[Federal Register: August 1, 2000 (Volume 65, Number 148)]
[Rules and Regulations]
[Page 47054-47103]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr01au00-13]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Health Care Financing Administration
42 CFR Parts 410, 412, 413, and 485
[HCFA-1118-F]
RIN 0938-AK09
Medicare Program; Changes to the Hospital Inpatient Prospective
Payment Systems and Fiscal Year 2001 Rates
AGENCY: Health Care Financing Administration (HCFA), HHS.
ACTION: Final rule.
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SUMMARY: We are revising the Medicare hospital inpatient prospective
payment system for operating costs to: implement applicable statutory
requirements, including a number of provisions of the Medicare,
Medicaid, and State Children's Health Insurance Program Balanced Budget
Refinement Act of 1999 (Pub. L. 106-113); and implement changes arising
from our continuing experience with the system. In addition, in the
Addendum to this final rule, we describe changes to the amounts and
factors used to determine the rates for Medicare hospital inpatient
services for
[[Page 47055]]
operating costs and capital-related costs. These changes apply to
discharges occurring on or after October 1, 2000. We also set forth
rate-of-increase limits and make changes to our policy for hospitals
and hospital units excluded from the prospective payment systems.
We are making changes to the policies governing payments to
hospitals for the direct costs of graduate medical education, sole
community hospitals and critical access hospitals.
We are adding a new condition of participation on organ, tissue,
and eye procurement for critical access hospitals that parallels the
condition of participation that we previously published for all other
Medicare-participating hospitals.
Lastly, we are finalizing a January 20, 2000 interim final rule
with comment period (65 FR 3136) that sets forth the criteria to be
used in calculating the Medicare disproportionate share adjustment in
reference to Medicaid expansion waiver patient days under section 1115
of the Social Security Act.
DATES: The provisions of this final rule are effective October 1, 2000.
This rule is a major rule as defined in 5 U.S.C. 804(2). Pursuant to 5
U.S.C. 801(a)(1)(A), we are submitting a report to Congress on this
rule on August 1, 2000.
FOR FURTHER INFORMATION CONTACT:
Steve Phillips, (410) 786-4531,
Operating Prospective
Payment, Diagnostic
Related Groups, Wage
Index, Reclassifications, and Sole Community Hospital Issues
Tzvi Hefter, (410) 786-4487,
Capital Prospective
Payment, Excluded
Hospitals, Graduate
Medical Education and
Critical Access Hospital
Issues
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I. Background
A. Summary
Section 1886(d) of the Social Security Act (the Act) sets forth a
system of payment for the operating costs of acute care hospital
inpatient stays under Medicare Part A (Hospital Insurance) based on
prospectively set rates. Section 1886(g) of the Act requires the
Secretary to pay for the capital-related costs of hospital inpatient
stays under a prospective payment system. Under these prospective
payment systems, Medicare payment for hospital inpatient operating and
capital-related costs is made at predetermined, specific rates for each
hospital discharge. Discharges are classified according to a list of
diagnosis-related groups (DRGs).
Certain specialty hospitals are excluded from the prospective
payment systems. Under section 1886(d)(1)(B) of the Act, the following
hospitals and hospital units are excluded from the prospective payment
systems: psychiatric hospitals and units, rehabilitation hospitals and
units, children's hospitals, long-term care hospitals, and cancer
hospitals. For these hospitals and units, Medicare payment for
operating costs is based on reasonable costs subject to a hospital-
specific annual limit.
Under sections 1820 and 1834(g) of the Act, payments are made to
critical access hospitals (CAHs) (that is, rural nonprofit hospitals or
facilities that meet certain statutory requirements) for inpatient and
outpatient services on a reasonable cost basis. Reasonable cost is
determined under the provisions of section 1861(v)(i)(A) of the Act and
existing regulations under 42 CFR Parts 413 and 415.
Under section 1886(a)(4) of the Act, costs of approved educational
activities programs are excluded from the operating costs of inpatient
hospital services. Hospitals with approved graduate medical education
(GME) programs are paid for the direct costs of GME in accordance with
section 1886(h) of the Act; the amount of payment for direct GME costs
for a cost reporting period is based on the hospital's number of
residents in that period and the hospital's costs per resident in a
base year.
The regulations governing the hospital inpatient prospective
payment system are located in 42 CFR Part 412. The regulations
governing excluded hospitals and hospital units are located in 42 CFR
Parts 412 and 413, and the GME regulations are located in 42 CFR Part
413.
On November 29, 1999, the Medicare, Medicaid, and State Children's
Health Insurance Program (SCHIP) Balanced Budget Refinement Act of
1999, Public Law 106-113, was enacted. Public Law 106-113 made a number
of changes to the Act affecting prospective payments to hospitals for
inpatient services and payments to excluded hospitals. This final rule
implements amendments enacted by Public Law 106-113 relating to FY 2001
payments for GME costs, disproportionate share hospitals (DSHs), sole
community hospitals (SCHs), and CAHs. These changes are addressed in
sections IV and VI of this preamble.
Other related provisions of Public Law 106-113 that pertain to
Medicare hospital inpatient payments with an effective date prior to
October 1, 2000, are addressed in an interim final rule with comment
period that is published elsewhere in this issue of the Federal
Register.
Public Law 106-113 also amended section 1886(j) of the Act, which
was added by section 4421 of the Balanced Budget Act of 1997 (Public
Law 105-33). Section 1886(j) of the Act provides for a fully
implemented prospective payment system for inpatient rehabilitation
hospitals and rehabilitation units, effective for cost reporting
periods beginning on or after October 1, 2002, with payment provisions
during a transitional period of October 1, 2000 to October 1, 2002
based on target amounts specified in section 1886(b) of the Act. We are
issuing a separate notice of proposed rulemaking to implement the
prospective payment system for inpatient rehabilitation hospitals and
units.
[[Page 47056]]
B. Summary of the Provisions of the May 5, 2000 Proposed Rule
On May 5, 2000, we published a proposed rule in the Federal
Register (65 FR 26282) that set forth proposed changes to the Medicare
hospital inpatient prospective payment system for operating costs for
FY 2001. In the proposed rule, we made no policy changes relating to
payments for capital-related costs under the hospital inpatient
prospective payment system in FY 2001. However, we did propose changes
to the amounts and factors used in determining the rates for capital-
related costs for FY 2001. The proposed rule also included changes
relating to payments for GME costs and payments to excluded hospitals
and units, SCHs, and CAHs.
The following is a summary of the major changes we proposed and the
issues we addressed in the May 5, 2000 proposed rule:
We proposed changes to the FY 2001 DRG classifications and
relative weights, as required by section 1886(d)(4)(C) of the Act.
We proposed an update to the FY 2001 hospital wage index,
using FY 1997 wage data. We also proposed to implement the second year
phaseout of Part A physician teaching-related costs, Part A certified
registered nurse anesthetist (CRNA) costs and resident costs from the
FY 2001 wage index calculation.
We discussed the impact of our policy on post acute care
transfers and set forth certain proposed changes concerning sole
community hospitals (SCHs), rural referral centers (RRCs), the indirect
medical education adjustment, the DSH adjustment and collection of data
on uncompensated costs for services furnished in hospitals, the
Medicare Geographic Classification Review Board (MGCRB)
classifications, and payment for the direct costs of GME.
We discussed FY 2001 as the last year of a 10-year
transition established to phase-in the prospective payment system for
capital-related costs for inpatient hospital services.
We discussed a number of proposals concerning excluded
hospital and hospital units and CAHs. The proposed changes addressed
limits on and adjustments to the proposed target amounts for FY 2001;
development of a prospective payment system for inpatient
rehabilitation hospitals and units; continuous improvement bonus
payments; clarification that the 5-percent threshold used in
calculating an excluded hospital's cost per discharge is based only on
Medicare inpatients discharged from the hospital-within-a-hospital; an
all-inclusive payment rate option for CAHs; and adding a new condition
of participation for CAHs relating to organ, tissue, and eye
procurement.
In the Addendum to the proposed rule, we set forth
proposed changes to the amounts and factors for determining the FY 2001
prospective payment rates for operating costs and capital-related
costs. We also addressed update factors for determining the rate-of-
increase limits for cost reporting periods beginning in FY 2001 for
hospitals and hospital units excluded from the prospective payment
system.
In Appendix A of the proposed rule, we set forth an
analysis of the impact of the proposed changes on affected entities.
In Appendix B of the proposed rule, we set forth the
technical appendix on the proposed FY 2001 capital cost model.
In Appendix C of the proposed rule, as required by section
1886(e)(3) (B) of the Act, we set forth our report to Congress on our
initial estimate of a recommended update factor for FY 2001 for
payments to hospitals included in the prospective payment systems, and
hospitals excluded from the prospective payment systems.
In Appendix D of the proposed rule, as required by
sections 1886(e)(4) and (e)(5) of the Act, we included our
recommendation of the appropriate percentage change for FY 2001 for:
--Large urban area and other area average standardized amounts (and
hospital-specific rates applicable to sole community and Medicare-
dependent, small rural hospitals) for hospital inpatient services paid
for under the prospective payment system for operating costs; and
--Target rate-of-increase limits to the allowable operating costs of
hospital inpatient services furnished by hospitals and hospital units
excluded from the prospective payment system.
In the proposed rule, we discussed recommendations by the
Medicare Payment Advisory Commission (MedPAC) concerning hospital
inpatient payment policies and presented our responses to those
recommendations. Under section 1805(b) of the Act, MedPAC is required
to submit a report to Congress that reviews and makes recommendations
on Medicare payment policies no later than March 1 of each year. This
year, MedPAC released a subsequent report in June containing additional
recommendations. We respond to those recommendations in section IV.E.
of this preamble.
C. Public Comments Received in Response to the Proposed Rule
We received a total of 290 timely items of correspondence
containing multiple comments on the proposed rule. Major issues
addressed by commenters included the creation of a new DRG for pancreas
and kidney transplants, the adequacy of the DRG for heart assist
devices, various aspects of the wage index calculation, rebasing of the
SCH payment rates, and reclassification of hospitals.
Summaries of the public comments received and our responses to
those comments are set forth below under the appropriate section
heading.
D. Final Rule for the January 20, 2000 Interim Final Rule
On January 20, 2000, we published in the Federal Register an
interim final rule with comment period (65 F 3136) to implement a
change in the Medicare DSH adjustment calculation policy in reference
to section 1115 expansion waiver days. The interim final rule set forth
the criteria to use in calculating the Medicare DSH adjustment for
hospitals for purposes of payment under the prospective payment system.
This final rule finalizes the policy in this interim final rule with
comment period. We discuss this policy in detail in Section IV.E.2. of
this preamble.
II. Changes to DRG Classifications and Relative Weights
A. Background
Under the prospective payment system, we pay for inpatient hospital
services on a rate per discharge basis that varies according to the DRG
to which a beneficiary's stay is assigned. The formula used to
calculate payment for a specific case takes an individual hospital's
payment rate per case and multiplies it by the weight of the DRG to
which the case is assigned. Each DRG weight represents the average
resources required to care for cases in that particular DRG relative to
the average resources used to treat cases in all DRGs.
Congress recognized that it would be necessary to recalculate the
DRG relative weights periodically to account for changes in resource
consumption. Accordingly, section 1886(d)(4)(C) of the Act requires
that the Secretary adjust the DRG classifications and relative weights
at least annually. These adjustments are made to reflect changes in
treatment patterns, technology, and any other factors that may change
the relative use of hospital resources. Changes to the DRG
classification system and the recalibration of the DRG
[[Page 47057]]
weights for discharges occurring on or after October 1, 2000, are
discussed below.
B. DRG Reclassification
1. General
Cases are classified into DRGs for payment under the prospective
payment system based on the principal diagnosis, up to eight additional
diagnoses, and up to six procedures performed during the stay, as well
as age, sex, and discharge status of the patient. The diagnosis and
procedure information is reported by the hospital using codes from the
International Classification of Diseases, Ninth Revision, Clinical
Modification (ICD-9-CM). Medicare fiscal intermediaries enter the
information into their claims processing systems and subject it to a
series of automated screens called the Medicare Code Editor (MCE).
These screens are designed to identify cases that require further
review before classification into a DRG.
After screening through the MCE and any further development of the
claims, cases are classified into the appropriate DRG by the Medicare
GROUPER software program. The GROUPER program was developed as a means
of classifying each case into a DRG on the basis of the diagnosis and
procedure codes and demographic information (that is, sex, age, and
discharge status). It is used both to classify past cases in order to
measure relative hospital resource consumption to establish the DRG
weights and to classify current cases for purposes of determining
payment. The records for all Medicare hospital inpatient discharges are
maintained in the Medicare Provider Analysis and Review (MedPAR) file.
The data in this file are used to evaluate possible DRG classification
changes and to recalibrate the DRG weights.
In the July 30, 1999 final rule (64 FR 41500), we discussed a
process for considering non-MedPAR data in the recalibration process.
In order for the use of particular data to be feasible, we must have
sufficient time to evaluate and test the data. The time necessary to do
so depends upon the nature and quality of the data submitted.
Generally, however, a significant sample of the data should be
submitted by August 1, approximately 8 months prior to the publication
of the proposed rule, so that we can test the data and make a
preliminary assessment as to the feasibility of using the data.
Subsequently, a complete database should be submitted no later than
December 1 for consideration in conjunction with the next year's
proposed rule, and as appropriate, in the recalibration in the final
rule following the proposed rule.
