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[Federal Register: November 1, 2002 (Volume 67, Number 212)]
[Rules and Regulations]
[Page 66717-66766]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr01no02-19]
[[Page 66717]]
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Part II
Department of Health and Human Services
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Centers for Medicare & Medicaid Services
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42 CFR Parts 405 and 419
Medicare Program; Changes to the Hospital Outpatient Prospective
Payment System and Calendar Year 2003 Payment Rates; and Changes to
Payment Suspension for Unfiled Cost Reports; Final Rule
[[Page 66718]]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Parts 405 and 419
[CMS-1206-FC and CMS-1179-F]
RIN 0938-AL19 and 0938-AK59
Medicare Program; Changes to the Hospital Outpatient Prospective
Payment System and Calendar Year 2003 Payment Rates; and Changes to
Payment Suspension for Unfiled Cost Reports
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Final rule with comment period.
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SUMMARY: This final rule with comment period revises the Medicare
hospital outpatient prospective payment system to implement applicable
statutory requirements and changes arising from our continuing
experience with this system. In addition, it describes changes to the
amounts and factors used to determine the payment rates for Medicare
hospital outpatient services paid under the prospective payment system.
These changes are applicable to services furnished on or after January
1, 2003. This rule also allows the Secretary to suspend Medicare
payments ``in whole or in part'' if a provider fails to file a timely
and acceptable cost report.
In addition, this rule responds to public comments received on the
November 2, 2001 interim final rule with comment period (66 FR 55850)
that set forth the criteria the Secretary will use to establish new
categories of medical devices eligible for transitional pass-through
payment under the Medicare's hospital outpatient prospective payment
system. Finally, this rule responds to public comments received on the
August 9, 2002 proposed rule for revisions to the hospital outpatient
prospective payment system and payment rates (67 FR 52092). CMS finds
good cause to waive proposed rulemaking for the assignment of new codes
to Ambulatory Payment Classifications and for the payment of influenza
and pneuomococcal vaccines under reasonable cost; justification for the
waiver will follow in a subsequent Federal Register notice.
DATES: Effective date: This final rule is effective January 1, 2003.
Comment date: We will consider comments on the ambulatory payment
classification assignments of Healthcare Common Procedure Coding System
codes identified in Addendum B with condition code NI, and on Sec.
419.23(d)(3), if we receive them at the appropriate address, as
provided below, no later than 5 pm on December 31, 2002.
FOR FURTHER INFORMATION CONTACT: Anita Heygster, (410) 786-0378--
outpatient prospective payment issues; Lana Price, (410) 786-4533--
partial hospitalization and end-stage renal disease issues; Gerald
Walters, (410) 786-2070--payment suspension issues.
SUPPLEMENTARY INFORMATION:
Availability of Copies and Electronic Access
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that receive the Federal Register.
This Federal Register document is also available from the Federal
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Government Printing Offi ce. The Web site address is: http://
www.access.gpo.gov/nara/index.html. To assist readers in referencing
sections contained in this document, we are providing the following
table of contents.
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Outline of Contents
I. Background
A. Authority for the Outpatient Prospective Payment System
(OPPS)
B. Summary of Rulemaking for the Outpatient Prospective Payment
System
C. Authority for Payment Suspensions for Unfiled Cost Reports
D. Summary of Changes in the August 9, 2002 Proposed Rule
1. Changes Relating to the OPPS
a. Changes Required by Statute
b. Additional Changes to OPPS
c. Changes to the Regulations Text
2. Changes Relating to Payment Suspension for Unfiled Cost
Reports
E. Summary of the November 2, 2001 Interim Final Rule with
Comment Period
F. Public Comments and Responses to the August 9, 2002 Proposed
Rule
1. OPPS
2. Payment Suspension for Unfiled Cost Reports
II. Changes to the Ambulatory Payment Classification (APC) Groups
and Relative Weights
A. Recommendations of the Advisory Panel on APC Groups
1. Establishment of the Advisory Panel
2. General Issues Considered by the Advisory Panel
3. Recommendations of the Advisory Panel and Our Responses
B. Other Changes Affecting Ambulatory Payment Classification
(APC) Assignments
1. Limit on Variation of Costs of Services Classified Within a
Group
2. Procedures Moved from New Technology APCs to Clinically
Appropriate APCs
3. APC Assignment for New Codes Created During Calenday Year
(CY) 2002 and Selected Codes and APC Assignments for 2003
4. Other Public Comments on APC Assignments and Payment Rates
5. Procedures That Will Be Paid Only As Inpatient Procedures
C. Partial Hospitalization
III. Recalibration of APC Weights for 2003
A. Data Issues
1. Treatment of ``Multiple Procedure'' Claims
2. Calendar Year 2002 Charge Data for Pass-Through Device
Categories
B. Description of How Weights Were Calculated for 2003
IV. Transitional Pass-Through and Related Payment Issues
A. Background
B. Discussion of Pro Rata Reduction
C. Expiration of Transitional Pass-Through Payments in Calendar
Year 2003 for Devices
D. Expiration of Transitional Pass-Through Payments in Calendar
Year 2003 for Drugs and Biologicals (Including Radiopharmaceuticals,
Blood, and Blood Products)
E. Expiration of Transitional Pass-Through Payments in Calendar
Year 2003 for Brachytherapy
F. Payment for Transitional Pass-Through Drugs and Biologicals
for Calendar Year 2003
V. Criteria for New Device Categories As Implemented in the November
2, 2001 Interim Final Rule with Comment
A. Criteria for Eligibility for Pass-Through Payment of a
Medical Device
B. Criteria for Establishing Additional Device Categories
1. Application Process for Creation of a New Device Category
2. Announcing a New Device Category
VI. Wage Index Changes for Calendar Year 2003
VII. Copayment for Calendar Year 2003
VIII. Conversion Factor Update for Calendar Year 2003
IX. Outlier Policy for Calendar Year 2003
X. Other Policy Decisions and Changes
A. Hospital Coding for Evaluation and Management (E/M) Services
B. Observation Services
[[Page 66719]]
C. Payment Policy When A Surgical Procedure on the Inpatient
List Is Performed on an Emergency Basis
1. Current Policy
2. Hospital Concerns
3. Clarification of Payment Policy
4. Orders to Admit
D. Status Indicators
E. Other Policy Issues Relating to Pass-Through Device
Categories
1. Reducing Transitional Pass-Through Payments To Offset Costs
Packaged Into APC Groups
2. Devices Paid With Multiple Procedures
F. Outpatient Billing for Dialysis
XI. Summary and Responses of Public Comments to CMS's Response to
MedPAC Recommendations
XII. Provisions of the Final Rule With Comment for 2003
A. OPPS
1. Statutory and Discretionary Changes
2. Changes to the Regulations Text
B. Payment Suspension for Unfiled Cost Reports
C. Partial Hospitalization Services
D. Pneumococcal and Influenza Vaccines
XIII. Response to Public Comments
XIV. Collection of Information Requirements
XV. Regulatory Impact Analysis
A. OPPS
1. General
2. Changes in this Final Rule
3. Limitations of Our Analysis
4. Estimated Impacts of this Final Rule on Hospitals
5. Estimated Impacts of this Final Rule on Beneficiaries
B. Payment Suspension for Unfiled Cost Reports Regulations Text
1. Effects on Provider that File Cost Reports
2. Effects on Other Providers
3. Effects on the Medicare Program
4. Effects on Beneficiaries
Addenda
Addendum A--List of Ambulatory Payment Classifications (APCs)
with Status Indicators, Relative Weights, Payment Rates, and
Copayment Amounts
Addendum B--Payment Status by HCPCS Code, and Related
Information
Addendum C--Hospital Outpatient Payment for Procedures by APC:
Displayed on CMS Web site Only
Addendum D--Payment Status Indicators for the Hospital
Outpatient Prospective Payment System
Addendum D1--Code Conditions
Addendum E--CPT Codes That Would Be Paid Only As Inpatient
Procedures
Addendum G--Service Mix Indices by Hospital: Displayed on CMS Web
site Only
Addendum H--Wage Index for Urban Areas
Addendum I--Wage Index for Rural Areas
Addendum J--Wage Index for Hospitals That Are Reclassified
Alphabetical List of Acronyms Appearing in the Final Rule
ACEP--American College of Emergency Physicians
AMA--American Medical Association
APC--Ambulatory payment classification
AWP--Average wholesale price
BBA--Balanced Budget Act of 1997
BIPA--Medicare, Medicaid, and SCHIP Benefits Improvement and
Protection Act of 2000
BBRA--Balanced Budget Refinement Act of 1999
CCR--Cost center specific cost-to-charge ratio
CMHC--Community mental health center
CMS--Centers for Medicare & Medicaid Services (Formerly known as
the Health Care Financing Administration)
CPT (Physician's) Current Procedural Terminology, Fourth Edition,
2002, copyrighted by the American Medical Association
CSW Clinical social worker
CY Calendar year
DRG Diagnosis-related group
DSH Disproportionate Share Hospital
EACH Essential Access Community Hospital
E/M Evaluation and management
ERCP Endoscopic retrograde cholangiopancreatography
ESRD End-stage renal disease
FACA Federal Advisory Committee Act
FY Federal fiscal year
HCPCS Healthcare Common Procedure Coding System
HIPAA Health Insurance Portability and Accountability Act of 1996
ICU Intensive care unit
ICD-9-CM International Classification of Diseases, Ninth Edition,
Clinical Modification
IME Indirect Medical Education
IPPS (Hospital) inpatient prospective payment system
LTC Long Term Care
MedPAC Medicare Payment Advisory Commission
MDH Medicare Dependent Hospital
MSA Metropolitan statistical area
NECMA New England County Metropolitan Area
OCE Outpatient code editor
OMB Office of Management and Budget
OPD (Hospital) outpatient department
OPPS (Hospital) outpatient prospective payment system
OT Occupational therapist
PHP Partial hospitalization program
PPS Prospective payment system
PPV Pneumococcal pneumonia (virus)
PRA Paperwork Reduction Act
RFA Regulatory Flexibility Act
RRC Rural Referral Center
RVUs Relative value units
SCH Sole Community Hospital
TEFRA Tax Equity and Fiscal Responsibility Act
USPDI United States Pharmacopoeia Drug Information
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I. Background
A. Authority for the Outpatient Prospective Payment System (OPPS)
When the Medicare statute was originally enacted, Medicare payment
for hospital outpatient services was based on hospital-specific costs.
In an effort to ensure that Medicare and its beneficiaries pay
appropriately for services and to encourage more efficient delivery of
care, the Congress mandated replacement of the cost-based payment
methodology with a prospective payment system (PPS). The Balanced
Budget Act of 1997 (BBA) (Pub. L. 105-33), enacted on August 5, 1997,
added section 1833(t) to the Social Security Act (the Act) authorizing
implementation of a PPS for hospital outpatient services. The Balanced
Budget Refinement Act of 1999 (BBRA) (Pub. L. 106-113), enacted on
November 29, 1999, made major changes that affected the hospital
outpatient PPS (OPPS). The Medicare, Medicaid, and SCHIP Benefits
Improvement and Protection Act of 2000 (BIPA) (Pub. L. 106-554),
enacted on December 21, 2000, made further changes in the OPPS. The
OPPS was first implemented for services furnished on or after August 1,
2000.
B. Summary of Rulemaking for the Outpatient Prospective Payment System
[sbull] On September 8, 1998, we published a proposed rule (63 FR
47552) to establish in regulations a PPS for hospital outpatient
services, to eliminate the formula-driven overpayment for certain
hospital outpatient services, and to extend reductions in payment for
costs of hospital outpatient services. On June 30, 1999, we published a
correction notice (64 FR 35258) to correct a number of technical and
typographic errors in the September 1998 proposed rule including the
proposed amounts and factors used to determine the payment rates.
