CPT CODE 72160
AND HCPCS CODE Q9947

Sum of CY
Sum of CY 2008 proposed
2007 payment
HCPCS code Short descriptor payment
(Q9947 paid (Q9947
separately) packaged)

Q9947 ........................ LOCM 200–249 mg/ml iodine, 1 ml (dependent service) ............................................... *$64.24 $0.00
71260 ......................... Ct thorax w/dye (independent service) ............................................................................ 250.94 289.71

Total Payment .................................................................................................................................................. 315.18 289.71


*Based on the mean number of units per day from our CY 2008 proposed rule data (48.3) and the April 2007 per unit payment rate for Q9947
($1.33).

The estimated overall impact of these be reflected in future ratesetting. furnish the supportive contrast agent in
changes that we are proposing for CY However, with respect to contrast association with independent
2008 is based on the assumption that agents, we believe that hospitals are procedures involving imaging must bill
hospital behavior would not change limited in the extent to which they both services on the same claim so that
with regard to when the contrast agents could change their behavior with regard the cost of the contrast agent can be
are provided by the same hospital that to how they furnish these services appropriately packaged into payment
performs the imaging procedure. Under because contrast agents are typically for the significant independent
this proposal, in order to provide provided on the same day immediately procedure. We expect to carefully
imaging procedures requiring contrast prior to an imaging procedure being monitor any changes in billing practices
agents, hospitals would either need to performed. We would expect that on a service-specific and hospital
administer the necessary contrast agent hospitals would always bill the contrast specific basis to determine whether
themselves or refer patients elsewhere agent on the same claim as the other there is reason to request that QIOs
for the administration of the contrast independent services for which the review the quality of care furnished or
agent. In the latter case, claims data contrast agent was administered. to request that Program Safeguard
would show such a change in practice As we indicated earlier, in all cases Contractors review the claims against
in future years and that change would we are proposing that hospitals that the medical record.
mstockstill on PROD1PC66 with PROPOSALS2

TABLE 19.—CONTRAST MEDIA HCPCS CODES PROPOSED FOR PACKAGED PAYMENT IN CY 2008
Proposed CY
HCPCS code Short descriptor CY 2007 SI CY 2007 APC 2008 SI

Q9945 .......... LOCM <=149 mg/ml iodine, 1 ml ........................................................................... K .................. 9157 N*


Q9946 .......... LOCM 150–199 mg/ml iodine, 1 ml ....................................................................... K .................. 9158 N*
Q9947 .......... LOCM 200–249 mg/ml iodine, 1 ml ....................................................................... K .................. 9159 N

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42674 Federal Register / Vol. 72, No. 148 / Thursday, August 2, 2007 / Proposed Rules

TABLE 19.—CONTRAST MEDIA HCPCS CODES PROPOSED FOR PACKAGED PAYMENT IN CY 2008—Continued
Proposed CY
HCPCS code Short descriptor CY 2007 SI CY 2007 APC 2008 SI

Q9948 .......... LOCM 250–299 mg/ml iodine, 1 ml ....................................................................... K .................. 9160 N*


Q9949 .......... LOCM 300–349 mg/ml iodine, 1 ml ....................................................................... K .................. 9161 N*
Q9950 .......... LOCM 350–399 mg/ml iodine, 1 ml ....................................................................... K .................. 9162 N*
Q9951 .......... LOCM >= 400 mg/ml iodine, 1 ml .......................................................................... K .................. 9163 N*
Q9952 .......... Inj Gad-base MR contrast, 1 ml ............................................................................. K .................. 9164 N*
Q9953 .......... Inj Fe-based MR contrast, 1 ml .............................................................................. K .................. 1713 N
Q9954 .......... Oral MR contrast, 100 ml ....................................................................................... K .................. 9165 N*
Q9955 .......... Inj perflexane lip micros, ml .................................................................................... K .................. 9203 N*
Q9956 .......... Inj octafluoropropane mic, ml ................................................................................. K .................. 9202 N
Q9957 .......... Inj perflutren lip micros, ml ..................................................................................... K .................. 9112 N
Q9958 .......... HOCM <=149 mg/ml iodine, 1 ml ........................................................................... N ................. n/a N*
Q9959 .......... HOCM 150–199 mg/ml iodine, 1 ml ....................................................................... N ................. n/a N
Q9960 .......... HOCM 200–249 mg/ml iodine, 1 ml ....................................................................... N ................. n/a N*
Q9961 .......... HOCM 250–299 mg/ml iodine, 1 ml ....................................................................... N ................. n/a N*
Q9962 .......... HOCM 300–349 mg/ml iodine, 1 ml ....................................................................... N ................. n/a N*
Q9963 .......... HOCM 350–399 mg/ml iodine, 1 ml ....................................................................... N ................. n/a N*
Q9964 .......... HOCM>= 400 mg/ml iodine, 1 ml ........................................................................... N ................. n/a N*
*Indicates that the contrast agent would have been packaged under the $60 packaging threshold methodology in CY 2008, even in the ab-
sence the broader packaging proposal for contrast agents.

(7) Observation Services time, physician care, and based on criteria discussed
We are proposing to package payment documentation in the medical record subsequently. (We note that if an HOPD
for all observation care, reported under (66 FR 59856, 59879). Payment for directly admits a patient to observation,
HCPCS code G0378 (Hospital observation care that did not meet these Medicare currently pays separately for
observation services, per hour) for CY specified criteria was packaged. that direct admission reported under
2008. Payment for observation would be Between CY 2003 and CY 2006, several HCPCS code G0379 (Direct admission of
packaged as part of the payment for the more changes were made to the OPPS patient for hospital observation care) in
separately payable services with which policy regarding separate payment for situations where payment for the actual
it is billed. We have defined observation observation services, such as: observation care reported under HCPCS
care as a well-defined set of specific, Clarification that observation is not code G0378 is packaged.) For CY 2008,
clinically appropriate services that separately payable when billed with as discussed in more detail later in this
include ongoing short-term treatment, ‘‘T’’ status procedures on the day of or proposed rule (section XI.), we are
day before observation care; proposing to continue the coding and
assessment, and reassessment before a
development of specific Level II HCPCS payment methodology for direct
decision can be made regarding whether
codes for hospital observation services admission to observation status, with
patients will require further treatment as
and direct admission to observation the exception of the requirement that
hospital inpatients or if they are able to
care; and removal of the initially HCPCS code G0379 is only eligible for
be discharged from the hospital.
established diagnostic testing separate payment if observation care
Observation status is commonly
requirements for separately payable reported under HCPCS code G0378 does
assigned to patients who present to the
observation (67 FR 66794, 69 FR 65828, not qualify for separate payment. This
emergency department and who then
and 70 FR 68688). Throughout this time requirement would no longer be
require a significant period of treatment
period, we maintained separate applicable under our proposal to
or monitoring before a decision is made package all observation services
concerning their next placement or to payment for observation care only for
the three specified medical conditions, reported under HCPCS code G0378.
patients with unexpectedly prolonged Currently, separate OPPS payment
recovery after surgery. Throughout this and OPPS payment for observation for
all other clinical conditions remained may be made for observation services
proposed rule, as well as in our manuals reported under HCPCS code G0378
and guidance documents, we use both packaged.
provided to a patient when all of the
of the terms ‘‘observation services’’ and Since January 1, 2006, hospitals have following requirements are met. The
‘‘observation care’’ in reference to the reported observation services based on hospital would receive a single separate
services defined above. an hourly unit of care using HCPCS payment for an episode of observation
Payment for all observation care code G0378. This code has a status care (APC 0339) when:
under the OPPS was packaged prior to indicator of ‘‘Q’’ under the CY 2007
CY 2002. Since CY 2002, separate OPPS, meaning that the OPPS claims 1. Diagnosis Requirements
payment of a single unit of an processing logic determines whether the a. The beneficiary must have one of
observation APC for an episode of observation is packaged or separately three medical conditions: congestive
observation care has been provided in payable. The OCE’s current logic heart failure, chest pain, or asthma.
limited circumstances. Effective for determines whether observation b. Qualifying ICD–9–CM diagnosis
mstockstill on PROD1PC66 with PROPOSALS2

services furnished on or after April 1, services billed under HCPCS code codes must be reported in Form Locator
2002, separate payment for observation G0378 are separately payable through (FL) 76, Patient Reason for Visit, or FL
was made if the beneficiary had chest APC 0339 (Observation) or whether 67, principal diagnosis, or both in order
pain, asthma, or congestive heart failure payment for observation services will be for the hospital to receive separate
and met additional criteria for packaged into the payment for other payment for APC 0339. If a qualifying
diagnostic testing, minimum and separately payable services provided by ICD–9–CM diagnosis code(s) is reported
maximum limits to observation care the hospital in the same encounter in the secondary diagnosis field, but is