Currently, cases are assigned to one of 501 DRGs (including one DRG
for a diagnosis that is invalid as a discharge diagnosis and one DRG
for ungroupable diagnoses) in 25 major diagnostic categories (MDCs).
Most MDCs are based on a particular organ system of the body (for
example, MDC 6 (Diseases and Disorders of the Digestive System));
however, some MDCs are not constructed on this basis since they involve
multiple organ systems (for example, MDC 22 (Burns)).
In general, cases are assigned to an MDC based on the principal
diagnosis, before assignment to a DRG. However, there are presently
five DRGs to which cases are directly assigned on the basis of
procedure codes. These are the DRGs for liver, bone marrow, and lung
transplants (DRGs 480, 481, and 495, respectively) and the two DRGs for
tracheostomies (DRGs 482 and 483). Cases are assigned to these DRGs
before classification to an MDC.
Within most MDCs, cases are then divided into surgical DRGs (based
on a surgical hierarchy that orders individual procedures or groups of
procedures by resource intensity) and medical DRGs. Medical DRGs
generally are differentiated on the basis of diagnosis and age. Some
surgical and medical DRGs are further differentiated based on the
presence or absence of complications or comorbidities (CC).
Generally, the GROUPER does not consider other procedures; that is,
nonsurgical procedures or minor surgical procedures generally not
performed in an operating room are not listed as operating room (OR)
procedures in the GROUPER decision tables. However, there are a few
non-OR procedures that do affect DRG assignment for certain principal
diagnoses, such as extracorporeal shock wave lithotripsy for patients
with a principal diagnosis of urinary stones.
We proposed several changes to the DRG classification system for FY
2001 and discussed other issues concerning DRGs. The proposed changes,
the public comments we received concerning them, and the final DRG
changes are set forth below. Unless otherwise noted, the changes we are
implementing will be effective in the revised GROUPER software (Version
18.0) to be implemented for discharges on or after October 1, 2000.
(Also unless otherwise specified, our DRG analysis is based on the full
(100 percent) FY 1999 MedPAR file (bills received through December 31,
1999 for discharges in FY 1999).
2. MDC 5 (Diseases and Disorders of the Circulatory System)
In the August 29, 1997 final rule with comment period (62 FR
45974), we noted that, because of the many recent changes in heart
surgery, we were considering conducting a comprehensive review of the
MDC 5 surgical DRGs. In the July 31, 1998 final rule with comment
period (63 FR 40956), we did adopt some changes to the MDC 5 surgical
DRGs. Since that time, we have received inquiries on a continuing basis
regarding these DRGs. We have continued to review Medicare claims data
and, based on our analysis, we proposed several DRG changes in MDC 5 in
the May 5, 2000 proposed rule.
a. Heart Transplant (DRG 103). As previously stated, cases are
generally assigned to an MDC based on principal diagnosis and
subsequently assigned to surgical or medical DRGs included in that MDC.
However, cases involving liver, bone marrow, and lung transplants (DRGs
480, 481, and 495, respectively) and the two DRGs for tracheostomies
(DRGs 482 and 483) are directly assigned on the basis of procedure
codes. Cases assigned to these DRGs before classification to an MDC are
referred to as pre-MDC. However, cases involving heart transplants are
currently assigned first to MDC 5 and then to DRG 103.
Currently, when a bone marrow transplant and a heart transplant are
performed during the same admission, the case is assigned to DRG 481
(Bone Marrow Transplant). Because bone marrow transplant cases are
first classified to pre-MDC, while heart transplants are first assigned
to MDC 5, the bone marrow transplant assumes precedence in the
assignment of the case to a DRG. However, payment for DRG 481 is
substantially less than DRG 103. For FY 2000, the relative weight for
DRG 103 is 19.5100, while the relative weight for DRG 481 is 8.7285.
To ensure appropriate DRG assignment of these cases, we proposed
that the heart transplant DRG, which encompasses combined heart-lung
transplantation (ICD-9-CM procedure code 33.6) and heart
transplantation (ICD-9-CM procedure code 37.5) be assigned to pre-MDC.
In this way, cases involving a bone marrow transplant and a heart
transplant would be assigned to DRG 103 (DRG 103 would be reordered
higher in the pre-MDC surgical hierarchy, as discussed in section
II.B.5. of this preamble).
We received two comments in support of this proposed change and are
adopting it as final.
[[Page 47058]]
b. Heart Assist Devices. We continue to review data in MDC 5
(Diseases and Disorders of the Circulatory System) to determine if
cases are being assigned to the most appropriate DRG based on clinical
coherence and similar resource consumption. At the December 1, 1994
ICD-9-CM Coordination and Maintenance Committee meeting, we recommended
that new codes be created to capture single and bi-ventricular heart
assist systems.
These codes, 37.65 (Implant of an external, pulsatile heart assist
system) and 37.66 (Implant of an implantable, pulsatile heart assist
system), were adopted for use for discharges occurring on or after
October 1, 1995. However, code 37.66 was deemed investigational and was
not considered a covered procedure. Effective May 5, 1997, we revised
Medicare coverage of heart assist devices to allow coverage of a
ventricular assist device (code 37.66) used for support of blood
circulation postcardiotomy if certain conditions were met.
Due to some residual misunderstanding regarding this coverage
policy, we emphasize that this device was and will continue to be
listed as a noncovered procedure in the Medicare Code Editor (MCE), the
front-end software product in the GROUPER program that detects and
reports errors in the coding of claims data. The reason that this
device is listed in the MCE, in spite of the fact that its implantation
is covered, is because of the stringent conditions that must be met by
hospitals in order to receive payment.
In the August 29, 1997 final rule (62 FR 45973), we moved procedure
code 37.66 from DRGs 110 and 111 \1\ (Major Cardiovascular Procedures
with and without CCs, respectively) to DRG 108 (Other Cardiothoracic
Procedures). As stated in the July 31, 1998 final rule (63 FR 40956),
we moved procedure code 37.66 to DRGs 104 and 105 (Cardiac Valve and
Other Major Cardiothoracic Procedures with and without CCs,
respectively) for FY 1999.
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\1\ A single title combined with two DRG numbers is used to
signify pairs. Generally, the first DRG is for cases with CC and the
second DRG is for cases without CC. If a third number is included,
it represents cases with patients who are age 0-17. Occasionally, a
pair of DRGs is split between age 17 and age 0-17.
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In the July 30, 1999 final rule (64 FR 41498), we responded to a
comment suggesting that heart assist devices be assigned to DRG 103.
For the proposed rule we reviewed the 100 percent FY 1999 MedPAR file
containing bills through December 31, 1999, and found that there were a
total of 47 implantable heart assist system procedures performed on
Medicare beneficiaries. Of these cases, 13 (approximately 28 percent)
were assigned to DRG 103 (Heart Transplant) and four (approximately 9
percent) were assigned to DRG 483 (Tracheostomy Except for Face, Mouth
and Neck Diagnoses), and, therefore, were paid at significantly higher
rates than the remaining 30 cases. All of the procedure code 37.66
cases have extremely high charges, which is consistent with past
analysis, and all of these cases are subject to payment as cost
outliers.
Our data analysis indicated that the most cases in any one hospital
was 5, while 17 hospitals performed only one heart assist system
implant each. We reiterate that only heart transplant cases can be
properly assigned to the transplant DRG (August 29, 1997 final rule (62
FR 45974)). Since heart assist devices are used across DRGs, many not
involving a transplant, we did not propose to assign procedure code
37.66 to DRG 103.
In addition to the review of 37.66, we also looked at procedure
codes 37.62 (Implant of other heart assist system), 37.63 (Replacement
and repair of heart assist system), and 37.65 (Implant of an external,
pulsatile heart assist system). These cases are currently assigned to
DRGs 110 and 111 (Major Cardiovascular Procedures). We believe that
these procedures are similar both clinically and in terms of resource
utilization to procedure code 37.66, which is already assigned to DRGs
104 and 105. Therefore, we proposed to move codes 37.62, 37.63, and
37.65 from DRGs 110 and 111 to DRGs 104 and 105.
Comment: We received four comments on this proposal.
Two comments in favor of our proposal were received from national
associations concerned with health care delivery.
Two commenters requested reevaluation of the DRG assignment of
mechanical heart assist devices, particularly procedure code 37.66, and
suggested that a new DRG be created to classify this technology, or
that these cases be assigned to DRG 103 (Heart Transplant). The
commenters pointed out that the heart assist implantation procedure is
typically performed in the same medical centers by the same surgical
teams as the heart transplant procedure.
With respect to our past decision not to assign cases with
procedure code 37.66 to DRG 103, one commenter acknowledged our
analysis of 1996 MedPAR data showing the costs of these cases to be
more similar to DRGs 104 and 105 than DRG 103, but suggested that we
look at more recent data. The commenter also questioned our rationale
for not assigning these cases to DRG 103 on the basis that heart assist
devices are used across DRGs.
One commenter argued that, as all the cases with procedure code
37.66 were qualified as cost outliers, the misplacement of this
procedure is evident. This commenter also noted that use of this
procedure is likely to increase in the future and suggested that HCFA
position itself ahead of the curve by increasing payment now in
anticipation of this event. The commenter urged HCFA to examine the
option of combining code 37.66 with other clinically similar low-volume
procedures, and creating a new DRG that would more appropriately pay
these cases. This recommended new DRG could conceivably include codes
37.62, 37.63, and 37.65, as they are similar both clinically and in
terms of resource consumption.
Finally, one commenter expressed concern that the uncovered status
of procedure code 37.66 in the MCE may be resulting in inappropriate
payment denials. The commenter recommended that HCFA review the
procedures employed by fiscal intermediaries to override the MCE edits.
Response: We are adopting our proposed change to assign procedure
codes 37.62, 37.63, and 37.65 to DRGs 104 and 105.
With respect to the comments regarding procedure code 37.66, we
have continually considered the issue of DRG assignment of heart assist
devices since this technology was assigned an ICD-9-CM code in 1995,
and became a Medicare covered procedure (if specific conditions were
met) effective in 1997. As we noted in the proposed rule, these are
costly cases that are currently spread across several DRGs. Although
the outlier policy is intended to help hospitals offset unusually
costly cases, we are concerned when a particular procedure always
qualifies as an outlier case.
However, we do not believe it would be appropriate to redefine DRG
103 to include these cases at this time. The presently limited
incidence of these cases, with very few cases occurring at any
particular hospital over the course of a year, does not warrant
disrupting the clinical coherence of DRG 103. The fact that these cases
are spread across a number of DRGs indicates they do not represent a
clinically cohesive group of patients in terms of their associated
diagnoses or other procedures.
We will continue to monitor and evaluate these cases to determine
whether a better approach might be
[[Page 47059]]
identified, including the possibility of a new DRG for procedure codes
37.62, 37.63, 37.65, and 37.66. We note that the classification of
patients into DRGs is a constantly evolving process. As there are
changes in the coding system, data collection, medical technology, or
medical practice, all DRG definitions will be reviewed and potentially
revised.
Concerning the concept of HCFA positioning itself "ahead of the
curve" by anticipating increased use of heart assist devices and
raising payment accordingly, we are reluctant to attempt to predict
future trends in medical practice, especially when such predictions
would affect payments across all DRGs as a result of DRG recalibration.
We appreciate the industry's continued interest in this system, and
look forward to working together to arrive at equitable payments for
this and other new technologies.
With respect to the comment concerning fiscal intermediary
overrides of MCE edits listing procedure code 37.66 as noncovered, we
will instruct our fiscal intermediaries to be aware of this issue. We
are concerned that Medicare payment for this procedure be limited to
those cases for which coverage is appropriate and that payment is not
inappropriately denied.
c. Platelet Inhibitors. Effective October 1, 1998, procedure code
99.20 (Injection or infusion of platelet inhibitor) was created. The
use of platelet inhibitors have been shown to significantly decrease
the rate of acute vessel closure, as well as the rate of cardiac
complications and death.\2\ Platelet inhibitors are frequently
administered to patients undergoing percutaneous transluminal coronary
angioplasty (PTCA). In addition, patients admitted with unstable angina
may also benefit from platelet inhibitors.\2\ This procedure code is
designated as a non-OR procedure that does not affect DRG assignment
(platelet inhibitors are administered either through intravenous
injection or infusion).
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\2\ Topol EJ and Serruys PW. "Frontiers in Interventional
Cardiology." Circulation.1998; 98: 1802. and Frishman W et al.
"Medical therapies for the Prevention of Restenosis after
Percutaneous Coronary Interventions." Curr Probl Cardology. 1998;
23: 555.
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For the past 2 years, a manufacturer of platelet inhibitors has
submitted data to support its position that cases involving platelet
inhibitor therapy receiving angioplasty should be reclassified from DRG
112 (Percutaneous Cardiovascular Procedures) to DRG 116 (Other
Permanent Cardiac Pacemaker Implant or PTCA with Coronary Artery Stent
Implant). Using the 100 percent FY 1999 MedPAR file that contains
discharges through September 30, 1999, we performed analysis for the
proposed rule of the cases for which procedure code 99.20 was reported.
There were a total of 37,222 cases spread across 123 DRGs.