[sbull] On April 7, 2000, we published a final rule with comment
period (65 FR 18434) that addressed the provisions of the PPS for
hospital outpatient services scheduled to be effective for services
furnished on or after July 1, 2000. Under this system, Medicare payment
for hospital outpatient services included in the PPS is made at a
predetermined, specific rate. These outpatient services are classified
according to a list of ambulatory payment classifications (APCs). The
April 7, 2000 final rule with comment period also established
requirements for provider departments and provider-based entities and
prohibited Medicare payment for nonphysician services furnished to a
hospital outpatient by a provider or supplier other than a hospital
unless the services are furnished under arrangement. In addition, this
rule extended reductions in payment for costs of hospital outpatient
services as required by the BBA and amended by the BBRA. Medicare
regulations governing the hospital OPPS are set forth at 42 CFR part
419.
[[Page 66720]]
[sbull] On June 30, 2000, we published a notice (65 FR 40535)
announcing a delay in implementation of the OPPS from July 1, 2000 to
August 1, 2000. We implemented the OPPS on August 1, 2000.
[sbull] On August 3, 2000, we published an interim final rule with
comment period (65 FR 47670) that modified criteria that we use to
determine which medical devices are eligible for transitional pass-
through payments. The August 3, 2000 rule also corrected and clarified
certain provider-based provisions included in the April 7, 2000 rule.
[sbull] On November 13, 2000, we published an interim final rule
with comment period (65 FR 67798). This rule provided for the annual
update to the amounts and factors for OPPS payment rates effective for
services furnished on or after January 1, 2001. We implemented the 2001
OPPS on January 1, 2001. We also responded to public comments on those
portions of the April 7, 2000 final rule that implemented related
provisions of the BBRA and public comments on the August 3, 2000 rule.
[sbull] On August 24, 2001, we published a proposed rule (66 FR
44672) that would revise the OPPS to implement applicable statutory
requirements, including relevant provisions of the Medicare, Medicaid,
and SCHIP Benefits Improvement and Protection Act of 2002 (BIPA) and
changes arising from our continuing experience with this system. It
also described proposed changes to the amounts and factors used to
determine the payment rates for Medicare hospital outpatient services
paid under the PPS. The changes applied to services furnished on or
after January 1, 2002.
[sbull] On November 2, 2001, we published a final rule (66 FR
55857) that announced the Medicare OPPS conversion factor for calendar
year 2002. In addition, it described the Secretary's estimate of the
total amount of the transitional pass-through payments for CY 2002 and
the implementation of a uniform reduction in each of the pass-through
payments for that year.
[sbull] On November 2, 2001, we also published an interim final
rule with comment period (66 FR 55850) that set forth the criteria the
Secretary will use to establish new categories of medical devices
eligible for transitional pass-through payments under Medicare's OPPS.
[sbull] On November 30, 2001, we published a final rule (66 FR
59856) that revised the Medicare OPPS to implement applicable statutory
requirements, including relevant provisions of BIPA, and changes
resulting from continuing experience with this system. It addition, it
described the CY 2002 payment rates for Medicare hospital outpatient
services paid under the PPS. This final rule also announced a uniform
reduction of 68.9 percent to be applied to each of the transitional
pass-through payments for certain categories of medical devices and
drugs and biologicals.
[sbull] On December 31, 2001, we published a final rule (66 FR
67494) that delayed, until no later than April 1, 2002, the effective
date of CY 2002 payment rates and the uniform reduction of transitional
pass-through payments that were announced in the November 30, 2001
final rule. In addition, this final rule indefinitely delayed certain
related regulatory provisions.
[sbull] On March 1, 2002, we published a final rule (67 FR 9556)
that corrected technical errors that affected the amounts and factors
used to determine the payment rates for services paid under the
Medicare OPPS and corrected the uniform reduction to be applied to
transitional pass-through payments for CY 2002 as published in the
November 30, 2001 final rule. These corrections and the regulatory
provisions that had been delayed became effective on April 1, 2002.
[sbull] On August 9, 2002, we published a proposed rule (67 FR
52092) that would revise the OPPS to implement applicable statutory
requirements and changes arising from our continuing experience with
this system. The changes would be applicable to services furnished on
or afterJanuary 1, 2003. This rule also proposed to allow the Secretary
to suspend Medicare payments ``in whole or in part'' if a provider
fails to file a timely and acceptable cost report.
C. Authority for Payment Suspensions for Unfiled Cost Reports
Authority for the provision regarding payment suspensions for
unfiled cost reports is contained within the authority for subpart C of
42 CFR part 405, that is, sections 1102, 1815, 1833, 1842, 1866, 1870,
1871, 1879, and 1892 of the Social Security Act (42 U.S.C. 1302, 1395g,
1395l, 1395u, 1395cc, 1395gg, 1395hh, 1395pp, and 1395ccc) and 31
U.S.C. 3711.
D. Summary of Changes in the August 9, 2002 Proposed Rule
1. Changes Relating to the OPPS
On August 9, 2002, we published a proposed rule (67 FR 52092) that
set forth proposed changes to the Medicare hospital OPPS and CY 2003
payment rates including changes used to determine these payment rates.
The following is a summary of the major changes that we proposed and
the issues we addressed in the August 9, 2002 proposed rule.
a. Changes Required By Statute
We proposed the following changes to implement statutory
requirements:
[sbull] Add APCs, delete APCs, and modify the composition of some
existing APCs.
[sbull] Recalibrate the relative payment weights of the APCs.
[sbull] Update the conversion factor and the wage index.
[sbull] Revise the APC payment amounts to reflect the APC
reclassifications, the recalibration of payment weights, and the other
required updates and adjustments.
[sbull] Cease transitional pass-through payments for drugs and
biologicals (including blood and blood products) and devices (including
brachytherapy), that will, on January 1, 2003, have been paid under
transitional pass-through methodology for at least 2 years.
b. Additional Changes to OPPS
We proposed the following additional changes to the OPPS and
Payment Suspension Provisions:
[sbull] Creation of new evaluation and management service codes for
outpatient clinic and emergency department encounters for
implementation no earlier than January 1, 2004.
[sbull] Changes to the list of services that we do not pay in
outpatient departments because we define them as inpatient only
procedures.
[sbull] Changes to our policy of nonpayment for procedures on the
inpatient only list in special cases involving death or transfer before
inpatient admission.
[sbull] Changes to our policy governing observation in cases of
direct admission to observation.
[sbull] Changes to status indicators for Healthcare Common
Procedure Coding System (HCPCS) codes.
[sbull] Changes to our policies governing dialysis for end-stage
renal disease (ESRD) patients and regarding partial hospitalization.
C. Changes to the Regulations Text
A. We proposed to make the following changes to our regulations:
Amend Sec. 419.66(c)(1) to specify that we must establish a new
category for a medical device if it is not described by any category
previously in effect as well as an existing category.
2. Changes Relating to Payment Suspension for Unfiled Cost Reports
[[Page 66721]]
We proposed to revise Sec. 405.371(c) to specify that we may
suspend Medicare payments ``in whole or in part'' if a provider has
failed to timely file an acceptable cost report. This provision is
consistent with the existing provisions in Sec. 405.371(a) governing
the suspension of Medicare payments ``in whole or in part'' under
certain conditions. We believe the Medicare program would benefit
because immediate complete payment suspension can be disruptive to
providers and may negatively affect the care of Medicare patients.
E. Summary of the November 2, 2001 Interim Final Rule with Comment
Period
On November 2, 2001, we published an interim final rule with
comment period in the Federal Register (66 FR 55850) that set forth the
criteria for establishing new categories of medical devices eligible
for transitional pass-through payments under Medicare's hospital OPPS
as required by section 1833(t)(6)(B)(ii) of the Act, as amended by
BIPA.
In the April 7, 2000 final rule with comment period (65 FR 18480),
we defined new or innovative devices using eight criteria, three of
which were revised in our August 3, 2000 interim final rule with
comment period (65 FR 47673-74). These criteria remained applicable
when defining a new category for devices, (that is, devices to be
included in a category must meet all previously established applicable
criteria for a device eligible for transitional pass-through payments)
but we revised the definition of an eligible device to conform the
requirements of amended section 1833(t)(6)(B)(ii) of the Act.
We also clarified our criterion that states that a device must be
approved or cleared by the Food and Drug Administration (FDA).
In establishing the criteria for establishing additional
categories, the Act mandates that new categories be established for
devices that were not being paid for as an outpatient hospital service
as of December 31, 1996 and for which no categories in effect (or
previously in effect) are appropriate, in such a way that no device is
described by more than one category and the average cost of devices to
be included in the category is not insignificant in relation to the APC
payment amount for the associated service. Based on these requirements,
we used the following criteria to establish a category of devices:
[sbull] Substantial clinical improvement. The category describes
devices that demonstrate a substantial improvement in medical benefits
for Medicare beneficiaries compared to the benefits obtained by devices
in previously established categories or other available treatments, as
described in regulations at new Sec. 419.66(c)(1).
[sbull] Cost. We determine that the estimated cost to hospitals of
the devices in a new category (including any candidate devices and the
other devices that we believe will be included in the category) is
``not insignificant'' relative to the payment rate for the applicable
procedures.
We received five timely items of correspondence on the November 2,
2001 interim final rule with comment period. Summaries of the public
comments and our responses to those comments are set forth below under
the appropriate section heading of this final rule with comment period.
F. Public Comments and Responses to the August 9, 2002 Proposed Rule
We received approximately 1,000 timely items of correspondence
containing multiple comments on the August 9, 2002 proposed rule. Of
that total, we received eight comments relating to the payment
suspension provision described in section I.D.2. Summaries of the
public comments received on other provisions and our responses to those
comments are provided below in section I.F.2 of this preamble.
1. OPPS
We received comments from various sources including but not limited
to health care facilities, physicians, drug and device manufacturers,
and beneficiaries. Hospital associations and the Medicare Payment
Advisory Commission (MedPAC) generally supported our proposed approach
to revising the relative weights and incorporating the drugs and
devices into payment for APCs. Pharmaceutial and medical device
manufacturers and some individual hospitals that furnish particular
devices or drugs were concerned with the proposed reductions in payment
for medical devices and drugs. We received many thoughtful comments
from a wide range of commenters with regard to methodological issues in
OPPS. In addition, several comments provided data to support their
assertions. The following are the major OPPS related issues addressed
by the commenters:
[sbull] Expiration of pass-through payment for most devices and
drugs/biologicals.
[sbull] Extent of reduction in payments for devices compared to
payments in 2002.
[sbull] Potential impact on access to care of proposed payments.
[sbull] The proposal to package drugs with a per line cost less
than $150 and to pay separately for others.
[sbull] Assignment and reassignment of codes to APCs (including
assignments to procedural APCs from new tech APCs).
[sbull] Quality, quantity and content of claims data used to set
payment weights.
[sbull] Continuation of a list of procedures that are not paid
under OPPS because we believe that they should be performed as
inpatient services.
[sbull] Policy on payment for outpatient observation care.
[sbull] Creation of evaluation and management codes for OPPS use.
Summaries of the public comments received and our responses to
those comments are set forth below under the appropriate headings of
this final rule with comment period.
2. Payment Suspension for Unfiled Cost Reports
Comments and Responses
Comment: All of the commenters stated that the rule provides for
increased flexibility and a reduction in the financial impact of
payment suspensions on providers. They indicated the increased
flexibility would allow providers to receive partial payments from
Medicare, which would lessen the financial impact of payment
suspensions.
Response: We appreciate the hospital associations supporting this
change.
Comment: One commenter suggested that payment suspension be limited
to those payments directly determined by the cost report.
Response: We believe that immediate suspension of all payments when
a cost report is not filed timely may not always be the appropriate
response. However, if we require a provider to file a cost report, it
is important for the cost report to be filed in a timely manner
regardless of the amount of payment that is determined based on the
cost report. We need flexibility in determining the amount of a
provider's payments to suspend if its cost report is not filed timely.