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Federal Register / Vol. 72, No. 148 / Thursday, August 2, 2007 / Proposed Rules 42675

not reported in either the Patient Reason conjunction with other independent payment for these services over this
for Visit field (FL 76) or in the principal separately payable hospital outpatient time period, the substantial growth by
diagnosis field (FL 67), separate services such as an emergency itself is noteworthy.
payment for APC 0339 is not allowed. department visit, surgical procedure, or We are also concerned that the
another separately payable service, and current criteria for separate payment for
2. Observation Time observation services may provide
thus observation costs can logically be
a. Observation time must be packaged into OPPS payment for disincentives for efficiency. In order for
documented in the medical record. independent services. As discussed observation services to be separately
b. A beneficiary’s time in observation extensively earlier in this section, payable, they must last at least 8 hours.
(and hospital billing) begins with the packaging payment into larger payment While this criterion was put in place to
beneficiary’s admission to an bundles creates incentives for providers ensure that separate payment is made
observation bed. to furnish services in the most efficient only for observation services of a
c. A beneficiary’s time in observation way that meets the needs of the patient, substantial duration, it may create a
(and hospital billing) ends when all encouraging long-term cost financial disincentive for an HOPD to
clinical or medical interventions have containment. make a timely determination regarding
been completed, including followup As we discussed in the general a patient’s safe disposition after
care furnished by hospital staff and overview of the CY 2008 packaging observation care ends. By packaging
physicians that may take place after a approach earlier in this section (section payment for all observation services,
physician has ordered the patient be regardless of their duration, we would
II.A.4.b. of this proposed rule), there has
released or admitted as an inpatient. provide incentives for more efficient
been substantial growth in program
d. The number of units reported with delivery of services and timely decision-
expenditures for hospital outpatient
HCPCS code G0378 must equal or making. The current criterion also
services under the OPPS in recent years.
exceed 8 hours. prohibits separate payment for
The primary reason for this upsurge is
observation services when a ‘‘T’’ status
3. Additional Hospital Services growth in the intensity and utilization
procedure (generally a surgical
a. The claim for observation services of services rather than the general price
procedure) is provided on the same day
must include one of the following of services or enrollment changes. This
or the previous day by the HOPD to the
services in addition to the reported observed trend is notably reflected in
same Medicare beneficiary. Again, this
observation services. The additional the frequency and costs of separately may create a financial disincentive for
services listed below must have a line- payable observation care for the last few hospitals to provide minor surgical
item date of service on the same day or years. While median costs for an procedures during a patient’s
the day before the date reported for episode of observation care that would observation stay, unless those
observation: meet the criteria for separate payment procedures are essential to the patient’s
• An emergency department visit have remained relatively stable between care during that time period, even if the
(APC 0609, 0613, 0614, 0615, or 0616); CY 2003 and CY 2006, the frequency of most efficient and effective performance
or claims for separately payable of those procedures could be during the
• A clinic visit (APC 0604, 0605, observation services has rapidly single HOPD encounter.
0606, 0607, or 0608); or increased. Comparing claims data for Currently, the OPPS pays separately
• Critical care (APC 0617); or separately payable observation care for observation care for only the three
• Direct admission to observation available for proposed rules spanning original medical conditions designated
reported with HCPCS code G0379 (APC from CY 2005 to CY 2008 (that is, claims in CY 2002, specifically chest pain,
0604). data reflecting services furnished from asthma, and congestive heart failure. As
b. No procedure with a ‘‘T’’ status CY 2003 to CY 2006), we see substantial discussed in more detail in the
indicator can be reported on the same growth in separately payable observation section (section XI.) of this
day or day before observation care is observation care billed under the OPPS proposed rule, the APC Panel
provided. over that time. In CY 2003, the full first recommended at its March 2007
year when observation care was meeting that we consider expanding
4. Physician Evaluation separately payable, there were separate payment for observation
a. The beneficiary must be in the care approximately 56,000 claims for services to include two additional
of a physician during the period of separately payable observation care. In diagnoses, syncope and dehydration. As
observation, as documented in the CY 2004, there were approximately mentioned previously, we have defined
medical record by admission, discharge, 77,000 claims for separately payable observation care as a well-defined set of
and other appropriate progress notes observation care. In CY 2005, that specific, clinically appropriate services,
that are timed, written, and signed by number increased to approximately which include ongoing, short-term
the physician. 124,300 claims, representing about a 61 treatment, assessment, and
b. The medical record must include percent increase in one year. In reassessment, that are furnished while a
documentation that the physician addition, in the CY 2006 data available decision is being made regarding
explicitly assessed patient risk to for this proposed rule, the frequency of whether a patient will require further
determine that the beneficiary would claims for separately payable treatment as a hospital inpatient or if
benefit from observation care. observation services increased again, to the individual is able to be discharged
In the context of our proposed CY more than 271,200 claims, about a 118- from the hospital. Given the definition
2008 packaging approach, for several percent increase over CY 2005 and more of observation services, it is clear that,
mstockstill on PROD1PC66 with PROPOSALS2

reasons we believe that it is appropriate than triple the number of claims from 2 in certain circumstances, observation
to package payment for all observation years earlier. While it is not possible to care could be appropriate for patients
services reported with HCPCS code discern the specific factors responsible with a range of diagnoses. Both the APC
G0378 under the CY 2008 OPPS. for the growth in claims for separately Panel and numerous commenters to
Primarily, observation services are ideal payable observation services, as there prior OPPS proposed rules have
for packaging because they are always have been minor changes in both the confirmed their agreement with this
provided as a supportive service in process and criteria for separate perspective. In addition, the June 2006

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Institute of Medicine (IOM) Report We have calculated the median costs 99285 is assigned to APC 0616 (Level 5
entitled, ‘‘Hospital-Based Emergency on which the proposed CY 2008 Emergency Visits), with a CY 2007 APC
Care: At the Breaking Point,’’ payment rates are based according to median cost of $323.36 and a proposed
encourages hospitals to apply tools to our proposed packaging approach under CY 2008 median cost of $344.50. The
improve the flow of patients through which payment for HCPCS code G0378 CY 2007 median cost of APC 0339 for
emergency departments, including would always be packaged (status separately payable observation is
developing clinical decisions units indicator ‘‘N’’). As we discussed $440.22.
where observation care is provided. The previously in more detail, in this The proposed CY 2008 payment rates
IOM’s Committee on the Future of section, this has the effect of both associated with this example are
Emergency Care in the United States changing the median costs for the outlined in Table 20 below. The table
Health System recommended that CMS independent services into which the indicates that the proposed CY 2008
remove the current limitations on the costs of the dependent and supportive payment for a Level 5 emergency
medical conditions that are eligible for observation services are packaged and department visit is higher than the CY
separate observation care payment in also of redistributing payment that 2007 payment amount for that code.
order to encourage the development of would otherwise have been made However, the proposed increase in the
such observation units. separately for the observation services Level 5 emergency department visit
As packaging payment provides we are proposing to newly package for payment rate for CY 2008 is
desirable incentives for greater CY 2008. significantly less than the CY 2007
efficiency in the delivery of health care For example, separately payable payment for separately payable
and provides hospitals with significant observation care is frequently billed observation. This is due to the fact that,
flexibility to manage their resources, we with CPT code 99285 (Emergency although observation services are
believe it is most appropriate to treat department visit for the evaluation and commonly billed with a Level 5
observation care for all diagnoses management of a patient (Level 5)). In emergency department visit, the
similarly by packaging its costs into the CY 2008 OPPS proposed rule claims proportion of all Level 5 emergency
payment for the separately payable data, CPT code 99285 was billed department visits that include
independent services with which the 157,668 times on claims with HCPCS observation (12 percent) is relatively
observation is associated. This code G0378 that meet our current small. Thus, when observation care that
consistent payment methodology would criteria for separate payment for would have met the CY 2007 criteria for
provide hospitals with the flexibility to observation care. In addition, about 57 separate payment is packaged into
assess their approaches to patient care percent of the claims for HCPCS code payment for separately payable services
and patient flow and provide G0378 that meet our current criteria for such as a Level 5 emergency department
observation care for patients with a separate payment also reported CPT visit, it raises the payment rate for that
variety of clinical conditions when code 99285. Under our proposed policy separately payable service for all
hospitals conclude that observation for CY 2008, we are proposing to occurrences of the service, even those
services would improve their treatment package payment for HCPCS code occurrences where observation care is
of those patients. Approximately 70 G0378 into the payment for separately not provided. As a result, the payment
percent of the occurrences of payable procedures that are provided in rate for the separately payable service,
observation care billed under the OPPS conjunction with HCPCS code G0378. the Level 5 emergency department visit,
are currently packaged, and this Specifically, we would package does not increase by the full amount of
proposal would extend the incentives payment for HCPCS code G0378 when the former payment rate for separately
for efficiency already present for the it is provided with a separately paid payable observation care as that amount
vast majority of observation services service such as CPT code 99285, so that is spread over many more occurrences
that are already packaged under the in this example observation would of Level 5 emergency department visits.
OPPS to the remaining 30 percent of receive packaged payment through the In addition, OPPS’ use of medians leads
observation services for which we separate OPPS payment for the Level 5 relative weight estimates to be less
currently make separate payment. emergency department visit. CPT code sensitive to packaging decisions.