The majority of the platelet inhibitor cases, 28,022 (75 percent of
all platelet inhibitor cases), are already assigned to DRG 116. The
average standardized charges for these cases are approximately $26,683,
compared to approximately $25,251 for DRG 116 overall. In DRG 112,
there were 4,310 platelet inhibitor cases (12 percent of all platelet
inhibitor cases) assigned. The average standardized charge for these
cases is approximately $22,786, compared to approximately $20,224 for
DRG 112 overall. Although the platelet inhibitor therapy cases that are
classified to DRG 112 do have somewhat higher charges than the average
case assigned to this DRG (11 percent, or $2,563), we found several
procedures in DRG 112 with average standardized charges higher than the
platelet inhibitor cases. For example, there were 1,560 cases in which
a single vessel PTCA or coronary atherectomy with thrombolytic agent
(procedure code 36.02) was performed with an average standardized
charge of approximately $25,181, and there were 4,951 cases in which a
multiple vessel PTCA or coronary atherectomy was performed, with or
without a thrombolytic agent (procedure code 36.05) with an average
standardized charge of approximately $23,608.
We also noted that there are several procedures assigned to DRG 112
that have average standardized charges lower than the average charges
for all cases in the DRG. For example, average charges for cases with
procedure code 37.34 (Catheter ablation of lesion or tissues of heart)
were $18,429.
There is always some variation in charges within a DRG. The
difference in variations of charges in DRG 112 is within the normal
range of charge variations.
Clinical homogeneity within DRGs has always been a fundamental
principle considered when assigning codes to appropriate DRGs.
Currently, DRG 116 includes cases involving the insertion of a
pacemaker as well as the insertion of coronary artery stents with PTCA.
On the other hand, cases assigned to DRG 112 involve less invasive
operating room and, in some cases, nonoperating room procedures.
The basis for DRG assignment has generally been the diagnosis of
the patient or the procedures performed. To the extent the use of a
particular technology becomes prevalent in the treatment of a
particular type of case, the DRG system is designed to account for any
increases or decreases in costs through recalibration. Hospitals
frequently benefit from this process while efficiency-enhancing
technology is being introduced. We believe that the update factors
established in section 1886(b)(3)(B)(i) of the Act, combined with the
potential for continuing improvements in hospital productivity, and
annual recalibration of the DRG weights, are adequate to finance
appropriate care of Medicare patients.
We also discussed in the proposed rule our analysis of cases where
platelet inhibitor therapy is targeted on acute coronary syndrome
patients without coronary intervention. These cases are assigned to DRG
124 (Circulatory Disorders Except Acute Myocardial Infarction with
Cardiac Catheterization and Complex Diagnosis) or DRG 140 (Angina
Pectoris). The concern is that both types of cases, those performed in
conjunction with coronary intervention and those without, be given an
equal focus in this evaluation.
Based on our analysis, we found 410 platelet inhibitor cases (1
percent) assigned to DRG 124. This is a small percentage of cases in
comparison to the overall total of 134,759 cases assigned to this DRG.
The platelet inhibitor cases had an average standardized charge of
approximately $17,378 compared to approximately $14,730 for DRG 124
overall. As we have indicated, there is always some variation in
charges within a DRG and this difference is within normal variation.
There were 66 platelet inhibitor cases (0.2 percent) assigned to
DRG 140. The average standardized charge for these cases is higher than
the overall DRG charge, approximately $8,992 and $5,657, respectively.
However, it represents a small percentage of the total (76,913) cases
assigned to DRG 140.
In summary, currently 75 percent of cases where code 99.20 is
present are assigned to DRG 116. The next most common DRG where these
cases are assigned is DRG 112 (12 percent). Cases assigned to DRG 116
generally involve implantation of a pacemaker or artery stent, while
cases assigned to DRG 112 involve percutaneous cardiovascular
procedures. Our analysis found a $3,897 difference between cases
involving platelet inhibitor therapy that were assigned to DRG 116 and
cases assigned to DRG 112, indicating a clinical distinction between
the cases grouping to the two DRGs. Finally, among platelet
[[Page 47060]]
inhibitor therapy cases that are assigned to DRG 112, our analysis
found that the average charges are well within the normal variation
around the overall average charges within the DRG. Based on these
findings, we believe it would be inappropriate to assign all cases
where procedure code 99.20 is present to DRG 116. Therefore, we did not
propose to change our current policy that specifies that assignment of
cases to this code does not affect the DRG assignment.
Comment: We received two comments on this issue. One commenter from
a national hospital association supported not assigning code 99.20 to
DRG 116. The other commenter argued that the analysis on which our
position was based is flawed. This commenter believed that perhaps as
many as five times the 37,222 cases we identified with ICD-9-CM
procedure code 99.20 actually exist in the data but the procedure was
not coded. To remedy this, the commenter suggested two options HCFA
could pursue. The first option would be to reexamine the data file with
the goal of excluding cases that appear to be miscoded. The commenter
suggested that HCFA might check total pharmacy charges in MedPAR and
exclude from the analysis cases without ICD-9-CM procedure code 99.20
that have pharmacy charges over a certain threshold (for example, a
threshold of $500). The second option would be to use outside data to
capture pharmacy information which would provide more reliable
information than coding with procedure code 99.20.
The commenter recommended that HCFA make a concerted effort,
perhaps through the Medicare fiscal intermediaries, to instruct
hospitals to use ICD-9-CM procedure code 99.20 on the claim of any case
that receives any of the three platelet inhibitors.
Response: We appreciate the support of the hospital association for
our position on this issue.
In response to the comment that the MedPAR data underreport
procedure code 99.20 because the data do not affect DRG assignment and
payment, we believe it is in hospitals' best interest to submit
accurate billing data that are utilized in the DRG reclassification and
recalibration of the DRG relative weights process.
We disagree with the recommendation that we exclude from our
analysis any bill with over $500 in pharmacy charges that does not
report procedure code 99.20. We question the analytical validity of
this approach, particularly given that many Medicare beneficiaries have
multiple chronic conditions requiring multiple medications. It is
simply not possible to determine coding accuracy by reviewing charge
data submitted on bills. The only way to identify coding errors would
be to review the actual medical records. To exclude cases with pharmacy
charges exceeding a certain predetermined threshold would likely skew
the results of any such analysis.
We remain open to considering and using non-MedPAR data to make DRG
changes if the data are reliable and validated. In the July 31, 1999
final rule (64 FR 41499), we described the timetable and process for
interested parties to submit non-MedPAR data.
With respect to the recommendation that we make a concerted effort
to ensure that hospitals use procedure code 99.20 appropriately, from
the inception of this procedure code, effective October 1, 1998, HCFA
has collaborated with the American Hospital Association (AHA) to
educate coders on platelet inhibitor therapy. An extensive article in
AHA's publication, Coding Clinic for ICD-9-CM, Fourth Quarter 1998,
identifies the platelet inhibitor drugs and includes instructions on
the appropriate code assignment. Coding instructions for platelet
inhibitors are also available via the 1998 regulatory updates
teleconference sponsored by AHA.
d. Extracorporeal Membrane Oxygenation. Extracorporeal Membrane
Oxygenation (ECMO) is a cardiopulmonary bypass technique that offers
long-term cardiopulmonary support to patients who have reversible
cardiopulmonary insufficiency that has not responded to conventional
management. It involves passing a patient's blood through an
extracorporeal membrane oxygenator that adds oxygen and removes carbon
dioxide. The oxygenated blood then is passed through a heat exchanger
to warm it to body temperature prior to returning it to the patient.
The process and equipment are similar to those used in open heart
surgery, but are continued over prolonged periods of time. ECMO
attempts to provide the patient with artificial cardiopulmonary
function while his or her own cardiopulmonary functions are incapable
of sustaining life.
Since ECMO involves the use of a device that sustains
cardiopulmonary function while the underlying condition is being
treated, it is important to identify and treat underlying conditions
leading to cardiopulmonary failure if the patient is to return to
normal cardiopulmonary function.
ECMO is assigned to procedure code 39.65 (Extracorporeal membrane
oxygenation (ECMO)). This code is not recognized as an OR procedure
within the DRG system and, therefore, does not affect payment. To
evaluate the appropriateness of payment under the current DRG
assignment, we have reviewed a 10-percent sample of Medicare claims in
the FY 1999 MedPAR file and found only 4 cases in which ECMO was used.
The charges for these cases ranged from $16,006 to $198,014. Since
medical literature indicates that ECMO is predominately used on
newborns and pediatric cases, this low number of claims is not
surprising. Only in recent years have some hospitals started to use
ECMO on adults. It is reserved for cases facing almost certain
mortality.
Because ECMO is a procedure clinically similar to a heart assist
device, we proposed that procedure code 39.65 be classified as an OR
procedure and be classified in DRGs 104 and 105 along with the heart
assist system procedures (as discussed in section II.B.2.b. of this
preamble). Those cases in which ECMO was provided, but for which the
principal diagnosis is not classified to MDC 5, would then be assigned
to DRG 468 (Extensive OR Procedure Unrelated to Principal Diagnosis).
This would be appropriate since it is possible that secondary
conditions or complications may arise during hospitalization that would
require the use of ECMO. The relatively high weight of DRG 468 would be
appropriate for these cases.
Comment: We received two comments in support of the proposal to
classify procedure code 39.65 as an OR procedure and then assign it to
DRGs 104 and 105. One of the commenters stated that most of the adult
patients receiving ECMO will fall within MDC 5 since ECMO is used for
patients with severe, but reversible, heart or lung disorders that have
not responded to the usual treatments of mechanical ventilation,
medicines, and extra oxygen. The commenter further stated that these
severely ill patients may continue on ECMO for a period of days or
weeks until the heart or lungs recover, or until the treatment is no
longer effective.
Response: We acknowledge the support of the commenters to classify
39.65 as an OR procedure and then assign it to DRGs 104 and 105 and are
adopting our proposal as final.
3. MDC 15 (Newborns and Other Neonates With Conditions Originating in
the Perinatal Period)
a. V05.8 (Vaccination for disease, NEC). DRG 390 (Neonate with
Other Significant Problems) contains newborn or neonate cases with
other significant
[[Page 47061]]
problems, not assigned to DRGs 385 through 389, DRG 391, or DRG 469. In
order to be classified into DRG 391 (Normal Newborn), the neonate must
have a principal diagnosis as listed under DRG 391 and either no
secondary diagnosis or a secondary diagnosis as listed under DRG 391.
Neonates with a secondary diagnosis of V05.8 (Vaccination for disease,
NEC) are currently classified to DRG 390. Although it would seem that
healthy newborns who receive vaccinations and have no other problems
would be assigned to DRG 391, code V05.8 is not included as one of the
secondary diagnoses under DRG 391, and therefore the case would not be
classified as a normal newborn (DRG 391). Code V05.8 is assigned to DRG
390 as a default, since it is not included under another complicated
neonate DRG or the normal newborn DRG.
In the proposed rule, we discussed our review of the
appropriateness of including diagnosis code V05.8 on the list of
acceptable secondary diagnoses under DRG 390 based on inquires that we
had received. We pointed out that by including V05.8 on the acceptable
secondary diagnosis list for DRG 390, newborns who receive vaccinations
are classified as having significant health problems. The inquirers
believed this incorrectly labels an otherwise healthy newborn as having
a significant medical condition. Providing a vaccination to a newborn
is performed to prevent the infant from contracting a disease.
We agreed with the inquirers that, absent any evidence of disease,
a newborn should not be considered as having a significant problem
simply because a preventative vaccination was provided. Therefore, we
proposed that V05.8 be removed from the list of acceptable secondary
diagnoses under DRG 390 and assigned as a secondary diagnosis under DRG
391. In doing so, these cases would no longer be classified to DRG 390.
Comment: We received two comments in support of our proposal to
remove code V05.8 from the list of acceptable secondary diagnoses under
DRG 390. These commenters agreed that a prophylactic vaccination should
not be classified as a significant problem. Newborns who receive these
prophylactic vaccinations should still be considered normal newborns.
We received no comments in opposition to the proposal.
Response: We are adopting the proposal to include V05.8 on the list
of acceptable secondary diagnoses under DRG 391 Normal Newborn. Codes
V05.3 (Viral hepatitis vaccination) and V05.4 (Varicella vaccination)
are already listed as acceptable secondary diagnoses under DRG 391.
b. Diagnosis code 666.02 (Third-stage postpartum hemorrhage,
delivered with postpartum complication). Diagnosis code 666.02 is
assigned to DRG 373 (Vaginal Delivery without Complicating Diagnoses).
This DRG was created for uncomplicated vaginal deliveries. However,
code 666.22 (Delayed and secondary postpartum hemorrhage, delivered
with postpartum complication) is assigned to DRG 372 (Vaginal Delivery
with Complicating Diagnoses). This means that mothers who have a
delayed and secondary postpartum hemorrhage would be assigned to DRG
372, while mothers who have a third-stage postpartum hemorrhage would
not be considered as a complicated delivery.
We believe a third-stage postpartum hemorrhage should be considered
a complicating diagnosis and, in order to categorize these cases more
appropriately, we proposed to move diagnosis code 666.02 from DRG 373
and assign it as a complicating diagnosis under DRG 372.
Comment: We received two comments supporting the proposal to
classify 666.02 as a complicating diagnosis under DRG 372. The
commenters agreed that a third-stage postpartum hemorrhage should be
classified as a complicated delivery. There were no comments submitted
in opposition to this change.