This could include the potential suspension of payments that are not
determined by the cost report. Thus, we will retain Sec. 405.371 of
the regulation as set forth in the proposed rule.
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II. Changes to the Ambulatory Payment Classification (APC) Groups and
Relative Weights
Under the OPPS, we pay for hospital outpatient services on a rate-
per-service basis that varies according to the APC group to which the
service is assigned. Each APC weight represents the median
[[Page 66722]]
hospital cost of the services included in that APC relative to the
median hospital cost of the services included in APC 601, Mid-Level
Clinic Visits. The APC weights are scaled to APC 601 because a mid-
level clinic visit is one of the most frequently performed services in
the outpatient setting.
Section 1833(t)(9)(A) of the Act requires the Secretary to review
the components of the OPPS not less often than annually and to revise
the groups and related payment adjustment factors to take into account
changes in medical practice, changes in technology, and the addition of
new services, new cost data, and other relevant information. Section
1833(t)(9)(A) of the Act requires the Secretary, beginning in 2001, to
consult with an outside panel of experts when annually reviewing and
updating the APC groups and the relative payment weights.
Finally, section 1833(t)(2) of the Act provides that, subject to
certain exceptions, the items and services within an APC group cannot
be considered comparable with respect to the use of resources if the
highest median or mean cost item or service in the group is more than 2
times greater than the lowest median cost item or service within the
same group (referred to as the ``2 times rule'').
We use the median cost of the item or service in implementing this
provision. The statute authorizes the Secretary to make exceptions to
the 2 times rule ``in unusual cases, such as low volume items and
services.''
For purposes of the proposed rule and for this final rule with
comment period, we analyzed the APC groups within this statutory
framework.
A. Recommendations of the Advisory Panel on APC Groups
1. Establishment of the Advisory Panel
Section 1833(t)(9)(A) of the Act, requires that we consult with an
outside panel of experts when annually reviewing and updating the APC
groups and the relative weights. The Act specifies that the panel will
act in an advisory capacity. The expert panel, which is to be composed
of representatives of providers, is to review and advise us about the
clinical integrity of the APC groups and their weights. The panel is
not restricted to using our data and may use data collected or
developed by organizations outside the Department in conducting its
review.
On November 21, 2000, the Secretary signed the charter establishing
an ``Advisory Panel on APC Groups'' (the Panel). The Panel is technical
in nature and is governed by the provisions of the Federal Advisory
Committee Act (FACA) as amended (Pub. L. 92-463). To establish the
Panel, we solicited members in a notice published in the Federal
Register on December 5, 2000 (65 FR 75943). We received applications
from more than 115 individuals nominating either themselves or a
colleague. After carefully reviewing the applications, we chose 15
highly qualified individuals to serve on the Panel. The first APC Panel
meeting was held on February 27, February 28, and March 1, 2001, to
discuss the 2001 APCs in anticipation of the 2002 OPPS.
We published a notice in the Federal Register on December 14, 2001,
to announce the location and time of the second Panel meeting, a list
of agenda items, and that the meeting was open to the public. We also
provided additional information through a press release and on our Web
site. We convened the second meeting of the Panel on January 22 through
January 24, 2002.
2. General Issues Considered by the Advisory Panel
In the proposed rule, we summarized the Panel's discussion of a
recommendation by the Panel's Research Subcommittee concerning the
format of written submissions and oral presentations to the Panel and
of several general OPPS payment issues.
Content for Future Presentations to the Panel
During the 2001 meeting, the Panel members felt that requiring
consistency for all presentations with regard to format, data
submission, and general information would assist them in analyzing the
submissions and presentations and making recommendations. Therefore,
upon the Panel's recommendation, the Research Subcommittee was
established during the 2001 meeting.
The Panel began its 2002 meeting by considering the Research
Subcommittee's recommendation to the Panel on requirements for written
submissions and oral presentations. The Research Subcommittee
recommended that all future oral presentations and written submissions
contain the following:
[sbull] Name, address, and telephone number of the proposed
presenter.
[sbull] Financial relationship(s), if any, with any company whose
products, services, or procedures are under consideration.
[sbull] CPT codes involved.
[sbull] APC(s) affected.
[sbull] Description of the issue.
[sbull] Clinical description of the service under discussion, with
comparison to other services within the APC.
[sbull] Description of the resource inputs associated with the
service under discussion, with a comparison to resource inputs for
other services within the APC.
[sbull] Recommendations and rationale for change.
[sbull] Expected outcome of change and potential consequences of no
change.
The Panel adopted the Subcommittee s recommendation. Presentations
for the 2003 meeting must contain, at a minimum, this information.
Inpatient Only List
At its February 2001 meeting, the Panel discussed the existence of
the inpatient list. The Panel favored its elimination. At the January
2002 meeting, Panel members noted that hospitals receive no payment for
a service performed in an outpatient department that appears on the
inpatient list, even though the physician performing that service will
receive payment for his or her services. The Panel believes the
physician should determine what procedure to perform and that both the
hospital and the physician should receive payment for the procedure. We
continue to disagree with the position taken by the Panel regarding the
inpatient list for reasons that we discuss in detail in the April 7,
2000 final rule (65 FR 18456).
Prior to the 2002 Panel meeting, we received requests from hospital
and surgical associations and societies to remove certain procedures
from the inpatient list. We reviewed those requests and presented to
the Panel the requests for which we were unable to make a determination
based on the information submitted with the request.
The Panel considered removing the following procedures from the
inpatient list:
------------------------------------------------------------------------
CPT Description
------------------------------------------------------------------------
21390..................................... Treat eye socket fracture
27216..................................... Treat pelvic ring fracture
27235..................................... Treat thigh fracture
[[Page 66723]]
32201..................................... Drain, precut, lung lesion
33967..................................... Insert a precut device
47490..................................... Incision of gallbladder
62351..................................... Implant spinal canal cath
64820..................................... Remove sympathetic nerves
92986..................................... Revision of aortic valve
92987..................................... Revision of mitral valve
92990..................................... Revision of pulmonary valve
92997..................................... Pul art balloon repr, precut
92998..................................... Pul art balloon repr, precut
------------------------------------------------------------------------
As the Panel recommended, we solicited comments and additional
information from hospitals and medical specialty societies that have an
interest in these procedures. At their 2003 meeting, the Panel also
recommended that we present to them any such comments that we receive
to assist in their evaluation of whether to recommend removing the
codes from the inpatient list.
The Panel did recommend that we remove from the inpatient list CPT
code 47001, Biopsy of liver, needle; when done for indicated purpose at
time of other major procedure. We agreed with the Panel's
recommendation and we proposed to remove 47001 from the inpatient list.
We further proposed to assign it status indicator ``N'' so that costs
associated withCPT code 47001 would be packaged into the APC payment
for the primary procedure performed during the same operative session.
In section II.B.5 of the proposed rule, we discussed additional
procedures, which were not considered by the Panel, that we proposed to
remove from the inpatient list. We discussed in detail our reasons for
proposing these additional changes, and we proposed two new criteria
that we would adopt in the future when evaluating whether to make a
procedure on the inpatient list payable under the OPPS. Table 6 in
section II.B.5 of the proposed rule lists all the procedures we
proposed to remove from the inpatient list, including those discussed
by the Panel. We considered the removal of CPT code 33967, Insertion of
intra-aortic balloon assist device, percutaneous from the inpatient
list, but did not include it in Table 6. The Panel considered this code
for removal from the inpatient list and had concerns about whether
performing this procedure in an outpatient setting is appropriate.
Further, we were not able to confirm that this procedure is being
performed on Medicare beneficiaries in an outpatient setting. We
solicited comments, including clinical data and specific case reports,
which would support payment for CPT 33967 under the OPPS.
Our discussion of the comments we received on this issue, our
response and the statement of final action regarding what services to
remove from the inpatient list is contained in section II.B.5.
Multiple Bills
During its February 2001 meeting, the Panel received oral testimony
identifying CMS exclusive use of single procedure claims to set
relative weights for APCs as a potential problem in setting appropriate
payment rates for APCs. Therefore, the panel asked its Research
Subcommittee to work with CMS staff, using the Endoscopic Retrograde
Cholangiopancreatography (ERCP) code family as a case study, to explore
the use of multiple procedure claims data for setting relative weights.
The Subcommittee made the following recommendations to the Panel,
which the Panel approved:
[sbull] We should continue to explore the use of multiple procedure
claims data for setting payment rates but should continue to use only
single procedure claims data to determine relative payment weights for
CY 2003.
[sbull] We should work with the APC Panel to explore the use of
multiple claims data drawn from OPPS claims for services such as
radiation oncology in time for the next APC Panel meeting.
[sbull] We should educate hospitals on appropriate coding and
billing practices to ensure that claims with multiple procedures are
properly coded and that costs are properly allocated to each procedure.
One presenter to the panel suggested a method to increase the
number of claims that could be considered as single claims. Currently,
we consider any claim submitted with two or more primary codes (that
is, a code assigned to an APC for separate payment) to be a multiple
procedure claim. When these claims contain line items for revenue
centers without an accompanying Healthcare Common Procedure Coding
System (HCPCS) code there is no way to determine the appropriate
primary code with which to package the revenue center. The presenter
suggested that we consider all claims where every line contains a
separately payable HCPCS code as a single procedure claim, reasoning
that on such claims we do not have to determine how and where to
``package'' line items not identified by a separately payable HCPCS
code. Where every line item contains a separately payable HCPCS code,
every cost can easily be allocated to a separately payable HCPCS code
on the line item and all costs for each HCPCS code can then be
accurately and completely determined.
We agreed with that suggestion. In section II.B.4 of the proposed
rule, we described how we determined the number of single claims used
to set the APC relative weights proposed for 2003 using this
methodology. We requested comments on our methodology.
Discussion of the comments we received on this issue, our
responses, and the statement of final action are contained in section
III.A.
Packaging
We sought the Panel's guidance on whether we should package the
costs of HCPCS codes for radiologic guidance and radiologic supervision
and interpretation services whose descriptors require that they only be
performed in conjunction with a surgical procedure.
In the proposed rule, we discussed why we package the costs of
certain procedures. We specified for example, that ``add-on''
procedures and radiologic guidance procedures should never be billed on
a claim without the code for an associated procedure. A facility should
not submit a claim for ultrasound guidance for a biopsy unless the
claim also includes the biopsy procedure, because the guidance is
necessary only when a biopsy is performed. A claim for a packaged
guidance procedure (or a supervision and interpretation procedure whose
descriptor requires it be performed in association with a surgical
procedure)
[[Page 66724]]
would be returned to the provider for correction and resubmission.
Also, we explained that we use packaging because billing
conventions allow hospitals to report costs for certain services using
only revenue center codes (that is, hospitals are not required to
specify HCPCS codes for certain services). Packaging allows these costs
to be captured in the data used to calculate median costs for services
with an APC.
After hearing the requests of several presenters, (details
discussed at 66 FR 52098 of the proposed rule) the Panel concluded
that, even though we could be setting relative weights based on error
claims, we should not package additional radiologic guidance and
supervision and interpretation procedures and should continue to
explore methodologies that would allow these procedures to be
recognized for separate payment. The Panel also recommended that
radiology guidance codes that were in APC 268 for CY 2001 but that were
designated with status indicator ``N'' as packaged services in 2002, be
restored as separately payable services for CY 2003. The Panel
requested that this topic be placed on the agenda for the next Panel
meeting.
Our discussion of the comments we received on this issue, our
responses and a statement of final action is contained in section
III.B.
Add-On Codes
As discussed in the proposed rule (66 FR 52098), we presented for
the Panel's consideration several options for payment of add-on codes,
including assignment of status indicator ``N'' to package them into the
payment for the base procedure. After thorough review, the Panel
concluded that we should continue to pay for add-on codes separately,
setting relative weights with the use of single procedure claims in
spite of the fact that these were error claims. The Panel asked us to
continue exploring ways to most appropriately pay for these services.