TABLE 20.—EXAMPLE OF THE EFFECTS OF THE CY 2008 PACKAGING PROPOSAL ON PAYMENT FOR OBSERVATION CARE
(HCPCS CODE G0378) AND CPT CODE 99295
Sum of CY Sum of CY
2007 payment 2008 proposed
HCPCS code Short descriptor (some G0378 payment
paid sepa- (G0378 pack-
rately) aged)

G0378 (under criteria for separately paid observation Hospital observation per hr (dependent service) ......... $442.81 $0.00
care).
99285 ............................................................................ Emergency dept visit (independent service) ................ 325.26 348.81

Total Payment ....................................................... ....................................................................................... 768.07 348.81


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This example cannot demonstrate the code G0378, as well as all other impact of APC weight recalibration and
overall impact of packaging observation packaging changes that we are packaging changes that we are
services on any given hospital because proposing for CY 2008, can only be proposing by classes of hospitals, and
each individual hospital’s case-mix and assessed in the aggregate for classes of the OPPS Hospital-Specific Impacts—
billing pattern would be different. The hospitals. Section XXII.B. of this Provider-Specific Data file presents our
overall impact of packaging HCPCS proposed rule displays the overall estimates of CY 2008 hospital payment

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for those hospitals we include in our services reported with HCPCS code and gives hospitals some flexibility to
ratesetting and payment simulation G0378 for CY 2008. Payment for manage their resources, we believe that
database. The hospital-specific impact observation services would be made as payment for larger bundles of major
file can be found at http:// part of the payment for the separately separately paid services that are
www.cms.hhs.gov/ payable independent services with commonly performed in the same
HospitalOutpatientPPS/ under which they are billed. As part of this hospital outpatient encounter or as part
supporting documentation for this proposal, we would change the status of a multi-day episode of care would
proposed rule. indicator for HCPCS code G0378 from create even more incentives for
The estimated overall impact of these ‘‘Q’’ to ‘‘N.’’ In addition, we would no efficiency, as discussed earlier.
changes that we are proposing for CY longer require the current criteria for Moreover, defining the ‘‘service’’ paid
2008 presented in section XXII.B. of this separate payment related to hospital under the OPPS by combinations of
proposed rule is based on the visits and ‘‘T’’ status procedures, HCPCS codes for component services
assumption that hospital behavior minimum number of hours, and that are commonly performed in the
would not change with regard to when qualifying diagnoses. However, we same encounter and that result in the
the dependent observation care is would retain as general reporting provision of a complete service would
provided in the same encounter and by requirements those criteria related to enable us to use more claims data and
the same hospital that performs the physician evaluation, documentation, to establish payment rates that we
independent services. To the extent that and observation beginning and ending believe more appropriately capture the
hospitals could change their behavior time as listed in sections II.A.2.a., b., costs of services paid under the OPPS.
and cease providing observation and c., and 4.a. and b. of this proposed Section 1833(t)(1)(B) of the Act
services, refer patients elsewhere for rule. Those are more general permits us to define what constitutes a
that care, or increase the frequency of requirements that encourage hospitals to ‘‘service’’ for purposes of payment
observation services, the data would provide medically reasonable and under the OPPS and is not restricted to
show such a change in practice in future necessary care and help to ensure the defining a ‘‘service’’ as a single HCPCS
years and that change would be proper reporting of observation services code. For example, the OPPS currently
reflected in future budget neutrality on correctly coded hospital claims that packages payment for certain items and
adjustments. However, with respect to reflect the full charges associated with services reported with HCPCS codes
observation care, we believe that all hospital resources utilized to provide into the payment for other separately
hospitals are limited in the extent to the reported services. payable services on the claim.
which they could change their behavior Consistent with our statutory flexibility
with regard to how they furnish these d. Proposed Development of Composite to define what constitutes a service
services because observation care, by APCs under the OPPS, we are proposing to
definition, is short-term treatment, (1) Background view a service, in some cases, as not just
assessment, and reassessment before a the diagnostic or treatment modality
decision can be made regarding whether As we discuss above in regard to our identified by one individual HCPCS
patients will require further treatment as reasons for our proposed packaging code but as the totality of care provided
hospital inpatients or if they are able to approach for the CY 2008 OPPS, we in a hospital outpatient encounter that
be discharged from the hospital after believe that it is crucial that the would be reported with two or more
receiving the independent services. We payment approach of the OPPS create HCPCS codes for component services.
believe it is unlikely that hospitals incentives for hospitals to seek ways to In view of this statutory flexibility to
would cease providing medically provide services more efficiently than define what constitutes a ‘‘service’’ for
necessary observation care or refer exist under the current OPPS structure purposes of OPPS payment, our desire
patients elsewhere for that care if they and allow hospitals maximum to encourage efficiency in HOPD care,
were unable to reach a decision that the flexibility to manage their resources. our focus on value-based purchasing,
patient could be safely discharged from The current OPPS structure usually and our desire to use as much claims
the outpatient department. We would provides payment for individual data as possible to set payment rates
expect that hospitals would always bill services which are generally defined by under the OPPS, we examined our
the supportive observation care on the individual HCPCS codes. We currently claims data to determine how we could
same claim as the other independent package the costs of some items and best use the multiple procedure claims
services provided in the single hospital services (such as drugs and biologicals (‘‘hardcore’’ multiples) that are
encounter. with an average per day cost of less than otherwise not available for ratesetting
As we indicated earlier, in all cases $55) into the payment for separately because they include multiple
we are proposing that hospitals that payable individual services. However, separately payable procedures furnished
furnish the observation care in because the extent of packaging in the on the same date of service. As
association with independent services OPPS is currently modest, furnishing discussed in more detail in our
must bill those services on the same many individual separately payable discussion of single and multiple
claim so that the costs of the observation services increases total payment to the procedure claims in section II.A.1.b. of
care can be appropriately packaged into hospital. We believe that this aspect of this proposed rule, we have focused in
payment for the independent services. the current OPPS structure is a recent years on ways to convert multiple
We expect to carefully monitor any significant factor in the growth in procedure claims to single procedure
changes in billing practices on a service- volume and spending that we discuss in claims to maximize our use of the
specific and hospital-specific basis to our general overview and provides a claims data in setting median costs for
mstockstill on PROD1PC66 with PROPOSALS2

determine whether there is reason to primary rationale for our proposed separately payable procedures. We have
request that QIOs review the quality of packaging approach for services in the been successful in using the bypass list
care furnished or to request that CY 2008 OPPS. While packaging to generate ‘‘pseudo’’ single procedure
Program Safeguard Contractors review payment for supportive dependent claims for use in median setting, but
the claims against the medical record. services into the payment for the this approach generally does not enable
In summary, we are proposing to independent services which they us to use the hardcore multiple claims
package payment for all observation accompany promotes greater efficiency that contain multiple separately payable