Response: We are adopting as final our proposal to classify 666.02
as a complication diagnosis under DRG 372.
c. Diagnosis Code 759.89 (Specified congenital anomalies, NEC)
(Alport's Syndrome). Alport's Syndrome (also referred to as hereditary
nephritis) is an inherited disorder involving damage to the kidney,
blood in the urine, and, in some cases, loss of hearing. It may also
include loss of vision. Patients who are not treated early enough or
who do not respond to treatment may progress to renal failure. A kidney
transplant is one treatment option for these cases. As with many of the
congenital anomalies, there is no unique ICD-9-CM code for this
condition. Alport's Syndrome, along with many other rare and diverse
congenital anomalies, is assigned to the rather nonspecific diagnosis
code 759.89 (Specific congenital anomalies, NEC). Examples include
William Syndrome, Brachio-Oto-Renal Syndrome, and Costello's Syndrome.
Each of these is a unique hereditary disorder affecting a variety of
body systems.
Patients can be diagnosed and treated for congenital anomalies
throughout their lives; treatment is not restricted to the neonatal
period. In our GROUPER, however, each diagnosis code is assigned to
just one MDC. In this case, diagnosis code 759.89 is assigned to MDC 15
(Newborns and Other Neonates with Conditions Originating in the
Perinatal Period) although the patient may be an adult.
In the proposed rule, we referred to a request from a physician
concerning renal transplants for patients with Alport's Syndrome. The
physician pointed out that when a patient with Alport's Syndrome is
admitted for a kidney transplant, the case is assigned to DRG 390
(Neonate with Other Significant Problems). In these instances, when the
principal diagnosis is code 759.89, the case is classified to MDC 15
although the patient may no longer be a newborn. The physician believed
that these cases should be assigned to DRG 302 (Kidney Transplant).
The inquirer suggested moving diagnosis code 759.89 to MDC 11
(Diseases and Disorders of the Kidney and Urinary Tract) so that when a
kidney transplant is performed, it will be assigned to DRG 302.
Although this seems quite appropriate for patients with Alport's
Syndrome found in diagnosis code 759.89, it does not work well for the
wide variety of patients also described by this code. Many others would
be inappropriately classified to MDC 11.
Alport's Syndrome cases with code 759.89 as a principal diagnosis
who receive a kidney transplant are assigned to DRG 468 (Extensive OR
Procedure Unrelated to Principal Diagnosis). This DRG has a FY 2000
relative weight of 3.6400. Also for FY 2000, DRG 302 (Kidney
Transplant) has a relative weight of 3.5669. Therefore, the payment
amounts are in fact comparable.
We discussed several options for resolving this issue:
(1) If the case is assigned a principal diagnosis code of renal
failure with Alport's Syndrome as a secondary diagnosis, the case could
be assigned to DRG 302. As this option would represent a change in the
sequencing of congenital anomaly codes and related complications, it
would have to be evaluated and subsequently approved by the Editorial
Advisory Board for Coding Clinic for ICD-9-CM. The Editorial Advisory
Board is comprised of representatives from the physician, coding, and
hospital industry. Final decisions on coding policy issues are made by
the representatives from the AHA, the American Health Information
Management Association, the National Center for Health Statistics, and
HCFA.
[[Page 47062]]
(2) A unique ICD-9-CM diagnosis code could be created for Alport's
Syndrome that could then be evaluated for possible assignment within
MDC 11. This issue has been referred to the National Center for Health
Statistics for consideration as a future coding modification.
One difficulty with this option is the large number of congenital
anomalies and the limited number of unused codes in this section of
ICD-9-CM. Each new code must be carefully evaluated for
appropriateness.
(3) A third option, which was already addressed, involves moving
diagnosis code 759.89 to MDC 11. The problem with this approach is that
many cases would then be misassigned to MDC 11 because the congenital
anomaly would not involve diseases of the kidney and urinary tract.
(4) A fourth option would be to leave the coding and DRG assignment
as they currently exist. Since few cases exist, the overall impact may
be minimal.
To evaluate the impact of leaving the DRG assignment as it
currently exists, in the proposed rule we examined data from a 10-
percent sample of Medicare cases in the FY 1999 MedPAR file. There were
95 cases assigned to a wide range of DRGs with code 759.89 as a
secondary diagnosis. There was only one case assigned to MDC 15 with a
principal diagnosis of code 759.89.
In the proposed rule, we recommended that diagnosis code 759.89
remain in MDC 15, since it encompasses such a wide variety of
conditions.
Comment: We received two comments in support of modifying the
coding advice for this particular congenital anomaly so that renal
failure is reported as the principal diagnosis and Alport's Syndrome is
reported as a secondary diagnosis. One commenter pointed out that a
distinction exists between those manifestations that are integral to
the congenital anomaly (and thus, according to the official coding
guidelines, would not be coded at all) and those that are not
considered integral. This commenter also supported the recommendation
for a change in guidelines that would allow sequencing a manifestation
that is not integral to the congenital anomaly as the principal
diagnosis. The other commenter indicated that while renal disease is
usually present in Alport's Syndrome, it does not always lead to renal
failure. The commenter also supported the reporting of renal failure as
the principal diagnosis, with Alport's Syndrome as a secondary
diagnosis.
Response: The coding and sequencing of Alport's Syndrome patients
with renal failure who are admitted for renal transplant were addressed
at the June 2000 meeting of the Editorial Advisory Board of Coding
Clinic for ICD-9-CM. Coding Clinic for ICD-9-CM is a publication of the
AHA. The issue specifically addressed was whether the code used for
Alport's Syndrome or the code for renal failure should be sequenced
first when the patient is admitted for a renal transplant for the renal
failure. In cases where manifestations are a key aspect of the
congenital anomaly, the congenital anomaly code is usually sequenced
first.
After careful evaluation, the Board determined that, in this
specific case, the code for renal failure would be sequenced first,
followed by the code for Alport's Syndrome. The Board also determined
that renal failure is not always present for patients with Alport's
Syndrome. These patients may, in fact, develop renal failure as a
result of other factors. Therefore, hospitals do not have to sequence
the congenital anomaly code first. By reporting renal failure as the
principal diagnosis, the case is appropriately assigned to DRG 302. The
Board's advice will be published in the third quarter 2000 issue of
Coding Clinic for ICD-9-CM and will be effective for discharges
occurring on or after September 1, 2000.
4. MDC 17 (Myeloproliferative Diseases and Disorders and Poorly
Differentiated Neoplasm)
Diagnosis code 273.8 (Disorders of plasma protein metabolism, NEC)
is assigned to DRG 403 (Lymphoma and Nonacute Leukemia with CC) and DRG
404 (Lymphoma and Nonacute Leukemia without CC). A disorder of plasma
protein metabolism does not mean one has a lymphoma with nonacute
leukemia. An individual can have a disorder of plasma protein
metabolism without having a lymphoma or leukemia.
In the proposed rule, we considered the appropriateness of
including diagnosis code 273.8 in DRGs 403 and 404. Disorders of plasma
protein metabolism are not lymphomas or leukemia, thus diagnosis code
273.8 is more closely related to DRG 413 (Other Myeloproliferative
Disorders or Poorly Differentiated Neoplasm Diagnoses with CC) and DRG
414 (Other Myeloproliferative Disorders or Poorly Differentiated
Neoplasm Diagnoses without CC).
We also examined charge data drawn from cases assigned to diagnosis
code 273.8 in a 10-percent sample of Medicare cases in the FY 1999
MedPAR file and found that the average charges for these cases were
also more closely related to DRGs 413 and 414 than to DRGs 403 and 404.
We proposed to move diagnosis code 273.8 from DRGs 403 and 404 to DRGs
413 and 414.
We also noted that diagnosis code 273.8 is included in the
following surgical DRGs that are performed on patients with lymphoma or
leukemia:
DRG 400 (Lymphoma and Leukemia with Major OR Procedure)
DRG 401 (Lymphoma and Nonacute Leukemia with Other OR
Procedure with CC)
DRG 402 (Lymphoma and Nonacute Leukemia with Other OR
Procedure without CC)
The same clinical issue would apply to these surgical DRGS
performed on patients with lymphoma and leukemia. Code 273.8 should be
assigned to the surgical DRGs for myeloproliferative disorders since
the cases are clinically similar and, as stated before, code 273.8 is
not clinically similar to lymphomas and leukemias. Therefore, we
proposed to remove code 273.8 from the surgical DRGs related to
lymphoma and leukemia (DRGS 400, 401, and 402) and assigned to the
following myeloproliferative surgical DRGS, based on the procedure
performed:
DRG 406 (Myeloproliferative Disorders or Poorly
Differentiated Neoplasms with Major OR Procedures with CC)
DRG 407 (Myeloproliferative Disorders Or Poorly
Differentiated Neoplasms with Major OR Procedures without CC)
DRG 408 (Myeloproliferative Disorders or Poorly
Differentiated Neoplasms with Other OR Procedures)
Comment: We received two comments supporting our proposal to remove
code 273.8 from the DRGs for lymphomas and leukemia (medical DRGs 403
and 404 as well as surgical DRGs 400 through 402). They supported
moving 273.8 to the DRGs for other myeloproliferative disorders
(medical DRGs 413 and 414 as well as surgical DRGs 406 through 408).
One commenter also pointed out that code 273.9 (Unspecified disorder of
plasma protein metabolism) is clinically similar to 273.8 and is also
included with the DRGs for lymphomas and leukemia. The commenter asked
if HCFA also planned to move 273.9 in a similar fashion to that
proposed for code 273.8 since they appear to be companion codes. The
commenter asserted that it was inappropriate to keep 273.9 in the DRGS
for lymphoma and leukemia.
Response: We agree that code 273.8 should be moved out of the DRGs
for lymphoma and leukemia and into the DRGs for other
myeloproliferative disorders. Also, we agree with the commenter who
stated that code 273.9
[[Page 47063]]
is clinically similar to 273.8 and should be treated in the same
manner. Each code would be more appropriately assigned to the DRGS for
other myeloproliferative disorders. Therefore, we are removing 273.9
from medical DRGS 403 and 404 and assigning it to DRGS 413 and 414. We
are adopting as final our proposal to remove 273.8 from medical DRGs
403 and 404 and assign it to medical DRGs 413 and 414. We are also
removing 273.8 and 273.9 from surgical DRGs 400, 401, and 402 and
assigning them to surgical DRGs 406, 407, and 408.
5. Surgical Hierarchies
Some inpatient stays entail multiple surgical procedures, each one
of which, occurring by itself, could result in assignment of the case
to a different DRG within the MDC to which the principal diagnosis is
assigned. Therefore, it is necessary to have a decision rule by which
these cases are assigned to a single DRG. The surgical hierarchy, an
ordering of surgical classes from most to least resource intensive,
performs that function. Its application ensures that cases involving
multiple surgical procedures are assigned to the DRG associated with
the most resource-intensive surgical class.
Because the relative resource intensity of surgical classes can
shift as a function of DRG reclassification and recalibration, we
reviewed the surgical hierarchy of each MDC, as we have for previous
reclassifications, to determine if the ordering of classes coincided
with the intensity of resource utilization, as measured by the same
billing data used to compute the DRG relative weights.
A surgical class can be composed of one or more DRGs. For example,
in MDC 11, the surgical class "kidney transplant" consists of a
single DRG (DRG 302) and the class "kidney, ureter and major bladder
procedures" consists of three DRGs (DRGs 303, 304, and 305).
Consequently, in many cases, the surgical hierarchy has an impact on
more than one DRG. The methodology for determining the most resource-
intensive surgical class involves weighting each DRG for frequency to
determine the average resources for each surgical class. For example,
assume surgical class A includes DRGs 1 and 2 and surgical class B
includes DRGs 3, 4, and 5. Assume also that the average charge of DRG 1
is higher than that of DRG 3, but the average charges of DRGs 4 and 5
are higher than the average charge of DRG 2. To determine whether
surgical class A should be higher or lower than surgical class B in the
surgical hierarchy, we would weight the average charge of each DRG by
frequency (that is, by the number of cases in the DRG) to determine
average resource consumption for the surgical class. The surgical
classes would then be ordered from the class with the highest average
resource utilization to that with the lowest, with the exception of
"other OR procedures" as discussed below.
This methodology may occasionally result in a case involving
multiple procedures being assigned to the lower-weighted DRG (in the
highest, most resource-intensive surgical class) of the available
alternatives. However, given that the logic underlying the surgical
hierarchy provides that the GROUPER searches for the procedure in the
most resource-intensive surgical class, this result is unavoidable.
We note that, notwithstanding the foregoing discussion, there are a
few instances when a surgical class with a lower average relative
weight is ordered above a surgical class with a higher average relative
weight. For example, the "other OR procedures" surgical class is
uniformly ordered last in the surgical hierarchy of each MDC in which
it occurs, regardless of the fact that the relative weight for the DRG
or DRGs in that surgical class may be higher than that for other
surgical classes in the MDC. The "other OR procedures" class is a
group of procedures that are least likely to be related to the
diagnoses in the MDC but are occasionally performed on patients with
these diagnoses. Therefore, these procedures should only be considered
if no other procedure more closely related to the diagnoses in the MDC
has been performed.
A second example occurs when the difference between the average
weights for two surgical classes is very small. We have found that
small differences generally do not warrant reordering of the hierarchy
since, by virtue of the hierarchy change, the relative weights are
likely to shift such that the higher-ordered surgical class has a lower
average weight than the class ordered below it.