They requested that this item also be placed on the agenda for the next
Panel meeting.
We proposed to accept the recommendations of the APC Panel both for
packaging radiology guidance and supervision and interpretation codes
and for payment of add-on codes. We proposed to pay separately in 2003
for radiology guidance codes that were paid in APC 268 in CY 2001 but
that were packaged in 2002.
3. Recommendations of the Advisory Panel and Our Responses
In the proposed rule, we summarized the issues considered by the
Panel, the Panel's APC recommendations and our subsequent action with
regard to the Panel's recommendations. The most recent data available
for the Panel to review in considering specific APC groupings were the
1999-2000 pre-OPPS claims data that were the basis of the CY 2002
relative payment weights. In the proposed rule, we provided a detailed
summary of the Panel discussion and recommendations (67 FR 52098-
52102). See the proposed rule for more details regarding these
discussions. The APC titles are shown in this discussion of the APC
Panel recommendations as they existed when the APC Panel met in January
2002. In a few cases the APC titles were changed for the proposed 2003
OPPS and therefore some APCs do not have the same title in Addendum A
as they have in this section.
As discussed below, the Panel sometimes declined to recommend a
change in an APC even though the APC violated the 2 times rule. In
section II.B.1 of this preamble, we discuss our proposals regarding the
2 times rule based on the CY 2001 data we are using to recalibrate the
2003 APC relative weights. Section II.B.1 also details the criteria we
use in deciding to make an exception to the 2 times rule. We asked the
Panel to review many of the exceptions we implemented in 2001 and 2002.
We refer to the exceptions as ``violations of the 2 times'' rule in the
following discussion.
APC 215: Level I Nerve and Muscle Tests
APC 216: Level III Nerve and Muscle Tests
APC 218: Level II Nerve and Muscle Tests
We presented this agenda item because APC 215 appeared to violate
the 2 times rule. In order to remedy this violation, we asked the Panel
to consider the following changes:
[sbull] Move CPT codes 95858, 95921, and 95922 from APC 215 to APC
218.
[sbull] Move CPT code 95930 from APC 216 to APC 218.
[sbull] Move CPT code 92275 from APC 216 to APC 231.
[sbull] Move CPT code 95920 from APC 218 to APC 216.
The Panel recommended that the changes we asked them to consider be
made, that is, to move CPT codes 95921 and 95922 to APC 218. However,
if the calendar year 2001 data support a move of 95921 to APC 216, the
Panel recommended that we consider that move.
APC 600: Low Level Clinic Visits
APC 601: Mid Level Clinic Visits
APC 602: High Level Clinic Visits
APC 610: Low Level Emergency Visits
APC 611: Mid Level Emergency Visits
APC 612: High Level Emergency Visits
We discussed the Panel's recommendations related to facility coding
for clinic and emergency department visits are discussed below, in
(section X.A of this rule).
APC 296: Level I Therapeutic Radiologic Procedures
APC 297: Level II Therapeutic Radiologic Procedures
APC 263: Level I Miscellaneous Radiology Procedures
APC 264: Level II Miscellaneous Radiology Procedures
APCs 296, 263, and 264 appear to violate the 2 times rule. We asked
the Panel to consider three options for reconfiguring these APCs so
that they would conform with the 2 times rule.
Option 1: Create a new APC, Level III Therapeutic Radiology
Procedures, by moving CPT code 75984 from APC 296 and 74475 from APC
297. Also, move CPT codes 76101, 70390, and 71060 from APC 263 to APC
264 and move CPT code 75980 from APC 297 to APC 296.
Option 2: Move CPT codes 76101, 703690, and 71060 from APC 263 to
APC 264 and move CPT code 75984 from APC 296 to APC 264. Move CPT code
75980 from APC 297 to APC 296.
Option 3: Create a new APC, Level III Miscellaneous Radiology
Procedures, by moving CPT codes 76080, 7036736, 76101, 70390,
74190, and 71060 from APC 263. Move CPT code 74327 from APC 296 to APC
263 and move CPT code 75980 from APC 297 to APC 296. APC 264 remains
unchanged.
The Panel noted that none of the options that we presented resolve
all of the 2 times violations. However, the Panel agreed that Option 2
would create more clinically coherent APCs without creating a new APC
based on anticipated device costs that would be billed in 2002. In
addition, the Panel invited the American College of Radiology and other
interested parties to proposed further changes for the Panel's
consideration next year.
We proposed to accept the Panel's recommendations that option 2 be
implemented.
APC 230: Level I Eye Tests and Treatments
APC 231: Level III Eye Tests and Treatments
APC 232: Level I Anterior Segment Eye Procedures
APC 233: Level II Anterior Segment Eye Procedures
APC 234: Level III Anterior Segment Eye Procedures
[[Page 66725]]
APC 235: Level I Posterior Segment Eye Procedures
APC 236: Level II Posterior Segment Eye Procedures
APC 237: Level III Posterior Segment Eye Procedures
APC 238: Level I Repair and Plastic Eye Procedures
APC 239: Level II Repair and Plastic Eye Procedures
APC 240: Level III Repair and Plastic Eye Procedures
APC 241: Level IV Repair and Plastic Eye Procedures
APC 242: Level V Repair and Plastic Eye Procedures
APC 247: Laser Eye Procedures Except Retinal
APC 248: Laser Retinal Procedures
APC 698: Level II Eye Tests and Treatments
APC 699: Level IV Eye Tests and Treatments
We asked the Panel to review these APCs to address clinical
inconsistencies and violations of the 2 times rule. We suggested
creating a new level for posterior segment eye procedures and other
changes in order to make the groups more clinically coherent, as
follows:
[sbull] Move CPT codes 65260 and 67218 from APC 237 to 236.
[sbull] Create a new APC (Level IV Posterior Segment Eye
Procedures) by moving CPT codes 67107, 67112, 67040, and 67108 from APC
237.
[sbull] Move CPT codes 67145, 67105, and 67210 from APC 247 to APC
248.
[sbull] Move CPT code 66999 from APC 247 to APC 232.
[sbull] Move CPT code 67299 from APC 248 to APC 235.
[sbull] Move CPT codes 65855, 66761, and 66821 from APC 248 to APC
247.
[sbull] Move CPT code 67820 from APC 698 to APC 230.
[sbull] Move CPT code 67208 from APC 231 to APC 235.
[sbull] Move CPT codes 92226, 92284, 65205, 92140 from APC 231 to
APC 698.
[sbull] Move CPT code 92235 from APC 231 to APC 699.
[sbull] Move CPT code 68100 from APC 233 to APC 232.
[sbull] Move CPT code 65180 from APC 233 to APC 234.
[sbull] Create a new APC (Level IV Anterior Segment Eye Procedures)
by moving CPT codes 66172, 66185, 66180, 66225 from APC 234.
[sbull] Move CPT code 92275 from APC 216 to APC 231.
No presenters commented on these APCs, and, after brief discussion,
the Panel recommended concurrence with our suggested changes. We
proposed to accept the Panel's recommendations. We noted in the
proposed rule that when we were able to use 2001 claims data to re-
evaluate the changes recommended by the Panel for these APCs, we found
violations of the 2 times rule in the reconfigured APCs. Nonetheless,
we proposed to accept the Panel's recommendations because they result
in more clinically coherent APCs. We solicited comments on further
changes that would address the violations of the 2 times rule.
APC 110: Transfusion
APC 111: Blood Product Exchange
APC 112: Apheresis, Photopheresis, and Plasmapheresis
We presented these APCs to the Panel in 2001 because of their low
payment rates and concern that our cost data were inaccurate. These
APCs were on the 2002 agenda in order to obtain further comment on our
cost data. We suggested no changes in the structure of these APCs.
The Panel recommended that plasma derivatives be placed in their
own APCs and classified in the same manner as whole blood products. In
addition, the Panel observed that hospitals incur additional costs with
each unit of blood product transfused and, therefore, recommended that
APC 110 be revised to allow for the costs of additional units of blood
product and clinical services.
In section IV.D of this rule, we discussed our payment proposals
for drugs and biologicals for which pass-through payments are scheduled
to expire in 2003. Those proposals would affect payment for blood and
blood products. We proposed not to accept the Panel's recommendation to
change current OPPS payment policy for transfusions.
Panel Recommendations to Defer Changes Pending Availability of 2001
Claims Data
Regarding the remaining APC groups that are addressed below, the
Panel recommended that we make no changes until data from claims billed
in 2001 under the OPPS become available for analysis. The Panel further
requested that we place the APC groups in this section on the agenda
for consideration at its meeting in 2003. The changes that we proposed
for the APCs in this section are based upon our review of the 2001
claims data, which did not become available until March 2002.
APC 203: Level V Nerve Injections
APC 204: Level VI Nerve Injections
APC 206: Level III Nerve Injections
APC 207: Level IV Nerve Injections
Several presenters to the Panel suggested changes in the
configuration of these APCs because of concerns that the current
classifications result in payment rates that are too low relative to
the resource costs associated with certain procedures in the APCs.
Several of these APCs include procedures associated with drugs or with
device categories for which pass-through payments are scheduled to
expire in 2003. The Panel recommended that we not change the structure
of these APCs at this time. Because the structure of these APCs was
substantially changed for 2002, and 2002 cost data was not yet
available, the Panel felt it would be appropriate to review 2002 cost
data prior to making further structural changes to these APCs. We
proposed to accept the Panel's recommendation.
We will place these APCs on the Panel's agenda when 2002 cost data
becomes available.
APC 43: Closed Treatment Fracture Finger/Toe/Trunk
APC 44: Closed Treatment Fracture/Dislocation, Except Finger/Toe/Trunk
On the basis of 1999-2000 claims data, these APCs violate the 2
times rule. The Panel reviewed these APCs and recommended no changes.
Our subsequent review of 2001 OPPS cost data shows continuing
violations of the 2 times rule and that costs within these APCs are
virtually identical. Therefore, we proposed to combine APCs 43 and 44
into APC 43. The procedures in the consolidated APC are clinically
homogeneous.
APC 58: Level I Strapping and Cast Application
APC 59: Level II Strapping and Cast Application
The Panel reviewed these APCs and recommended that no changes be
made pending analysis of 2001 claims data. The Panel did recommend that
billing instructions be developed on the appropriate use of the codes
in these APCs. We agreed with the Panel's recommendation regarding the
need for billing instructions, and we expect to develop such
instructions for hospitals to use in 2003.
Our subsequent review of 2001 claims data reveals that, in some
cases, costs for short casts and splints are greater than costs for
long casts and splints. Moreover, the proposed payments for these two
APCs, based on 2001 OPPS data, would not differ significantly from each
other. Therefore, we proposed to combine the codes in APC 58 and APC 59
into a single APC, APC 58. Combining these APCs does not compromise
clinical homogeneity. The relative weight of the proposed single APC is
virtually identical to the relative weight of each of the two current
APCs. We proposed to continue to work with hospitals to develop
appropriate coding
[[Page 66726]]
for these services and will review the appropriate APC structure for
these services next year.
APC 279: Level I Angiography and Venography Except Extremity
APC 280: Level II Angiography and Venography Except Extremity
Without the benefit of 2001 OPPS claims data, it was difficult for
the Panel to determine whether the apparent violation of the 2 times
rule in APCs 279 and 280 was attributable to underreporting of
procedures or inaccurate coding. Therefore, the Panel recommended no
changes pending the availability of the more recent claims data. After
subsequently reviewing the 2001 claims data, we proposed to move CPT
codes 75978, Transluminal balloon angioplasty, venous, radiological
supervision and interpretation, and 75774, Angiography, selective, each
additional vessel studied after basic examination, radiological
supervision and interpretation, to new APC 0668. This would resolve
violations of the 2 times rule and result in clinically coherent APCs.