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procedures, all with associated under the OPPS. Where the claims data payment for specified mental health
packaging that cannot be split among show that combinations of services are services provided by one hospital to a
them. We believe that we could use the commonly furnished together, in the single beneficiary on one date of service
data from many more multiple future we will actively examine whether based on the payment rates associated
procedure claims by creating APCs for it would be more appropriate to with the APCs for the individual
payment of those services defined as establish a composite APC under which services would exceed the per diem
frequently occurring common we would pay a single rate for the partial hospitalization payment (listed
combinations of HCPCS codes for service reported with a combination of as APC 0033 (Partial Hospitalization)),
component services that we see in HCPCS codes on the same date of those specified mental health services
correctly coded multiple procedure service (or different dates of service) are assigned to APC 0034, which has the
claims. than to continue to pay for these same payment rate as APC 0033, and the
Our examination of data for multiple individual services under service- hospital is paid one unit of APC 0034.
procedure claims identified two specific specific APCs. We are proposing these This longstanding policy regarding
sets of services that we believe are good specific encounter-based composite payment of APC 0034 for combinations
candidates for payment based on the APCs for CY 2008 because we believe of independent services provided in a
naturally occurring common that this approach could move the OPPS single hospital encounter resembles the
combinations of component codes that toward possible payment based on an payment policy for composite APCs that
we see on the multiple procedure encounter or episode-of-care basis, we are proposing for LDR prostate
claims. These are low dose rate (LDR) enable us to use more valid and brachytherapy and cardiac
prostate brachytherapy and cardiac complete claims data, create hospital electrophysiologic evaluation and
electrophysiologic evaluation and incentives for efficiency, and provide ablation services for CY 2008. Similar to
ablation services. hospitals with significant flexibility to the logic for the proposed composite
Specifically, we have been told (and manage their resources that do not exist APCs, the OCE determines whether to
our data support) that claims for LDR when we pay for services on a per pay these specified mental health
prostate brachytherapy, when correctly service basis. As such, these proposed services individually or to make a single
coded, report at least two major composite APCs may serve as a payment at the same rate as the per
separately payable procedure codes the prototype for future creation of more diem rate for partial hospitalization for
majority of the time. For reasons composite APCs, through which we all of the specified mental health
discussed below, we are proposing to could provide OPPS payment for other services furnished on that date of
use these correctly coded claims that types of services in the future. We note service. However, we note this
would otherwise be unusable hardcore that while these proposed composite established policy for payment of APC
multiples as the basis for an encounter- APCs for CY 2008 are based on observed 0034 differs from the proposed policies
based composite APC that would make
combinations of component HCPCS for the new CY 2008 composite APCs
a single payment when both codes are
codes reported on the same date of because APC 0034 is only paid if the
reported with the same date of service.
service for a single encounter, we also sum of the individual payment rates for
We also are proposing to pay separately
will be exploring in the future how we the specified mental health services
for these procedure codes in cases
could set payments based on episodes of provided on one date of service exceeds
where only one of the two procedures
care involving services that extend the APC 0034 payment rate, which
is provided in a hospital encounter,
beyond the same date but which are all equals the per diem rate of APC 0033 for
through the APC associated with that
supportive of a single, related course of partial hospitalization.
component procedure code that is
treatment. While we are not proposing We are not proposing to change this
furnished.
Similarly, we have been told (and our to implement multi-day episode-of-care mental health services payment policy
data support) that multiple cardiac APCs in CY 2008, we welcome for CY 2008. However, we are proposing
electrophysiologic evaluation, mapping, comments on the concept of developing to change the status indicator from ‘‘S’’
and ablation services are typically these APCs to provide payment for such to ‘‘Q’’ for the HCPCS codes for the
furnished on the same date of service episodes in order to inform our future specified mental health services to
and that the correctly coded claims are analyses in this area. which APC 0034 applies because those
typically the multiple procedure claims While we have never previously used codes are conditionally packaged when
that include several component services the term ‘‘composite’’ APC under the the sum of the payment rates for the
and that we are unable to use in our OPPS, we do have one historical single code APCs to which they are
current claims process. The CY 2007 payment policy that resembles the CY assigned exceeds the per diem payment
CPT book introductory discussion in the 2008 proposed composite APC policy. rate for partial hospitalization. While we
section entitled ‘‘Intracardiac Since the inception of the OPPS, CMS have not published APC 0034 in
Electrophysiological Procedures/ has limited the aggregate payment for Addendum A in the past, we are
Studies’’ notes that, in many specified less intensive mental health including it in Addendum A to this
circumstances, patients with services furnished on the same date to proposed rule entitled ‘‘Mental Health
arrhythmias are evaluated and treated at the payment for a day of partial Composite,’’ consistent with our naming
the same encounter. Therefore, as hospitalization, which we considered to taxonomy and publication of the two
discussed in detail below, we are also be the most resource intensive of all other proposed composite APCs. We are
proposing to establish an encounter outpatient mental health treatment (65 also including the mental health
based composite APC for these services FR 18455). The costs associated with composite APC 0034 and its member
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that would provide a single payment for administering a partial hospitalization HCPCS codes in Addendum M to this
certain common combinations of program represent the most resource proposed rule in the same way that we
component cardiac electrophysiologic intensive of all outpatient mental health show the HCPCS codes to which the
services that are reported on the same treatment, and we do not believe that LDR Prostate Brachytherapy Composite
date of service. we should pay more for a day of APC and Cardiac Electrophysiologic
These composite APCs reflect an individual mental health services under Evaluation and Ablation Composite
evolution in our approach to payment the OPPS. Through the OCE, when the APC apply.

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In summary, we are not proposing a needles or catheters are inserted into the reports the placement of the needles or
change to the longstanding payment prostate, and then radioactive sources catheters for services furnished on or
policy under which the OPPS pays one are permanently implanted into the after January 1, 2007. Before this date,
unit of APC 0034 in cases in which the prostate through the hollow needles or including in the claims for services
total payments for specified mental catheters. The needles or catheters are furnished in CY 2006 that were used to
health services provided on the same then removed from the body, leaving the develop this proposed rule, CPT code
date of service would otherwise exceed radioactive sources in the prostate 55859 (Transperineal placement of
the payment rate for APC 0033. forever, where they slowly give off needles or catheters into prostate for
However, we are proposing to change radiation to destroy the cancer cells interstitial radioelement application,
the status indicator to ‘‘Q’’ for the until the sources are no longer with or without cystoscopy) reported
HCPCS codes for mental health services radioactive. At least two CPT codes are this service. All of the claims for CPT
to which this policy applies and which used to report the composite treatment code 55859 (as reported in the CY 2006
comprise this existing composite APC, service because there are separate codes claims data) are for the placement of
because payment for these services that describe placement of the needles needles or catheters for prostate
would be packaged unless the sum of or catheters and application of the brachytherapy, although not all are
the individual payments assigned to the brachytherapy sources. LDR prostate related to permanent brachytherapy
codes would be less than the payment brachytherapy cannot be furnished source application.
for APC 0034. without the services described by both
CPT code 77778 (Interstitial radiation
We look forward to public comments of these codes. Generally, the
source application; complex) reports the
on the concept of composite APCs in component services represented by both
application of brachytherapy sources
general and, specifically, the two new codes occur in the same operative
and, when billed with CPT code 55859
proposed encounter-based composite session in the same hospital on the same
date of service. However, we have been (or CPT code 55875 after January 1,
APCs for CY 2008, and we hope to
told of uncommon cases in which they 2007) for the same encounter, reports
involve the public and the APC Panel in
are furnished in different locations, with placement of the sources in the prostate.
the creation of additional composite
the patient being transported from one We have been told that application of
APCs. Our goal would be to use the
location to another for application of the brachytherapy sources to the prostate is
many naturally occurring multiple
sources. In addition, other services, estimated to be about 85 percent of all
procedure claims that cannot currently
commonly CPT code 76965 (Ultrasonic occurrences of CPT code 77778 under
be incorporated under the existing APC
guidance for interstitial radioelement the OPPS, consistent with our CY 2006
structure, regardless of whether the
application) and CPT code 77290 claims data used for CY 2008
naturally occurring pattern of multiple
(Therapeutic radiology simulation-aided ratesetting. CPT code 77778 is also used
procedure claims prevents the
field setting; complex) are often to report the application of sources of
development of single bills.
provided in the same hospital brachytherapy to body sites other than
(2) Proposed Low Dose Rate (LDR) encounter. the prostate.
Prostate Brachytherapy Composite APC CPT code 55875 (Transperineal Historical coding, APC assignments,
(a) Background placement of needles or catheters into and payment rates for CPT codes 55859
LDR prostate brachytherapy is a prostate for interstitial radioelement (CPT code 55875 beginning in CY 2007)
treatment for prostate cancer in which application, with or without cystoscopy) and 77778 are shown below in Table 21.