Based on the preliminary recalibration of the DRGs, we proposed to
modify the surgical hierarchy as set forth below. As we stated in the
September 1, 1989 final rule (54 FR 36457), we were unable to test the
effects of proposed revisions to the surgical hierarchy and to reflect
these changes in the proposed relative weights because the revised
GROUPER software was unavailable at the time the proposed rule was
completed. Rather, we simulated most major classification changes to
approximate the placement of cases under the proposed reclassification,
then determined the average charge for each DRG. These average charges
then served as our best estimate of relative resource use for each
surgical class.
We proposed to revise the surgical hierarchy for the pre-MDC DRGs,
MDC 8 (Diseases and Disorders of the Musculoskeletal System and
Connective Tissue), and MDC 10 (Endocrine, Nutritional, and Metabolic
Diseases and Disorders) as follows:
In the pre-MDC DRGs, we proposed to move DRG 103 (Heart
Transplant) from MDC 5 to pre-MDC. We proposed to reorder DRG 103
(Heart Transplant) above DRG 483 (Tracheostomy Except for Face, Mouth,
and Neck Diagnoses).
In the pre-MDC DRGs, we proposed to reorder DRG 481 (Bone
Marrow Transplant) above DRG 495 (Lung Transplant).
In MDC 8, we proposed to reorder DRG 230 (Local Excision
and Removal of Internal Fixation Devices of Hip and Femur) above DRGs
226 and 227 (Soft Tissue Procedures).
In MDC 10, we proposed to reorder DRG 288 (OR Procedures
for Obesity) above DRG 285 (Amputation of Lower Limb for Endocrine,
Nutritional, and Metabolic Disorders).
Comment: One commenter supported the surgical hierarchy proposals.
Another commenter opposed the reordering of DRG 230 above DRGs 226 and
227 in MDC 8. The commenter stated that, if both procedures are
performed during the same operative episode, reordering DRGs 226 and
227 above DRG 230 would more appropriately capture facility resources.
Response: Although local excision and removal of internal fixation
devices of hip and femur procedures may be less resource intensive than
many of the surgical procedures in DRGs 226 and 227, we proposed the
surgical hierarchy change because our data indicated cases of local
excision and removal of internal fixation devices of hip and femur are
more resource intensive than cases in DRGs 226 and 227. At the time of
our proposed surgical hierarchy change, the average standardized
charges for cases in DRG 230 were approximately $1,000 more than the
average standardized charges for cases in DRGs 226 and 227. We are
adopting the proposed surgical hierarchy change as final so that cases
with multiple procedures will be assigned to the higher-weighted DRG.
We will continue to monitor the MDC 8 surgical hierarchy as part of our
ongoing review.
Based on a test of the proposed revisions using the most recent
MedPAR file and the final GROUPER software, we have found that all the
proposed
[[Page 47064]]
revisions are still supported by the data and no additional changes are
indicated. Therefore, we are adopting these changes in this final rule.
6. Refinement of Complications and Comorbidities (CC) List
In the September 1, 1987 final notice (52 FR 33143) concerning
changes to the DRG classification system, we modified the GROUPER logic
so that certain diagnoses included on the standard list of CCs would
not be considered a valid CC in combination with a particular principal
diagnosis. Thus, we created the CC Exclusions List. We made these
changes for the following reasons: (1) To preclude coding of CCs for
closely related conditions; (2) to preclude duplicative coding or
inconsistent coding from being treated as CCs; and (3) to ensure that
cases are appropriately classified between the complicated and
uncomplicated DRGs in a pair. We developed this standard list of
diagnoses using physician panels to include those diagnoses that, when
present as a secondary condition, would be considered a substantial
complication or comorbidity. In previous years, we have made changes to
the standard list of CCs, either by adding new CCs or deleting CCs
already on the list. In the May 5, 2000 proposed rule, we proposed no
deletions of the diagnosis codes on the CC list.
In the May 19, 1987 proposed notice (52 FR 18877) concerning
changes to the DRG classification system, we explained that the
excluded secondary diagnoses were established using the following five
principles:
Chronic and acute manifestations of the same condition
should not be considered CCs for one another (as subsequently corrected
in the September 1, 1987 final notice (52 FR 33154)).
Specific and nonspecific (that is, not otherwise specified
(NOS)) diagnosis codes for a condition should not be considered CCs for
one another.
Conditions that may not coexist, such as partial/total,
unilateral/bilateral, obstructed/unobstructed, and benign/malignant,
should not be considered CCs for one another.
The same condition in anatomically proximal sites should
not be considered CCs for one another.
Closely related conditions should not be considered CCs
for one another.
The creation of the CC Exclusions List was a major project
involving hundreds of codes. The FY 1988 revisions were intended only
as a first step toward refinement of the CC list in that the criteria
used for eliminating certain diagnoses from consideration as CCs were
intended to identify only the most obvious diagnoses that should not be
considered complications or comorbidities of another diagnosis. For
that reason, and in light of comments and questions on the CC list, we
have continued to review the remaining CCs to identify additional
exclusions and to remove diagnoses from the master list that have been
shown not to meet the definition of a CC. See the September 30, 1988
final rule (53 FR 38485) for the revision made for the discharges
occurring in FY 1989; the September 1, 1989 final rule (54 FR 36552)
for the FY 1990 revision; the September 4, 1990 final rule (55 FR
36126) for the FY 1991 revision; the August 30, 1991 final rule (56 FR
43209) for the FY 1992 revision; the September 1, 1992 final rule (57
FR 39753) for the FY 1993 revision; the September 1, 1993 final rule
(58 FR 46278) for the FY 1994 revisions; the September 1, 1994 final
rule (59 FR 45334) for the FY 1995 revisions; the September 1, 1995
final rule (60 FR 45782) for the FY 1996 revisions; the August 30, 1996
final rule (61 FR 46171) for the FY 1997 revisions; the August 29, 1997
final rule (62 FR 45966) for the FY 1998 revisions; and the July 31,
1998 final rule (63 FR 40954) for the FY 1999 revisions. In the July
30, 1999 final rule (64 FR 41490), no modifications were made to the CC
Exclusions List for FY 2000 because we made no changes to the ICD-9-CM
codes for FY 2000.
In this final rule, we are making limited revisions of the CC
Exclusions List to take into account the changes that will be made in
the ICD-9-CM diagnosis coding system effective October 1, 2000. (See
section II.B.8. below, for a discussion of ICD-9-CM changes.) These
changes are being made in accordance with the principles established
when we created the CC Exclusions List in 1987.
Tables 6F and 6G in section V. of the Addendum to this final rule
contain the revised CC Exclusions List that is effective for discharges
occurring on or after October 1, 2000. Each table shows the principal
diagnoses along with changes to the excluded CCs. Each of these
principal diagnoses is shown with an asterisk and the additions or
deletions to the CC Exclusions List are provided in an indented column
immediately following the affected principal diagnosis.
CCs that were added to the list appear in Table 6F--Additions to
the CC Exclusions List. Beginning with discharges on or after October
1, 2000, the indented diagnoses will not be recognized by the GROUPER
as valid CCs for the asterisked principal diagnosis.
CCs that were deleted from the list are in Table 6G--Deletions from
the CC Exclusions List. Beginning with discharges on or after October
1, 2000, the indented diagnoses will be recognized by the GROUPER as
valid CCs for the asterisked principal diagnosis.
Copies of the original CC Exclusions List applicable to FY 1988 can
be obtained from the National Technical Information Service (NTIS) of
the Department of Commerce. It is available in hard copy for $92.00
plus $6.00 shipping and handling and on microfiche for $20.50, plus
$4.00 for shipping and handling. A request for the FY 1988 CC
Exclusions List (which should include the identification accession
number (PB) 88-133970) should be made to the following address:
National Technical Information Service, United States Department of
Commerce, 5285 Port Royal Road, Springfield, Virginia 22161; or by
calling (703) 487-4650.
Users should be aware of the fact that all revisions to the CC
Exclusions List (FYs 1989, 1990, 1991, 1992, 1993, 1994, 1995, 1996,
1997, 1998, 1999, and those in Tables 6F and 6G of this document) must
be incorporated into the list purchased from NTIS in order to obtain
the CC Exclusions List applicable for discharges occurring on or after
October 1, 2000. (Note: There was no CC Exclusions List in FY 2000
because we did not make changes to the ICD-9-CM codes for FY 2000.)
Alternatively, the complete documentation of the GROUPER logic,
including the current CC Exclusions List, is available from 3M/Health
Information Systems (HIS), which, under contract with HCFA, is
responsible for updating and maintaining the GROUPER program. The
current DRG Definitions Manual, Version 17.0, is available for $225.00,
which includes $15.00 for shipping and handling. Version 18.0 of this
manual, which includes the final FY 2001 DRG changes, will be available
in October 2000 for $225.00. These manuals may be obtained by writing
3M/HIS at the following address: 100 Barnes Road, Wallingford,
Connecticut 06492; or by calling (203) 949-0303. Please specify the
revision or revisions requested.
We received no comments on the CC Exclusions List in the proposed
rule.
7. Review of Procedure Codes in DRGs 468, 476, and 477
Each year, we review cases assigned to DRG 468 (Extensive OR
Procedure Unrelated to Principal Diagnosis), DRG 476 (Prostatic OR
Procedure Unrelated to Principal Diagnosis), and DRG 477
[[Page 47065]]
(Nonextensive OR Procedure Unrelated to Principal Diagnosis) to
determine whether it would be appropriate to change the procedures
assigned among these DRGs.
DRGs 468, 476, and 477 are reserved for those cases in which none
of the OR procedures performed is related to the principal diagnosis.
These DRGs are intended to capture atypical cases, that is, those cases
not occurring with sufficient frequency to represent a distinct,
recognizable clinical group. DRG 476 is assigned to those discharges in
which one or more of the following prostatic procedures are performed
and are unrelated to the principal diagnosis:
60.0 Incision of prostate
60.12 Open biopsy of prostate
60.15 Biopsy of periprostatic tissue
60.18 Other diagnostic procedures on prostate and periprostatic
tissue
60.21 Transurethral prostatectomy
60.29 Other transurethral prostatectomy
60.61 Local excision of lesion of prostate
60.69 Prostatectomy NEC
60.81 Incision of periprostatic tissue
60.82 Excision of periprostatic tissue
60.93 Repair of prostate
60.94 Control of (postoperative) hemorrhage of prostate
60.94 Transurethral balloon dilation of the prostatic urethra
60.99 Other operations on prostate
All remaining OR procedures are assigned to DRGs 468 and 477, with
DRG 477 assigned to those discharges in which the only procedures
performed are nonextensive procedures that are unrelated to the
principal diagnosis. The original list of the ICD-9-CM procedure codes
for the procedures we consider nonextensive procedures, if performed
with an unrelated principal diagnosis, was published in Table 6C in
section IV. of the Addendum to the September 30, 1988 final rule (53 FR
38591). As part of the final rules published on September 4, 1990 (55
FR 36135), August 30, 1991 (56 FR 43212), September 1, 1992 (57 FR
23625), September 1, 1993 (58 FR 46279), September 1, 1994 (59 FR
45336), September 1, 1995 (60 FR 45783), August 30, 1996 (61 FR 46173),
and August 29, 1997 (62 FR 45981), we moved several other procedures
from DRG 468 to 477, and some procedures from DRG 477 to 468. No
procedures were moved in FY 1999, as noted in the July 31, 1998 final
rule (63 FR 40962), or in FY 2000, as noted in the July 30, 1999 final
rule (64 FR 41496).
a. Moving Procedure Codes from DRGs 468 or 477 to MDCs. We annually
conduct a review of procedures producing assignment to DRG 468 or DRG
477 on the basis of volume, by procedure, to determine the
appropriateness of moving procedure codes out of these DRGs into one of
the surgical DRGs for the MDC into which the principal diagnosis falls.
The data are arrayed two ways for comparison purposes. We look at a
frequency count of each major operative procedure code. We also compare
procedures across MDCs by volume of procedure codes within each MDC.
That is, using procedure code 57.49 (Other transurethral excision or
destruction of lesion or tissue of bladder) as an example, we
determined that this particular code accounted for the highest number
of major operative procedures (162 cases, or 9.8 percent of all cases)
reported in the sample of DRG 477. In addition, we determined that
procedure code 57.49 appeared in MDC 4 (Diseases and Disorders of the
Respiratory System) 28 times as well as in 9 other MDCs.
Using a 10-percent sample of the FY 1999 MedPAR file, we determined
that the quantity of cases in DRG 477 totaled 1,650. There were 106
instances where the major operative procedure appeared only once (6.4
percent of the time), resulting in assignment to DRG 477.
Using the same 10-percent sample of the FY 1999 MedPAR file, we
reviewed DRG 468. There were a total of 3,858 cases, with one major
operative code causing the DRG assignment 311 times (or 8 percent) and
230 instances where the major operative procedure appeared only once
(or 6 percent of the time).