APC 115: Cannula/Access Device Procedures
We proposed to move CPT code 36860, External Cannula Declotting;
without balloon catheter, to APC 103, Miscellaneous Vascular
Procedures. We believe this makes both APC 115 and APC 103 more
clinically homogeneous and it resolves a violation of the 2 times rule
in APC 115 that was caused by the presence of CPT code 36860.
APC 93: Vascular Repair/Fistula Construction
APC 140: Esophageal Dilation without Endoscopy
APC 141: Upper GI Procedures
APC 142: Small Intestine Endoscopy
APC 143: Lower GI Endoscopy
APC 144: Diagnostic Anoscopy
APC 145: Therapeutic Anoscopy
APC 146: Level I Sigmoidoscopy
APC 147: Level II Sigmoidoscopy
APC 148: Level I Anal/Rectal Procedure
APC 149: Level II Anal/Rectal Procedure
Our subsequent review of 2001 claims data suggests that the cost
data for APCs 144 and 145 are aberrant. The cost data for these APCs
yield relative weights and payments that are significantly higher than
the relative weights for APCs 146 and 147, which consist of similar
procedures performed through a sigmoidoscope rather than an anoscope.
As currently arranged, the APC configuration for these services could
provide a financial incentive for hospitals to perform unnecessary
anoscopic procedures, either alone or with a sigmoidoscopy. To rectify
this problem, we proposed to move the procedures in APCs 144 and 145 to
APC 147 with the exception of CPT code 46600, Anoscopy; diagnostic,
which we proposed to assign to APC 340, Minor Ancillary procedures. We
believe these changes would result in clinically coherent APCs with
appropriate relative weights and payment rates.
APC 363: Otorhinolaryngologic Function Tests
Based on 2001 claims data, we proposed to move CPT codes 92543,
92588, 92520, 92546, 92516, 92548, and 92584 to new APC 0660 (Level III
Otorhinolaryngolgic Function Tests). This change would resolve a 2
times rule violation and create clinically coherent APCs.
APC 96: Non-Invasive Vascular Studies
APC 265: Level I Diagnostic Ultrasound Except Vascular
APC 266: Level II Diagnostic Ultrasound Except Vascular
APC 267: Vascular Ultrasound
APC 269: Level I Echocardiogram Except Transesophageal
APC 270: Transesophageal Echocardiogram
The APC Panel recommended making no changes in the configuration of
these APCs. Based on 2001 claims data, we proposed to make several
changes in order to resolve 2 times rule violations and to make these
APCs more clinically coherent. Specifically, we proposed to move CPT
code 43499 from APC 0140 to APC 141; CPT code 93721 from APC 0096 to
APC 368; CPT code 93740 from APC 0096 to APC 367; CPT code 93888 from
APC 0267 to APC 266; and CPT code 93931 from APC 0267 to APC 266. We
also proposed to move CPT codes 78627, 76825, and 93320 from APC 0269
to new APC 0671 to achieve more clinical coherence. We also proposed to
create new APC 0670 for intravascular ultrasound and intracardiac
echocardiography consisting of CPT codes 37250, 37251, 92978, 92979,
and 93662.
APC 291: Level I Diagnostic Nuclear Medicine Excluding Myocardial Scans
APC 292: Level II Diagnostic Nuclear Medicine Excluding Myocardial
Scans
Subsequent to the APC Panel meeting, we received comments on these
APCs from the Nuclear Medicine Task Force. After a thorough review of
that proposal within the context of the 2001 claims data, we proposed
to accept the recommendations of the Nuclear Medicine Task Force, which
would result in a complete reconfiguration of APCs 290, 291, and 292.
Although the reconfiguration would create violations of the 2 times
rule, we agree with the Task Force that the reconfigured APCs are more
clinically coherent. We note that APCs 290, 291, and 292 as currently
configured would also violate the 2 times rule. Therefore, we solicited
comments on the proposed reconfiguration of APCs 290, 291, and 292 and
on alternative groupings that would achieve clinical coherence without
violating the 2 times rule.
APC 274: Myleography
APC 179: Urinary Incontinence Procedures
APC 182: Insertion of Penile Prosthesis
APC 19: Level I Excision/Biopsy
APC 20: Level II Excision/Biopsy
APC 21: Level IV Excision/Biopsy
APC 22: Level V Excision/Biopsy
PC 694: Level III Excision/Biopsy
Based on 2001 claims data, we proposed to move several codes from
APC 19 to APC 20 and several codes from ACP 20 to APC 21. Additionally,
we proposed to move CPT codes 11770, 54105, and 60512 to APC 22. We
also proposed to move CPT code 58999 to APC 191 and CPT code 37799 to
APC 35. These changes would result in clinically coherent APCs that do
not violate the 2 times rule.
APC 24: Level I Skin Repair
APC 25: Level II Skin Repair
APC 26: Level III Skin Repair
APC 27: Level IV Skin Repair
APC 686: Level V Skin Repair
Based on 2001 claims data, we proposed to move CPT code 43870 from
APC 0025 to APC 141; and CPT codes with high costs from APC 26 to APC
27. We also proposed to move the codes remaining in APC 26 to APC 25.
APC 26 would then be deleted. These changes would result in a more
compact APC structure without compromising the clinical homogeneity of
the reconfigured APCs and without violating the 2 times rule. See Table
1 for the final list of codes to be moved from APC 26 to APC 25 or APC
27.
Table 1.--HCPCS Codes to be Moved From APC 26 Into APC 25 or APC 27
------------------------------------------------------------------------
2003 2003
2002 APC 26 APC 25 APC 27
------------------------------------------------------------------------
11960................................................... ...... 11960
11970................................................... ...... 11970
12037................................................... 12037 ......
12047................................................... 12047 ......
12057................................................... 12057 ......
13150................................................... 13150 ......
13160................................................... ...... 13160
14000................................................... ...... 14000
14001................................................... ...... 14001
[[Page 66727]]
14020................................................... ...... 14020
14021................................................... ...... 14021
14040................................................... ...... 14040
14041................................................... ...... 14041
14060................................................... ...... 14060
14061................................................... ...... 14061
14300................................................... ...... 14300
14350................................................... ...... 14350
15000................................................... 15000 ......
15001................................................... 15001 ......
15050................................................... 15050 ......
15101................................................... ...... 15101
15120................................................... ...... 15120
15121................................................... ...... 15121
15200................................................... ...... 15200
15201................................................... 15201 ......
15220................................................... ...... 15220
15221................................................... 15221 ......
15240................................................... ...... 15240
15241................................................... 15241 ......
15260................................................... ...... 15260
15261................................................... 15261 ......
15351................................................... ...... 15351
15400................................................... 15400 ......
15401................................................... 15401 ......
15570................................................... ...... 15570
15572................................................... ...... 15572
15574................................................... ...... 15574
15576................................................... ...... 15576
15600................................................... ...... 15600
15610................................................... ...... 15610
15620................................................... ...... 15620
15630................................................... ...... 15630
15650................................................... ...... 15650
15775................................................... 15775 ......
15776................................................... 15776 ......
15819................................................... 15819 ......
15820................................................... ...... 15820
15821................................................... ...... 15821
15822................................................... ...... 15822
15823................................................... ...... 15823
15825................................................... ...... 15825
15826................................................... ...... 15826
15829................................................... ...... 15829
15835................................................... 15835 ......
20101................................................... ...... 20101
20102................................................... ...... 20102
20910................................................... ...... 20910
20912................................................... ...... 20912
20920................................................... ...... 20920
20922................................................... ...... 20922
20926................................................... ...... 20926
23921................................................... 23921 ......
25929................................................... ...... 25929
33222................................................... ...... 33222
33223................................................... ...... 33223
44312................................................... ...... 44312
44340................................................... ...... 44340
15580--Code Deleted ...... ......
15625--Code Deleted ...... ......
------------------------------------------------------------------------
APC 77: Level I Pulmonary Treatment
APC 78: Level II Pulmonary Treatment
APC 251: Level I ENT Procedures
APC 252: Level II ENT Procedures
APC 253: Level III ENT Procedures
APC 254: Level IV ENT Procedures
APC 256: Level V ENT Procedures
Based on 2001 claims data, we proposed to address violations of the
2 times rule by moving CPT codes 40812, 42330, and 21015 from APC 0252
to APC 253 and by moving CPT codes 41120 and 30520 to APC 254.
We are adopting the changes discussed in the proposed rule as final
except as noted in our discussion of specific APC changes in section
II.B, below.
B. Other Changes Affecting Ambulatory Payment Classification (APC)
Assignments
1. Limit on Variation of Costs of Services Classified Within a
Group
Section 1833(t)(2) of the Act provides that the items and services
within an APC group cannot be considered comparable with respect to the
use of resources if the highest cost item or service within a group is
more than 2 times greater than the lowest cost item or service within
the same group. However, the statute authorizes the Secretary to make
exceptions to this limit on the variation of costs within each group in
unusual cases such as low-volume items and services. No exception may
be made, however, in the case of a drug or biological that has been
designated as an orphan drug under section 526 of the Federal Food,
Drug, and Cosmetic Act.
Taking into account the APC changes discussed in relation to the
APC panel recommendations in this section of this preamble and the use
of 2001 claims data to calculate the median cost of procedures
classified to APCs, we reviewed all APCs to determine which of them
would not meet the 2 times limit. We use the following criteria when
deciding whether to make exceptions to the 2 times rule for affected
APCs:
[sbull] Resource homogeneity.
[sbull] Clinical homogeneity.
[sbull] Hospital concentration.
[sbull] Frequency of service (volume).
[sbull] Opportunity for upcoding and code fragmentation.
For a detailed discussion of these criteria, refer to the April 7,
2000, final rule (65 FR 18457).
We received several comments on this proposal. A summary of these
comments and our responses are provided below.
Comment: One commenter recommended that we move CPT code 47556
(Biliary endoscopy with dilation of biliary stricture with stent) from
APC 0152 to APC 0153 because its placement in APC 0152 violated the 2
times rule.
Response: We will not make any changes at this time, but we will
present this issue to the APC Advisory Panel. We do not use low-volume
procedures in determining whether an APC violates the 2 times rule
because there is a high potential for miscoding of such procedures and
because our cost data is less reliable. The cost data that we do have
for CPT 47556 indicates that APC 0152 is appropriate.
Comment: Several commenters thanked us for creating a separate APC
for Computed Tomographic Angiography (CTA) but requested that we not
use claims data to develop a payment rate. These commenters asserted
that our claims data was faulty because hospitals had not developed
specific charges for CTA and were using charges for other Computed
Tomography (CT) when billing for CTA. They recommended that we use
either the relative ratio of charges from hospitals that billed CTA at
a higher rate than CT and use that ratio to determine a payment rate
for CTA, or use a proxy model that the commenter had developed.
Response: Our payment rates for CT and CTA are different and our
claims data indicates that CTA costs more than CT. Using claims data
only from hospitals that charge more for CTA than CT is inappropriate,
and the proxy model has not been validated. Therefore, we will update
our payment for CTA next year based on 2002 claims data.
Table 2 contains the final list of APCs that we exempt from the 2
times rule based on the criteria cited above. In cases in which
compliance with the 2 times rule appeared to conflict with a
recommendation of the APC Advisory Panel, we generally accepted the
Panel recommendation. This was because Panel recommendations were based
on explicit consideration of resource use, clinical homogeneity,
hospital specialization, and the quality of the data used to determine
payment rates.
The median cost for hospital outpatient services for these and all
other APCs can be found at Web site: http://www.cms.hhs.gov.