TABLE 21.—HISTORICAL PAYMENT RATES FOR COMPLEX INTERSTITIAL APPLICATION OF BRACHYTHERAPY SOURCES
Payment APC for Payment rate APC for Brachytherapy
OPPS CY Combination APC rate for CPT HCPCS for CPT codes HCPCS source
code 77778 code 77778 55859/55875 code 55859

2000 ..................................................... N/A ........................ $198.31 APC 0312 $848.04 APC 0162 Pass-through.
2001 ..................................................... N/A ........................ 205.49 APC 0312 878.72 APC 0162 Pass-through.
2002 ..................................................... N/A ........................ 6,344.67 APC 0312 2,068.23 APC 0163 Pass-through with
pro rata reduc-
tion.
2003 (prostate brachytherapy with io- G0261, APC 648, n/a n/a n/a n/a Packaged.
dine sources). $5,154.34.
2003 (prostate brachytherapy with pal- G0256, APC 649, n/a n/a n/a n/a Packaged.
ladium sources). $5,998.24.
2003 (not prostate brachytherapy, not N/A ........................ 2,853.58 APC 0651 1,479.60 APC 0163 Separate payment
including sources). based on scaled
median cost per
source.
2004 ..................................................... N/A ........................ 558.24 APC 0651 1,848.55 APC 0163 Cost.
2005 ..................................................... N/A ........................ 1,248.93 APC 0651 2,055.63 APC 0163 Cost.
2006 ..................................................... N/A ........................ 666.21 APC 0651 1,993.35 APC 0163 Cost.
2007 ..................................................... N/A ........................ 1,035.50 APC 0651 2,146.84 APC 0163 Cost.
mstockstill on PROD1PC66 with PROPOSALS2

Payment rates for CPT code 77778, in median costs for these services results is a multiple procedure claim.
particular, have fluctuated over the in use of only incorrectly coded claims Specifically, we have been informed
years. We have frequently been for LDR prostate brachytherapy because, that a correctly coded claim for LDR
informed by the public that reliance on for application of brachytherapy sources prostate brachytherapy should include,
single procedure claims to set the to the prostate, a correctly coded claim for the same date of service, both CPT

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codes 55859 and 77778, brachytherapy as a single procedure and the supporting clinical situations where the LDR
sources reported with Level II HCPCS services were either packaged or sources were not applied in the same
codes, and typically separately coded bypassed for purposes of calculating the operative session as the insertion of the
imaging and radiation therapy planning median for the combined pair of codes. needles or catheters. These data are
services, and that we should use (We refer readers to the CY 2006 final consistent with our understanding of
correctly coded claims to set the median rule with comment period (70 FR current clinical practice for prostate
for APC 0651 (Complex Interstitial 68596) and the CY 2007 final rule with brachytherapy, and we believe that
Radiation Source Application) in comment period (71 FR 68043) for those multiple claims are correctly
particular (where CPT code 77778 is specific discussion of these findings.) coded claims for this common clinical
assigned). In presentations to the APC Hence, we concluded that the single bill scenario. Similarly, 83 percent of the
Panel in its March 2006 meeting, and in median costs were reasonable and, for claims for complex interstitial
response to the CY 2006 and CY 2007 both the CY 2006 OPPS and CY 2007 brachytherapy source application CPT
OPPS proposed rules, commenters OPPS, we based payment for CPT codes code 77778 also included the CPT code
urged us to set the payment rate for LDR 55859 and 77778 on single procedure for inserting needles or catheters into
prostate brachytherapy services using claims. the prostate, consistent with our
only multiple procedure claims. (b) Proposed Payment for LDR Prostate understanding that the vast majority of
Specifically for CY 2007, they urged us Brachytherapy cases of complex interstitial
to sum the costs on multiple procedure brachytherapy source application
claims containing CPT codes 77778 and For the CY 2008 OPPS, we are procedures are specifically for the
55859 (and no other separately payable proposing to create a composite APC treatment of prostate cancer, rather than
services not on the bypass list) and, 8001, titled ‘‘LDR Prostate other types of cancer.
excluding the costs of sources, split the Brachytherapy Composite,’’ that would
Using the proposed packaging
resulting aggregate median cost on the provide one bundled payment for LDR
approach for imaging supervision and
multiple procedure claim according to a prostate brachytherapy when the
interpretation services and guidance
preestablished attribution ratio between hospital bills both CPT codes 55875 and
services for CY 2008, we were able to
CPT codes 77778 and 55859. They 77778 as component services provided
identify 1,343 claims, 14 percent of all
indicated that any claim for a during the same hospital encounter. It is
OPPS claims that reported these two
brachytherapy service that did not also shown in Addendum A to this proposed
procedures on the same date, that
rule as APC 8001 (LDR Prostate
report a brachytherapy source should be contain both CPT codes 55859 and
Brachytherapy Composite). As
considered to be incorrectly coded and 77778 on the same date of service and
discussed in detail in section VII. of this
thus not reflective of the hospital’s no other separately paid procedure
proposed rule, we are proposing to
resources required for the interstitial code. We were not able to use more
continue to pay sources of
source application procedure. The claims to develop this composite APC
brachytherapy separately in accordance
presenters to the APC Panel believed median cost because there are several
with the requirements of the statute.
that claims that did not contain both In the CY 2006 claims used to radiation therapy planning codes that
brachytherapy source and source calculate the proposed CY 2008 median are commonly reported with CPT codes
application codes should be excluded costs, CPT code 55859 was reported 55859 and 77778 and that are both
from use in establishing the median cost 14,083 times. The proposed rule median separately paid and not on the bypass
for APC 0651. They believed that cost for CPT code 55859, calculated list because the amount of their
hospitals that reported the from 2,232 single and ‘‘pseudo’’ single associated packaging exceeds the
brachytherapy sources on their claims bills, is $2,328.56. The CY 2008 threshold for inclusion on the bypass
were more likely to report complete proposed rule median cost for APC 0163 list. A complete discussion of the
charges for the associated brachytherapy (Level IV Cystourethroscopy and other bypass list under our CY 2008
source application procedure than Genitourinary Procedures) to which packaging proposal is provided in
hospitals that did not report the CPT code 55859 was assigned for CY section II.A. of this proposed rule.
separately payable brachytherapy 2006 and to which CPT code 55875 is We packaged the costs of packaged
sources. assigned for CY 2007 is $2,322.30. In the revenue codes and packaged HCPCS
As a result of those comments, for set of claims used to calculate the codes into the sum of the costs for CPT
both CY 2006 and CY 2007, we used median cost for APC 0651, to which codes 55859 and 77778 to derive a total
multiple procedure claims containing CPT code 77778 is the only assigned proposed median cost of $3,127.35 for
both CPT codes 55859 and 77778 to service, CPT code 77778 was reported the composite LDR prostate
determine a median cost for the totality 11,850 times. The CY 2008 proposed brachytherapy service based upon the
of both services (with both packaging rule median cost for APC 0651 (and, 1,343 claims that contained both CPT
and bypassing of the other commonly therefore, for CPT code 77778) based on codes and no other separately paid
furnished services). We compared the 339 single and ‘‘pseudo’’ single procedure codes. This is reasonably
median calculated from this subset of procedure bills is $969.73. comparable to $3,298.29, the sum of the
claims reflecting the most common In examining the claims data used to CPT median costs we calculated using
clinical scenario to the single bill calculate the median costs for this the single procedure bills for CPT codes
median costs for CPT codes 55859 and proposed rule, we found 9,807 claims 55859 and 77778 (($2,328.56 plus
77778 as a method of determining on which both CPT code 55859 and CPT $969.73). We believe that the difference
whether the total payment to the code 77778 were billed on the same date between the composite APC median
mstockstill on PROD1PC66 with PROPOSALS2

hospital for both services furnished to of service. These data suggest that LDR cost based upon those claims that
provide LDR prostate brachytherapy prostate brachytherapy constituted at contain both codes and the sum of the
would be reasonable. In both years, we least 70 percent of CY 2006 claims for median costs for the APCs to which the
found that the sum of the single bill CPT code 55859, with the remainder of two individual CPT codes map is
medians was reasonably close to the claims representing the insertion of minimal and may be attributable to
median cost of both services from needles or catheters for high dose rate efficiencies in furnishing the services
multiple claims when they were treated prostate brachytherapy or unusual together during a single encounter.