Our medical consultants then identified those procedures occurring
in conjunction with certain principal diagnoses with sufficient
frequency to justify adding them to one of the surgical DRGs for the
MDC in which the diagnosis falls. Based on this year's review, we did
not identify any necessary changes in procedures under either DRG 468
or 477 and, therefore, did not propose to move any procedures from
either DRG 468 or DRG 477 to one of the surgical DRGs. We received no
comments on our review results and, therefore, we will not move any
procedures from these DRGs for FY 2001.
b. Reassignment of Procedures Among DRGs 468, 476, and 477. We also
conduct an annual review of a list of ICD-9-CM procedures that, when in
combination with their principal diagnosis code, result in assignment
to DRGs 468, 476, and 477, to ascertain if any of those procedures
should be moved from one of these DRGs to another of these DRGs based
on average charges and length of stay. We analyze the data for trends
such as shifts in treatment practice or reporting practice that would
make the resulting DRG assignment inappropriate. If our medical
consultants were to find these shifts, we would propose moving cases to
keep the DRGs clinically similar or to provide payment for the cases in
a similar manner. Generally, we move only those procedures for which we
have an adequate number of discharges to analyze the data. Based on
this year's review, we proposed not to move any procedures from DRG 468
to DRGs 476 or 477, from DRG 476 to DRGs 468 or 477, or from DRG 477 to
DRGs 468 or 476. We received no comments on this proposal, and
therefore are not moving any procedures from the DRGs indicated.
c. Adding Diagnosis Codes to MDCs. It has been brought to our
attention that an ICD-9-CM diagnosis code should be added to DRG 482
(Tracheostomy for Face, Mouth and Neck Diagnoses) to preserve clinical
coherence and homogeneity of the system. In the case of a patient who
has a facial infection (diagnosis code 682.0 (Other cellulitis and
abscess, Face)), the face may become extremely swollen and the
patient's ability to breathe might be impaired. It might be deemed
medically necessary to perform a temporary tracheostomy (procedure code
31.1) on the patient until the swelling subsides enough for the patient
to once again breathe on his or her own.
The combination of diagnosis code 682.0 and procedure code 31.1
resulted in assignment to DRG 483 (Tracheostomy Except for Face, Mouth
and Neck Diagnoses). The absence of diagnosis code 682.0 in DRG 483
forces the GROUPER algorithm to assign the case based solely on the
procedure code, without taking this diagnosis into account. Clearly
this was not the intent, as diagnosis code 682.0 should be included
with other face, mouth and neck diagnosis. We believe that cases such
as these would appropriately be assigned to DRG 482. Therefore, we
proposed to add diagnosis code 682.0 to the list of other face, mouth
and neck diagnoses already in the principal diagnosis list in DRG 482.
We received one comment in support of the proposed change, and are
adopting as final the proposal to add diagnosis code 682.0 to DRG 482.
8. Changes to the ICD-9-CM Coding System
As described in section II.B.1 of this preamble, the ICD-9-CM is a
coding system that is used for the reporting of diagnoses and
procedures performed on a patient. In September 1985, the ICD-9-CM
Coordination and Maintenance Committee was formed. This is a Federal
interdepartmental committee, co-chaired by the National Center for
[[Page 47066]]
Health Statistics (NCHS) and HCFA, charged with maintaining and
updating the ICD-9-CM system. The Committee is jointly responsible for
approving coding changes, and developing errata, addenda, and other
modifications to the ICD-9-CM to reflect newly developed procedures and
technologies and newly identified diseases. The Committee is also
responsible for promoting the use of Federal and non-Federal
educational programs and other communication techniques with a view
toward standardizing coding applications and upgrading the quality of
the classification system.
The NCHS has lead responsibility for the ICD-9-CM diagnosis codes
included in the Tabular List and Alphabetic Index for Diseases, while
HCFA has lead responsibility for the ICD-9-CM procedure codes included
in the Tabular List and Alphabetic Index for Procedures.
The Committee encourages participation in the above process by
health-related organizations. In this regard, the Committee holds
public meetings for discussion of educational issues and proposed
coding changes. These meetings provide an opportunity for
representatives of recognized organizations in the coding field, such
as the American Health Information Management Association (AHIMA)
(formerly American Medical Record Association (AMRA)), the AHA), and
various physician specialty groups as well as physicians, medical
record administrators, health information management professionals, and
other members of the public to contribute ideas on coding matters.
After considering the opinions expressed at the public meetings and in
writing, the Committee formulates recommendations, which then must be
approved by the agencies.
The Committee presented proposals for coding changes for FY 2000 at
public meetings held on June 4, 1998 and November 2, 1998. Even though
the Committee conducted public meetings and considered approval of
coding changes for FY 2000 implementation, we did not implement any
changes to ICD-9-CM codes for FY 2000 because of our major efforts to
ensure that all of the Medicare computer systems were compliant with
the year 2000. Therefore, the code proposals presented at the public
meetings held on June 4, 1998 and November 2, 1998, that (if approved)
ordinarily would have been included as new codes for October 1, 1999,
were held for consideration for inclusion in the annual update for FY
2001.
The Committee also presented proposals for coding changes for
implementation in FY 2001 at public meetings held on May 13, 1999 and
November 12, 1999, and finalized the coding changes after consideration
of comments received at the meetings and in writing by January 7, 2000.
Copies of the Coordination and Maintenance Committee minutes of the
1999 meetings can be obtained from the HCFA Home Page by typing http://
www.hcfa.gov/medicare/icd9cm.htm. Paper copies of these minutes are no
longer available and the mailing list has been discontinued.
The ICD-9-CM code changes that have been approved will become
effective October 1, 2000. The new ICD-9-CM codes are listed, along
with their DRG classifications, in Tables 6A and 6B (New Diagnosis
Codes and New Procedure Codes, respectively) in section VI. of the
Addendum to this final rule. As we stated above, the code numbers and
their titles were presented for public comment at the ICD-9-CM
Coordination and Maintenance Committee meetings. Both oral and written
comments were considered before the codes were approved. In the May 5,
2000 proposed rule, we solicited comments only on the proposed DRG
classification of these new codes.
Further, the Committee has approved the expansion of certain ICD-9-
CM codes to require an additional digit for valid code assignment.
Diagnosis codes that have been replaced by expanded codes or other
codes, or have been deleted are in Table 6C (Invalid Diagnosis Codes).
These invalid diagnosis codes will not be recognized by the GROUPER
beginning with discharges occurring on or after October 1, 2000. For
codes that have been replaced by new or expanded codes, the
corresponding new or expanded diagnosis codes are included in Table 6A
(New Diagnosis Codes). No procedure codes were replaced by expanded
codes or other codes, and no procedure codes were deleted. Revisions to
diagnosis code titles appear in Table 6D (Revised Diagnosis Code
Titles), which also includes the DRG assignments for these revised
codes. Revisions to procedure code titles appear in Table 6E (Revised
Procedure Codes Titles).
Comment: One commenter questioned the DRG assignments in Table 6A
for new ICD-9-CM codes V45.74, V45.76, V45.77, V45.78 and V45.79. The
commenter pointed out that it has been HCFA's longstanding practice to
assign a new code to the same DRG or DRGs as its predecessor code. The
commenter had seen a draft conversion table prepared by the NCHS for
codes being revised October 1, 2000, and indicated that the conversion
table did not support the DRG assignments for these specific codes.
Response: The commenter is correct. HCFA bases DRG assignments on
the DRG assignment of the predecessor code. Tables 6A through 6E in the
proposed rule were prepared prior to NCHS' completion of the conversion
table. The DRG assignments were based on a mapping of codes V45.74,
V45.76, V45.77, and V45.78 from code V45.89. However, the correct
mapping on the conversion table now shows the following predecessor
codes:
------------------------------------------------------------------------
Previous
New Code Code Previous DRG
------------------------------------------------------------------------
V45.74.......................... 593.89 331, 332, 333
596.8 331, 332, 333
V45.76.......................... 518.89 101, 102
V45.77.......................... 602.8 352
607.89 352
608.89 352
620.8 358, 359, 369
621.8 358, 359, 369
622.8 358, 359, 369
V45.78.......................... 360.89 46, 47, 48
V45.79.......................... 255.8 300, 301
289.59 398, 399
388.8 73, 74
569.49 188, 189, 190
577.8 204
[[Page 47067]]
V45.89 467
------------------------------------------------------------------------
We have modified the DRG assignments for V45.74, V45.76, V45.77,
and V45.78 in Table 6A of this final rule according to the mapping
indicated in the third column in the preceding table. However, V45.79
has a number of predecessor codes appearing in multiple MDCs and, thus,
would not relate to any specific MDC. After discussions with NCHS, we
determined that this code should continue to use V45.89 as its
predecessor code for purposes of DRG assignment, since it is not
restricted to a specific body system. Therefore, the DRG assignment for
V45.79 was not changed in Table 6A.
9. Other Issues
a. Immunotherapy. Effective October 1, 1994, procedure code 99.28
(Injection or infusion of biologic response modifier (BRM) as an
antineoplastic agent) was created and designated as a non-OR procedure
that does not affect DRG assignment. This cancer treatment involving
biological response modifiers is also known as BRM therapy or
immunotherapy.
In response to a comment on the May 7, 1999 proposed rule, for the
FY 2000 final rule we analyzed cases for which procedure code 99.28 was
reported using the 100 percent FY 1998 MedPAR file. The commenter
requested that we create a new DRG for BRM therapy or assign cases in
which BRM therapy is performed to an existing DRG with a high relative
weight. The commenter suggested that DRG 403 (Lymphoma and Nonacute
Leukemia with CC) would be an appropriate DRG.
For the proposed rule, we analyzed all cases for which procedure
code 99.28 was reported. We identified 1,179 cases in 136 DRGs in 22
MDCs. No more than 141 cases were assigned to any one particular DRG.
Of the 1,179 cases, 141 cases (approximately 12 percent) were
assigned to DRG 403 in MDC 17. We found approximately one-half of these
cases had other procedures performed in addition to receiving
immunotherapy, such as chemotherapy, bone marrow biopsy, insertion of
totally implantable vascular access device, thoracentesis, or
percutaneous abdominal drainage, which may account for the increased
charges. There were 123 immunotherapy cases assigned to DRG 82
(Respiratory Neoplasms) in MDC 4 (Diseases and Disorders of the
Respiratory System). We noted that, in some cases, in addition to
immunotherapy, other procedures were performed, such as insertion of an
intercostal catheter for drainage, thoracentesis, or chemotherapy.
There were 84 cases assigned to DRG 416 (Septicemia, Age >17) in
MDC 18 (Infectious and Parasitic Diseases (Systemic or Unspecified
Sites)). The principal diagnosis for this DRG is septicemia and, in
addition to receiving treatment for septicemia, immunotherapy was also
given. There were 79 cases assigned to DRG 410 (Chemotherapy without
Acute Leukemia as Secondary Diagnosis) in MDC 17.
The cost of immunotherapy is averaged into the weight for these
DRGS and, based on our analysis, we did not believe a reclassification
of these cases was warranted. Due to the limited number of cases that
were distributed throughout 136 DRGs in 22 MDCs and the variation of
charges, we concluded that it would be inappropriate to classify these
cases into a single DRG.
Although there were 141 cases assigned to DRG 403, it would be
inappropriate to place all immunotherapy cases, regardless of
diagnosis, into a DRG that is designated for lymphoma and nonacute
leukemia. We establish DRGs based on clinical coherence and resource
utilization. Each DRG encompasses a variety of cases, reflecting a
range of services and a range of resources. Generally, then, each DRG
reflects some higher cost cases and some lower cost cases. To the
extent a new technology is extremely costly relative to the cases
reflected in the DRG relative weight, the hospital might qualify for
outlier payments, that is, additional payments over and above the
standard prospective payment rate.
We did not receive any comments regarding payment for immunotherapy
cases.
b. Pancreas Transplant. Effective July 1, 1999, Medicare covers
whole organ pancreas transplantation if the transplantation is
performed simultaneously with or after a kidney transplant (procedure
codes 55.69, Other kidney transplantation, and V42.0, Organ or tissue
replaced by transplant, Kidney) (Transmittal No. 115, April 1999). We
noted that when we published the notification of this coverage in the
July 30, 1999 final rule (64 FR 41497), we inadvertently made an error
in announcing the covered codes. We cited the incorrect codes for
pancreas transplantation as procedure code 52.80 (Pancreatic
transplant, not otherwise specified) and 52.83 (Heterotransplant of
pancreas). The correct procedure codes for pancreas transplantation are
52.80 (Pancreatic transplant, not otherwise specified) and 52.82
(Homotransplant of pancreas). The Coverage Issues Manual was revised to
reflect this change via Transmittal 124, April 2000, effective October
1, 2000.
Pancreas transplantation is generally limited to those patients
with severe secondary complications of diabetes, including kidney
failure. However, pancreas transplantation is sometimes performed on
patients with labile diabetes and hypoglycemic unawareness. Pancreas
transplantation for diabetic patients who have not experienced end-
stage renal failure secondary to diabetes is excluded from coverage.
Medicare also excludes coverage of transplantation of partial
pancreatic tissue or islet cells.
In the July 30, 1999 final rule (64 FR 41497), we indicated that we
planned to review discharge data to determine whether a new DRG should
be created, or existing DRGs modified, to further classify pancreas
transplantation in combination with kidney transplantation.
Under the current DRG classification, if a kidney transplant and a
pancreas transplant are performed simultaneously on a patient with
chronic renal failure secondary to diabetes with renal manifestations
(diagnosis codes 250.40 through 250.43), the case is assigned to DRG
302 (Kidney Transplant) in MDC 11 (Diseases and Disorders of the Kidney
and Urinary Tract). If a pancreas transplant is performed following a
kidney transplant (that is, during a different hospital admission) on a
patient with chronic renal failure secondary to diabetes with renal
manifestations, the case is assigned to DRG 468 (Extensive OR Procedure
Unrelated to Principal Diagnosis). This is because pancreas transplant
is not assigned to MDC 11, the MDC to which a principal diagnosis of
chronic renal failure secondary to diabetes is assigned.