Table 2.--Table of APCs Exempted From 2 Times Rule
------------------------------------------------------------------------
APC Description
------------------------------------------------------------------------
0012................................... Level I Debridement &
Destruction
0019................................... Level I Excision/ Biopsy
0020................................... Level II Excision/ Biopsy
0025................................... Level II Skin Repair
0032................................... Insertion of Central Venous/
Arterial Catheter
0043................................... Closed Treatment Fracture
Finger/Toe/Trunk
0046................................... Open/Percutaneous Treatment
Fracture or Dislocation
[[Page 66728]]
0058................................... Level I Strapping and Cast
Application
0074................................... Level IV Endoscopy Upper Airway
0080................................... Diagnostic Cardiac
Catheterization
0081................................... Non-Coronary Angioplasty or
Atherectomy
0093................................... Vascular Repair/Fistula
Construction
0097................................... Cardiac and Ambulatory Blood
Pressure Monitoring
0099................................... Electrocardiograms
0103................................... Miscellaneous Vascular
Procedures
0105................................... Revision/Removal of Pacemakers,
AICD, or Vascular
0121................................... Level I Tube changes and
Repositioning
0140................................... Esophageal Dilation without
Endoscopy
0147................................... Level II Sigmoidoscopy
0148................................... Level I Anal/Rectal Procedure
0155................................... Level II Anal/Rectal Procedure
0165................................... Level III Urinary and Anal
Procedures
0170................................... Dialysis
0179................................... Urinary Incontinence Procedures
0191................................... Level I Female Reproductive
Proc
0192................................... Level IV Female Reproductive
Proc
0203................................... Level VI Nerve Injections
0204................................... Level I Nerve Injections
0207................................... Level III Nerve Injection
0218................................... Level II Nerve and Muscle Tests
0225................................... Implantation of Neurostimulator
Electrodes
0230................................... Level I Eye Tests & Treatments
0231................................... Level III Eye Tests &
Treatments
0233................................... Level II Anterior Segment Eye
Procedures
0235................................... Level I Posterior Segment Eye
Procedures
0238................................... Level I Repair and Plastic Eye
Procedures
0239................................... Level II Repair and Plastic Eye
Procedures
0252................................... Level II ENT Procedures
0260................................... Level I Plain Film Except Teeth
0274................................... Myelography
0286................................... Myocardial Scans
0290................................... Level I Diagnostic Nuclear
Medicine Excluding Myocardial
Scans
0291................................... Level II Diagnostic Nuclear
Medicine Excluding Myocardial
Scans
0294................................... Level I Therapeutic Nuclear
Medicine
0297................................... Level II Therapeutic Radiologic
Procedures
0303................................... Treatment Device Construction
0304................................... Level I Therapeutic Radiation
Treatment Preparation
0330................................... Dental Procedures
0345................................... Level I Transfusion Laboratory
Procedures
0354................................... Administration of Influenza/
Pneumonia Vaccine
0356................................... Level II Immunizations
0367................................... Level I Pulmonary Test
0368................................... Level II Pulmonary Tests
0370................................... Allergy Tests
0373................................... Neuropsychological Testing
0600................................... Low Level Clinic Visits
0602................................... High Level Clinic Visits
0660................................... Level III Otorhinolaryngologic
Function Tests
0692................................... Electronic Analysis of
Neurostimulator Pulse
Generators
0694................................... Mohs Surgery
0698................................... Level II Eye Tests & Treatments
------------------------------------------------------------------------
2. Procedures Moved From New Technology APCs to Clinically Appropriate
APCs
In the November 30, 2001 final rule, we made final our proposal to
change the period of time during which a service may be paid under a
new technology APC (66 FR 59903), initially established in the April 7,
2000 final rule. That is, beginning in 2002, we will retain a service
within a new technology APC group until we have acquired adequate data
that allow us to assign the service to a clinically appropriate APC.
This policy allows us to move a service from a new technology APC in
less than 2 years if sufficient data are available, and it also allows
us to retain a service in a new technology APC for more than 3 years if
sufficient data upon which to base a decision for reassignment have not
been collected.
Effective in 2003, we will move several procedures from new
technology APCs to clinical APCs. Those procedures and the clinical
APCs to which we are assigning the procedures for payment in 2003 are
identified in Table 3. Based upon our review of the 2001 outpatient
prospective payment system (OPPS) claims data, we believe that we have
sufficient information upon which to base assignment of these
procedures to clinical APCs. In making this determination, we reviewed
both single and multiple procedure claims. In the proposed rule at 67
FR 52103, we discuss the procedures that we followed to make this
determination. In some cases we proposed classification of a new
technology procedure in an APC with procedures that are similar both
clinically and in terms of resource consumption. In other cases, we
proposed to create a new APC for a new technology procedure because we
do not believe any of the existing APCs contain procedures that are
clinically similar and similar in terms of resource consumption. We
solicited comments on our proposed reassignment of the new technology
procedures listed in Table 3 of the proposed rule (67 FR 52103-52104).
We received several comments on this proposal which are summarized
below.
Comment: Several commenters brought to our attention that, as a
result of moving codes for proton beam radiation therapy out of APC
0710 and APC 0712 (new technology codes) and into APC 0664 (Proton beam
radiation therapy), simple treatments would receive a higher payment
while intermediate and complex treatments would receive a lower
payment. Commenters requested that these codes remain in APCs 0710 and
0712 or be split into separate APCs.
Response: We thank the commenters for bringing this to our
attention, and we agree that codes for simple proton beam radiation
therapy (CPT 77522 and CPT 77520) should be placed in a different APC
than codes for intermediate (CPT 77523) and complex (CPT 77525)
radiation therapy. However, it would be inappropriate to return these
codes to their previous new technology APCs (0712 and 0712) due to our
having sufficient claims data to place them in their own APCs.
Therefore, we will place codes for simple radiation therapy (CPTs 77522
and 77520) in APC 0664 and codes for intermediate (CPT 77523) and
complex (CPT 77525) therapy in the newly created APC 0650.
Comment: Numerous commenters expressed concern over the movement of
HCPC G0173 (Stereo radiosurgery, complete) from APC 0721 (New
Technology Level XV $5,000-$6,000) to APC 0663 (Stereotactic
radiosurgery), resulting in lower payment. Commenters requested that
HCPCS G0173 be returned to APC 0721 (New Technology Level XV $5,000-
$6,000) because our current data includes both linear accelerator and
multi source treatments.
Response: We agree with commenters and have returned HCPC G0173
(Stereotactic radiosurgery, complete) to APC 0721 (New Technology Level
XV $5,000-$6,000). We will review our claims data for next year's
proposed rule to determine appropriate placement for all stereotactic
radiosurgery procedures.
Comment: Many commenters brought to our attention that G0251
(Stereotactic radiotherapy, multisession) was erroneously omitted from
the proposed rule. Commenters asserted that G0251 differs substantially
from G0173 and G0243, and they requested that G0251 be reinstated and
placed in an APC that pays more than APC 0721 (New Technology Level XV
$5,000-$6,000).
Response: We thank the commenters for bringing this to our
attention, and we agree that the elimination of G0251 in the proposed
rule was in error. However, we do not agree with the
[[Page 66729]]
placement of G0251 in an APC that pays more than APC 0721 (New
Technology Level XV $5,000-$6,000). Although there are significant
fixed costs for all stereotactic radiosurgery procedures, our review of
cost data does not show that our current APC assignment for G0251 (APC
713) is inappropriate. We will review the APC assignments for all
stereotactic radiosurgery procedures next year when we have 2002 claims
data available.
Comment: A commenter expressed concern over the bundling of
payments for CPT 77370 (Special medical radiation physics consultation)
and CPT 77336 (Continuing medical physics consultation) into code G0242
(Multisource photon stereotactic plan) based on the understanding that
G0242 is unrelated to CPT 77370 and CPT 77336. The commenter requested
that CPT 77370 and CPT 77336 be unbundled from G0242.
Response: We want hospitals to bill all resources associated with
G0242 in one code. G0242 includes the work of a physicist and other
staff, therefore it is appropriate that the resources used for CPT
77370 and CPT 77336 remain bundled with G0242. Separate payment for
77370 and 77336 would result in duplicate payment.
Comment: Many commenters expressed concern that FDG PET procedures
are moving to a new clinical APC 0667 (Nonmyocardial positron emission
tomography) with a payment of $971--a reduction of $404. The commenters
asserted that although the proposed rule would continue separate pass-
through payment for FDG (in APC 1775), the proposed new payment would
not cover the cost of the PET procedure and would undermine access to
care.
Response: We agree that our claims data may not accurately reflect
the cost of FDG PET procedures.
On June 29, 2001, CMS announced its intention to issue a national
coverage determination (NCD) limiting the type of technology that can
be used to perform Medicare-covered PET scans. This NCD became
effective January 1, 2002. We believe that our claims data includes a
significant number of PET scans performed on coincidence cameras that
are no longer covered by Medicare. This could have the effect of
lowering the median cost as compared to our future claims data that
will reflect (due to the NCD) only the use of full-ring or partial-ring
PET scanners. For this reason, until we are confident that our claims
data reflects the predominant use of dedicated PET scanners, we will
continue to pay for FDG PET in APC 714 (New Technology--Level IX $1250-
$1500) until further review of claims data for the 2004 final rule.
Comment: A commenter expressed concern about our proposal to
reassign digital mammography from New Technology APC 0707 to a clinical
APC (0699). Commenters recommended that we retain the assignment to New
Technology APC 0707 for 1 more year until further data analysis can be
performed.
Response: We disagree with the commenter. Hospitals billed for
approximately 7,000 occurrences of digital mammography in 2001,
providing us with sufficient data upon which to calculate a median
cost.
New Technology APC Issues
Comment: A manufacturer was pleased that we designated endometrial
cryoablation as eligible for new technology service APC payment, but
was displeased at the delay in reaching our decision as well as the
specific new technology service APC in which the service was placed. We
proposed to place endometrial cryoablation into new technology service
APC 980, which has a payment rate of $1,875. The commenter contended
that endometrial cryoablation has similar resource costs as
cryoablation of the prostate and should be assigned to new technology
service APC 984, at $4,250, which would cover the cost of a
cryoablation probe also. It provided a brief cost analysis from a
single major medical center.
Response: We assigned endometrial cryoablation into new technology
service APC 980 based on cost data submitted.
New Technology APC for Preview Planning Software
Comment: A manufacturer commented on our proposal to reassign the
procedure related to Preview Treatment Planning Software (C9708) from
its current APC 975, which pays $625, to APC 973, which pays $250. The
manufacturer of Preview asserted that its sales records, which it
provided, demonstrate that the cost to hospitals of providing Preview
support the assignment of APC 975. It contended that we must have based
the new APC assignment on faulty claims data.
Response: For the final rule, we had access to a larger number of
claims for C9708, and we have moved it back to APC 975.
Comment: A manufacturer was pleased that we designated endometrial
cryoablation as eligible for new technology service APC payment, but
was displeased at the delay in reaching our decision as well as the
specific new technology service APC in which the service was placed. We
proposed to place endometrial cryoablation into new technology service
APC 980, which has a payment rate of $1,875. The commenter contended
that endometrial cryoablation has similar resource costs as
cryoablation of the prostate and should be assigned to new technology
service APC 984, at $4,250, which would cover the cost of a
cryoablation probe also. It provided a brief cost analysis from a
single major medical center.
Response: We assigned endometrial cryoablation into new technology
service APC 980 based on cost data submitted.
Table 3 below is the final list of Healthcare Common Procedure
Coding System (HCPCS) reassignments of new technology procedures.
Table 3.--Changes in HCPCS Assignments From New Technology APCs to Procedure APCs for 2003
----------------------------------------------------------------------------------------------------------------
HCPCS Description 2002 SI 2003 SI 2002 APC 2003 APC
----------------------------------------------------------------------------------------------------------------
19103............................ Bx breast precut w/device S T 0710 0658
33282............................ Implant pat-active ht S S 0710 0680
record.
36550............................ Declot vascular device... T T 0972 0677
53850............................ Prostatic microwave T T 0982 0675
thermotx.