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We believe that creation of the insertion of needles or catheters for high importantly, this composite APC
composite APC for the payment of LDR dose rate prostate brachytherapy, and payment methodology that we are
prostate brachytherapy is consistent the low dose rate brachytherapy source proposing would contribute to our goal
with the statute and with our desire to application procedure (CPT code 77778) of providing payment under the OPPS
use more claims data for ratesetting, would not be reported. In high dose rate for a larger bundle of component
particularly data from correctly coded prostate brachytherapy, the sources are services provided in a single hospital
claims that reflect typical clinical applied temporarily several times over a outpatient encounter, creating
practice, and to make payment for larger few days while the needles or catheters additional hospital incentives for
packages and bundles of services to remain in the prostate, and the needles efficiency and cost containment, while
provide enhanced incentives for or catheters are removed only after all providing hospitals with the most
efficiency and cost containment under the treatment fractions have been flexibility to manage their resources.
the OPPS and to maximize hospital completed. We have also been told by
flexibility in managing resources. (3) Proposed Cardiac Electrophysiologic
hospitals that, even when LDR prostate
Under our proposal, hospitals that Evaluation and Ablation Composite
brachytherapy is planned, there are
furnish LDR prostate brachytherapy APC
occasions in which the needles or
would report CPT codes 55875 and catheters are inserted in one facility and (a) Background
77778 and the codes for the applicable the patient is moved to another facility During its March 2007 meeting,
brachytherapy sources in the same for the application of the sources. In members of the APC Panel indicated
manner that they currently report these those cases, we would need to be able that the reason we found so few single
items and services (in addition to to appropriately pay the hospital that bills for procedures assigned to APC
reporting any other services provided), inserted the needles or catheters before 0087 (Cardiac Electrophysiologic
using the same HCPCS codes and the patient was discharged prior to Recording/Mapping), specifically 72 of
reporting the same charges. We would source application. Moreover, there are
require that hospitals report both CPT 11,834 or 0.61 percent of all proposed
cases in which the needles or catheters rule CY 2006 claims, is that most of the
codes resulting in the composite APC are inserted but it is not possible to
payment on the same claim when they services assigned to APCs 0085 (Level II
proceed to the application of the sources Electrophysiologic Evaluation), 0086
are furnished to a single Medicare and, therefore, the hospital would
beneficiary in the same facility on the (Ablate Heart Dysrhythm Focus), and
correctly report only CPT code 55875. 0087 are performed in varying
same date of service, and we would Similarly, more than 10 brachytherapy
make any necessary conforming changes combinations with one another.
sources can be applied interstitially (as Therefore, correctly coded claims would
to the billing instructions to ensure that described by CPT code 77778) to sites
they do not present an obstacle to most often include multiple codes for
other than the prostate and it is, component services that are reported
correct reporting. We may implement therefore, necessary to have a separate
edits to ensure that hospitals do not with different CPT codes and that are
payment rate for CPT code 77778. now paid separately through different
submit two separate claims for these Hence, for CY 2008 we are proposing to
two procedures when furnished on the APCs. There would never be many
continue to pay for CPT code 55875 (the single bills and those that are reported
same date in the same facility. When successor to CPT code 55859) through
this combination of codes is reported, as single bills would likely represent
APC 0163 and to pay for CPT code atypical cases or incorrectly coded
the OCE would assign the composite 77778 through APC 0651 when the
APC 8001 and the Pricer would pay claims.
services are individually furnished We examined the combinations of
based on the payment rate for the
other than on the same date of service services observed in our claims data
composite APC. The OCE would assign
in the same facility. across these three APCs to see whether
APC 0163 or APC 0651 only when both
codes are not reported on the same In summary, we are proposing to there was the potential for handling the
claim with the same date of service, and establish a composite APC, shown in data differently so that we could use
we would expect this to be the atypical Addendum A as APC 8001, to provide more claims data to set the payment
case. The composite APC would have a payment for LDR prostate brachytherapy rates for these procedures, particularly
status indicator of ‘‘T’’ so that payment when the composite service, billed as those services assigned to APC 0087
for other procedures also assigned to CPT codes 55875 and 77778, is where we have had a persistent concern
status indicator ‘‘T’’ with lower furnished in a single hospital encounter regarding the limited and reportedly
payment rates would be reduced by 50 and to base the payment for the unrepresentative single bills available
percent when furnished on the same composite APC on the median cost for use in calculating the median cost
date of service as the composite service, derived from claims that contain both according to our standard OPPS
in order to reflect the efficiency that codes. These two CPT codes are methodology. We initially developed
occurs when multiple procedures are assigned to status indicator ‘‘Q’’ in and examined frequency distributions of
furnished to a Medicare beneficiary in a Addendum B to this proposed rule to unique combinations of codes on claims
single operative session. We would not signify their conditionally packaged which contained at least one unit of any
expect that the composite APC payment status, and their composite APC code assigned to APC 0085, 0086, or
would be commonly reduced because assignments are noted in Addendum M. 0087 and then broadened these analysis
we believe that it is unlikely that a This proposal would permit us to base to any combination of an
higher paid procedure would be payment on claims for the most electrophysiologic evaluation and
performed on the same date. common clinical scenario for interstitial ablation code.
mstockstill on PROD1PC66 with PROPOSALS2

We are proposing to continue to radiation source application to the Our initial frequency distributions
establish separate payment rates for prostate. We note that this payment supported the APC Panel members’
APC 0651 (to which only CPT code bundle would also include payment for description of their experiences. We
77778 is assigned) and for APC 0163 (to the commonly associated imaging identified and enumerated the most
which we are proposing to continue to guidance services, which would be commonly appearing unique
assign CPT code 55875). In some cases, newly packaged under our proposed CY occurrences (either single procedures or
CPT 55875 may be reported for the 2008 packaging approach. Most combinations) of codes for services

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42682 Federal Register / Vol. 72, No. 148 / Thursday, August 2, 2007 / Proposed Rules

assigned to status indicator ‘‘S,’’ ‘‘T,’’ 0087. There were 7,379 claims in the occurrences from CY 2006 claims
‘‘V,’’ or ‘‘X’’ that contained at least one top 100 occurrence types. Table 22 available for this proposed rule.
code assigned to APC 0085, 0086, or shows the 10 most common unique

TABLE 22.—TEN MOST FREQUENTLY OCCURRING UNIQUE OCCURRENCES OF CARDIAC ELECTROPHYSIOLOGIC


EVALUATION, MAPPING, AND ABLATION PROCEDURES AND OTHER SEPARATELY PAYABLE SERVICES
Combination HCPCS CY 2007 CY 2007
Frequency Short descriptor
number code APC SI

1 .......................... 763 93620 Electrophysiology evaluation ...................................................................... 0085 T


2 .......................... 509 93609 Map tachycardia, add-on ........................................................................... 0087 T
93620 Electrophysiology evaluation ...................................................................... 0085 T
93621 Electrophysiology evaluation ...................................................................... 0085 T
93623 Stimulation, pacing heart ........................................................................... 0087 T
93651 Ablate heart dysrhythm focus .................................................................... 0086 T
3 .......................... 398 93609 Map tachycardia, add-on ........................................................................... 0087 T
93620 Electrophysiology evaluation ...................................................................... 0085 T
93621 Electrophysiology evaluation ...................................................................... 0085 T
93651 Ablate heart dysrhythm focus .................................................................... 0086 T
4 .......................... 381 93650 Ablate heart dysrhythm focus .................................................................... 0086 T
5 .......................... 376 93620 Electrophysiology evaluation ...................................................................... 0085 T
93623 Stimulation, pacing heart ........................................................................... 0087 T
6 .......................... 248 93005 Electrocardiogram, tracing ......................................................................... 0099 S
93609 Map tachycardia, add-on ........................................................................... 0087 T
93620 Electrophysiology evaluation ...................................................................... 0085 T
93621 Electrophysiology evaluation ...................................................................... 0085 T
93623 Stimulation, pacing heart ........................................................................... 0087 T
93651 Ablate heart dysrhythm focus .................................................................... 0086 T
7 .......................... 225 93005 Electrocardiogram, tracing ......................................................................... 0099 S
93609 Map tachycardia, add-on ........................................................................... 0087 T
93620 Electrophysiology evaluation ...................................................................... 0085 T
93621 Electrophysiology evaluation ...................................................................... 0085 T
93651 Ablate heart dysrhythm focus .................................................................... 0086 T
8 .......................... 225 93613 Electrophys map 3d, add-on ...................................................................... 0087 T
93620 Electrophysiology evaluation ...................................................................... 0085 T
93621 Electrophysiology evaluation ...................................................................... 0085 T
93651 Ablate heart dysrhythm focus .................................................................... 0086 T
9 .......................... 217 93005 Electrocardiogram, tracing ......................................................................... 0099 S
93620 Electrophysiology evaluation ...................................................................... 0085 T
10 ........................ 185 93613 Electrophys map 3d, add-on ...................................................................... 0087 T
93620 Electrophysiology evaluation ...................................................................... 0085 T
93621 Electrophysiology evaluation ...................................................................... 0085 T
93623 Stimulation, pacing heart ........................................................................... 0087 T
93651 Ablate heart dysrhythm focus .................................................................... 0086 T

Although the number of claims for occurring combinations of codes on least one code from group A for
each unique occurrence was modest, we claims that also contained at least one evaluation services and at least one code
were able to determine that there were code assigned to APC 0085, 0086 or from group B for ablation services
certain combinations of codes that 0087 and our clinical review of the reported on the same date of service on
occurred most often together. Based on codes, we proceeded to study an individual claim, as specified in
our review of the most frequently combination claims that contained at Table 23 below.