For the proposed rule, using 100 percent of the data in the FY 1999
MedPAR file (which contains hospital bills received for FY 1999 through
[[Page 47068]]
December 31, 1999), we analyzed the cases for which procedure codes
52.80 and 52.83 were reported. We identified a total of 79 cases in 8
DRGs, in 3 MDCs, and in 1 pre-MDC. Of the 79 cases identified, 49 cases
were assigned to DRG 302, 14 cases were assigned to DRG 468, and 8
cases were assigned to DRG 191 (Pancreas, Liver and Shunt Procedures
with CC). The additional 8 cases were distributed over 5 other assorted
DRGs, and due to their disparity, were not considered in our
evaluation.
We examined our data to determine whether it was appropriate to
propose a new kidney and pancreas transplant DRG. We identified 49 such
dual transplant cases in the FY 1999 MedPAR file. We do not believe
this to be a sufficient sample size to warrant the creation of a new
DRG. Furthermore, we noted that nearly half of these cases occurred at
a hospital in Maryland, which is not paid under the prospective payment
system. The rest of the cases are spread across multiple hospitals,
with no single hospital having more than 5 cases in the FY 1999 MedPAR.
We received 261 comments on this issue, 244 of which were form
letters.
We will continue to monitor these dual transplant cases to
determine whether it may be appropriate in the future to establish a
new DRG. However, we are not establishing a new DRG for these cases for
FY 2001 and the current procedure code classification will remain in
effect.
Comment: All commenters called for the establishment of a unique
DRG recognizing the combined transplant of kidney and pancreas in the
same operative episode. Some commenters cited increased utilization of
hospital resources, especially operating-room time, recovery time, and
immunosuppressive drugs as justification for a separate DRG for a
combined pancreas-kidney transplant. One commenter forwarded to us
facility-specific charge data for four dual-transplant patients seen at
that center through December 1997.
Response: We stated in the proposed rule that there does appear to
be a difference between the charges for dual kidney-pancreas transplant
patients assigned to DRG 302 (Kidney Transplant) and those patients who
received only a kidney transplant. However, the numbers of dual
transplant cases in our database were insufficient to warrant
establishing a new DRG for dual transplants.
We point out that, given the low volume of these cases and their
infrequent occurrence in any particular hospital, we believe our
outlier policy will provide adequate protection for any extraordinarily
costly cases. Furthermore, there is always variation in terms of the
costs for cases within a DRG relative to the payments under the
prospective payment system for that DRG. Although examining these cases
in isolation from other DRG 302 cases appears to suggest that dual
transplants are more expensive, the nature of the prospective payment
system is such that hospitals are expected to be able to offset cases
where costs are greater than payments with those cases where payments
exceed costs.
We further point out that additional Medicare coverage of a
transplanted organ does not necessarily and immediately result in
creation of a unique DRG. A specific example of not creating a unique
DRG is the combined heart-lung transplant procedure. Effective for
discharges occurring on or after October 1, 1990, Medicare was able to
identify combined heart-lung transplant using ICD-9-CM code 33.6
(Combined heart-lung transplantation). Instead of assigning this new
code to its own specific DRG, however, it was combined with heart
transplant in DRG 103 (Heart Transplant). When DRG 495 (Lung
Transplant) was created for cases discharged on or after October 1,
1994, review of our data revealed that assignment of code 33.6 was more
clinically coherent with DRG 103 than DRG 495. Therefore, code 33.6 was
not moved into the new lung transplant DRG. Although this does not
indicate we will not create a distinct DRG for combined kidney and
pancreas transplants, it does show a precedent for allowing a
sufficient sample of cases to accumulate before deciding whether a new
DRG is necessary.
Finally, one of the risks of establishing a new DRG based on few
documentable cases is that a few extremely low-cost cases could
dramatically reduce the average charges in a year, thereby lowering the
relative weight and potentially underpaying cases in this DRG by a
significant amount.
Comment: Several commenters argued that combined pancreas and
kidney transplants are underpaid every time they are performed and
expressed concern that this lack of funding provides limited access to
this procedure for Medicare beneficiaries.
Response: We do not believe that beneficiaries' access will be
limited by our decision. In addition, it is a violation of a hospital's
Medicare provider agreement to place restrictions on the number of
Medicare beneficiaries it accepts for treatment unless it places the
same restrictions on all other patients.
Comment: One commenter argued that the incremental cost of the
pancreas transplant was insufficient to cause the claim to move into
outlier status.
Response: Our data show covered charges submitted by hospitals
ranging from a low of approximately $42,000 to a high in excess of
$182,000 for cases in DRG 302. Outlier payments are meant to alleviate
the financial effects of treating extraordinarily high-cost cases.
Therefore, the commenter may be correct in saying that some of the
cases with lower charges might not be further compensated by outlier
payments. However, other cases are further compensated to mitigate
losses experienced by hospitals.
Comment: One commenter stated we underrepresented the volume of
future dual transplants under Medicare, citing mid-year approval of
Medicare coverage for pancreas transplants, and noting that this is not
enough time to accurately reflect the numbers of procedures since
patients normally must accrue longer wait times before they receive
organ offers for transplant.
Response: It is true that we did not attempt to project the future
volume of combined kidney and pancreas transplant procedures. We
reported the number of actual hospital claims in our MedPAR data base,
submitted through December 1999, when we published the proposed rule in
the May 5, 2000 Federal Register (65 FR 26294). DRG categories and
payment are always based on actual historical hospital charge data, not
projected data. What must also be considered, however, is that dual
transplants would only appear in statistics concerning DRG 302, while
HCFA also covers pancreas transplants performed in separate operative
episodes, subsequent to kidney transplantation. Those pancreatic
transplants occurring after kidney transplant would appear in DRG 468,
or potentially other DRGs as well, depending on the principal
diagnosis.
Comment: Several commenters noted that the 1998 Annual Report of
United Network for Organ Sharing (UNOS) indicated there were 966
simultaneous kidney-pancreas transplants, and questioned HCFA's
reported 49 cases appearing in DRG 302 as being too low. One commenter,
citing the inability of HCFA to be able to identify cases of dual
kidney-pancreas transplants, pointed out the need for a specific DRG
for this category of patients. Another commenter noted that data were
lost because of the incorrect publication of ICD-9-CM code 52.83
(Heterotransplant
[[Page 47069]]
of pancreas) as being a covered procedure.
Response: Most patients who are experiencing end-stage renal
disease should be eligible for Medicare benefits. We note, however,
that none of the commenters submitted specific evidence contrary to our
finding that, outside of a single hospital in Maryland, no individual
hospital had more than five Medicare dual transplant cases during FY
1999.
Obviously one issue is the timing of the creation of the coverage
benefit, which was conferred for cases discharged on or after July 1,
1999. Cases transplanted prior to that date should not have appeared in
our data as covered procedures.
We recognize that 52.83 is an incorrect code, and have corrected
this typographical error in the Medicare Coverage Issues Manual, as
noted above. Interestingly, the original data reported in the proposed
notice contained 79 cases of pancreas transplant, but there were only 7
instances in which code 52.83 was reported. We believe that hospital
coders recognized the error in the original coverage instruction, and
chose to submit the less specific code 52.80 instead.
Comment: Several commenters asserted that it was contradictory for
us to argue that 49 cases is too few to establish a DRG but we
indicated in the May 5, 2000 proposed rule that there were 40 DRGs with
fewer than 10 cases per year.
Response: These low-volume DRGs are not new, but in most cases were
created very early during or even prior to the implementation of the
prospective payment system. Many of these DRGs are related to patient
categories that are rare in the Medicare population, such as age less
than 17 or labor and delivery during childbirth. The DRG relative-
weights for these DRGs are adjusted based on the overall change in the
DRG weights rather than through normal recalibration.
We do not believe our policy not to establish a new dual transplant
DRG for combined kidney and pancreas transplants is contradicted by the
existence of these low-volume DRGs. As the commenters indicated, the
number of combined kidney and pancreas transplants is likely to
increase in the next few years, and therefore it is important to ensure
an accurate and stable DRG payment is established.
Comment: Several commenters offered to work closely with HCFA to
identify cases and costs associated with this category of patients.
Response: We appreciate these offers and the cooperative spirit in
which they were presented. Our ability to evaluate and implement
potential DRG changes depends on the availability of validated,
representative data. We remain open to using non-MedPAR data if the
data are reliable and validated and enable us to appropriately measure
relative resource use. We will continue to monitor this category of
patients, and will address this issue in the FY 2002 proposed rule.
C. Recalibration of DRG Weights
We proposed to use the same basic methodology for the FY 2001
recalibration as we did for FY 2000 (July 30, 1999 final rule (64 FR
41498)). That is, we recalibrated the weights based on charge data for
Medicare discharges. However, we used the most current charge
information available, the FY 1999 MedPAR file. (For the FY 2000
recalibration, we used the FY 1998 MedPAR file.) The MedPAR file is
based on fully coded diagnostic and procedure data for all Medicare
inpatient hospital bills.
The final recalibrated DRG relative weights are constructed from FY
1999 MedPAR data (discharges occurring between October 1, 1998 and
September 30, 1999), based on bills received by HCFA through March
2000, from all hospitals subject to the prospective payment system and
short-term acute care hospitals in waiver States. The FY 1999 MedPAR
file includes data for approximately 11.0 million Medicare discharges.
The methodology used to calculate the DRG relative weights from the
FY 1999 MedPAR file is as follows:
To the extent possible, all the claims were regrouped
using the proposed DRG classification revisions discussed in section
II.B. of this preamble.
Charges were standardized to remove the effects of
differences in area wage levels, indirect medical education and
disproportionate share payments, and, for hospitals in Alaska and
Hawaii, the applicable cost-of-living adjustment.
The average standardized charge per DRG was calculated by
summing the standardized charges for all cases in the DRG and dividing
that amount by the number of cases classified in the DRG.
We then eliminated statistical outliers, using the same
criteria used in computing the current weights. That is, all cases that
are outside of 3.0 standard deviations from the mean of the log
distribution of both the charges per case and the charges per day for
each DRG are eliminated.
The average charge for each DRG was then recomputed
(excluding the statistical outliers) and divided by the national
average standardized charge per case to determine the relative weight.
A transfer case is counted as a fraction of a case based on the ratio
of its transfer payment under the per diem payment methodology to the
full DRG payment for nontransfer cases. That is, transfer cases paid
under the transfer methodology equal to half of what the case would
receive as a nontransfer would be counted as 0.5 of a total case.
We established the relative weight for heart and heart-
lung, liver, and lung transplants (DRGs 103, 480, and 495) in a manner
consistent with the methodology for all other DRGs except that the
transplant cases that were used to establish the weights were limited
to those Medicare-approved heart, heart-lung, liver, and lung
transplant centers that have cases in the FY 1999 MedPAR file.
(Medicare coverage for heart, heart-lung, liver, and lung transplants
is limited to those facilities that have received approval from HCFA as
transplant centers.)
Acquisition costs for kidney, heart, heart-lung, liver,
lung, and pancreas transplants continue to be paid on a reasonable cost
basis. Unlike other excluded costs, the acquisition costs are
concentrated in specific DRGs (DRG 302 (Kidney Transplant); DRG 103
(Heart Transplant); DRG 480 (Liver Transplant); DRG 495 (Lung
Transplant); and DRG 468 (Pancreas)). Because these costs are paid
separately from the prospective payment rate, it is necessary to make
an adjustment to prevent the relative weights for these DRGs from
including the acquisition costs. Therefore, we subtracted the
acquisition charges from the total charges on each transplant bill that
showed acquisition charges before computing the average charge for the
DRG and before eliminating statistical outliers.
When we recalibrated the DRG weights for previous years, we set a
threshold of 10 cases as the minimum number of cases required to
compute a reasonable weight. We proposed to use the same case threshold
in recalibrating the DRG weights for FY 2001. Using the FY 1999 MedPAR
data set, there were 40 DRGs containing fewer than 10 cases. We
computed the weights for these 40 low-volume DRGs by adjusting the FY
2000 weights of these DRGs by the percentage change in the average
weight of the cases in the other DRGs.
The weights developed according to the methodology described above,
using the DRG classification changes, resulted in an average case
weight that differs from the average case weight before recalibration.
Therefore, the new weights are normalized by an adjustment factor
(1.45507) so that the
[[Page 47070]]
average case weight after recalibration is equal to the average case
weight before recalibration. This adjustment is intended to ensure that
recalibration by itself neither increases nor decreases total payments
under the prospective payment system.
We received no comments on DRG recalibration.
Section 1886(d)(4)(C)(iii) of the Act requires that, beginning with
FY 1991, reclassification and recalibration changes be made in a manner
that assures that the aggregate payments are neither greater than nor
less than the aggregate payments that would have been made without the
changes. Although normalization is intended to achieve this effect,
equating the average case weight after recalibration to the average
case weight before recalibration does not necessarily achieve budget
neutrality with respect to aggregate payments to hospitals because
payment to hospitals is affected by factors other than average case
weight. Therefore, as we have done in past years and as discussed in
section II.A.4.a. of the Addendum to this final rule, we make a budget
neutrality adjustment to assure that the requirement of section
1886(d)(4)(C)(iii) of the Act is met.