53852............................ Prostatic rf thermotx.... T T 0982 0675
55873............................ Cryoablate prostate...... T T 0982 0674
76075............................ Dual energy x-ray study.. S S 0707 0288
76076............................ Dual energy x-ray study.. S S 0707 0665
77520............................ Proton trmt, simple w/o S S 0710 0664
comp.
77522............................ Proton trmt, simple w/ S S 0710 0664
comp.
[[Page 66730]]
77523............................ Proton trmt, intermediate S S 0712 0664
77525............................ Proton treatment, complex S S 0712 0664
92586............................ Auditor evoke potent, S S 0707 0218
limit.
95965............................ Meg, spontaneous......... T S 0972 0717
95966............................ Meg, evoked, single...... T S 0972 0714
95967............................ Meg, evoked, each addl... T S 0972 0712
C1300............................ Hyperbaric oxygen........ S S 0707 0659
C9708............................ Preview Tx Planning T T 0975 0973
Software.
G0125............................ PET img WhBD sgl pulm T S 0976 0667
ring.
G0166............................ Extrnl counterpulse, per T T 0972 0678
tx.
G0168............................ Wound closure by adhesive T X 0970 0340
G0173............................ Stereo radoisurgery, S S 0721 0663
complete.
G0204............................ Diagnostic mammography S S 0707 0669
digital.
G0206............................ Diagnostic mammography S S 0707 0669
digital.
G0210............................ PET img whbd ring dxlung S S 0714 0667
ca.
G0211............................ PET img whbd ring init S S 0714 0667
lung.
G0212............................ PET img whbd ring restag S S 0714 0667
lun.
G0213............................ PET img whbd ring dx S S 0714 0667
colorec.
G0214............................ PET img whbd ring init S S 0714 0667
colre.
G0215............................ PET img whbd restag col.. S S 0714 0667
G0216............................ PET img whbd ring dx S S 0714 0667
melanom.
G0217............................ PET img whbd ring init S S 0714 0667
melan.
G0218............................ PET img whbd ring restag S S 0714 0667
mel.
G0220............................ PET img whbd ring dx S S 0714 0667
lymphom.
G0221............................ PET img whbd ring init S S 0714 0667
lymph.
G0222............................ PET img whbd ring resta S S 0714 0667
lymp.
G0223............................ PET img whbd reg ring dx S S 0714 0667
hea.
G0224............................ PET img whbd reg ring ini S S 0714 0667
hea.
G0225............................ PET img whbd ring restag S S 0714 0667
hea.
G0226............................ PET img whbd dx esophag.. S S 0714 0667
G0227............................ PET img whbd ring ini S S 0714 0667
esopha.
G0228............................ PET img whbd ring restg S S 0714 0667
esop.
G0229............................ PET img metabolic brain S S 0714 0667
ring.
G0230............................ PET myocard viability S S 0714 0667
ring.
G0231............................ PET WhBD colorec; gamma S S 0714 0667
cam.
G0232............................ PET WhBD lymphoma; gamma S S 0714 0667
cam.
G0233............................ PET WhBD melanoma; gamma S S 0714 0667
cam.
G0234............................ PET WhBD pulm nod, gamma S S 0714 0667
cam.
----------------------------------------------------------------------------------------------------------------
3. APC Assignment for New Codes Created During Calendar Year (CY) 2002
and Selected Codes and APC Assignments for 2003
During CY 2002, we created several HCPCS codes to describe services
newly covered by Medicare and payable under the hospital OPPS. While we
have assigned these services to APCs for CY 2002, we opened the
assignments to public comment in the proposed rule. In addition, in the
proposed rule, we proposed to create several new HCPCS codes and APC
assignments with an effective date of January 1, 2003 and we solicited
comments on these proposed codes and proposed APC assignments. Table 4
below includes new procedural HCPCS codes either created for
implementation in July 2002, which we intend to implement in October
2002, or which we will implement in January 2003.
Table 4 does not include new codes for drugs and devices for which
we established or intend to establish pass-through payment eligibility
in July or October 2002.
Table 4.--New G Codes for 2002 and 2003 for Which There Are Final APC Assignments
----------------------------------------------------------------------------------------------------------------
Code Long descriptor Effective Final APC SI
----------------------------------------------------------------------------------------------------------------
G0245......................... Initial physician evaluation and 7/1/2002 0600 V
management of a diabetic patient with
diabetic sensory neuropathy resulting in
a loss of protective sensation (LOPS)
which must include: 1. The diagnosis of
LOPS, 2. A patient history, 3. A physical
examination that consists of at least the
following elements: (a) Visual inspection
of the forefoot, hindfoot, and toe web
spaces, (b) Evaluation of a protective
sensation, (c) Evaluation of foot
structure and biomechanics, (d)
Evaluation of vascular status and skin
integrity, and (e) Evaluation and
recommendation of footwear. 4. Patient
education.
[[Page 66731]]
G0246......................... Follow-up physician evaluation and 7/1/2002 0600 V
management of a diabetic patient with
diabetic sensory neuropathy resulting in
a LOPS to include at least the following:
1. A patient history. 2. A physical
examination that includes: (a) Visual
inspection of the forefoot, hindfoot, and
toe web spaces, (b) Evaluation of
protective sensation, (c) Evaluation of
foot structure and biomechanics, (d)
Evaluation of vascular status and skin
integrity, and (e) Evaluation and
recommendation of footwear. 3. Patient
education.
G0247......................... Routine foot care by a physician of a 7/1/2002 0009 T
diabetic patient with diabetic sensory
neuropathy resulting in a loss of
protective sensation (LOPS) to include if
present, at least the following: (1)
local care of superficial wounds, (2)
debridement of corns and calluses, and
(3) trimming and debridement of nails.
G0248......................... Demonstration, at initial use, of home INR 7/1/2002 0708 S
monitoring for patient with mechanical
heart valve(s) who meets Medicare
coverage criteria, under the direction of
a physician; includes: demonstrating use
and care of the INR monitor, obtaining at
least one blood sample, provision of
instructions for reporting home INR test
results, and documentation of patient
ability to perform testing.
G0249......................... Provision of test materials and equipment 7/1/2002 0708 S
for home INR monitoring to patient with
mechanical heart valve(s) who meets
Medicare coverage criteria. Includes
provision of materials for use in the
home and reporting of test results to
physician; per 4 tests.
G0250......................... Physician review, interpretation and 7/1/2002 N/A E
patient management of home INR testing
for a patient with mechanical heart
valve(s) who meets other coverage
criteria; per 4 tests (does not require
face-to-face service).
G0252......................... PET imaging, full and partial-ring PET 10/1/2002 0714 S
scanners only, for initial diagnosis of
breast cancer and/or surgical planning
for breast cancer (e.g., initial staging
of axillary lymph nodes).
G0253......................... PET imaging for breast cancer, full and 10/1/2002 0714 S
partial-ring PET scanners only, staging/
restaging of local regional recurrence or
distant metastases (i.e., staging/
restaging after or prior to course of
treatment).
G0254......................... PET imaging for breast cancer, full and 10/1/2002 0714 S
partial-ring PET scanners only,
evaluation of response to treatment,
performed during course of treatment.
G0255......................... Current perception threshold/sensory nerve 10/1/2002 N/A E
conduction test, (sNCT) per limb, any
nerve.
G0258......................... Intravenous infusion during separately 1/1/2003 0340 Deleted X
payable observation stay, per observation with 90-day
stay (must be reported with G0244). grace period
G0257......................... Unscheduled or emergency dialysis 1/1/2003 0170 S
treatment for an ESRD patient in a
hospital outpatient department that is
not certified as an ESRD facility.
G0259......................... Injection procedure for sacroiliac joint; 1/1/2003 N/A N
arthrography.
G0260......................... Injection procedure for sacroiliac joint; 1/1/2003 0204 T
provision of anesthetic, steroid and/or
other therapeutic agent and arthrography.
G0256......................... Prostate brachytherapy using permanently 1/1/2003 0649 T
implanted palladium seeds, including
transperitoneal placement of needles or
catheters into the prostate, cystoscopy
and application of permanent interstitial
radiation source.
G0261......................... Prostate brachytherapy using permanently 1/1/2003 684 T
implanted iodine seeds, including
transperitoneal placement of needles or
catheters into the prostate, cystoscopy
and application of permanent interstitial
radiation source.
G0263......................... Direct admission of patient with diagnosis 1/1/2003 N/A N
of congestive heart failure, chest pain
or asthma for observation.
G0264......................... Initial nursing assessment of patient 1/1/2003 0600 S
directly admitted to observation with
diagnosis other than congestive heart
failure, chest pain, or asthma.
G0290......................... Transcatheter placement of a drug eluting 1/1/2003 0656 E
intracoronary stent(s), percutaneous,
with or without other therapeutic
intervention, any method; single vessel.
G0291......................... Transcatheter placement of a drug eluting 1/1/2003 0656 E
intracoronary stent(s), percutaneous,
with or without other therapeutic
intervention, any method; each additional
vessel.
----------------------------------------------------------------------------------------------------------------
HCPCS Codes Created During CY 2002
The G codes G0245 through G0250 were created to implement payment
for newly covered Medicare services due to national coverage
determinations. The G codes G0252-G0255 were established October 1,
2002, as a result of national coverage policies that became effective
October 1, 2002. These codes were created to accurately describe the
services covered, to ensure that they were reported correctly, to track
their utilization, and to establish payment. We solicited comments on
the APC assignment of these services. The codes describing evaluation
and management services were assigned to clinic visit APCs containing
similar services, and the codes describing procedural services were
assigned to new technology APCs or to APCs containing procedures
requiring similar resource consumption. Because G0250 is a professional
service furnished by a physician, it is not payable under OPPS.
We did not receive any comments on the codes or APC assignments for
G0245, G0246, G0247, G0248, G0249, G0250, or G0255. Therefore, we are
finalizing them as shown.
We are also finalizing APC assignments for G0252, G0253, and G0254.
The comments and responses for these services are discussed elsewhere
in this preamble.
We implemented HCPCS code G0258 (Intravenous Infusion(s) During
Separately Payable Observation Stay)
[[Page 66732]]
effective October 1, 2002, to describe infusion therapy given during a
separately payable observation stay. We assigned it to APC 0340 because
we believed APC 0340 appropriately accounts for the resources used for
infusion during observation. As discussed in section X.B, we received
many comments opposing creation of this code. Therefore, we will delete
it effective January 1, 2003.
New HCPCS Codes for January 1, 2003, for Which We Proposed APC
Assignments in the August 9, 2002 Proposed Rule
In the August 9, 2002, proposed rule, we proposed to create several
new HCPCS codes for 2003 to address issues that have come to our
attention, to describe new technology procedures, to implement policy
proposals discussed in the rule, and to allow more appropriate
reporting of procedures currently described by (physician's) current
procedural terminology (CPT) (HCPCS Level I) codes. The codes we
proposed are as follows:
(1) G0FFF--Bone Marrow Aspiration and Biopsy Services--we proposed
to create this code to describe bone marrow aspiration and biopsy
performed through the same incision. We proposed to place this code in
APC 0003. This code also appears in the proposed rule for the physician
fee schedule, published in the June 28, 2002, issue of the Federal
Register (67 FR 43846). This code would facilitate proper reporting of
this procedure.
As discussed under general comments and responses below, we
received many comments that objected to the proliferation of G codes
for the services for which the CPT or HCPCS level II process could be
used to create a code. After review of the comments, we agree that this
code should go through the CPT process. Therefore, we have not
implemented the G code we proposed. We will instead, submit a code for
``Bone Marrow Biopsy and Aspiration Performed in the Same Bone'' to CPT
in time for the 2004 CPT code cycle.