TABLE 23.—GROUPS OF CARDIAC ELECTROPHYSIOLOGIC EVALUATION AND ABLATION PROCEDURES FOR FURTHER
ANALYSIS
HCPCS CY 2007 CY 2007
Codes used in combinations: at least one in Group A and one in Group B code APC SI

Group A:
Electrophysiology evaluation .................................................................................................................. 93619 0085 T
Electrophysiology evaluation .................................................................................................................. 93620 0085 T
Group B:
Ablate heart dysrhythm focus ................................................................................................................. 93650 0086 T
Ablate heart dysrhythm focus ................................................................................................................. 93651 0086 T
mstockstill on PROD1PC66 with PROPOSALS2

Ablate heart dysrhythm focus ................................................................................................................. 93652 0086 T

When we studied claims that were 5,118 claims that met these code 93620 (Comprehensive
contained a code in group A and also a criteria, and that of these 5,118 claims, electrophysiologic evaluation including
code in group B, we found that there 4,552 (89 percent) contained both CPT insertion and repositioning of multiple

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electrode catheters with induction or attempted induction of arrhythmia; with the same date of service and calculated
attempted induction of arrhythmia; with left atrial pacing and recording from a median cost from the total costs on
right atrial pacing and recording, right coronary sinus or left atrium (List these claims. Some claims had more
ventricular pacing and recording, His separately in addition to code for than one code from each group.
bundle recording) from APC 0085 and primary procedure)), 93622 Although the claim was required to
CPT code 93651 (Intracardiac catheter (Comprehensive electrophysiologic contain at least one code from each
ablation of arrhythmogenic focus; for evaluation including insertion and group to be included, the claim could
treatment of supraventricular repositioning of multiple electrode also contain any number of codes from
tachycardia by ablation of fast or slow catheters with induction or attempted either group and any number of units of
atrioventricular pathways, accessory induction of arrhythmia; with left those codes. In addition, the costs of the
atrioventricular connections or other ventricular pacing and recording (List five supportive intraoperative services
atrial foci, singly or in combination) separately in addition to code for previously assigned to APC 0087 that
from APC 0086 with the same date of primary procedure)), and 93623 we identify above were packaged, as
service. Given that CPT code 93651 had (Programmed simulation and pacing well as the costs of the other items and
a total frequency of 8,091, this means after intravenous drug infusion (List services proposed to be packaged for the
that more than 55 percent of the claims separately in addition to code for CY 2008 OPPS. This selection process
for CPT code 93651 also contained CPT primary procedure)). These codes are all yielded 5,118 claims to use for the
code 93620. CPT code 93620 had a total CPT add-on codes that CPT indicates calculation. The proposed composite
frequency of 12,624, approximately 50 are to be reported in addition to the median cost for these claims using the
percent higher than the total frequency code for the primary procedure. Our CY 2008 proposed rule data is
for CPT code 93651, which is consistent clinical review of the services described $8,528.83. We believe that this cost is
with our expectations because CPT code by these five CPT codes determined that attributable largely to the 4,552 claims
93620 describes a diagnostic service and they are supportive dependent services that contain one unit each of CPT code
CPT code 93651 is a treatment service that are provided most often as 93620 and CPT code 93651 (and some
that may be provided based upon the supplemental to procedures assigned to unknown numbers and combinations of
findings of the evaluation described by APCs 0085 and 0086. The procedures in packaged services). In comparison, the
CPT code 93620. In addition to the APCs 0085 and 0086 can be performed
sum of the CY 2008 proposed rule CPT
codes for group A and group B services, without these supportive add-on
code median costs for CPT code 93620
the combination claims also contained procedures, but these dependent
(which is $3,111.76) and CPT code
costs for packaged services that were services cannot be done except as a
93651 (which is $5,643.95) is $8,755.71.
reported under revenue codes without supplement to another
If the 50 percent multiple procedure
HCPCS codes and under packaged electrophysiologic procedure. Therefore,
discount is applied to the CPT code
HCPCS codes. As we discuss in we are proposing to unconditionally
median cost for the lower cost
considerable detail above, we lack a package all of these five CPT codes
procedure based on its assignment to an
methodology that could be used to under the grouping of intraoperative
APC with a ‘‘T’’ status, the adjusted sum
allocate these packaged costs to major services for the CY 2008 OPPS. We
discuss the packaging of intraoperative of the median costs is $7,199.83
separately paid procedures in a manner ($5,643.95 + $1,555.88). These medians
which gives us confidence that the costs services in general, including these
services, above. were calculated using only claims that
would be attributed correctly. We have contain correct devices and do not
However, packaging these supportive
explored and will continue to explore contain token charges or the ‘‘FB’’
ancillary services that are so often
an alternative strategy that would enable modifier. We believe the significant
reported with the cardiac
us to use these correctly coded multiple positive difference between the
electrophysiologic evaluation and
procedure claims for ratesetting. composite and discounted costs still
ablation services does not enable us to
In our review of these claims, not only use many more claims because, as we reflects efficiencies, as the sum of the
did we find a high number of claims on noted previously, the claims on which discounted median costs does not take
which there was one code from group A these codes most commonly appeared into account the cost of other
and one code from group B, but we also typically also contained at least one procedures also provided that are
found that claims for procedures separately paid code from APC 0085 assigned to APCs 0085 and 0086, while
assigned to APC 0087 for CY 2007 and one code from APC 0086. Although the composite median cost of $8,528.83
usually appeared on claims that the most common combination of codes does, to some extent, reflect the cost of
contained a code from APC 0085 or APC from APCs 0085 and 0086 is the pair of other multiple procedures in APCs 0085
0086, or both. The most frequently CPT codes 93620 and 93651, there are and 0086 that were also reported on the
appearing CPT codes that were assigned numerous other combinations of claims used to develop the composite
to APC 0087 for CY 2007 were, as services from APCs 0085 and 0086 that median cost. In addition, these two
shown above, 93609 (Intraventricular are performed and, while not as calculations are based upon two
and/or intra-atrial mapping of frequent, these combinations are also different sets of claims, single procedure
tachycardia site(s), with catheter reflected in the multiple claims. claims in one case (which do not
manipulation to record from multiple In order to use more claims and represent the way the service is
sites to identify origin of tachycardia adequately reflect the varied, common typically furnished) and the specified
(List separately in addition to code for combinations of electrophysiologic subset of clinically common
primary procedure)), 93613 evaluation and ablation CPT codes, we combination claims in the second case.
mstockstill on PROD1PC66 with PROPOSALS2

(Intracardiac electrophysiologic 3- calculated a composite median cost Moreover, while the 50 percent multiple
dimensional mapping (List separately in from all claims containing at least one procedure reduction is our best
addition to code for primary code from group A and at least one code aggregate estimate of the overall degree
procedure)), 93621 (Comprehensive from group B as if they were a single of efficiency applicable to multiple
electrophysiologic evaluation including service. We selected multiple procedure surgeries, it may or may not be
insertion and repositioning of multiple claims that contained at least one code specifically appropriate to this
electrode catheters with induction or in group A and one code in group B on particular combination of procedures.

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42684 Federal Register / Vol. 72, No. 148 / Thursday, August 2, 2007 / Proposed Rules

By selecting the multiple procedure composite configuration below in Table the medians for the composite claims
claims that contained at least one code 24 represent the sum of the frequency of containing at least one code from each
in each group, we were able to use many single bills used to set the medians for group and with packaging of the costs
more claims than were available to APCs 0085 and 0086 with packaging of of the five intraoperative services,
establish the individual APC medians. the five intraoperative services and the divided by the total frequency of each
The percents by CPT code for the frequency of multiple bills used to set CPT code.

TABLE 24.—PERCENTAGE OF CLAIMS USED TO CALCULATE MEDIAN COSTS FOR CARDIAC ELECTROPHYSIOLOGIC
EVALUATION AND ABLATION PROCEDURES
Standard configuration Composite
(with packaging of configura-
intraoperative services) tion (with
packaging
of intra-
Proposed operative
Codes used in combinations: at least one in group A and one HCPCS CY 2008 SI services)
in Group B code CPT per- Overall APC
APC centage of percentage CPT per-
single of single centage of
claims claims single and
combination
claims

Group A:
Electrophysiology evaluation ............................................... 93619 0085 T ..... 38.99 25.47 63.96
Electrophysiology evaluation ............................................... 93620 0085 T ..... 22.30 25.47 61.77
Group B:
Ablate heart dysrhythm focus .............................................. 93650 0085 T ..... 39.58 25.47 52.50
Ablate heart dysrhythm focus .............................................. 93651 0086 T ..... 4.59 4.68 63.30
Ablate heart dysrhythm focus .............................................. 93652 0086 T ..... 7.53 4.68 58.78