III. Changes to the Hospital Wage Index
A. Background
Section 1886(d)(3)(E) of the Act requires that, as part of the
methodology for determining prospective payments to hospitals, the
Secretary must adjust the standardized amounts "for area differences
in hospital wage levels by a factor (established by the Secretary)
reflecting the relative hospital wage level in the geographic area of
the hospital compared to the national average hospital wage level." In
accordance with the broad discretion conferred under the Act, we
currently define hospital labor market areas based on the definitions
of Metropolitan Statistical Areas (MSAs), Primary MSAs (PMSAs), and New
England County Metropolitan Areas (NECMAs) issued by the Office of
Management and Budget (OMB). The OMB also designates Consolidated MSAs
(CMSAs). A CMSA is a metropolitan area with a population of one million
or more, comprising two or more PMSAs (identified by their separate
economic and social character). For purposes of the hospital wage
index, we use the PMSAs rather than CMSAs since they allow a more
precise breakdown of labor costs. If a metropolitan area is not
designated as part of a PMSA, we use the applicable MSA. Rural areas
are areas outside a designated MSA, PMSA, or NECMA. For purposes of the
wage index, we combine all of the rural counties in a State to
calculate a rural wage index for that State.
We note that, effective April 1, 1990, the term Metropolitan Area
(MA) replaced the term MSA (which had been used since June 30, 1983) to
describe the set of metropolitan areas consisting of MSAs, PMSAs, and
CMSAs. The terminology was changed by OMB in the March 30, 1990 Federal
Register to distinguish between the individual metropolitan areas known
as MSAs and the set of all metropolitan areas (MSAs, PMSAs, and CMSAs)
(55 FR 12154). For purposes of the prospective payment system, we will
continue to refer to these areas as MSAs.
Beginning October 1, 1993, section 1886(d)(3)(E) of the Act
requires that we update the wage index annually. Furthermore, this
section provides that the Secretary base the update on a survey of
wages and wage-related costs of short-term, acute care hospitals. The
survey should measure, to the extent feasible, the earnings and paid
hours of employment by occupational category, and must exclude the
wages and wage-related costs incurred in furnishing skilled nursing
services. As discussed below in section III.F of this preamble, we also
take into account the geographic reclassification of hospitals in
accordance with sections 1886(d)(8)(B) and 1886(d)(10) of the Act when
calculating the wage index.
B. FY 2001 Wage Index Update
The FY 2001 wage index values in section VI of the Addendum to this
final rule (effective for hospital discharges occurring on or after
October 1, 2000 and before October 1, 2001) are based on the data
collected from the Medicare cost reports submitted by hospitals for
cost reporting periods beginning in FY 1997 (the FY 2000 wage index was
based on FY 1996 wage data).
The FY 2001 wage index includes the following categories of data
associated with costs paid under the hospital inpatient prospective
payment system (as well as outpatient costs), which were also included
in the FY 2000 wage index:
Salaries and hours from short-term, acute care hospitals.
Home office costs and hours.
Certain contract labor costs and hours.
Wage-related costs.
Consistent with the wage index methodology for FY 2000, the wage
index for FY 2001 also continues to exclude the direct and overhead
salaries and hours for services not paid through the inpatient
prospective payment system such as skilled nursing facility services,
home health services, or other subprovider components that are not
subject to the prospective payment system.
We calculate a separate Puerto Rico-specific wage index and apply
it to the Puerto Rico standardized amount. (See 62 FR 45984 and 46041.)
This wage index is based solely on Puerto Rico's data. Finally, section
4410 of Public Law 105-33 provides that, for discharges on or after
October 1, 1997, the area wage index applicable to any hospital that is
not located in a rural area may not be less than the area wage index
applicable to hospitals located in rural areas in that State.
Comment: One commenter believed that the FY 2001 wage calculation
does not allow for inflationary effects or existing contractual
increases, and recommended that we consider using a more recent
Medicare cost reporting year and allow for inflationary wage
adjustments.
Response: Due to the time period allowed for: (1) hospitals to
complete and submit their cost reports to their intermediaries, (2)
intermediaries to review and submit the cost reports to HCFA, (3)
intermediaries to perform a separate, detailed review of all wage data
and submit the results to HCFA, and (4) HCFA to compile a complete set
of all hospitals' wage data from a given Federal fiscal year, we do not
have available more recent reliable data to calculate the wage index.
As described in the proposed rule (65 FR 26299) and section III.E. of
this final rule, we adjust the wage data to a common period that
reflects the latest cost reporting period for the filing year. Because
the wage index is a relative measure, comparing area average hourly
wages to a national average hourly wage, we believe the wage index is
minimally impacted by inflationary effects beyond those accounted for
by adjusting the data to a common period.
C. FY 2001 Wage Index
Because the hospital wage index is used to adjust payments to
hospitals under the prospective payment system, it should, to the
extent possible, reflect the wage costs associated with the areas of
the hospital included under the hospital inpatient prospective payment
system. In response to concerns within the hospital community related
to the removal from the wage index calculation costs related to GME
(teaching physicians and residents) and certified registered nurse
anesthetists (CRNAs), which are paid by Medicare separately from the
prospective
[[Page 47071]]
payment system, in 1998 the AHA convened a workgroup to develop a
consensus recommendation on this issue. The workgroup recommended that
costs related to GME and CRNAs be phased out of the wage index
calculation over a 5-year period. Based upon our analysis of hospitals'
FY 1996 wage data, and consistent with the AHA workgroup's
recommendation, we specified in the July 30, 1999 final rule (64 FR
41505) that we would phase-out these costs from the calculation of the
wage index over a 5-year period, beginning in FY 2000. In keeping with
the decision to phase-out costs related to GME and CRNAs, the final FY
2001 wage index is based on a blend of 60 percent of an average hourly
wage including these costs, and 40 percent of an average hourly wage
excluding these costs.
Comment: We received one comment in support of our continued
transition of removing GME and CRNA costs from the wage index
calculation. We also received a comment from a national association
representing nurse anesthetists expressing concern that, as a result of
disparities in cost reporting systems and vague fiscal intermediary
instructions, CRNA costs that should be paid under Part B might still
be reported in hospitals' FY 1997 cost reports. The commenter also
stated that removing CRNA costs from the wage index eliminates a
payment mechanism for the indirect patient care activities performed by
CRNAs, resulting in a disincentive for hospitals to employ CRNAs. To
avoid any disruption in the "continuous operations of hospitals," the
commenter recommended that, prior to implementing any changes to the
wage index calculation, HCFA should refine the Part A cost data
collection and cost reporting process and instruct the fiscal
intermediaries to provide all hospitals with "explicit instructions as
to the appropriate reporting of CRNA costs." The commenter believed
this refinement to the cost data will identify and exclude only the
CRNA salary costs related to the rural hospital cost pass-through
provisions and allow Part A reimbursement for indirect patient care
which are not reimbursed under Medicare Part B. In keeping with the
general policy to exclude costs that are not paid through the Medicare
prospective payment system, the commenter also recommended that HCFA
exclude salaries reported under Medicare Part A for anesthesia
assistants.
Response: We note that the FY 2001 wage index is the second year of
the transition to eliminating Part A CRNA costs from the wage index. As
evidenced in the impact analysis in the May 5, 2000 proposed rule (65
FR 26415), eliminating these CRNA and GME costs has an insignificant
impact, with no category of hospitals impacted by more than 0.1
percent. Therefore, we do not believe it is necessary to delay further
removal of CRNA costs.
Payment for CRNA services is made under a fee schedule under
Medicare Part B (Supplementary medical insurance), with the sole
exception of payments to hospitals under the rural pass-through
provision. Although a hospital contracting for CRNA services would
include the costs on its cost report, the fiscal intermediary forwards
the information to the carrier for payment under the fee schedule. As
the commenter noted, this payment structure has been in place since
January 1, 1989. We believe that intermediaries and carriers are
generally well informed and experienced in the handling of these costs.
However, we will consider whether further clarification of our
instructions is necessary.
The commenter also stated that Medicare does not specifically
exclude anesthesia assistants, who are also reimbursed under Part B,
from the wage index. The cost report instructions for Worksheet A, Line
20, refer to nonphysician anesthetists, which include both CRNAs and
anesthesia assistants. We will consider whether our Worksheet S-3
instructions need to be revised to explicitly instruct hospitals to
remove the Part B costs associated with anesthesia assistants as well.
1. Teaching Physician Costs and Hours Survey
As discussed in the July 30, 1999 final rule, because the FY 1996
cost reporting data did not separate teaching physician costs from
other physician Part A costs, we instructed our fiscal intermediaries
to survey teaching hospitals to collect data on teaching physician
costs and hours payable under the per resident amounts (Sec. 413.86)
and reported on Worksheet A, Line 23 of the hospitals' cost report.
The FY 1997 cost reports also do not separately report teaching
physician costs. Therefore, we once again conducted a special survey to
collect data on these costs. (For the FY 1998 cost reports, we have
revised the Worksheet S-3, Part II so that hospitals can separately
report teaching physician Part A costs. Therefore, after this year, it
will no longer be necessary for us to conduct this special survey.)
The survey data collected as of mid-January 2000 were included in
the preliminary public use data file made available on the Internet in
February 2000 at HCFA's home page (http://www.hcfa.gov). At that time,
we had received teaching physician data for 459 out of 770 teaching
hospitals reporting physician Part A costs on their Worksheet S-3, Part
II. Also, in some cases, fiscal intermediaries reported that teaching
hospitals did not incur teaching physician costs. In early January
2000, we instructed fiscal intermediaries to review the survey data for
consistency with the Supplemental Worksheet A-8-2 of the hospitals'
cost reports. Supplemental Worksheet A-8-2 is used to apply the
reasonable compensation equivalency limits to the costs of provider-
based physicians, itemizing these costs by the corresponding line
number on Worksheet A.
When we notified the hospitals, through our fiscal intermediaries,
that they could review the survey data on the Internet, we also
notified hospitals that requests for changes to the teaching survey
data had to be submitted by March 6, 2000. We instructed fiscal
intermediaries to review the requests for changes received from
hospitals and submit necessary data revisions to HCFA by April 3, 2000.
We removed from the wage data the physician Part A teaching costs and
hours reported on the survey form for every hospital that completed the
survey. These data had been verified by the fiscal intermediary before
submission to HCFA.
For the FY 2000 wage index, the AHA workgroup recommended that, if
reliable teaching physician data were not available for removing
teaching costs from hospitals' total physician Part A costs, HCFA
should remove 80 percent of the costs and hours reported by hospitals
attributable to physicians' Part A services. In calculating the FY 2000
wage index, if we did not receive survey data for a teaching hospital,
we removed 80 percent of the hospital's reported total physician Part A
costs and hours from the calculation. In the May 5, 2000 proposed rule,
for the FY 2001 wage index, we proposed a different approach. In some
instances, fiscal intermediaries had verified that teaching hospitals
do not have teaching physician costs; for these hospitals, it is not
necessary to adjust the hospitals' physician Part A costs. We conferred
with the fiscal intermediaries to distinguish teaching hospitals that
did not have teaching physician costs from teaching hospitals that had
not identified the portion of their physician Part A costs associated
with teaching physicians (that is, hospitals that did not complete the
teaching survey).
[[Page 47072]]
In calculating the final FY 2001 wage index, we removed 100 percent
of the physician Part A costs and hours (reported on Worksheet S-3,
Lines 4, 10, 12, and 18) in the FY 2001 wage index calculation for
those hospitals where the fiscal intermediary verifies that the
hospital has otherwise unidentified teaching physician costs included
in physician Part A costs and hours. For those teaching hospitals whose
fiscal intermediaries identified as having costs attributable to
teaching physicians but reported no physician Part A costs on the
Worksheet S-3, we removed 100 percent of Worksheet A, Line 23, Column
1. To determine the hours to be removed, the costs reported on Line 23
of the Worksheet A, Column 1 are divided by the national average hourly
wage for teaching physicians of $59.17 based upon the survey.
We note that Line 23 of Worksheet A, Column 1, flows directly into
hospitals' total salaries on Worksheet S-3, Part II. Line 23 contains
GME costs not directly attributable to residents' salaries or fringe
benefits. Therefore, these costs tend to be costs associated with
teaching physicians. To the extent a hospital fails to separately
identify the proportion of its Line 23, Worksheet A costs associated
with teaching physicians, we believe it is reasonable to remove all of
these costs under the presumption that they are all associated with
teaching physicians.
Thus, as we proposed in the May 5 proposed rule, for the FY 2001
wage index, we are either using the data submitted on the teaching
physician survey (837 hospitals), or, in the absence of such data,
removing 100 percent of physician Part A costs reported on Worksheet S-
3 (287 hospitals), or removing the amount reported on Line 23 of
Worksheet A, Column 1 (18 hospitals).
We received one comment in support of removing 100 percent of
physician Part A costs and hours from teaching hospitals where the
fiscal intermediary verifies that the hospital has otherwise
unidentifiable teaching costs included in physician Part A costs and
hours.
2. Nurse Practitioner and Clinical Nurse Specialist Costs
The current wage index includes salaries and wage-related costs for
nurse practitioners (NPs) and clinical nurse specialists (CNSs) who,
similar to physician assistants and CRNAs (unless at hospitals under
the rural pass-through exception for CRNAs), are paid under the
physician fee schedule. Over the past year, we have received several
inquiries from hospitals and fiscal inter