(2) G0257--Unscheduled and Emergency Treatment for ESRD Patients--
we proposed this code to facilitate payment for dialysis provided to
ESRD patients in the outpatient department of a hospital that does not
have a certified ESRD facility. The comments, responses, and final
action regarding these services are discussed in section X.F of this
rule.
(3) G0259 and G0260--Sacroiliac Joint Injections--we proposed to
create these two codes to replace CPT code 27096, Injection procedure
for sacroiliac joint, arthrography and/or anesthetic steroid. CPT code
27096 describes two distinct procedures requiring different resource
consumption. Moreover, our policy of packaging injection procedures for
imaging required packaging of this procedure even when it was used to
report injection of a steroid or anesthetic. In these cases, it was
appropriately billed without another procedure and should have been
payable. Therefore, in order to facilitate appropriate reporting and
payment for the procedures described by CPT code 27096, we proposed to
create G0259, Injection procedure for sacroiliac joint, arthrography,
and G0260, Injection procedure for sacroiliac joint, provision of
anesthetic and/or steroid. We proposed to give G0259 status indicator
N, and we proposed to assign G0260 to APC 0204.
Comment: Many commenters raised concern over nonpayment for
sacroiliac joint injections. The commenter brings to our attention that
when a sacroiliac joint injection, CPT code 27096 (Injection procedure
for sacroiliac joint, arthrography and/or anesthetic steroid), is
performed for anesthetic/steroid purposes, the procedure is not being
paid since the costs are only packaged into the arthrography imaging
component.
Response: We appreciate this concern and agree with the commenter
that payment should be made for sacroiliac joint injections when
administered for anesthetic/steroid purposes. Therefore, in order to
facilitate appropriate reporting and payment for the procedures
described by CPT code 27096 (Injection procedure for sacroiliac joint,
arthrography and/or anesthetic steroid), we have created the following
new G-codes to replace CPT code 27096: G0259 (Injection procedure for
sacroiliac joint, arthrography) and G0260 (Injection procedure for
sacroiliac joint, provision of anesthetic and/or steroid). G0259 has
been given status indicator N, and G0260 has been assigned to APC 0204.
(4) G0KKK--Prostate Brachytherapy--we proposed this code to
implement our policy decision discussed in section III.C.3 of the
proposed rule (section IV.E of this rule). As a result of comments we
created two new codes G0256 and G0261. See section IV.E. for the
discussion of prostate brachytherapy.
(5) G0263 and G0264--Observation Care--we proposed to create these
codes to describe observation care provided to a patient who is
directly admitted from a physician's office to a hospital for
observation care. We discussed these codes in detail in section VIII.B
of the proposed rule. Our discussion of the final action, comments, and
responses is contained in section X.B of this rule.
(6) G0290, G0291; Drug Eluting Stents--We discuss these codes in
the immediately following section.
Drug-Eluting Stents
In the August 9, 2002 proposed rule, we discussed the exceptional
circumstances that led us to propose a departure from our standard OPPS
payment methodology as we have done under the inpatient PPS for Federal
fiscal year (FY) 2003 (67 FR 50003-50005). We made this unusual
proposal to ensure consistent payment for drug-eluting stents in both
the inpatient and outpatient settings; to ensure that hospital
resources are not negatively affected by a sudden surge in demand for
this new technology if FDA approval is received; and to ensure that
Medicare payment does not impede beneficiary access to what appears to
be a potentially landmark advance in the treatment of coronary disease.
Consistent with the special approach we implemented in the inpatient
PPS final rule, we proposed to create two new HCPCS codes and a new APC
that may be used to pay for the insertion of coronary artery drug-
eluting stents under the OPPS to be effective if these stents receive
FDA approval for general use. Of course, as with other new procedures,
FDA approval does not mean that Medicare will always cover the approved
item. Medicare coverage depends upon whether an item or service is
medically necessary to treat an illness or injury as determined by
Medicare contractors based on the specifics of individual cases.
The new HCPCS codes that we proposed are as follows:
G0290--Transcatheter placement of a drug eluting intracoronary
stent(s), percutaneous, with or without other therapeutic intervention,
any method; single vessel
G0291--Transcatheter placement of a drug eluting intracoronary
stent(s), percutaneous, with or without other therapeutic intervention,
any method; each additional vessel
We proposed to assign G0290 and G0291 to new APC 0656,
Transcatheter Placement of Drug-Eluting Coronary Stents, with a status
indicator of T.
To establish a payment amount for the proposed new APC, we proposed
to apply the same assumptions that we used in establishing the weights
for diagnosis-related group (DRG) 526 (Percutaneous Cardiovascular
Procedure with Drug-Eluting Stent with AMI) and DRG 527 (Percutaneous
Cardiovascular Procedure With Drug-Eluting Stent Without AMI) as
described in the final
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rule implementing the FY 2003 inpatient PPS. That is, we assume a price
differential of approximately $1,200 when drug-eluting stents are used.
We assumed an average of 1.5 stents per procedure, and we proposed to
add $1,200 to the median costs established for APC 0104 based on 2001
claims data to determine the payment rate for APC 656. We proposed to
calculate a relative payment weight and payment rate for APC 0656 in
accordance with the methodology that we discuss in section III.B. of
this preamble.
We proposed to implement payment under APC 0656 effective April 1,
2003, consistent with the effective date for implementation of the
drug-eluting DRGs under the OPPS and contingent upon FDA approval by
that date. If the FDA grants approval prior to April 1, 2003, hospitals
would be paid for insertion of coronary artery drug-eluting stents
under APC 104. Such claims may qualify for outlier payments.
We proposed to establish the new HCPCS codes and APC group for
coronary artery drug-eluting stents to allow close tracking of the
utilization and costs associated with these services. In the proposed
rule, we invited comments on this proposed methodology for recognizing
the additional costs of drug-eluting stents under the OPPS.
Comment: All of the commenters who addressed our payment proposal
for drug-eluting stents supported our taking proactive steps to create
an APC for this new technology in anticipation of FDA approval by April
2003. However, most of the commenters expressed concern about the level
of payment proposed for APC 656, stating that $1,200 significantly
understates the added cost of the drug-eluting stents. One commenter
suggested that indications from the market are projecting a cost of
$2,000 per stent. Another commenter cited vendors who indicate that
drug-eluting stents will cost 3 times the cost of the current stent for
an approximate cost of $3,360 each. Several commenters stated that the
incremental cost between a bare metal and a drug-eluting stent is
expected to be $2,000. Two commenters urged us to set the rate for APC
656 based on the actual price difference between the current and drug-
eluting stents, and one commenter recommended setting the initial
payment amount at a level that is 60 percent above the probable
hospital acquisition cost. One commenter asked why we added $1,200 to
APC 656 rather than $1,800. The basis for this request was that the
incremental payment for inpatient care was $1,800 for an average of 1.5
stents per procedure.
Response: To establish a payment rate for APC 656, we proposed to
add $1,200 to the median cost of stent insertion procedures in APC 104,
based on assumptions that we applied to establish the weights for DRGs
involving drug-eluting stents under the inpatient PPS. Based on the
median cost established for APC 104 using the 2001 claims data that
were reflected in the August 9, 2002 proposed rates, we determined that
an additional $1,200 would offset the incremental cost of an average of
1.5 drug-eluting stents per procedure.
We do not agree that the incremental payment should be $1,800.
Although it is true that 1.5 stents are typically placed per procedure,
it is rare for two stents to be placed in one coronary artery in an
outpatient setting. Furthermore, hospitals can bill under the OPPS a
separate code for each vessel in which a stent is placed, unlike the
inpatient PPS. Because hospitals will in most cases be able to report
each stent placement separately in the outpatient setting, making an
incremental payment of $1800 would significantly overpay for each
stent.
As we explain elsewhere in this preamble, the payment rates that
this final rule implements are based on more current data than those
that were available when we set the rates proposed in the August 9,
2002 rule. The rates in this final rule also reflect adjustments
intended to level the transition from rates based on pre-OPPS data and
estimated pass-through device and drug costs to rates based entirely on
OPPS data that reflect actual device and drug costs reported by
hospitals.
Comment: One commenter expressed concern about our expectation that
a new technology must ``transform'' medical care and be the object of
substantial demand in order to justify making an exception to our
standard OPPS payment methodology. The commenter believes that our
rationale for making an exception for drug-eluting stents establishes
an almost unattainable threshold for other technologies to reach in
order to receive similar treatment in the future. Conversely, another
commenter expressed concern that by establishing codes and payment
rates for drug-eluting stents, we are setting a precedent that will
likely increase the pressure to create new temporary codes for non-
breakthrough technologies. This commenter encouraged us to maintain
highly selective criteria when creating new codes for new technologies
in the future.
Response: As we explain at length in the August 9, 2002 proposed
rule, we believe that drug-eluting stents are potentially a
revolutionary approach to the treatment of coronary disease.
Ordinarily, we would expect a new technology like the drug-eluting
stent to qualify for a pass-through payment or for payment under a new
technology APC.
However, because the drug-eluting stent does not meet the criteria
established for these two methods of payment for new technology under
the OPPS, we were compelled to seek an alternative approach in order to
ensure beneficiary access to this extraordinary new treatment, once it
receives FDA approval, without placing an extraordinary burden on
hospital resources. We expect that either a pass-through payment or
assignment to a new technology APC will, in the overwhelming
preponderance of cases, provide adequate and timely payment under the
OPPS for new technology. We agree with the commenter who supported
maintaining highly selective standards when establishing codes for new
technology. The threshold for such an approach must be exceptionally
high and applicable only in the most extraordinary and unusual cases.
Comment: One commenter asked that we clarify how we will adjust the
2003 OPPS payment rates if FDA approval is not given for drug-eluting
stents by April 1, 2003. The commenter is concerned about the adverse
effect on the rates for other services that would result from our
having recalibrated and scaled the relative payment weights for all
services, taking into account additional payment for drug-eluting
stents that turns out not to be an expenditure.
Response: We have reviewed the impact of the drug-eluting stents on
the total recalibration exercise and determined that excluding the
additional allowance for the drug-eluting stents would not result in a
significant redistribution of funds for other services if FDA approval
were not issued by April 1, 2003, triggering payment under the OPPS. We
estimated that slightly fewer than one-third of the cases paid under
APC 104 (approximately 5,400 procedures) would be performed using drug-
eluting stents during the three quarters of 2003 when payment would be
made for APC 656, assuming FDA approval is issued by April 1, 2003.
Payment for the use of drug-eluting stents represents approximately
0.17 percent of the total APC weights. Restoration of these payments to
the pool of weights for other services would not measurably
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change the weights of the other APCs. Therefore, we would not revise
the 2003 APC weights if payment for drug-eluting stents were not
allowed beginning April 1, 2003.
Comment: One commenter expressed concern that the general use of
data from other countries to set the national payment rate for a new
device in the absence of hospital claims and cost data raises long term
issues regarding the impact this approach would have on manufacturers'
investment and pricing strategies, both abroad and in the United
States. The commenter recommended that we consider these issues in more
depth.
Response: We respond to this issue in our discussion of MedPAC
comments in section XI.
Comment: One commenter recommended that we carefully monitor the
use of APCs for which the national payment rate is established based on
pricing in countries other than the United States and the costs
reported by hospitals for those APCs. Another commenter stated that the
new HCPCS codes for the drug-eluting stent procedures should be
temporary and that we should ask the CPT Editorial Board to develop
national CPT codes as soon as possible.
Response: As we indicated in the August 9, 2002 proposed rule, we
intend to closely track the utilization and costs associated with the
drug-eluting stents. We established the G-codes for the use of drug-
eluting stents precisely in order to permit us to collect these data.
However, the cost data taken from hospital claims associated with the
use of the drug-eluting stents will ultimately be incorporated into the
current CPT codes for coronary stent placement. We believe that the
current CPT codes describe the procedure adequately and that separate
permanent codes specific to the use of drug-eluting stents are not
necessary based on the expectation that drug-eluting stents will
eventually beco