Moreover, by packaging CPT codes the composite median cost of $8,528.83 procedure would be performed on the
93609, 93613, 93621, 93622, and 93623, as the basis for establishing the relative same date. We are proposing to continue
we use many more of the claims for weight for this newly created APC for to pay separately for other separately
these codes from the most common the composite electrophysiologic paid services that are not reported under
clinical scenarios than would otherwise evaluation and ablation service. Under the codes in groups A and B (such as
be possible if the supportive this composite APC, unlike most other chest x-rays and electrocardiograms).
intraoperative services were separately APCs, we would make a single payment Moreover, where a service in group A
paid. Wherever any of these codes for all services reported in groups A and is furnished on a date of service that is
appears on a claim that can be used for B. We are proposing that hospitals different from the date of service for a
median setting, the cost data for these would continue to code using CPT code in group B for the same
codes are packaged in the calculation of codes to report these services and that beneficiary, we are proposing that
the median cost for the separately paid the OCE would recognize when the payments would be made under the
services on the claim. criteria for payment of the composite single procedure APCs and the
APC are met and would assign the composite APC would not apply. Given
(b) Proposed Payment for Cardiac
composite APC instead of the single our CY 2008 proposal to
Electrophysiologic Evaluation and
procedure APCs as currently occurs. unconditionally package payment for
Ablation
The Pricer would make a single five cardiac electrophysiologic CPT
In view of our findings with regard to payment for the composite APC that codes as members of the category of
how often the codes in groups A and B would encompass the program payment intraoperative services that were
appear together on the same claim, we for the code in group A, the code in previously assigned to APCs 0085 and
are proposing to establish one group B, and any other codes reported 0087, we are also proposing to
composite APC, shown in Addendum A in groups A or B, as well as the reconfigure APCs 0084 through 0087,
as APC 8000 (Cardiac packaged services furnished on the where many of the cardiac
Electrophysiologic Evaluation and same date of service. The proposed electrophysiologic procedures that will
Ablation Composite), for CY 2008 that composite APC would have a status be separately paid when they are not
would pay for a composite service made indicator of ‘‘T’’ so that payment for paid according to the composite APC
up of any number of services in groups other procedures also assigned to status are assigned. Specifically, we are
A and B when at least one code from indicator ‘‘T’’ with lower payment rates proposing to discontinue APC 0087, and
group A and at least one code from would be reduced by 50 percent when reconfigure APCs 0084, 0085, and 0086,
group B appear on the same claim with furnished on the same date of service as with proposed titles and median costs of
the same date of service. The five CPT the composite service, in order to reflect Level I Electrophysiologic Procedures
mstockstill on PROD1PC66 with PROPOSALS2

codes involved in this composite APC the efficiency that occurs when multiple (APC 0084) at $647.41; Level II
are assigned to status indicator ‘‘Q’’ in procedures are furnished to a Medicare Electrophysiologic Procedures (APC
Addendum B to this proposed rule to beneficiary in a single operative session. 0085) at $3,059.46; and Level III
identify their conditionally packaged We would not expect that the proposed Electrophysiologic Procedures (APC
status, and their composite APC composite APC payment would be 0086) at $5,709.52, respectively. We
assignments are identified in commonly reduced because we believe refer readers to section IV.A.2. of this
Addendum M. We are proposing to use that it is unlikely that a higher paid proposed rule for a discussion of

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calculation of median costs for device- prior to development of the proposed status indicator ‘‘Q’’ is billed on a date
dependent APCs. We believe this packaging approach discussed above, of service without a code that is
reconfiguration improves the clinical and we have summarized and assigned to any of the four status
and resource homogeneity of these responded to the APC Panel’s indicators noted above, the ‘‘special’’
APCs which would provide payment for packaging-related recommendations packaged code assigned to status
cardiac electrophysiologic procedures below. Three of the codes reviewed by indicator ‘‘Q’’ would be separately
that would be individually paid when the Packaging Subcommittee at the payable.
they do not meet the criteria for March 2007 APC Panel meeting are The Packaging Subcommittee
payment of the composite APC. included in the seven categories of identified areas for change for some
We believe that creation of the services identified for packaging under currently packaged CPT codes that it
proposed composite APC for cardiac the CY 2008 OPPS. For those three believed could frequently be provided
electrophysiologic evaluation and codes, we specifically applied the to patients as the sole service on a given
ablation services is the most efficient proposed CY 2008 criteria for date and that required significant
and effective way to use the claims data determining whether a code should be hospital resources as determined from
for the majority of these services and proposed as packaged or separately hospital claims data. Based on the
best represents the hospital resources payable for CY 2008. Specifically, we comments received, additional issues,
associated with performing the common determined whether the service is a and new data that we shared with the
combinations of these services that are dependent service falling into one of the Packaging Subcommittee concerning the
clinically typical. We believe that this seven specified categories that is always packaging status of codes for CY 2008,
proposed ratesetting methodology or almost always provided integral to an the Packaging Subcommittee reviewed
results in an appropriate median cost for independent service. For those four the packaging status of numerous
the composite service when at least one codes that were reviewed during the HCPCS codes and reported its findings
evaluation service in group A is March 2007 APC Panel meeting but that to the APC Panel at its March 2007
furnished on the same date as at least do not fit into any of the seven meeting. The APC Panel accepted the
one ablation service in group B. This categories of codes that are part of our report of the Packaging Subcommittee,
approach creates incentives for CY 2008 proposed packaging approach, heard several presentations on certain
efficiency by providing a single we applied the packaging criteria packaged services, discussed the
payment for a larger bundle of major described above that were historically deliberations of the Packaging
procedures when they are performed used under the OPPS. Moreover, we Subcommittee, and recommended
together, in contrast to continued took into consideration our interest in that—
separate payment for each of the expanding the size of payment groups 1. CMS place CPT code 76937
individual procedures. We expect to (Ultrasound guidance for vascular
for component services to provide
develop additional composite APCs in access requiring ultrasound evaluation
encounter-based and episode-of-care-
the future as we learn more about major of potential access sites, documentation
based payment in the future in order to
currently separately paid services that of selected vessel patency, concurrent
encourage hospital efficiency and
are commonly furnished together during realtime ultrasound visualization of
provide hospitals with maximal
the same hospital outpatient encounter. vascular needle entry, with permanent
flexibility to manage their resources.
recording and reporting (list separately
e. Service-Specific Packaging Issues In accordance with a recommendation in addition to code for primary
As a result of requests from the of the APC Panel, for the CY 2007 OPPS, procedure)) on the list of ‘‘special’’
public, a Packaging Subcommittee to the we implemented a new policy that packaged codes (status indicator ‘‘Q’’).
APC Panel was established to review all designates certain codes as ‘‘special’’ (Recommendation 1)
the procedural CPT codes with a status packaged codes, assigned to status 2. CMS evaluate providing separate
indicator of ‘‘N.’’ Commenters to past indicator ‘‘Q’’ under the OPPS, where payment for trauma activation when it
rules have suggested that certain separate payment is provided if the code is reported on a claim for an ED visit,
packaged services could be provided is reported without any other services regardless of the level of the emergency
alone, without any other separately that are separately payable under the department visit. (Recommendation 2)
payable services on the claim, and OPPS on the same date of service. 3. CMS place CPT code 0175T
requested that these codes not be Otherwise, payment for the ‘‘special’’ (Computer aided detection (CAD)
assigned status indicator ‘‘N.’’ In packaged code is packaged into (computer algorithm analysis of digital
deciding whether to package a service or payment for the separately payable image data for lesion detection) with
pay for a code separately, we have services provided by the hospital on the further physician review for
historically considered a variety of same date. We note that these ‘‘special’’ interpretation and report, with or
factors, including whether the service is packaged codes are a subset of those without digitization of film radiographic
normally provided separately or in HCPCS codes that are assigned to status images, chest radiograph(s), performed
conjunction with other services; how indicator ‘‘Q,’’ which means that their remote from primary interpretation) on
likely it is for the costs of the packaged payment is conditionally packaged the list of ‘‘special’’ packaged codes
code to be appropriately mapped to the under the OPPS. We are proposing to (status indicator ‘‘Q’’).
separately payable codes with which it update our criteria to determine (Recommendation 3)
was performed; and whether the packaged versus separate payment for 4. CMS place CPT code 0126T
expected cost of the service is relatively ‘‘special’’ packaged HCPCS codes (Common carotid intima-media
low. As discussed above regarding our assigned to status indicator ‘‘Q’’ for CY thickness (IMT) study for evaluation of
mstockstill on PROD1PC66 with PROPOSALS2

proposed packaging approach for CY 2008. For CY 2008, payment for atherosclerotic burden or coronary heart
2008, we have modified the historical ‘‘special’’ packaged codes would be disease risk factor assessment) on the
considerations outlined above in packaged when these HCPCS codes are list of ‘‘special’’ packaged codes (status
developing our proposal for the CY 2008 billed on the same date of service as a indicator ‘‘Q’’) and that CMS consider
OPPS. The Packaging Subcommittee code assigned to status indicator ‘‘S,’’ mapping the code to APC 340 (Minor
discussed many HCPCS codes during ‘‘T,’’ ‘‘V,’’ or ‘‘X.’’ When one of the Ancillary Procedures).
the March 2007 APC Panel meeting, ‘‘special’’ packaged codes assigned to (Recommendation 4)

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5. CMS p